Okay, I get it. The city wants to incentivize the building of housing into specific areas, such as downtown or near the Capital Mall.
How do the city council do it? They identify areas to improve density. They then grant tax exemptions/deductions to builders allowing them to forgo paying taxes on those properties for a specified period of time. Builders then build.
Just look around the city’s core and note the number of newly built apartment buildings. And growth continues. Some proposals are in the building stages and more have filed plans awaiting approval and financing. So, that’s success? Right? It is, if you are the owner of the structure, or you are a city official wanting to improve density in a given area.
But it’s not a success for the taxpayer. The loss of taxable value through granting exemptions moves the tax burden onto the average taxpayer who doesn’t get any exemptions. As an example, a homeowner is taxed for city services. A builder with this benefit is not taxed, so doesn’t contribute toward paying for those services.
An article titled, “Olympia’s rising tax exempt skyline” from the May 2019 issue of Works In Progress laid out some facts. According to author Dan Leahy, four projects alone granted the owners/developers close to $35 million in exemptions. The owner pays property tax only on the land and any associated retail or commercial space, The residential part of the building is exempt. This translates into a public subsidy worth over $425,000/year which extended over the 8-year life span of the exemption totals over $3.4 million. These figures did not include the most recent housing, including the completed Annie’s Lofts or Harbor Heights nor any fairly recent others. This is quite the incentive.
According to Mr. Leahy, there is a 12-year tax exemption available but only if 20% of the units are ‘affordable’. None of the developers chose the longer exemption period. Well duh! The 8-year exemption does not require that any portion of the units be affordable. The only requirement is to locate the project in the target area.
So what did the city get for granting these? The bottom line is that housing, most often rentals, was increased. However, the cost of rent on an apartment or of purchasing a condominium make these options unavailable for all but wealthier occupants. Profit to the developer was enhanced, the taxpayer picks up the loss of value through increased taxation, and those seeking affordable housing continue to struggle or remain homeless.
And if that is not enough, The JOLT last week ran an article titled “Unaffordable housing a threat to Olympia economy, says city planner” about a presentation given to city officials. How ironic. Those officials heard from the strategic projects manager, Amy Buckler, how unaffordable housing threatens the Olympia economy. Another, duh! Well, when the city only values density and not affordability, you aid the housing crisis.
Isn’t it about time the city re-prioritizes and puts the citizen taxpayer first, the builder second? Their actions to date show a different type of denseness.
Fred Yancey is a retired educator based in Olympia. He is a lifetime Washingtonian who currently works as a lobbyist advocating for seniors.
Editor's Note: The opinions in this piece are those of the writer and not the staff or board of The JOLT News Organization. If you have an opposing opinion or even an opinion about another local topic, we encourage you to write it up and send it to us for publication.
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SandiToeze
Love this opinion and the truth of it all. There are just a lot of ins and outs of politics, taxation, and general government mysteries that boggle the mind, particularly in Olympia.
Now, add to that the fact that the city of Olympia isn't putting tax monies in all the places where they should. For instance, the streets. I hate driving into or through downtown Olympia because it's a very jarring experience. I don't know of anywhere else that has worse street maintenance. A daytime trip into downtown Oly is pretty scary for a lot of reasons, all of which involve sights and experiences one encounters without even getting out of the vehicle. I won't even consider that drive after dark. And Olympia used to be such a nice place....
Wednesday, July 6, 2022 Report this
PCBigLife
Like so many political issues, there is more than one way to characterize any given policy, and the Multi Family Tax Exemption (MFTE) as discussed above is a good example. To truly understand the exemption and why it exists, or most any policy, we need to look at its history. When the MFTE was adopted many years ago it was a very different time politically and economically, especially with respect to housing. The primary goal was to get people living downtown so that they would support the businesses and keep downtown healthy. That’s the concept. The businesses – retail, restaurants, theater, etc. – are what defines a downtown. Those businesses require enough people with sufficient means to survive. And it appears that the MFTE was successful, or at a minimum played a part in all the new development downtown. Now we’ll actually see if that concept, people living downtown, helps maintain our city core.
But similar to the current zoning policy (also adopted years ago) that allows an extra two stories of height in the city’s core to get people living there (the West Bay Yards proposal takes advantage of this policy), it is time to evaluate and change these laws to address our current political climate. Our housing needs are now much more tied to the economy and the need for “affordable housing”, however we want to define affordable. My understanding is that these policies are being looked at this year by the city. The council is certainly aware of the issues, differing opinions and options.
Lastly, I would not characterize the forfeiture of tax revenue as a subsidy. Subsidy implies that we are giving something away, costing the taxpayers. That simply isn’t the case. What we are doing is not collecting taxes on the residential portion of buildings that might not even have been built without these policies. As these buildings are in an already dense and central part of the city, I’d think the substantial taxes we do collect on the property for the property and commercial space should still pay most, if not all, of the added cost for services.
So we can characterize the same policies, the same events, in any number of ways. A healthy downtown needs regular care and feeding; that’s what the city was trying to do. I prefer to think that possibly the city actually accomplished what they set out to do years ago, and now it’s time to reflect and change with the times.
Wednesday, July 6, 2022 Report this