Vancouver City Council takes a step closer to changing their multifamily tax exemption program


This first phase would include changing qualifying housing from affordable to income-based housing

VANCOUVER — After months of debate, Vancouver City Councilor appears set to approve the first phase in their plan to overhaul the Multifamily Tax Exemption (MFTE).

The Block 10 development in downtown Vancouver is one of several to recently qualify for a Multifamily Tax Exemption. File photo
The Block 10 development in downtown Vancouver is one of several to recently qualify for a Multifamily Tax Exemption. File photo

The MFTE, which has been in place since 1997, has increasingly been used as a tool to incentivize developers to include affordable housing downtown, or along part of the Mill Plain corridor.

Last year however, it came under greater scrutiny after several developers were granted the exemption, and council members noted that what qualifies as “affordable” was defined by the median household income of the Portland metro area, which is approximately 30 percent higher than the median family income of the Vancouver area alone.

In response, the council directed staff to begin looking at ways to adjust the formula to focus on the Vancouver median income, but then balked over concerns the change could put a damper on downtown development.

Instead, the council appears poised to phase in changes to the MFTE, starting with adjusting the terminology. Instead of “affordable housing,” developers could include “income-based housing” in exchange for property tax breaks of up to 12 years.

Vancouver City Council is set to consider changes to their Multifamily Tax Exemption program next Monday, the first step in a process to reform the affordable housing incentive. Image courtesy Vancouver Community and Economic Development
Vancouver City Council is set to consider changes to their Multifamily Tax Exemption program next Monday, the first step in a process to reform the affordable housing incentive. Image courtesy Vancouver Community and Economic Development

The council could still work to tie the tax exemptions to affordable housing based on Vancouver median income, but would likely tackle that in phase two later this Summer.

The plan presented at a first hearing on Monday night would also remove a number of public improvements that currently allow developers to qualify for property tax breaks, and would expand the MFTE boundary slightly east of the Interstate Bridge to include a 2-acre parcel of land currently home to the Who Song and Larry’s and Joe’s Crab Shack restaurants. 

The site’s owner, Kirkland Development, has proposed a multi-story building on the site, with up to 220 market-rate housing units and 140,000 square feet of office, retail and restaurant space.

Vancouver City Council could vote next week to include a 2-acre property east of the Interstate Bridge in their Multifamily Tax Exemption overlay. Image courtesy Vancouver Community and Economic Development
Vancouver City Council could vote next week to include a 2-acre property east of the Interstate Bridge in their Multifamily Tax Exemption overlay. Image courtesy Vancouver Community and Economic Development

Chad Eiken, the city’s Community and Economic Development director, said Kirkland would tear down and rebuild the city-owned pier along the waterfront, which has been closed due to concerns it could collapse.

“We don’t have a cost estimate, but it would be a considerable cost to the city to remove that structure,” Eiken told the council. “And so that is what the developers are proposing to do for the city. And then they would construct the shoreline path on the upland portion of the site.”

Councilor Sarah Fox was the lone no vote on the proposal as it currently exists.

“I’ve been pretty consistent about my reluctance to expand the boundary of our MFTE area when we still have what looks like a lot of work ahead of us,” Fox explained. “Expanding the boundary before we’ve really come to an agreement about what this program should look like… It’s just not ready.” 

A proposed development on the current site of Joe’s Crab Shack and Who Song and Larry’s would include up to 220 residential units and 140,000 square feet of commercial space. Image courtesy Vancouver Community and Economic Development
A proposed development on the current site of Joe’s Crab Shack and Who Song and Larry’s would include up to 220 residential units and 140,000 square feet of commercial space. Image courtesy Vancouver Community and Economic Development

The current proposal would broaden the definition of what qualifies as a public benefit, but mandate that it cost at least 25 percent of the overall tax benefit to the developer.

Parking also previously qualified as a public benefit, but would now do so only if it were contained within a structure, rather than on-street, and only at 10 percent or more over the current parking minimums for downtown.

Some of this could be a mute point after the Washington legislature wraps up their work.

“There is some movement at the state level to make some changes to the state’s requirements for multifamily tax exemptions,” Eiken noted. “We’re monitoring that closely, and we’ll know more once the legislative session concludes about how that will affect the city’s local ordinance.”

Energy efficiency standards removed

Another change would remove energy efficiency as a potential public benefit option, though Eiken said developers could still propose it in exchange for tax incentives.

“The burden is on staff as well as you, as the decision makers to say, ‘Alright, how much of a benefit is that? And is it enough of a benefit?’” said Eiken. “And it’s really hard to quantify things like enhanced landscaping and energy efficiency.”

Councilor Ty Stober said the removal of the energy efficiency public benefit item “gives me a lot of heartburn,” but that the city is also working to finalize its Climate Action Plan and could revisit the subject as part of that process.

“The benefits are really through the roof when it comes to providing renewables in an urban area,” agreed Councilor Bart Hansen, “and this might be one of the incentives that we could provide, in order to make that a possibility.”

The council will hold a public hearing on the proposed changes at their March 15 meeting, with a potential final vote to follow.

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About The Author

Chris Brown comes to Clark County Today with 15 years of local news experience as a reporter, editor, and anchor at KXL News Radio and KOIN-6 TV in Portland. In 2016, he won an Oregon Association of Broadcaster's award for Best Investigative Reporting for a series on America's Violent Youth. He has also been awarded by the Associated Press for Best Breaking News coverage as editor of Portland's Morning News following the 2015 school shooting at Umpqua Community College in Roseburg, Oregon. The second oldest of eight home-schooled children, Brown graduated from high school two years early. After several odd jobs, he earned an internship at KXL Radio, eventually working his way into a full-time job. Brown has lived in Clark County his entire life, and is very excited at the opportunity to now focus full-time on the significant stories happening in his own back yard, rather than across “the river.’’ After a few years in Vancouver, he recently moved back to Battle Ground with his wife and two young daughters. When he's not working to report what's happening in Clark County, Brown enjoys spending time with his family, playing music, taking pictures, or working in the yard. He also actually does enjoy long walks on the beach, and sunsets.

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