It could certainly be argued that the property tax exemption program that Tacoma, like many cities, uses to promote the construction of new multifamily housing has been a success.
With a few notable caveats and qualifiers.
There’s little question developers have taken advantage of it. As The News Tribune’s Debbie Cockrell reported earlier this month, an analysis of projects currently utilizing the 8- and 12-year exemptions shows 2,034 units have been created here.
How many units would have been created if the programs didn’t exist? As a recent legislative audit described, it’s difficult to say.
Either way, what’s far more difficult to argue — if not impossible — is that any of this is doing much to quickly address our need for real affordable housing.
It’s simply not. For a small, perfect snapshot of why, take a look at this week’s Tacoma City Council agenda.
A total of three multi-family projects were scheduled for City Council consideration Tuesday, all expected to be approved.
A 44-unit development in the Sixth Avenue mixed-use center applied for the 8-year property tax exemption, offered to multifamily developers building four or more units.
The other two — a 6-unit development also near Sixth Avenue, and a 4-unit development downtown — sought the 12-year property tax exemption, offered to developers who include coveted “affordable” units in their mix.
The specifics of both tax exemption programs are wonky, but important, as are their likely shortcomings and the histories of how they came to be. Luckily, Cockrell has already done the heavy lifting for me on that front in her previous reporting, explaining the context and nuance you need to know.
So what do you need to know about this week’s offerings?
It’s startlingly straightforward:
Taken together, the two smaller developments promise to create three new “affordable” units, a one-bedroom and two studio apartments. All of them will be 450 square feet.
At least according to plans submitted by the developers during the application process, all of the new “affordable” units will initially rent for the exact same price as similarly sized units in each development.
You read that right.
The development near Sixth Avenue will have six studio apartments. Both market rate and “affordable” are expected to rent for $900 a month, according to city documents submitted by the developer.
The downtown development, meanwhile, will have four units. Both of its one-bedrooms are expected to rent for $800 a month.
So what does “affordable” really mean, in this case?
Seems safe to say, not much, at least not yet.
In a memo to the City Council and City Manager Elizabeth Pauli, here’s how city staff spins giving a 12-year tax credit to the developers planning to charge the same price for market rate and affordable as a good thing:
“Although at this time, the market rate expected rents and the affordable rents are the same and are deemed ‘affordable,’ over the twelve-year exemption as market rate rents increase, the affordable unit will have to continue to comply with the allowable rental rates tied to the 80-percent of the Pierce County Area Median income as published annually by HUD.”
In other words, while there’s currently no difference in some areas between market rate and the prescribed rent developers need to charge to qualify for a 12-year tax exemption, some day — presumably — the math will be different, and the new units will be locked in at 80-percent of AMI.
That ringing you hear is the real estate bust of 2008 calling, and it would like a word.
“Technically, according to the definition, it’s affordable,” said city project manager Debbie Bingham of the new units, noting that the developers could technically charge more than $1,100 a month and still qualify for the tax break.
“That’s kind of the catch, right?” Bingham said.
It certainly is.
To this columnist, it seems safe to say that when “market rate” and “affordable” mean the same thing, it’s probably time to reconsider the approach, or at the very least what we’re claiming it can do.
But what do I know?
Unfortunately, for the most part, our elected leaders seems inclined to wait and see if the state Legislature will swoop in and save the day, offering a statewide fix.
It might happen. It might not.
Meanwhile, any city action that might be taken — like, for instance, lowering the area median income requirement — has been seemingly put on the back burner, for fear that any rash action would inadvertently stifle needed development of all kinds.
It’s often argued that new multifamily housing of any kind ultimately helps cool Tacoma’s soaring rental market. There’s likely economic truth in that statement, not that it’s particularly satisfying.
What’s even more unsatisfying is the status quo. As local leaders have acknowledged many times, there’s a dire need for more — real — affordable housing.
Half-measures simply aren’t cutting it, and right now the city’s 12-year affordable housing property tax exemption program often feels more like a nifty accounting trick than something that’s actually going to help.
The deals doled out this week prove it. Case closed.
So, again, if Tacoma isn’t going to fix the problem, we should at least be honest about what it most effectively produces: Solid deals for savvy developers and more of the same for just about everyone else.
Please forgive me if I’m less than impressed, given the circumstances.