Multi-Family Housing Tax Exemption. October 5, 2015 Vancouver City Council Workshop Peggy Sheehan, Program Manager Community and Economic Development

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1 Multi-Family Housing Tax Exemption October 5, 2015 Vancouver City Council Workshop Peggy Sheehan, Program Manager Community and Economic Development

2 Presentation Overview Overview Multi-Family Housing Tax Exemption Program Usage Review Upcoming Projects Next Steps Multi-Family Housing Tax Exemption - 2

3 WA State History and Purpose Stimulate new or enhanced residential opportunities in designated urban centers and achieve the housing goals mandated by the Growth Management Act 1995 Initial authorization by State Statute 1997 Incorporated into City Code Chapter State revised statute to include affordability component Multi-Family Housing Tax Exemption- 3

4 Current Context VCCV Policies Encourage residential development including affordable housing as the key to the city center vitality. a plan policy Use the City s Residential Tax Abatement program as the primary means for encouraging a variety of affordable residential uses in the city center. a plan recommendation Multi-Family Housing Tax Exemption - 4

5 Future of Program Potential review of the multi-family tax exemption program based on Affordable Housing Task Force recommendations (in 2016) or VCCV update (in 2017) Considerations include strengthening affordability requirements; adding other eligibility criteria such as density, low-income housing, mixed-use components, other public benefits; expanding program to additional locations Multi-Family Housing Tax Exemption - 5

6 City Ordinance 3.22 Overview Follows State Authorizing Statute RCW and 12-year exemption options 12-year exemption if 20% of the units are for low- and moderateincome residents 115% area median income or less rent cannot exceed 30% of tenant s household income VCCV boundary and Fourth Plain Sub Area as qualified residential target areas Multi-Family Housing Tax Exemption - 6

7 Tax Exemption Quick Facts Construction must be completed within 3 years of program approval Land value is taxed as usual Any other new construction associated with the project is taxed as usual Exemption does not reduce property tax revenue Addition of new property to the tax base is delayed. Delay is for all taxing districts, not just the City Exemption starts after project completion Annual monitoring is required by the City At the end of the exemption period, the project is added to the tax base as new construction Multi-Family Housing Tax Exemption - 7

8 Income Limits and Rent Levels Income Level 115% AMI Current Level for Multi- Family Tax Exemption 2015 Income Levels and Maximum Rents 1-Person Household 2-Person Household 4-Person Household Annual Affordable Annual Affordable Annual Income Rent Max. Income Rent Max. Income $59,225 $1,481 $67,620 $1,691 $84,525 $2, % AMI $51,500 $1,288 $58,800 $1,470 $73,500 $1,838 80% AMI Low-Income $41,200 $1,030 $47,050 $1,176 $58,800 $1,470 50% AMI Very Low-Income $25,750 $644 $29,400 $735 $36,750 $919 30% AMI Extremely Low-Income $15,450 $386 $17,650 $441 $24,250 $606 Source: U.S. Department of Housing and Urban Development, effective 3/6/2015 Affordable Rent Max. Multi-Family Housing Tax Exemption - 8

9 Application Process Fee and formal application as required per VMC (E) Review criteria and timelines outlined per VMC (F) CED Director approves application Subject to Council approval: Applicant will enter contract with the City CED Director will issue Certificate of Acceptance Annual Monitoring includes: Annual declaration submitted to the City by the property owner City submits report annually to the State per RCW Multi-Family Housing Tax Exemption - 9

10 Application External Evaluation Financial evaluation completed by private consultant Fiscal Impact: Property tax revenue exempted Total and by taxing districts Fiscal impact of proposed development One-time and ongoing revenue New vs. baseline for existing use Net present value over 20 years no development and with/without exemption Multi-Family Housing Tax Exemption - 10

11 Prior Use of Exemptions See next slide Multi-Family Housing Tax Exemption- - 11

12 Exemption 20% Low/Mod Development Total New Resident Annual Spending on Food & Project Term Units Income? Cost Income 1 Entertainment 2 Completed Projects Vancouvercenter NA $ 20,900,000 $ 7,578,000 $ 1,156,000 Anthem Park NA $ 9,800,000 $ 1,077,000 $ 164,000 Heritage Place NA $ 20,700,000 $ 5,308,000 $ 810,000 Prestige Plaza Yes $ 11,600,000 $ 3,539,000 $ 540,000 Total Completed $ 63,000,000 $ 17,502,000 $ 2,670,000 Projects in Construction 15 West TBD - 12 Yrs 120 Yes-100% $ 14,600,000 $ 4,616,000 $ 704,000 Total Approved $ 77,600,000 $ 22,118,000 $ 3,374,000 Estimated Number of Jobs Supported Notes: 1) In 2012 dollars based on Census data on per capita income and household size of 1.5 2) Based on household expenditures from Bureau of Labor Statistics 2012 Consumer Expenditure Survey 3) Based on employment multipliers from WA Office of Financial Management (2007 data) Multi-Family Housing Tax Exemption - 12

13 Recently Approved MFTE Projects South Tower at Vancouvercenter Esther Short West The Uptown Multi-Family Housing Tax Exemption - 13

14 Proposed Projects Overview 13 West 1510 C Street Waterfront Multi-Family Housing Tax Exemption - 14

15 Pending Approval Approved Under Construction Built Multi-Family Housing Tax Exemption -15

16 Project Summary 13 West 1510 C Street Waterfront Total Development Square Feet 74,913 13, ,291 Number of Stories Floor Area Ratio Commercial Square Feet Total Development Cost (excluding land) 1,700 / 2 live work units 1,800 / 4 live work units 4,983 $15,027,000 $2,110,000 $51,664,000 Number of Residential Units 90 (92 incl. live work) 14 (18 incl. live work) 150 Studio Bedroom Bedroom Bedroom 11 Multi-Family Housing Tax Exemption - 16 Penthouse 3

17 Project Summary 13 West 1510 C Street Waterfront Proposed Rents Studio $715 $850 $950-$1,400 1 Bedroom $754 $1,200 $1,800-$2,200 2 Bedroom $903 $2,700-$3,000 3 Bedroom $3,000-$3,200 Penthouse $3,800-$3,900 Low/Moderate Income Units? Yes All No No Length of Exemption 12 Years 8 Years 8 Years Multi-Family Housing Tax Exemption - 17

18 13 West 92 units (90 residential; 2 live/work) $15,027,000 development cost 12-year exemption requested 100% low/moderate-income Looking Southwest Looking West Multi-Family Housing Tax Exemption - 18

19 13 West Looking East Looking North Multi-Family Housing Tax Exemption - 19

20 1510 C Street 18 units (14 residential; 4 live/work) $2,110,000 development cost 8-year exemption requested North Elevation Facing 16 th Street East Elevation Facing C Street Multi-Family Housing Tax Exemption - 20

21 Waterfront 150 units $51,664,000 development cost 8-year exemption requested Multi-Family Housing Tax Exemption - 21

22 CCRA Review CCRA reviewed all three projects on September 17 th and recommended all projects move forward to Council Multi-Family Housing Tax Exemption - 22

23 Next Steps/Timeline CED Director approves application upon meeting requirements with VMC 3.22 October 19, 2015 Public Hearing Council review of contract with owner Approves, amends and approves, or rejects draft contract Upon approval, CED Director signs Conditional Certificate Multi-Family Housing Tax Exemption - 23

24 Questions and Discussion Peggy Sheehan, CED Programs Manager Multi-Family Housing Tax Exemption - 24