Developer bringing 240 apartments to Puyallup approved for tax exemption
A real estate developer will get an eight-year tax exemption following the construction of apartment buildings in downtown Puyallup.
The Puyallup City Council unanimously authorized the Eight-Year Limited Multifamily Property Tax Exemption Agreement contracts between the city and developer, Urban Puyallup Mixed Use LLC on May 12.
The State Department of Commerce created the MFTE program in 1995 for housing growth in cities. In Puyallup, the tax incentive is meant to encourage more multifamily housing unit developments in specific areas of the city, such as downtown, South Hill and the River Road Corridor, according the city’s website.
One of Urban Puyallup’s projects is the AOB development, which is anticipated to have 140 apartment units at 330 Third St. SW, behind the Puyallup Public Library. Their other planned development is the Bell Place project at 204 Fourth St. SW, which will have 100 units. The developments will be a mix of studio, one-bedroom and two-bedroom apartments, the city’s senior planner Chris Beale presented to the city council at the May 12 meeting.
The two projects will not offer affordable housing units, they will be market rate, city spokesperson Eric Johnson told The News Tribune via email.
It is estimated the city is giving up $11,454.70 to $17,424.45 in property tax revenue during the exemption years for Bell Place. With the AOB project, the city is giving up about $15,796.50 to $23,974.15 in property tax revenue, Beale said.
With the tax exemptions, the developer does not have to pay property taxes on the residential improvements for eight years after the buildings are constructed. The property owner still pays tax on the land and on non-residential improvements like the commercial portion of a mixed-use building, Johnson said.
Four projects to date have recently used Puyallup’s 8-year MFTE program, city emergency manager Kirstin Hofmann told The News Tribune in an email. This includes the AOB and Bell Place projects.
The city also offers a 12-year MFTE program, where at least 20% of housing units must be set aside for low and moderate income households. The Bradley Heights Project, an apartment building under construction at 202 27th Ave. SE, uses the 12-year program, she wrote.
The city’s program has been around since 2003, according to The News Tribune’s previous reporting.
Following the council’s authorization of the signing of the MFTE contracts, a conditional certificate will be issued. The developer has three years from the date the certificate is issued to build the MFTE project and apply for their final certificate to start the tax exemption, according to the city of Puyallup website.
City council member Lindsay Smolko asked Beale about the penalty provisions if the developer doesn’t meet the agreements.
“If they don’t meet the terms of the contract, my memory having looked at it a couple days ago, is that they simply aren’t eligible for the tax relief,” city attorney Joe Beck said.
In order to get their final certificate, the developer must make sure that:
- The project was finished within three years from the date the council approved their Conditional Contract of Tax Exemption (with the possibility of an extension)
- The project is in a designated and targeted residential area
- The project is multi-family or mixed-use and provides at minimum four housing units
The AOB and Bell Place projects are actively being reviewed for civil and building permits, Johnson said.
He said that according to the city council-approved development agreement, the developer has five years to complete the project. It is anticipated they will complete the project within that timeframe, but Johnson referred The News Tribune to the developer for those details.
The News Tribune has reached out to Urban Puyallup for an update on the timeline.
