Work to begin this summer on 151-unit Lacey apartments with tap room
Construction of a 151-unit apartment building in Lacey’s Midtown is set to get underway this summer, the Lacey City Council finance committee learned on Tuesday.
The project, which has already received land-use approval, will be built at Sixth Avenue Southeast and Woodland Square Loop. It’s expected to have a tap room with outdoor seating, and 119 of the units will be studio apartments, targeting students at the nearby South Puget Sound Community College campus.
Part of the development site used to be home to a Chinese restaurant and the green building it inhabited is still there.
The developer behind the project is MJR Development of Kirkland, a group that has been active in the immediate area, having bought a number of former largely vacant office buildings that they are getting refilled with tenants.
South Sound Behavioral Hospital occupies one of MJR’s buildings and MJR also built a new site for the state Utilities and Transportation Commission.
There’s a first associated with the new apartments: MJR is applying for an eight-year multifamily tax exemption, the first such application in Lacey’s Midtown since the city adopted a multifamily tax exemption ordinance for the area in 2014.
According to city information, the “program exempts the value of new housing construction from property taxation,” and that “exemption applies to all levies assessed by taxing districts.”
Besides the city, the other taxing districts include Lacey Fire District 3 and North Thurston Public Schools.
The exemption does not apply to the land or the non-housing related improvements, such as the commercial space for the tap room, according to the city.
“I do kind of cringe a little bit about taking away junior taxing districts’ property tax revenue,” Lacey Mayor Andy Ryder said during the meeting.
Rick Walk, the city’s community and economic development director, acknowledged it “exempts public entity revenue,” but that ends after eight years.
The idea is to encourage the construction of more housing, which then entices other development to come to the area over that eight-year period, so that when the tax exemption ends, the city’s tax base has expanded, Walk said.
If the developer had agreed to reserve 20 percent of the apartment units for low-income housing, the tax exemption could have lasted 12 years, according to the city.
Walk added there is demand for housing in the area. Sixth Avenue Place, a 100-unit apartment project just west of the site for this project, opened in 2008 and has had occupancy rates of 95 percent or higher since then, he said.
The city has 90 days to review the multifamily tax-exempt application, and then it is expected to come before Lacey City Council as a contract in June.
This story was originally published April 28, 2021 at 5:45 AM.
