Snohomish tax break for developers shifts burden

City of Snohomish Planning Director Glen Pickus in his Oct. 2, 2018 memo to council, stated hebelieved an argument can be made that there is no lost revenue from a multi-family tax exemption (MFTE) because without the exemption the project would not have been built. That’s a fallacious statement in two ways:

Budget impacts: You can confirm this with the county assessor that property taxes are “budget-based,” meaning all taxing districts receive their set budgeted amount of revenue every year, regardless of the number and amount of exemptions. There is no impact on the taxing districts but more exemptions cause a huge and severe negative impact on property taxpayers who have to make up the difference.

For example, Pickus in his memo to council on June 7, gave a report on the MFTE project at 161 Lincoln Avenue that will be exempted for the next eight years, even though none of the apartments is “affordable” housing as rents average $2,500 a month. Pickus estimated the owner/developer will realize a property tax savings of $167,800 over eight years. Pickus even admits these numbers are likely understated.

Now extrapolate that to the Midtown county-owned nine acres when fully developed. The county’s nine acres then would have a maximum of 1,485 dwelling units. Without the MFTE, owners of the developed nine acres would have to pay $4.455 million (1,485 units times $3,000 a unit) per year to the various taxing districts.

With the MFTE, the owners would realize a savings of $4.455 million per year in property taxes they would otherwise have to pay. There are about 3,000 property tax accounts in the city; so the average extra burden per household per year amounts to a whopping $1,485.

There is no other term to call this proposed MFTE program in Midtown but a “stealth tax” on the average city homeowner and renter. And this extra $1,485 yearly burden is only from the development of the county-owned nine acres. Just think what the extra burden will be when Craig Skotdal fully develops his Snohomish Square shopping center into five-story multi-family apartments.

Then separately, there is the likelihood the school district will have to build new schools to accommodate the several thousands of new residents who have children.

Pickus falsely assumes that without the MFTE, projects would never be built. Refuting that argument is the prime example of Gordie Cole, longtime local builder and developer and city planning department commissioner. Cole recently completed his 5-story, wood-framed, 100 unit multi-family project just off Bickford Avenue and just north of the Midtown District. He built it without the MFTE and his rents are very modest and affordable.

Councilmembers, please reverse your unanimous decision you made on June 7 to move forward with the MFTE in Midtown and on July 5 vote to reject Pickus’ proposed ordinance.

Morgan Davis

Snohomish

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