Multifamily Tax Exemption Program

Applications

Vancouver City Council Workshop

August 1, 2016

Peggy Sheehan, CED Program Manager

• Rental Market Update

• Multifamily Tax Exemption Program

• Proposed Projects

• Block 6 at the Waterfront

• Hutton Block

• Discussion/Next Steps

Presentation Overview

Multi-Family Tax Exemption Program Applications - 2

Rental Market Update

Source: Runstad Center for Real Estate Studies Spring 2016 Apartment Report

Multi-Family Tax Exemption Program Applications - 3

Clark County Apartment Market Survey – Spring 2016

Rental Market Update

The September 2015 report reflects a large increase in units from the March 2015 report; the presumption is that these are new units not yet fully leased

1-Person Household 2-Person Household 4-Person Household

Income

Level Annual Income

Max. Affordable

Rent Annual Income

Max. Affordable

Rent Annual Income

Max. Affordable

Rent

115% AMI $59,225 $1,481 $67,620 $1,691 $84,525 $2,113

100% AMI $51,500 $1,288 $58,800 $1,470 $73,500 $1,838

80% AMI $41,200 $1,030 $47,040 $1,176 $58,800 $1,470

60% AMI $30,900 $773 $35,280 $882 $44,100 $1,103

Multi-Family Tax Exemption Program Applications - 4

Income and Affordable Rents (HUD)

Multifamily Tax Exemption Program Overview

• Defers placement of new residential construction value on

tax roll

• New non-residential construction added as usual and land

value remains on tax roll

• Two options:

• 8-year exemption with no affordability component

• 12-year exemption with affordability component (20%

of units for tenants earning up to 115% AMI)

• Available in City Center and Fourth Plain areas

Multi-Family Tax Exemption Program Applications - 5

Multifamily Tax Exemption Project Pipeline

• 14 completed or approved developments (more than 1,400

units total)

• 2 applications

• Among the 16 total projects, 4 target 20%+ of units to tenants

at/below 115% AMI

Multi-Family Tax Exemption Program Applications - 6

7

Multifamily Tax Exemption Project Pipeline

New Application: Block 6

Developer: Gramor Development

Project location: 655 W Columbia

Way (one block east of Grant Street)

Multi-Family Tax Exemption Program Applications - 8

− 53 units plus commercial

space

− 53 on-site parking spaces

− $22.2 million development cost

− 8-year exemption requested

New Application: Hutton Block

Developer: Master Development

Project location: 1506 Main Street

Multi-Family Tax Exemption Program Applications - 9

− 108 units plus commercial

space

− 42 on-site parking spaces

− $13.4 million development cost

− 12-year exemption requested

Overview of Proposed Projects

Block 6 Hutton Block

Total Development Cost

(excluding land) $22,243,173 $13,398,587

Lot Size (sq. ft.) 34,205 43,930

Total Development Area (sq. ft.) 72,948 66,960

Number of Stories 6 4

Floor Area Ratio 2.13 1.52

Commercial Area (sq. ft.) 6,564 2,000

Number of Residential Units 53 108

Multi-Family Tax Exemption Program Applications - 10

Proposed Rents and Unit Mix

Block 6 Hutton Block

Unit Types Proposed Rents # Units Proposed Rents # Units

Studio - - $565 - $710 44

1-Bedroom $1,726 - $2,167 22 $990 - $1,130 42

2-Bedroom $2,925 20 $2,070 - $2,460 20

3-Bedroom $3,709 9 - -

Penthouse $3,641 2 - -

Live/Work - - $1,950 2

Multi-Family Tax Exemption Program Applications - 11

Rent Comparisons

Project 1 BR Rent Rent $/SF

Runstad Survey

(spring 2016)

$837 $1.31

The Uptown $1,335 $1.62

Broadway and 19th - $1.74

500 E 16th Street $1,100 $1.75

Our Heroes Place $1,650 $2.00

Block 6 $1,726 - $2,167 $2.67

Hutton Block $990 - $1,130 $1.95

Multi-Family Tax Exemption Program Applications - 12

Financial Analysis

• Fiscal Benefit to City

• Both projects provide a positive net present value (NPV) fiscal

benefit over 20 years

• The NPV of new property, construction sales tax & utility taxes

exceeds the NPV of the property tax exemption by a factor of 1.5 to

2.8 over 20 years

• Developer Return

• Developer returns on projects are not high relative to a risk

adjusted/market return

Multi-Family Tax Exemption Program Applications - 13

Financial Analysis – Tax Revenue and Jobs Estimates

Block 6 Hutton Block

Net Present Value of City Tax

Revenue (over 20 Years) $671,793 $761,580

Net Present Value of Tax Exemption

(over 20 Years) $435,891 $270,613

Construction Jobs 202 103

Multi-Family Tax Exemption Program Applications - 14

Project Design: Block 6

15

Project Design: Block 6

Multi-Family Tax Exemption Program Applications - 16

Project Design: Hutton Block

17

NW 16th St

NW 15th St

Was

hing

ton

St.

Mai

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Project Design: Hutton Block

Multi-Family Tax Exemption Program Applications - 18

Project Design: Hutton Block

Multi-Family Tax Exemption Program Applications - 19

• CCRA reviewed applications July 21, 2016

• City Council public hearing and consideration of tax exemption

agreements August 15, 2016

• Multifamily Tax Exemption Program to be reviewed for possible

changes this year

• August 22, 2016 workshop

• Proposed public hearing September 12, 2016

Next Steps/Timeline

Multi-Family Tax Exemption Program Applications - 20

Peggy Sheehan, Program Manager

Community and Economic Development

Peggy.Sheehan@cityofvancouver.us

Questions and Discussion