A clearer picture of personal property tax impacts if the Snohomish Town builder incentive idea is successful


A clearer picture of personal property tax impacts if the city builder incentive idea is successful

SNOHOMISH — If City Council agrees to put in place a tax holiday on new multimillion-dollar apartment buildings in the city’s Midtown neighborhood along Avenue D, a carrot to attract more affordable housing, landlords the city and the wider area would end up paying extra on their property taxes to make up the difference.
How many?
It depends on what your home is worth, if a developer is asking for the exemption, and basically if any developers are biting.
But unless the entire stretch is redeveloped overnight, there may be between $20 and $50 added to your property tax bill to provide tax relief for a major project, depending on the assessed value of your home. .
For a developer, that could be worth millions. The town’s planning director said he was influential enough to determine whether a developer chose to build in Snohomish or elsewhere.
The city council will vote on the issue on September 20. Some members are still openly debating the idea.
The County Assessor’s Office presented the council with raw data last week.
If a new building received $2 million in tax exemptions, someone with a $468,000 home within the city limits would have seen their 2022 property tax bill be 95 cents higher than normal to compensate exemption.
$2 million is roughly the amount the city exempted for a seven-unit apartment building at 161 Lincoln Ave. as part of a tax relief for development in the Pilchuck District. The impact was 0.0024 cents per $1,000.
The Grandstand asked the county assessor’s office to produce a script of a 100-unit apartment building with $40 million exempt. It could be a new five-story building, similar to the Aero Apartments in Everett on Hewitt and Rucker Avenues in Midtown.
Here, $19.11 is what a homeowner’s tax bill of $468,000 would have increased in 2022. The actual levy rate impact would be 4 cents per $1,000 for city residents if a development $40 million was exempt this year.
Area residents would pay approximately 40% less as they would not pay municipal property taxes, but would pay taxes to the Snohomish School District, Snohomish Fire District 4, and others. In this $40 million urban development scenario, the rate is 0.024 per $1,000 of assessed value; for a $500,000 house, it’s $12.
Minimum residential zoning densities in Midtown would require any residential development on the County Avenue D site to be at least 144 units.
An oversized example presented to the board is 1,485 units at $594 million exempt in 2022 figures. The cost this year would have been a 71 cent per $1,000 increase in the levy rate. A $468,000 homeowner would have seen his property tax increase by $344.
Councilwoman Karen Guzak called the scenario “pure fantasy” in reaction.
The city will be mass-mailing information about the exemption and creating a website soon.
The county assessor’s office can only really calculate on historical data and not future predictions, said county assessor Linda Hjelle.

affordable housing
Snohomish’s new proposal would change the parameters to get a builder’s exemption in the Pilchuck district and add it to Midtown.
The metrics would remove property taxes for just eight years if a developer builds multi-family residences with at least 10% of rent-limited units as affordable to “low-income” people, and adds an additional four years only if developers work it out to either have 25% or more of the units as affordable units or if 20% of the units are affordable to “low income” households, with 10% of those units being price restricted for “very low income” units.
What is “low income”?
According to the metrics, a single person should not earn more than about $63,000 a year to be classified as “low income” or earn 80% of the median or less.
They would have to earn less than about $40,000 a year to be classified as “very low income” based on 50% of the median income.
Since affordable housing is defined as costing no more than one-third of income, for someone earning $60,000, the rent ceiling cannot exceed $1,650 per month.
For a “very low income” single person, this caps out at $1,100 per month in rent.
The average median income for the entire county dictates which income levels fall into which category. That median is $115,000, according to federal data.
Some city council members are still debating whether the exemption is the right approach to development.
Granting an exemption can motivate developers to build affordable housing, although it is not guaranteed, planning director Glen Pickus has previously said.
The future does not belong to us, stress the town planners. The market will decide.
On July 5, the county-owned Avenue D court representative said he argued for the exemption, but said the county did not support adding a requirement of “very low income” to obtain a 12-year exemption period.

Mixed public
Proponents of the exemption claim that building affordable housing is the only way for service workers who work in Snohomish to pay rent to live in Snohomish.
Opponents said the developers would exceed the exemption period with reduced rents, but then increase rental prices because there is no obligation for them to continue providing affordable housing.
People living outside the city have raised objections to the city council creating a tax incentive that affects their property taxes.
Others have criticized that Snohomish’s encouraging development dilutes what attracted people to live in the Snohomish area.
Another public hearing is scheduled for the September 20 council meeting before council votes.

Consult our publications online!

About Dora Kohler

Check Also

Features, Pricing & More – Forbes Advisor

Web.com is a website solution and online marketing solution designed for businesses of all sizes. …