A planned housing and commercial complex on West Main Street in Battle Ground has officially received city support for an eight-year exemption on property taxes in order to get the project built.
During its Aug. 7 meeting, the Battle Ground City Council voted 6-1 to enter into a contract agreement with Deacon Development, the builders of West Main Commons. The project will feature 220 apartments and 36,000 square feet of commercial space on the property, located directly east of Battle Ground’s Best Western hotel.
The contract allows for the development to take advantage of a multifamily tax exemption now in city code.
The contract requires the developer to have 10% of its units, 23 in total, as “affordable” homes. To be affordable housing, a household’s income is at or below 80% of the adjusted median income for Clark County. Monthly housing costs for a unit, including utilities, cannot exceed 30% of that level of income for a household.
Once the contract is signed, the developer must construct the project in a three-year timeframe, Battle Ground Community Development Director Sam Crummett said. Only after a certificate of occupancy is issued will the city not collect property taxes on the impacted areas for the eight-year duration of exemption. Only the multifamily portion of the development will have the property tax exemption, the staff report stated. The commercial development and the land the project is on will all still be subject to those taxes.
Estimated to be close to $90 million by the developer in total, the portion of the project that will be exempt is anticipated to be about $55 million in assessed value. The city will not receive about $530,000 in property taxes annually because of the exemption, Crummett said.
He said the contract was the final step of agreements between the city and the developer. In the first few weeks of 2023, the City Council approved the area where the tax exemption would be applied, which is specifically the land of the West Main Commons property.
Following the council’s vote to put the tax exemption program in city code Feb. 6, the developer applied for the program, and the city reviewed a contract that was brought before the council at the Aug. 7 meeting.
The exemption affects taxing districts outside of the city, including Clark County Fire District 3. The city anticipates the fire district will not receive $536,000 over the entire exemption period that it would otherwise collect.
This didn’t sit well with Councilor Shane Bowman. He said the narrative has changed over the course of the process on what impacts the exemption would have.
“It was presented to us that no one was losing money except for us,” Bowman said.
He mentioned the developer had proposed giving a grant of sorts to the other affected taxing districts as some sort of mitigation. Battle Ground City Manager Erin Erdman believed that proposal was removed due to an issue on what legal mechanism could be used to allow for that kind of grant.
Bowman said, although the city receives revenues from other sources like sales and utility taxes, other districts like fire and schools are reliant on property tax as their primary source of regular funding. He was initially opposed to approving the contract, though Erdman pointed out that the city had already approved a development agreement with the idea that it would eventually lead to the tax exemption approval.
“That was approved without having all the knowledge that we should have had to make that decision,” Bowman said.
Battle Ground Mayor Philip Johnson countered by noting there wasn’t any intentional deception in what impacts the exemption would have.
“It was with the best knowledge we had at the time,” Johnson said.
Erdman said there was the potential for legal complications should the city vote against approving the contract, given the past action the city has taken to move the plan forward.
Councilor Adrian Cortes noted the development would still generate revenue with the city through sales tax on construction and future utility taxes. Other districts will also receive the usual impact fees on new construction.
“That is a huge economic-generating project regardless of the pause on property tax,” Cortes said.
The influx of people that the 220-unit complex will allow means more residents spending to contribute to sales tax, which has become a greater portion of city revenues in recent years, Cortes noted.
Under current market conditions, the project won’t be able to move forward without the tax exemption, Deacon Development Finance Manager Ian Lewallen said.
“That’s just the nature of the industry and capital markets where we’re at,” Lewallen said.
Bowman reiterated that the city’s ability to prevent other taxing districts from collecting property taxes seemed wrong, especially if it happened to the city itself.
“If it was us, and the county came out and did this, we’d be pissed,” Bowman said.
Acknowledging Bowman’s concerns, Johnson noted the work leading up to the vote has gone on for roughly a year. During that time it looked as if the city and the developer would finally reach a deal on the exemption.
“In this case, we’ve passed the point of no return,” Johnson said.
Despite his apprehension, Bowman ultimately voted to move ahead with the contract. Only Councilor Tricia Davis voted against it.
Bowman lamented how a lack of clear direction and conflicting information from the sources providing it led to the conflict he saw.
“We need to have a better policy about this kind of stuff, especially when the state does not even have a policy on it,” Bowman said.
