Apartment developer Battle Ground seeks tax exemption for housing project

Rick Bannan / [email protected]

A developer looking to build hundreds of apartments off West Main Street in Battle Ground is looking to take advantage of a state law that allows tax breaks for projects offering affordable housing.

At its July 18 meeting, the Battle Ground City Council voted 4-3 to begin work on an amendment to a development agreement between the city and Deacon Development on a project known as “West Main Commons.” .

The current deal for the $85 million project includes 220 market-priced apartments ranging from studios to two-bedroom units and 36,000 square feet of retail space at the north end of the project. The development would be located west of the Best Western Battle Ground hotel.

At the meeting, Deacon Development President Steve Deacon proposed an eight-year Multifamily Tax Exemption (MFTE) for the project. The exemption is authorized by state law and would reduce property taxes on a portion of the development for that period, if approved.

The MFTE would only apply to improvements in the residential portion of the project, Deacon noted. Commercial property and land prior to residential area improvements would still be subject to full property tax.

If approved, 10% of the project’s units would be deemed “affordable,” Deacon said. Affordability would be based on households having 80% of the median family income.

“The MFTE is really very important for our financial planning. We’re realizing that more and more as the cost of construction goes up, it’s like every week,” Deacon said.

If the exemption is approved, it is estimated that the city will collect approximately $536,000 less in property taxes over the duration of the exemption.

Other tax entities, such as Clark County Fire District 3 and Battle Ground Public Schools, would also be affected by the exemption.

Due to “considerable concerns” about impacts to fires and school districts, the developer offered to fund a $300,000 grant for the two entities, which would be distributed by the city, Deacon said.

Councilor Shane Bowman was suspicious of the proposed tax relief.

“I hate that other taxpayers are subsidizing it,” Bowman said.

When an entity such as a school district administers a bond, the full amount is paid from the total tax pool.

“A ladder truck now costs $1.2 million. Sharing that ($300,000) with the school district…it’s peanuts to them,” Bowman said.

Bowman said he thought the project was “phenomenal,” but noted he didn’t like giving taxpayers’ money away.

Deacon highlighted some of the positive revenue the project would generate. If built, the project would generate approximately $1.8 million in sales taxes during construction, approximately $2.1 million in retail sales taxes, $1.2 million in property taxes with the MFTE in place and $3.9 million in licensing and system development costs.

Bowman and Councilor Shauna Walters questioned the basis of one and a half parking spaces per household in the development, as included in the current agreement.

Deacon said he couldn’t speak to trends specific to Battle Ground, but nationally he said there was a trend towards fewer cars per household.

“In almost every apartment complex in this neighborhood there are cars overflowing onto the street,” Walters said.

Bowman said the composition of cars in the city is completely different from what a person sees in downtown Vancouver.

“If you go through most of our subdivisions at Battle Ground, you don’t have small vehicles. You have big trucks,” Bowman said.

City Manager Erin Erdman noted that commercial space has its own parking requirements based on square footage. The project currently includes plans for 85 studios and 85 one-bedroom units, while the remainder are two-bedroom units, which may require less parking space than other developments.

The affordable housing clause is expected to remain in place during the eight-year exemption, according to the development agreement.

Deputy Mayor Cherish DesRochers expressed concern about what would happen to residents who use the affordable housing option once that stipulation expires.

“A lot of times when people arrive somewhere they want to stay there permanently, especially if they’re like old people,” DesRochers said.

Bowman said housing built in Vancouver’s Esther Short Park neighborhood used what some council members called the MFTE’s “tax loophole.”

“I bet you my council pay check for the month that there is no more affordable housing in the Esther Short Park area. It’s all high-end housing now that (the exemption) has run out,” Bowman said.

Bowman, DesRochers, Walters and Councilor Adrian Cortes voted to begin work on amending the development agreement. Councilors Tricia Davis, Troy McCoy and Mayor Philip Johnson voted against.

“I’m not very into giving people money. I’m not very good at opening people’s checkbooks. And I’m not very keen on letting people miss out on their obligation,” Johnson said.

Johnson noted that he owned three rental properties and said the exemption was the result of large-scale developers who had stronger lobbying powers at Olympia than the “moms and pops” landlords.

“(If) I don’t pay my taxes … the county treasurer will stake them and sell them for me,” Johnson said.