The Kent City Council is taking steps to give a property tax break to the developer that plans to buy the city’s Riverbend par 3 golf course to build 500 apartments as part of a mixed-use project.
The council approved a resolution on Nov. 15 to establish a residential target area for what’s known as the Riverbend Gateway property, at the par 3 course that sits south of West Meeker Street along the Green River. That resolution starts the process to approve a potential multi-family housing property tax exemption for eight years to the developer.
“It’s a tool to make sure we can get a high quality developer,” said Matt Gilbert, city planning manager, in a report to the council’s Operations Committee. “The money (saved from taxes) can go back into a good project.”
Residents can comment about the proposal during a public hearing at 7 p.m. Tuesday, Dec. 13 in front of the council at City Hall, 220 Fourth Ave. S. The property tax waiver already exists in the downtown core but the council wants to expand that residential target area to the par 3 site.
Auburn-based FNW Inc./Landmark Development Group (FNW) submitted plans to the city in September for a mixed-use project featuring two contemporary style buildings, each with 6,000 square feet of retail space and 120 residential flats; and 21 urban-style walk-up buildings with 12 units each, including one, two and three bedroom units. The development would seek to attract young professionals and families. The units would rent for market-rate prices.
City officials and FNW have yet to sign a purchase agreement for the 18-acre site. Sale proceeds would be used to eliminate the golf fund debt of about $2.6 million and allow for about $6 million in capital improvements to the 18-hole course in an effort to draw more players. The Riverbend Golf Complex operates at a deficit of about $300,000 per year.
Seattle developer Tarragon used the property tax break to build the Dwell at Kent Station Apartments, which opened earlier this year. Tarragon still pays taxes on the land value but not on the building valuation. The exemption costs the city about $25,000 a year in tax revenue but will save Tarragon nearly $1.7 million over the eight years because it won’t have to pay building valuation taxes to schools, the Kent Regional Fire Authority, King County and other taxing districts. Tarragon will save an estimated $210,000 a year in property taxes, according to city staff.
FNW would save quite a bit more on taxes at the Riverbend property because of a much larger development with a higher value.
No other developer has applied to the city for the tax exemption first approved by the council in 1998 to encourage multi-family developments downtown. Goodman Real Estate of Seattle, which built The Platform Apartments downtown in 2014, didn’t apply for the waiver.
Gilbert said the tax waiver allowed Tarragon to include better amenities at the Dwell. The complex includes a rooftop deck, two large outdoor courtyards, garden plots, barbecue area, fire pits, a fitness center, community lounge, dog run and a bicycle room.
Councilwoman Dana Ralph said at the committee meeting that she sat through presentations by potential developers of the Riverbend property and the tax exemption loomed large.
“Every presentation it is what’s driving to put quality in the development,” Ralph said. “Every developer was consistent about amenities and quality and structure. Everything we are pushing for seems to be at risk without the multi-family exemption.”
Ralph also pointed out that since the city owns the par 3 golf course now it receives no property taxes, so any taxes it gets from a developer who buys the land would be “a net gain.”
Councilman Jim Berrios asked Gilbert at the council’s Economic and Community Development Committee meeting on Nov. 14 whether the lack of a property tax waiver could be a deal breaker with the developer who wants to buy the par 3 land.
“Potentially,” Gilbert said.
The committee also expanded the residential target area to include the Colony Park Apartments that sit just east of the par 3 course in case a developer wants to rebuild that aging complex.
“As we look at this piece of property and the age of the apartments, I think it’s justifiable we may be getting this beautiful complex and do we have an opportunity to create an incentive to do something with this current property,” Berrios said.
City Attorney Tom Brubaker told the committee it was important to move the residential target area change forward to the full council.
“We are trying to get this done and meet the developer’s goals and get it passed in 2016 rather than 2017,” Brubaker said.
Brubaker added that even with the change the developer would need to apply for the property tax waiver and the council would need to approve it as a separate matter.