A Kent City Council committee approved multifamily property tax exemptions for two new apartment developers coming to town.
The approval of the eight-year exemption for the Marquee on Meeker property was more of a formality since the full council already agreed in August to the deal as part of a contract to sell the city-owned Riverbend Golf Complex par 3 property to Auburn-based FNW, Inc./Landmark Development Group for $10.5 million.
FNW will remove the golf course and plans to construct nearly 500 apartments. Construction is expected to start next spring on the first phase, which will include about 288 units and 6,000 square feet of commercial space. About 15 of the planned 23 project buildings will go up during phase one.
“I thought we already voted for this,” said Councilwoman Tina Budell at the council’s Economic and Community Development Committee meeting on Monday about the tax exemption.
“It was in the agreement, but under state law the decision must be separate,” said Ben Wolters, city economic and community development director. “The agreement was with the understanding they would submit the (exemption) application.”
Budell, Bill Boyce and Jim Berrios voted to approve the property tax exemption. The measure goes to the full seven-member council on Tuesday, Nov. 21, for approval.
The committee also approved an application for the multifamily tax exemption from Kent architect Imad Bahbah, who plans to build a 157-unit, seven-story complex called Madison Plaza Apartments at West Meeker Street and Madison Avenue.
Seattle developer Tarragon used the property tax break to build the Dwell at Kent Station Apartments, which opened in 2016. 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 Puget Sound Regional Fire Authority, King County and other taxing districts. Tarragon saves more than $200,000 a year in property taxes, according to city staff.
Developers of Madison Plaza would save an estimated $250,000 per year in property taxes, said Jason Garnham, city planner. No estimate was available from city staff about how much the Marquee on Meeker developers would save.
Wolters emphasized to the committee the value the tax exemptions bring to the city.
“We use it to get better projects,” Wolters said. “We are going to get the projects because of the market, we use it to get better projects.”
The idea is the developers use the tax savings to build better projects with more amenities and of higher quality. Both new apartment complexes are considered market-rate projects, which means rents will be whatever the going rate is based on supply and demand. With the strong economy, many people are looking to rent.
Madison Plaza amenities are expected to include a fitness center as well as a rooftop with dining, recreation and even a dog walking area, Garnham said.
The tax exemption also has other values to the city.
“The purpose is to stimulate development and redevelopment of vacant sites or under-utilized sites, reduce development pressure on single-family neighborhoods and achieve residential densities that support transit use,” Garnham told the committee.
The applicants must meet certain criteria to get the tax break, including locating in a target area (downtown), the project must have structured parking and part of a ground floor must be for commercial use.
Goodman Real Estate of Seattle, which built The Platform Apartments downtown in 2014, didn’t apply for the waiver.