(Posted at the request of Mysty Beal)
Date: January 15, 2009
Time: 7:30 p.m.
At: Des Moines City Hall
This Public Hearing concerns the Multi-Family Tax Exemption Ordinance under consideration by the City Council. This measure would exempt developers/owners from paying property taxes for 8 years on between 1,800 and 5,500 new Residential Units on Pacific Ridge.
(This tax exemption would apply to only the value of the Residential Units and would not exempt property taxes on the Land, Common Areas or Commercial Areas within the projects.) This is being done under a State Law (RCW 84-14) which allows cities to issue tax waivers to encourage development in depressed areas. I understand that it has been done in Burien and Shoreline, but not nearly to the same magnitude currently under consideration by Des Moines.
No one will disagree that development on Pacific Ridge would be great for our area and that there are no bad guys in this situation. There is a smart developer who is looking at this from purely a business standpoint, and City Councilmembers who want to diversify and increase the tax base in Des Moines to end our annual budget cut panics and/or tax increases on the residents. But, I believe the City Council is moving too fast and does not have enough impartial financial information that these waivers will benefit our City, our Schools and our Fire Department.
As of December 13, the City confirmed that no Independent Financial Analysis of this proposal had been done. I understand that Financial Projections will be presented to the City Council to show how the new commercial taxes might balance out the loss of the new property tax. However, these projections are not impartial as they will be produced by the Developer who stands to benefit financially from the approval of this proposal. Based on their current positions, I believe this property tax waiver is favored by 5 Councilmembers.
In my opinion, there are two significant questions about this measure. The problem is that they are both unanswerable at this time because of the lack of impartial financial information and independent analysis.
- Can the City afford to waive this much in new property tax?
- Can the School District, Fire Department and all the other districts afford these waivers?
If each of the new Residential Units in the 1,800 unit project is valued at $300K, the Annual Impact on Des Moines of waiving new property taxes would be a loss of about $640,000. In 8 years, this would grow to about $5,120,000. If the City were to waive property tax on 5,500 units, the Annual Impact on Des Moines would be a loss of about $1,950,000 in new property taxes, which would balloon to about $15,600,000 after 8 years. Because of a lack of impartial financial information, I don’t believe we know if our City can afford these waivers.
Again, no one knows for sure. As bizarre as it may sound, if approved by our City Council, these exemptions will also waive State, County, School District, Fire District, Library District property taxes on the new Residential Units. The City, County and State will recover some of their tax losses through Sales Tax on construction and the potential retail sales from the Commercial Areas. But, it is important to note that the Sales Tax on construction that the City receives is not likely to cover the Traffic Impact Fees that have already been waived for this developer. And, our School, Fire and Library Districts will get nothing from these Sales Tax Revenues. Even though their taxes will be waived, to the best of my knowledge there has been no official coordination between the City and the School, Fire or the other districts about these waivers to determine the financial impact on their operations. As taxpayers and stakeholders in all these other jurisdictions, I believe we need their independent analysis and input before any decision is made by our City Council.
- Attend the Public Hearing on January 15th to ask the City Council to either vote against this measure, or request that independent accountants from the school, fire and library districts review the proposed ordinance and provide a non-biased assessment to the Council and the public so that everyone can understand the full impact of these property tax waivers before the Council votes on this measure, or
- Call the City Councilmembers at (206) 878-4595, or
- E-mail the City Councilmembers at: firstname.lastname@example.org and ask for more information.