Port Townsend City Council considers tax exemptions to enourage housing

PORT TOWNSEND — The Port Townsend City Council is one step closer to enacting a program that provides for limited eight- or 12-year tax exemptions for qualified new multi-unit housing located within designated target areas of the city.

The council approved the first reading of an ordinance relating to taxation, adopting a multifamily tax exemption program, and designating residential target areas. The ordinance also adds a new chapter, Multi-Family Tax Exemptions, to the municipal code. The vote was 5-1, with Council member Pamela Adams absent and Council member Robert Gray opposed.

The council will meet for another public hearing on the subject at 6:30 p.m. Aug. 6 in City Hall, 540 Water St. It will consider taking final action then.

The program is intended to provide incentives for the development and redevelopment of a balanced socioeconomic mix of housing to create urban-mixed use districts.

According to a map prepared by the planning department, the proposed primary target areas include those within the historic district, the waterfront and uptown, the areas between Upper Sims Way and Sheridan St., and the area between Discovery Road and San Juan Avenue.

Gray voted against the ordinance because he questioned the validity of the legal notices published for the meeting, saying they were not clear.

“How would the person reading this know if they were living in a designated area,” said Gray, specifically relating to a designation titled Subarea 6. “There are six versions of a subarea plan. There hasn’t been a public hearing on the subarea plans.”

According to the ordinance, Area 6 is “generally described as the area withing the Rainier Street/Upper Sims Way subarea plan. It also includes the R-III zones area north of Sims Way, west to the Port Townsend Business Park, north to 9th Street and east to Logan Street.”

Director of Development Services Lance Bailey said that individuals were responsible for finding out the impact.

“If I were a property owner and I wanted to know exactly where it was, I could go to the materials we posted online which we included in this document.”

Gray pointed out the map was posted on the city’s website last Friday, but the two public notices were published on June 27 and July 4.

“In the public notice, the area is described as R3 and R4. They wouldn’t know what they are because the maps weren’t posted,” he said. “I would be concerned if I were living in the target area.”

Bailey explained that application for the program requires notice be given to surrounding properties.

New and redevelopment projects of existing buildings located in the residential target area proposing a mixed use commercial office or retail project with multiple-use residential units would qualify for the tax exemption if four or more residential units are included.

Existing multiple-unit housing that has been vacant for 12 months or more would not have to provide additional units.

For the eight-year exemption, new multi-family units would have to qualify with the income requirement only and not the number of units.

New, converted or rehabilitated housing would have to provide for a minimum of 50 percent of the space for permanent residential occupancy. In an existing development, there would need to be a minimum of four additional multiple units.

Tax exemptions for multiple unit housing would be issued beginning on Jan. 1 immediately following the calendar year of issuance. To qualify for the 12-year exemption, at least 20 percent of the housing units would have to be rented through the duration of the exemption as affordable housing to low-income households, which is 80 percent or less of median income.

For ownership projects, at least 20 percent of the multiple unit housing units in the project must be sold as affordable housing to low- or moderate-income households.

The exemption doesn’t apply to the value of the land or to the value of non-housing-related improvements.

If the owner of the property decides to convert the multiple housing to a different use, the county assessor and city administrator must be notified and the tax exemption will be cancelled and additional taxes, interest and penalties will be imposed.

Liz Coker, who is the executive director of the Home Builders Association, told the council that most contractors are backed up 18 months to two years with projects.

“People don’t want to put money into apartment buildings. Finding people to build fourplexes, eightplexes or 16- plexes is very hard.

“I need this for my construction people. I have 57 companies I represent, 57 companies would hire 40 people tomorrow. But they have no place to live. They can’t be hired because they can’t live here.

“We need this workforce housing. If we don’t take care of jobs for younger people, this town and this county are going to suffer so bad.”

For more information, see www.cityofpt.us and click on the “city hall” button.

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Jefferson County Editor/Reporter Jeannie McMacken can be reached at 360-385-2335 or at jmcmacken@peninsuladailynews.com.

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