OLYMPIA — Port of Olympia land would be eligible for up to 12 years of property tax breaks under a proposal from an Olympia City Council committee.
The 12-year exemption would apply to new or rehabilitated housing if at least 20 percent of the units are rented or sold at what’s considered an affordable price. Market-rate housing would qualify for an eight-year tax break.
The City Council approved the same tax exemption for much of downtown and corridors on the west and east sides last year, but it excluded the port.
Port Executive Director Ed Galligan said that puts the port at a disadvantage because it has 6 acres of land on East Bay that it wants to sell or lease to private developers, which could include housing. The developments would go near a new Hands On Children’s Museum, LOTT headquarters/education center and public plaza.
Galligan supports adding those 6 acres to the exemption district.
“I think everybody benefits,” he said.
The full council should decide on extending the district to port-owned property soon, said Steve Friddle, community services manager for the city.
Councilman Joe Hyer, the chairman of the finance committee, said that the port pays no property tax. But if it should lease its property to a developer, the developer would have to pay tax on the structures built on the property.
The tax exemption would apply only to the housing areas of the structure. For example, in a mixed-use building that includes office, retail and housing space, only the value of the housing would be tax-exempt.
The property-tax exemption was made possible by state law. The Legislature authorized a 10-year property-tax break for multifamily housing in 1995, allowing individual cities to opt into the program. Olympia did in 1997. The legislature changed the tax break in 2007 to eight years, or 12 years if the development contains affordable housing.
Friddle said the city’s finance committee also considered extending the tax exemption to more of the west side, but staff members recommend further study before going forward. He wants to see how much tax money the city could stand to lose from the change, among other things.
Councilman Craig Ottavelli, a member of the finance committee, strongly supports the change.
“I think this is a big deal,” he said. “We’ll trust that the port will use it effectively.”