The Pierce County Council on Tuesday unanimously approved a 12-year property tax exemption for a residential development meant to change the face of Parkland.
Construction on a $20 million project to build 104 apartments, plus office and retail space, a block from Pacific Lutheran University is expected to start in January and finish 12 months later, said developer John Korsmo.
The four-story project, called Garfield North, has been controversial not only because of the tax break that will help drive it, but also because the development is displacing seven small businesses. Owners of one business are critical of how developers have treated them.
Council member Dick Muri, R-Steilacoom, said Garfield North will be the best thing that’s happened to Parkland in a decade, bringing jobs and “a higher quality of life.”
Councilman Stan Flemming, R-University Place, said the project will further revitalize the neighborhood around PLU.
State lawmakers this year approved a 12-year property tax exemption on the values of new residential housing on Garfield Street. It’s a tool cities have had for years.
“In order for the project to make sense financially, the tax abatement was a necessity,” said Korsmo, president of Tacoma-based Korsmo Construction.
Garfield North aims to attract PLU professors, staff members and other professionals to live near campus instead of in downtown Tacoma or Seattle.
The tax exemption starting in 2015 applies to only the residential portion of the 127,000-square-foot project. The exemption would create an estimated annual tax burden of at least $239,000 spread across county taxpayers, according to the bill’s fiscal note.
But developers don’t expect an overall loss in property tax revenue from current levels because the land and retail space would be taxed.
In addition, $15 million in construction costs are expected to generate $1.4 million in sales tax.
The council voted 7-0 Tuesday in favor of the tax exemption. In August, it had designated the Garfield neighborhood as a larger target area for the multi-family property tax exemption.
The tax break is contingent on 20 percent of the units being rented as affordable housing.
The development is a partnership of PLU, Korsmo Construction and Affinity Investments of Tacoma.
Judi Brown, who co-owns Getting Personal Imprinting with her husband, DJ, reiterated Tuesday her previous criticism.
“The developers who are receiving this very large tax abatement have in my estimation handled tenant relations poorly with those small businesses who were operating on the street,” Brown told the council.
In an interview, she said, “Our main frustration in all of this is the underhanded nature and the flip-flop communication we’ve been getting from (developers) since last spring.”
Brown said changing demands in move-out dates have caused her to pay rent for two locations since August. Her business is relocating to Lakewood by the end of its lease in January.
Affinity Investments president Kirk Rector cited a lack of firm dates with Pierce County, the financing market and the development plans.
“Unfortunately, we have not been in the position we wish we could have been to give them more concrete information as to the development’s start dates,” Rector said.
Two businesses moved on their own. Rector said his company offered relocation assistance to the others.
Three businesses remain: a tax service, hair salon and the Browns’ trophy-engraving shop.
Rector said the developers will pay the final three months of the Browns’ lease – a total of $4,650 – without a signed agreement the two parties disagree on.
“I’ll take that,” Judi Brown said.Steve Maynard: 253-597-8647