According to an article published in the Columbian on November, 28th, the City of Vancouver is considering a change to the tax exemption affordability incentives they have been using for decades to promote urban renewal.
When Holland Partner Group released the information on the Block Ten project, there were some people upset that the city was using the federal FHA, income guidelines based on the broad Portland – Vancouver metro area rather than the specific local incomes which are actually lower than the broad metro area.
The Columbian article says: “The city of Vancouver is planning to revise a tax exemption program designed to incentivize affordable housing, requiring developers to meet a more stringent definition of “affordability” in order to qualify.
The equation used to calculate affordable rents would be linked to Vancouver’s income data alone, where the median income is $64,900 for a family of four. Currently, the program uses income data for the greater Portland metro area, where the median family income is $92,100.
As a result, the so-called affordable units have remained out of reach for the typical Vancouver family, even as the Multifamily Tax Exemption Program granted developers of new apartments an eight-, 10- or 12-year break on their property taxes.”
In fairness, the people protesting the $2000+ rents being called “affordable” are not wrong. It isn’t “affordable.” So don’t call the program “affordable,” call it what it is, “sub market rent.” But Vancouver has a skewed income average. The city has a large inventory of what I call “Kaiser Cottages” These small 1940s homes were built in 1942-43 to house the families of some 39,000 employees working the shipyards during World War II. These homes are very “affordable” today and lure families with lower incomes to the area to either rent these homes or buy them when they are listed. That plays a significant role in affecting the median family income in Vancouver as these 700-900 square foot homes represent a large percentage of the local single family home inventory. There is nothing wrong with that. But Vancouver’s lower median family income masks the fact that some of the wealthiest people in the entire metro area also live here. Basing the entire redevelopment of Downtown on Vancouver’s lower median income will destroy the entire premise of urban renewal. We had low income housing in Downtown in the 1990s along with an Esther Short Park filled with crime, drugs, prostitutes and other undesirable elements. This MFTEP program brought about meaningful change and the subsequent increase in local property values has flooded the tax coffers with money to expand other services designed to help our more vulnerable citizens, including affordable housing on viable transit lines we have seen on the 4th Plain corridor. Yes my friends, it turns out that empty undeveloped or under-developed land doesn’t generate as much tax revenue as dense urban development does; who would of thought?
So the council is considering a plan to reduce the required rents on these tax exemption programs. This will fail and it will fail miserably. If the council doesn’t realize this, they are pushing the “STUPID” button. Rather than come out and explain to these concerned people that mid-rise and high-rise projects are expensive to build and are not generally going to lead to traditional “affordable” housing, they are in full political pandering mode. Pandering to the squeaky wheel will not help solve our city affordable housing issues. Also it should be noted that the land in Downtown and on the new Waterfront is among the most expensive in the county. These building sites typically have land values in the $3-4 million an acre range. The 0.96 acre Block Ten property was sold to Holland for $3,330,000 last spring. This is not the type of property suited for affordable, low income projects. If the city wanted to help low income people why did they charge such a high price for that property? Yes, I went there. They are being hypocritical on this issue. This same MFTEP program is largely responsible for the the beautiful Esther Short Park area and all of the great things we all enjoy regardless of income, like free concerts, festivals, Farmer’s Market, and so on. The Mayor is off her rocker on this and it may cost her job in 2022.
We have to ask ourselves, whether we want to create a nice quality Downtown neighborhood with shops and restaurants, a place where ALL of our citizens can visit and enjoy, or whether we want our downtown to become a Section 8 project zone. I think it is a safe bet that 95% of Vancouver residents do not want Downtown and the Waterfront to become a crap-hole like it was in the mid 1990s.
My wife and I make a very good income, well above the metro average used for the current program, but we cannot afford to buy one of the new Kirkland Tower Condos as those will be multi-million dollar properties. That’s fine, I can’t afford the Kirkland Condos, but I can enjoy the neighborhood, that projects like it are creating; the Waterfront Park, the shops and restaurants. We all benefit as a community when our Downtown and Waterfront areas develop even if we can’t afford to live there personally. But according to the council, just because most can’t afford it, it should not be built, seriously Council, that’s your play? Should we ban Bentley, Aston Martin, and Lamborghini cars in Vancouver as well? I get it, the city is offering a tax break and that is what causes the public to take notice. But these projects are taking under-developed or undeveloped property that has been under utilized for DECADES and creating an incentive to build something nice on it. the trade off is a short 8-12 year reduced taxation that will lead to a much higher tax revenue in the future. Collecting full tax rate on a $3 million dollar vacant lot is not as beneficial to the citizens of Vancouver than collecting reduced tax rate on a $50 million urban project. Nor is the vacant undeveloped lot producing income like the developed project does in the form of jobs, new residents and such.
If the city has concerns about providing low income residents housing they can expand the current programs that have been putting higher density housing on our transit lines. The city is planning a second VINE line along the Mill Plain corridor. If they follow what they did on the Fourth Plain line, a fair amount of subsidized affordable housing will follow. They can also provide organizations such as VHA a faster path through the bureaucracy to get their projects approved and built faster. VHA does an excellent job of producing quality affordable housing for lower income citizens. But VHA won’t be building on the expensive lots at the Waterfront, Duh!
The thing this council needs to do is get busy and start luring employers that create higher income jobs. Right now there is a bit of an exodus out of Portland’s Downtown. All of this negative activity over the last several months has led many firms with high paying jobs to start looking elsewhere for real estate. Vancouver and Downtown in particular, could be the IDEAL relocation spot for many disenfranchised businesses in Portland. Rather than drag our downtown into lower income, maybe we should focus on raising Downtown up to the metro median.
Furthermore, a number of Portland’s larger manufacturing firms are facing an ever increasing hostile environment at Portland City Hall. Companies such as Gunderson and Daimler – Freightliner could very well take advantage of opportunities in our manufacturing areas at both Columbia Center or the Port of Vancouver. Bringing high paying jobs here reduces traffic on the two Columbia River bridges, reduces the impact of Oregon’s income tax scheme on Clark County residents, and benefits the community at large. Hey Council, ‘benefitting the community at large’, that’s kind of your job, right?