SNOHOMISH MIDTOWN DISTRICTCouncil declines tax exemption in 4-3 vote to seek other paths

The Snohomish City Council at a meeting in the upper level of the Carnegie Building in September 2022. The council meets at 6 p.m. on the first and third Tuesday of each month at the Carnegie Building, typically in the lower level.

The Snohomish City Council at a meeting in the upper level of the Carnegie Building in September 2022. The council meets at 6 p.m. on the first and third Tuesday of each month at the Carnegie Building, typically in the lower level.
Photo by Michael Whitney.

SNOHOMISH — A 4-3 vote by the City Council last week put an end to talks of offering developers a tax waiver that intended to jointly encourage development and affordable housing in the Midtown District up Avenue D.
Councilman David Flynn put forward the motion. Council members Lea Anne Burke, Tom Merrill and Donna Ray went along with it.
Just before the vote, some council members expressed wanting to hold off on taking a vote to hear a wider range of options for affordable housing incentives.
"Midtown Snohomish does not need an incentive," Flynn said at the meeting. Midtown's 5-story "building heights are enough to (act as) the incentive."
Merrill echoed the same in concerns he outlined about the MFTE.
City planning director Glen Pickus and planner Brooke Eidem said a different approach for affordable housing will be introduced early next year.
The city’s proposal to use a multi-family tax exemption (MFTE) for Midtown caught the public’s attention due to how it would have impacted personal property taxes.
The MFTE is used in other cities. It waives the annual cost of property taxes for a developer during a set period. The taxes not paid by the developer would be spread as a price increase upon all other property owners in the broader area to cover the difference — such as taxpayers living in the Snohomish School District and Snohomish Fire District 4’s boundaries.
A developer would have been able to secure the exemption in Midtown on the condition that they dedicate a portion of units to affordable housing in a new multi-family project.
Flynn said post-vote that there’s a need for affordable housing, but he felt the MFTE is not the right method as it has no permanence.
“I’m for affordable housing and solutions that are sustainable. I do not think the MFTE is that,” Flynn said.
“My intention on removing the MFTE” from the options is to have Snohomish look at “only programs designed for affordable housing,” Flynn said.
And, he had a problem with the MFTE causing tax impacts on residents outside Snohomish city limits, he said.
Councilwoman Karen Guzak, the proposal’s most enthusiastic supporter, had called a motion to enact the tax exemption. It died when no other council members spoke up to procedurally hold the vote.
Guzak explained in prepared remarks that establishing the tax exemption sets up Midtown for success in the long-range. It would take years for the area to develop and the cost impact is not immediate. All its critics are looking at it from a personal perspective versus the collective good, Guzak said.
The Pilchuck District, on the town’s eastside, already has a MFTE tax exemption but without an affordable housing requirement.
The City Council will be asked to amend the Pilchuck District’s rules to add the condition.
Flynn said if his motion failed, he would have asked to take a vote to postpone the MFTE decision so council could study more options.
Thousands of hours in staff time, council study and public discourse snowballed into Sept. 20’s council meeting where a decision was anticipated.
More than 50 people came for the meeting upstairs in The Carnegie Building.
Nineteen took the podium to comment, largely in opposition. Three dozen additional written comments were also part of the record. Most of them were against the proposal.
Residents on fixed-incomes opposed the incentive because it adds to their taxes. Others opposed the timing of a tax impact in the wake of inflation.
Speakers who supported the MFTE emphasized that Snohomish already is unaffordable to everyday people. For the first time, a teacher new to the Snohomish School District couldn’t afford to find a place in town on their salary, a speaker said. It tells of the cut-off in affordability, that speaker said.
Jennifer Kaloger, a mom and coach, said “I’m the person you’re taxing” if this proposal passed. Her and all other young families already hurting with increased costs, she said.
Former Mayor John Kartak told council members that the exemption idea is “merely a redistribution of wealth.”
Some said they were unexpectedly jolted to speak at the hearing in response to finding a city notification postcard in their mailbox just earlier that day.
Morgan Davis, who frequently monitors City Hall, spread public warnings about the MFTE. He challenged the city’s facts and his statements even got name-checked by city staff in a meeting.
City officials said the MFTE fit what council asked for. It would achieve the Midtown’s vision for future development while bringing in more affordable housing to Snohomish. It could lead to 25 to 50 new units built in any given year, and a larger population brings in sales tax revenue and grows the property tax base. Pickus said not having an MFTE puts Snohomish at a competitive disadvantage in attracting developers, backing it up with conversations he had with people in the development community.
A key property in Midtown is the former public works yard at 13th Street and Avenue D that is being put up for surplus.
The county’s hired broker began taking sealed bids around mid-August for an 8.6-acre section of the 9.4-acre site, said the site’s overseer, Randy Blair in public works. The bid opportunity is published in a real estate network.
The county and its brokers gave no promises to bidders that Snohomish would pass a MFTE, Blair said, although he called it “disappointing” it didn’t pass.
The county is placing no pre-set conditions on how the site should be developed.
“We didn’t because the Midtown District guidelines are fairly clear” on what can be developed, he said.
The 8.6-acre chunk happens to have no wetlands, Blair confirmed.
The city attributes guiding the fate of this property as to why a study group convened two years ago which led to creating the Midtown District.
The bid due date for sealed bids is Oct. 14, and the county will open the bids it received to look at them Oct. 17. A final mutual closing date could be about 120 days after Oct. 17, Blair said, which would go into the new year.