Al French’s condos tax-free for 10 years

Portions of a 10-story building planned by City Councilman Al French will be tax-free for 10 years.

The City Council on Monday approved a multifamily tax exemption for ParcTwo20, a residential, commercial and office project across from Holy Family Hospital.

French, co-owner of the project, abstained from voting on the deal. The rest of council unanimously supported it.

Councilman Bob Apple said the building meets the requirements for the tax program.”He has the right just like anybody would,” Apple said. “If you follow the rules, you get to play.”

French, who is running for mayor, said construction of the building, at 220 E. Rowan, is scheduled to start in the fall.

It will include 32 condominiums with an average selling price of $422,500, said Susanne Croft, the city’s incentives specialist.

Owners of condos in the project will not have to pay property taxes on the building for the first 10 years. Taxes will still be owed on the land and on other portions of the tower that are not residential.

In March, the City Council voted to extend the multifamily tax exemption program for five more years. It was created in 2000 and had been scheduled to expire. The exemptions have been criticized by some for focusing too much on downtown and too little on affordable housing. Others argue that they have promoted city living and prevent urban sprawl.

Croft noted that three of the four applications submitted for the exemptions this year, including French’s, are outside downtown in designated neighborhood business centers. The others are in Indian Trail and near St. John’s Cathedral.

French said that the incentives allowed him to create a bigger project that will generate more taxes than the building he otherwise would have constructed. He said even with the exemptions, the property will pay about $100,000 a year in property taxes.

“If it were not for the incentives, we would have just built another medical office building,” French said.

French’s project is one of the last tax breaks the city will consider under old standards pertaining to multifamily tax exemptions.

A new law, which went into effect on May 11, reduces the length of a tax exemption to eight years if at least 20 percent of a project’s residential units aren’t geared for low- or moderate-income households. If that requirement is met, however, the applicant is eligible for a 12-year exemption.

Croft said the city has one remaining application that was submitted before the changes were effective. French’s application was submitted April 27.

French is working on the project with developer Rob Daugherty. French said if he’s elected he would put his interest in a trust, and Daugherty would manage the project without him. The city charter prohibits the mayor from holding a second job.