Council may fine-tune condo tax breaks

The Spokane City Council in the past six years has approved property tax exemptions for nearly $42 million worth of condominium and apartment projects under a program intended to concentrate multifamily housing near commercial areas.

The exemptions, which run for 10 years each, translate into a potential citywide tax savings of about $600,000 a year to property owners in 14 projects.

They include high-end condos worth upward of $500,000 overlooking the Spokane River and apartments at the north end of the Indian Trail Neighborhood where some residents are complaining about too much residential growth.

Council members on Thursday said they are considering changes before re-enacting the city law, which is scheduled to expire in early April. The council is likely to approve an extension of the program, with some modifications, because the exemptions are seen as a way to encourage economic development.

The law was initially approved in 2000 to bring more residential development to commercial centers and traffic corridors under a broad “growth management” policy.

“I think that’s the goal of the centers – to up the densities to make the retail more viable,” said Councilman Bob Apple.

Councilman Al French earlier in the week defended the property tax exemptions as a way to enlarge the property tax base while bringing immediate benefit through additional sales and utility taxes and improved values to surrounding properties.

Council members said they may want to remove property along the Spokane River, where demand for condos appears to be sufficient to entice development without the multifamily tax break.

Another area being reconsidered is the Indian Trail neighborhood, where about 300 apartments adjacent to a shopping center were approved for the exemptions.

Residents of northwest Spokane, including Indian Trail, want a moratorium on residential development because of traffic congestion and other growth-related problems.

“Indian Trail doesn’t want any multiple-family housing,” said Council President Joe Shogan.

On the other hand, neighborhoods such as Hillyard or West Central could benefit from additional housing to support nearby businesses, council members said.

Also, council members said they may want to put new conditions on the exemptions, such as requiring low-income units in each project.

Councilwoman Nancy McLaughlin said adding requirements could discourage potential housing projects.

Exemptions for two projects are pending before the City Council. They involve eight units proposed for 2828 S. Garfield St. and 21 units in the former J.C. Penney building at 809 W. Main Ave. The council is scheduled to consider the exemptions Monday during its 6 p.m. legislative session in Council Chambers.

The tax exemptions are allowed under a state law intended to help cities guide higher urban densities to selected areas identified in comprehensive land-use plans.

Bellingham, Tacoma, Everett, Seattle and Vancouver also offer the incentives. Seattle’s program includes a requirement that low-income units be included in the projects. Tacoma has seen the greatest use of the incentives with 77 projects approved so far.

Council members said they want to hear from residents about what changes they would like in the program.

“You have an opportunity to look at the program again,” said Teresa Brum of the city’s economic development division. “Is the program doing what you want it to do, and if not, do you want to make some changes?”