Two more Tacoma market-rate apartment projects gain tax exemptions
As new apartments are being built in Tacoma to meet an influx of residents seeking affordable housing, rents continue to rise at different rates in the county.
Against that backdrop, Tacoma City Council on Tuesday awarded tax exemptions to two new apartment developments: a parcel encompassing 632, 638, and 640 North Trafton Street in the Sixth Avenue Mixed Use Center, and a parcel at 1402 Tacoma Ave. S. in the Downtown Regional Growth Center.
Both qualified for the eight-year multifamily property tax exemption, which proponents, including the mayor, argue is helping bring much-needed housing.
Critics contend it’s only bringing development to certain sectors, along with scant parking.
At the same meeting Tuesday, the council took actions to address another challenge: providing shelter to those who cannot afford any housing.
Those measures included authorizing an agreement with the Low Income Housing Institute to operate a temporary emergency shelter site in the city. Also approved: a measure to extend the declared shelter emergency for homeless residents in Tacoma and changes to the temporary shelter ordinance with the goal of making it easier for churches and nonprofits to set up shelters.
The juxtaposition was not lost on those who spoke during public comment.
“In the light of our housing crisis I plead with you, in these decisions ... that you put people and the planet ahead of the financial gain of developers and that you focus on widespread affordability,” said one commenter.
As the city has worked to begin implementing its Affordable Housing Action Strategy, the tax exemptions remain a target of critics skeptical of their use as others contend they remain a useful tool in bringing developers to Tacoma.
Mayor Victoria Woodards directly addressed the criticism in October when two other developments, Proctor III and McKinley 20, received the same tax benefits.
“Frankly, we need as much housing as we can get,” Woodards said at the October council meeting. “ ... And while we especially need workforce housing, we need all kinds of housing.”
A review of City Council agendas so far this year shows the council approving six projects for 12-year development tax exemptions that include a percentage of affordable units. In contrast, it also has approved 11 projects (and one amended from the 12-year version) with eight-year development tax exemptions that do not include the affordable component.
The 12-year projects approved so far this year include 61 affordable units and 219 market rate units.
The 8-year projects approved so far in 2019, along with the one that was amended from a 12-year to eight-year exemption, total 1,265 units.
How high? Depends
Recent rent reports reflect the pressures those trying to stay in their homes are facing.
A November report from RentCafe, which tracks rent rates on a national scale, showed that in October, year-over-year percentage rent rate increases varied in Pierce County.
Puyallup led the way, showing 7.8 percent year-over-year increase in rents at an average of $1,529 per month. Tacoma’s average rate for October was $1,340, a mere 0.5 percent increase from September but 5.3 percent higher than last year.
In response to questions, the data tracking service told The News Tribune that Gig Harbor at $1,552 was up 3.7 percent year over year, and University Place, at $1,277, showed the region’s highest jump in just a month from September to October, and additionally was up 6.8 percent year over year.
The cheapest rental offerings continue to be Lakewood, according to RentCafe, with an average rent of $1,249.
In contrast, the average rent in the Seattle metro area for October, $1,786 in October, was an increase of 4 percent over a year ago.
New developments
The North Trafton Street project approved for the 8-year tax exemption is replacing three single-family homes near the intersection of North Eighth and North Trafton streets with 42 market-rate units (with 35 parking stalls). It is being developed by Encompass Property Management LLC of Gig Harbor, led by Chad Scialabba and Andrew Brooks, according to the Secretary of State’s corporate listings online.
The development will include 15 studios, 520 square feet, renting for $1,050 a month; 12 one-bedroom, one-bath units, 700 square feet, $1,300 a month; and 15 three-bedroom, two-bath units, 850 square feet at $1,550 a month.
The other development approved for the 8-year exemption Tuesday, at the corner of South 14th Street and Tacoma Avenue South, will create 188 market-rate units with 59 parking stalls. It is being developed by Ethos Development LLC of Portland, led by Paul del Vecchio.
The development will include 135 studio units, 300 square feet, $1,100; 47 two-bedroom, two-bath units, 750 square feet, $2,250; and six three-bedroom, two-bath units, 870 square feet at $2,550.
According to Ethos Development’s website, the apartments will have “a full suite of amenities and two parking decks. The project falls within an Opportunity Zone and has a likely start of early 2021.”
Ethos already qualified for a separate 8-year exemption for 115 market-rate apartments at 1351 Fawcett Ave. earlier this year. That development, Analog Apartments, filed for its building permit Nov. 18 and its plan review is in process with the city.
Del Vecchio at that time noted the exemption was needed for his company to be able to develop.
“In order to be built, market-rate multifamily projects need to make enough money to cover debt service at completion,” he told The News Tribune in March. “Even if the tax benefits in future years offset the aggregate rent subsidy in the affordable units, it would penalize the early years and make the project infeasible.”
Asked Tuesday where he thought the Tacoma market was in terms of apartment development, del Vecchio told The News Tribune via email: “Currently market fundamentals from the developer perspective are good, though construction prices are increasing rapidly ... so it’s unclear what the future holds.”
“Housing prices and rents continue to increase, so it seems to me that there is still a need for new units,” he added. “Our ‘affordable-by-design’ strategy, which produces units that are smaller, yet more affordable than other new product, should work well in this environment and contribute to the need for accessibly priced housing.”
Del Vecchio, in comments sent to The News Tribune late Wednesday, wrote: “We are experiencing many of the same issues in Portland. A few of those that spoke (at Tuesday’s council meeting) tied the 8-year MULTE program to those issues and I believe that tie to be misguided. In our urban areas we need more of all types of housing: market rate, low income housing, permanent supportive housing and temporary shelters. The 8-year tax exemption is necessary to make projects financially feasible and removing it would be a detriment to the cause everyone so passionately and rightly advocated for, more housing.”
The latest Ethos Development site is currently home to Go Philly Cheesesteaks & Wings. According to its website and information from the City of Lakewood, Go Philly is moving to a new location in Lakewood at Custer Road West and 75th Street West, across from the Classy Chassis self-serve car wash, in the near future.
This story was originally published November 21, 2019 at 6:10 AM.
