A tax break for building in downtown Olympia

It could happen if City Council agrees to plan for those involved in housing in district

By Matt Batcheldor | The Olympian • Published August 24, 2008

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If the allure of walking to shops, restaurants and workplaces isn't enough, people considering a move to downtown could get another incentive — up to 12 years of property-tax breaks. – If the allure of walking to shops, restaurants and workplaces isn't enough, people considering a move to downtown could get another incentive — up to 12 years of property-tax breaks.

Property-tax exemption rules

• New or rehabilitated housing in a special district can be exempt from property taxes for eight years — 12 years if at least 20 percent of the units go to lower-income occupants. The Olympia City Council is expected to adopt this after reviews next month.

• The housing must be on commercially zoned property in one of three designated districts — downtown, a corridor on the east side along Fourth and State avenues or in west Olympia, along Harrison Avenue.

• Only the improvement, not the land, qualifies for the exemption.

• Fifty percent of the space must be for permanent residential occupancy.

• At least four new housing units must be created.

• New construction and rehabilitation must be completed within three years of approval of the application.

• Property to be rehabilitated must be vacant at least 12 months before application.

• Tenant displacement is prohibited.

• The applicant must enter into a contract with the city and agree to terms and conditions.

Source: City of Olympia

Building or rehabilitating housing in a special district that includes downtown could qualify the owners for eight years of property-tax exemptions — 12 years if at least 20 percent of the units are rented or sold at what's considered an affordable price.

The Olympia City Council is set to consider the exemption next month. The Legislature authorized the exemptions in 2007, replacing the previously allowed 10-year exemption.

The tax break has drawn criticism lately because Triway Enterprises, a South Sound developer, has asked the city to raise building-height limits on the isthmus downtown between Capitol Lake and Budd Inlet so it can build five- and seven-story mixed-use buildings with 141 condominiums. The City Council will hold a five-hour public hearing about the controversial proposal Sept. 16 at The Washington Center for the Performing Arts.

The exemption would mean that Triway could pay no property taxes on the buildings for eight years or until a unit was sold. The buyer of a unit then would get the tax exemption for the remainder of the eight years. Opponents say it's a tax break for the wealthy; Triway's units are planned to be upscale.

"I think it's especially galling," said Bob Jacobs, a former mayor and spokesman for Friends of the Waterfront, which opposes Triway's proposal. "I think to most people ... multimillionaires would be exempt from property taxes for eight years."

But proponents of the tax break say it will attract housing to help revitalize downtown, bringing people and their disposable income into the center of the city. A study by independent consultant Greg Easton, commissioned by Triway, states the taxes that the project would generate outweigh the taxes that would be exempted by nearly two to one.

"It's become policy in virtually every city" of size in the state, said Jeanette Hawkins, a project manager for Triway and a former city councilwoman.

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