Not all housing is equal. Tacoma’s tax breaks for big developers need to reflect that
Tacoma City Council member Chris Beale’s frustration was palpable during Tuesday’s study session, and appropriate, given the circumstances.
He wasn’t trying to hide it.
“I’m really hesitant on this one,” Beale said in response to an ordinance introduced by his council colleague, John Hines, which — if passed in the coming weeks — would end the city’s eight-year multi-family housing tax credit for developers in Proctor and Point Ruston.
Truth is, Beale had every right to be annoyed. Sure, he shares the ordinance’s stated goal of increasing affordable housing in these two well-off neighborhoods. But he’s also been pushing — for roughly two years now — for an approach that would go much further. The ordinance currently being considered by the council would tweak the city’s eight-year multi-family housing tax credit policy in just two neighborhoods; Beale wants the tax credit to be reevaluated citywide, and potentially scraped altogether.
The eight-year credit — which the city regularly grants simply for the construction of market rate housing in targeted areas — is divisive tool for a reason. In the midst of an affordable housing crisis, and at a time when new high-end developments seem to be filling our expanding skyline like never before, the wisdom of offering a tax break to developers building housing few Tacoma residents can afford feels debatable, at best.
Is a government giveaway really necessary? And is it actually helping? Would it be more effective to expand and strengthen the city’s 12-year multi-family tax credit, which at the very least requires developers to include some (questionably) affordable units?
They’re valid questions that the council began to weigh with apparent sincerity … back in 2019.
Then they stopped.
Beale, for one, hasn’t forgotten.
“When we paused the discussion in 2019 — which wasn’t preliminary … we paused it because we thought we were going to see changes to the state law,” Beale said, recalling a proposed city ordinance that would have required affordable units as part of the eight-year tax credit that was heading toward final passage that December, until it wasn’t, and a fix from the state legislature that never came.
“It just continues to seem to me like we need a broader dialogue,” Beale continued. “Frankly, I would like to still debate the merits of getting rid of the 8-year program citywide.”
It’s a debate well worth having, which is why a move that — even in the most generous light — would do little more than dip the city’s pinky toe back into the fray met such a tepid response, at least from Beale.
Would Hines’ ordinance — which also has the support of at-large council member Kristina Walker — represent a small step in the right direction? Maybe. There’s a good chance developers don’t need the city to sweeten the deal for market rate projects in Proctor or Point Ruston to pencil out. The city’s own analysis suggests as much. Similarly, there are likely other parts of Tacoma with lower rents where the eight-year credit still has value (particularly with rising construction costs). Targeting Proctor and Point Ruston first, just to see how it goes, is the kind of low-risk endeavor that the bureaucracy is built on, even if it’s potential reward is minimal at best.
It’s just that such a minor move — while kicking the broader conversation and analysis Beale has been calling for down the road once again — can’t help but feel largely performative.
Are we actually going to dive into this? Or not?
Reading the tea leaves Tuesday, it quickly became clear that Hines’ proposal has an uphill battle. Along with Beale — who also questioned what the city would tell less affluent neighborhoods where market rate developments would still be incentivized — the majority of other council members who spoke also expressed significant misgivings. During Tuesday night’s council meeting the ordinance was advanced to a second reading, but what happens from here remains to be seen.
Until then, here’s what we already know: Tacoma residents watching the price of housing skyrocket have every right to question the eight-year tax break, the effect it’s having and the council’s inaction over the last two years.
Since long before 2019, what Tacoma has needed is a neighborhood-by-neighborhood approach that identifies precisely what is necessary to spur thoughtful development in each area, and then flexibly adjusts the city’s economic development dials — like available tax credits — accordingly to achieve the desired results. That has yet to happen.
In the meantime, we’ve repeatedly been told that we shouldn’t view the city’s multi-family housing tax credit program as an affordable housing tool.
We’ve also been told that all new housing is good housing — to the point that even something that’s true in the abstract becomes meaningless in practice. If we just keep plugging away, the thinking goes, the market will eventually normalize.
So when does that happen? Five years? Ten years? For our grandchildren?
Beale isn’t the only one frustrated right now, and for good reason. Until Tacoma finally addresses where the city’s tax breaks are going — and what they’re actually building — every time a developer gets one for a new upscale project that few of us can afford to live in, it will feel like a slap in the face.
Not to mention a wasted opportunity.
This story was originally published June 24, 2021 at 6:00 AM.
