Monday, January 29, 2007

City Council Eyes Curtailing Housing Tax Exemption

Next Tuesday evening, February 6th, the Tacoma City Council will consider enacting a one-year moratorium on the multifamily tax exemption for housing projects in downtown Tacoma with fewer than 30 units or a density lower than 80 units per acre.

In order to implement the proposed moratorium, the Council would have to declare an emergency, permitting the ordinance to be adopted without public comment until Tuesday, April 10th--over a month after it is adopted.

The tax incentive is used by many Washington cities and is credited with stimulating much of the demand underpinning the revitalization of downtown Tacoma over the past decade. The incentive has been described as one of the few tools Tacoma has to encourage investment downtown and to revitalize the city.

Why is the City of Tacoma considering implementing this moratorium? There is a concern about the “manner of construction” of some projects within the Tacoma Mall center that have a “lack of pedestrian access improvements.” The city is also concerned that the tax exemption should be “reserved for projects of more significant scale.”

Just as the tax exemption has provided real benefit to downtown revitalization, the proposed moratorium could bring real barriers to downtown's renaissance. The Bridge Condominiums (Marcourt) at 744 Market St. has only has 14 units and encompasses only 54 units per acre, so this model restoration project would not have qualified under the proposed moratorium (which requires a project size of 30 units and 80 units per acre).

The nearby Vintage Y, a historic restoration with only 17 units, would have been barred as well if it had applied for the multifamily tax incentive rather than for an historic tax incentive.

Prium Companies' Foss Waterway project--Nineteen Thirty-Three Dock St.--would also fail to meet the moratorium’s requirements. The project is currently designed to have 90 units on a 1.35-acre lot--only 66.7 units per acre--far short of the moratorium’s requirement of 80 residential units per acre. The Prium project fails the moratorium’s requirement as much of the space of the project is currently designed to be commercial and retail but the moratorium only counts residential units in its density calculation.

This action seems inconsistent with other policies adopted by the City Council--especially the recent commitment to pursue a denser built environment downtown.


  1. I am hoping that the council will slow down and take a look at some of the adverse impact first before they rush into this.

    Stakeholders that would be effected need to be consulted.

    We need more incentives to invest in downtown Tacoma, not less. We still have dozens of buildings that need restoration.

  2. The city made a good decision on the issue yesterday by taking the issue off of the agenda.

    The issue of the sidewalks and other building concerns were discussed but it looks like they are going to address it through the buildings codes.

    That certainly seems logical as one cannot have two sets of building codes.

    Also, the best I can tell, no other city using the program has any density or project size requirements to use the tax exemption:

    Bellingham Municipal Code, Ch. 17.82.030

    Kirkland Municipal Code, Ch. 5.88

    Olympia Municipal Code, Ch. 5.86

    Spokane Municipal Code,Ch. 8.15

    Wenatchee Municipal Code, Ch. 5.88

    It would be ironic for Tacoma, who needs the program most, to place the most restrictions on its use.

    The higher buildings are going to be built by developers in Tacoma when the market supports such structures.

    The tall buildings in Seattle and other cities were put in as a result of market demand, not by legislation.