Council extends downtown residential tax exemption

The Marysville City Council extended a property tax exemption for multi-family residential units for the downtown area in an effort to encourage development downtown.

A section of the city code allows for developers to get some property tax exemption for residential development, however it was scheduled to sunset this year.

During the March 25 City Council meeting, City Council members voted to remove the sunset to keep the measure in place.

The area where this exemption is allowed is bounded by Eighth Street to the north, Ebey Slough to the south, Alder Avenue to the east and I-5 to the west.

“That section of our code allows our downtown a tax exemption for multi-family construction projects,” said Gloria Hirashima, chief administrative officer for Marysville.

The property tax exemption lasts for either 8 or 12 years.

To receive the 12-year exemption a developer has to provide at least 20 units, at least 20 percent of which must be affordable housing sold or rented to low- to moderate-income residents.

There are no income parameters for the eight-year exemption.

“The basis is really to revitalize the urban center of the city,” said Hirashima.

City developers usually prefer areas away from urban cores because they are easier to build residential buildings on, she said.

“With new construction you usually see it more on the outskirts of cities where there are greenfield areas,” said Hirashima.

“It is much easier to develop in those type of areas,” she said.

The property tax exemption is supposed to offset some of those complications which make downtown projects more expensive.

“To build houses in a downtown you’re going to have additional costs,” said Hirashima.

Older existing structures may have to be cleared out and working with smaller parcels often has more particular demands for construction, she said.

That is why the state allows for these kinds of property tax exemptions for developers putting up new residential buildings in downtown cores, she said.

Although harder for developers, the city sees many advantages to bringing more residential buildings downtown.

“One advantage is that there is already an infrastructure in place,” said Hirashima, and Marysville’s downtown is already strongly integrated into transit routes.

The original ordinance was put in place in 2009 and hasn’t been used since then.

“We didn’t have any multi-family projects in the area during that time,” said Hirashima. “It’s our hope that we’re getting to a point where downtown redevelopment is becoming more attractive."

The downtown area where this property tax exemption is allowed is zoned for mixed use.

Hirashima noted that doesn’t necessarily mean the classic city setup of “retail on the bottom floor, apartments above,” but could just mean commercial/retail space in a separate building set aside.

Although a developer can choose to include that kind of space, a property does not have to include retail/commercial space to be eligible for the property tax exemption.

The city owns shoreline property that was previously used by industry and has a more active say in how that will be used.

“We’ll have direct control of what uses would go into that property,” said Hirashima. “If we want to see a mixed-use type of building there the city can require it."