Council pauses Midtown development tax exemption topic
SNOHOMISH — The City Council on July 5 voted 5-1 to pause taking a vote on whether to give a short-term tax exemption to multi-family residential developers in the Midtown District, the city's zoning area along Avenue D, to a later date to-be-determined.
Part of their decision to table is because of public confusion on the tax impacts on existing residents if they approve the proposed exemption for new development.
Behind tabling the vote, councilmembers said they wanted to first see more public outreach and requested that representatives from the County Assessor’s Office present the council with expert advice on the tax cost impacts.
Councilwoman Karen Guzak gave the dissenting vote. Guzak called on colleagues to act and take leadership on the issue, saying she was already prepared to vote in favor.
Numerous residents spoke against approving the exemption.
Council President Tom Merrill replied to Guzak that he was ready to vote, too, but heard enough to warrant tabling the matter.
Councilwoman Lea Anne Burke was out of town and did not vote.
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More details abut the Midtown development tax exemption below:
SNOHOMISH — A property tax exemption is being proposed on new development in the Midtown District along Avenue D, and a public hearing on this will be at the Tuesday, July 5 City Council meeting with City Council confirmation possibly afterward.
In it, the city would offer to waive property taxes for eight years if 10% of the units are rent-limited for affordable housing or 12 years if 20% of the units are rent-limited for affordable housing.
“We want some affordable housing, and this is the best way we have right now,” city planning director Glen Pickus told the City Council June 7.
Opponents say exempting taxes for multimillion dollar developments has the consequence of benefiting developers while spreading the share of property tax costs to everyone else.
Earlier this month, the City Council took a vote declaring an intent to vote to ultimately approve the property tax exemption in Midtown.
Property tax exemption systems are relatively new for Snohomish. The city’s only one is for new development in the Pilchuck District in Snohomish’s east end.
Only one property citywide has been developed utilizing that tax exemption: 161 Lincoln Ave., a building with seven residential units. With the exemption, the city is forgoing $1,277 in city property tax revenue over the span of eight years on this property, Pickus quoted county assessor’s office figures June 7. The cost that shifted to all resident's property taxes is an increase of 30 cents per year, Pickus said.
In Midtown, whoever buys and redevelops the county’s 9-acre site likely will use the exemption for a much bigger project. The vacant lot along Avenue D opposite 10th Street has a real estate broker attached to selling the land.
Unless it’s turned into all office space, the Midtown District’s housing density minimums, applied to 9 acres, would obligate building at least 144 residential units, which adds approximately 360 people.
The exemption is on the residential section of a building, not the underlying land.
When it came to 161 Lincoln Ave., which redeveloped the site of a long-defunct car wash, Pickus said without the exemption, it wouldn’t have been redeveloped.
A city consultant wrote in a new city-commissioned housing analysis that “the county has allocated an additional 2,752 residents for the City by 2044. These residents will drive demand for approximately 1,200 new dwelling units over the 20-year period.”
Since the Midtown District is 102 acres, heavy redevelopment that leans residential could greatly grow the number of residential units. New development is how the city is approaching how to gain more affordable housing.
“I personally believe the most logical approach to the affordable housing issue is to build more housing, period. The more housing units we have, the more affordable some will be,” Pickus said during a separate June 7 council workshop.
Concerned property owner Morgan Davis sent the Tribune data from the county assessor’s office that there are 2,982 property tax accounts in the city without an exemption which would shoulder part of the cost of exempted property taxes for new development in Midtown.
The city’s property tax rate is 66 cents for every $1,000 in assessed value. The owner of an example $500,000 home is paying $330 this year for the city’s tax portion. (Their full tax bill is $5,390 at the rate of $10.78 per $1,000.)
The Midtown public hearing is during the council meeting 6 p.m. July 5 in the Carnegie, 105 Cedar Ave.
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