Council rejects tax break for downtown apartment project


By John Larson –



An apartment building that is partly built in downtown is on hold right now, after Tacoma City Council took the unusual action of rejecting a property tax break for the project. Six members were present during the April 30 meeting; Councilmembers Ryan Mello, Robert Thoms and Conor McCarthy were absent. Both measures failed by a voice vote, with Councilmember Chris Beale voting no both times. Councilmember Anders Ibsen abstained from voting on both. Five votes were needed to approve each measure.

For many years, the city has offered a property tax exemption for certain projects in designated parts of town. The projects must have a minimum of four units; the majority have many more. The areas are places the city has identified as ideal for mixed-use development, which generally is retail shops or restaurants on the first floor with condominiums or apartments above.

Developers who agree to set aside a certain number of units as affordable housing qualify for a 12-year tax break. Those who go for all market-rate rental units apply for the eight-year tax break. The eight-year tax break has been awarded to many projects. The week before, the Council approved a 12-year tax break for a development near South 72ndStreet and Pacific Avenue, where Pacific Lanes bowling alley will soon be demolished to make way for an apartment building. The affordable units will rent from $1,046 to $1,342 per month, with some utilities included. Two other projects downtown were recently approved for the eight-year break.

The project is on a parking lot formerly owned by the city, across the street from the downtown library on Tacoma Avenue. HQC USA LLC, a company in Vietnam, purchased the parcel for $750,000 in 2017. Debbie Bingham, a project manager in the city’s Community and Economic Development Department, explained to the Council some of the complexities involved in such real estate projects involving investors from other nations. Bingham said construction began in October 217, then came to a halt in July 2018 due to financing issues.

One of the measures would have amended terms of the development agreement. The other would have switched the project from a 12-year tax break, with some units designated as affordable housing, to an eight-year break with all units at market rate.

Bingham said one amendment would have increased the number for units to 186, with 174 parking spaces. The original price tag of the project was $35 million; it is now an estimated $50 million.

Market-rate rents in the building would be $1,200 to $1,400 for 13 studio apartments, ranging in size from 450 to 500 square feet. Rent would be $1,500 to $1,700 for 143 one-bedroom, one bathroom units of up to 1,500 square feet. Rent would be $2,200 for 14 two-bedroom, two-bath units of 950 square feet. The most expensive rent would be $2,400 for 16 two-bedroom, two-bath units of 1,090 square feet.

As the cost of rental housing has skyrocketed in Tacoma in the past few years, the eight-year tax break has come under fire, especially from advocates for affordable housing.

In an e-mailed statement to Tacoma Weekly, Beale said “the eight-year tool remains a valuable tool for the development of housing in general, which contributes to affordability by expanding supply at multiple price points in a housing market currently overburdened by demand. I believe, however, that the bar should be set higher for future projects being developed on city-owned properties that consider affordable housing. The city remains committed to addressing the issue of affordable housing, and work on implementing our Affordable Housing Action Strategy is ongoing. This includes analyzing our policies around the development of affordable units.”









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