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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Spokane mulls extension of housing incentives for Garland District, University District

 (Molly Quinn / The Spokesman-Review)

The city of Spokane may extend tax incentives to multifamily housing developers on part of the North Side and near downtown .

The city has proposed extending the boundaries of its multifamily tax exemption zone to include parts of the Garland District and University District just south of Spokane Falls Boulevard.

The proposal is aimed at encouraging residential development and offset the rising cost of housing in Spokane.

“We’re doing this because there’s been a strong desire to meet the housing shortage need around the community, and these two areas seem to be ripe for moving this forward,” Teri Stripes, an economic development specialist with the city, told the City Council earlier this month.

The multifamily tax exemption offers housing developers a tax exemption on the value they add to the property.

For example, if a property is valued at $100,000 before its development and $500,000 after, the tax incentive applies to the difference – in this case, $400,000. The system is built to ensure that the city does not actively lose existing tax revenue, but it does mean it is collecting less than it would otherwise on the new development.

The city of Spokane offers two tiers of tax exemption under the program.

If at least 20% of the units are rented to people who earn no more than 115% of the area median income, the developer is eligible to receive a 12-year tax exemption. Those who simply rent apartments at the going market rate are eligible for an eight-year tax exemption.

Once the exemption period is over, the property owner pays full taxes.

The additions proposed by the city this month amount to just 45 acres in the Garland District and 26 acres in the University District, bringing the total area of the multifamily tax exemption zone to about 5,000 acres – just more than 10% of the total land area of the city.

The expansion would pale in comparison to the one enacted in 2019, when the city expanded the borders by nearly 50%.

That expansion left out a small portion of the University District.

“This little update will correct that problem as well as add back in the Garland District,” Stripes told the council.

The city is expected to review its multifamily tax exemption program this year following the adoption of legislation intended to spur affordable housing development by the state Legislature in 2021.

An affirmative vote on a resolution by the City Council on Monday would kick off a weekslong process to extend the boundary.

A public hearing would be held on Feb. 14 followed by a final vote by the City Council.

The new boundaries would not take effect until 30 days after the council’s approval.

Editor’s note: This story was changed on Tuesday to correct the date of a public hearing on the tax exemption boundary. It would be on Feb. 14.