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Two developers first to qualify for 10-year-old property tax exemption
Between 2003 when the City of Auburn adopted its multi-family property tax exemption, and 2013, no proposed development projects qualified for the credit.
Too steep, developers said of the minimum required investment per unit of $200,000.
On Monday, however, the Auburn City Council lowered the minimum investment per unit to $130,000, allowing two developers to carry their projects over the threshold.
The first, Landmark Development, breaks ground Oct. 10 on a five-story, 126-unit, mixed-use building, Trek Apartments, on the site of the former Cavanaugh Block.
The second, Teutsch Partners LLC, this week acquired from the City the last remaining City-owned property on the catalyst blocks south of City Hall — the Gambini block on South Division that houses the Auburn Area Chamber of Commerce and the parking lot immediately south of the Sunbreak Cafe.
Teutsch's plans to develop market rate projects there for senior housing or for apartments.
Both companies wrote the City asking for amendments to the ordinance, for a little flexibility, so they could qualify.
The City also moved the period by which the application for the abatement had to be submitted to a point prior to the issuance of building permits rather than by the end of the year.
"The reason we extended that was that there were some requirements that we imposed, things we had to learn about with some standards and analysis that we wanted to be done, that basically made it impossible for some of the developers that were looking at the properties to get that it in on time. We simply changed the words ... to give them more time to get it done," said Councilman John Partridge.
"It allows the developer to take advantage of this credit," Partridge added.
Bret Jacobsen, one of the principals of the Landmark Development Group, explained recently what getting the tax abatement would mean.
"(It allows) us to build a better product than we might otherwise be able to bring to the table," Jacobsen said.
He said that when Landmark developed property in the City of Lakewood years ago, the tax abatement the City offered let his company "bring a product to the market that is probably achieving in excess of 30-percent better rent than anything in the marketplace. It allowed us to better the product type. And that's exactly what we're doing here."
Jacobsen estimated that for the average tenant of the Trek Apartments, the exemption would be worth about $1,000 a year.
Councilman John Holman noted that the study on which the City relied to set the $200,000 per unit threshold was based on all of King County.
"It was using as a market-rate comparable downtown Seattle and Bellevue, and that's not our competition," Holman said.