Developers of a 200-unit apartment complex are hoping to obtain the second property tax exemption issued by the City of Battle Ground to increase affordable housing in the area.
During its June 5 meeting, the Battle Ground City Council heard from Tirus “T.J.” Fontenette, the managing principal of Principal Properties LLC, who presented the plan for “Eaton Park and Remy Heights,” a 200-unit, two-phased development on the southwest side of the city.
The project includes two separate 5-acre parcels to the west of the existing 180-unit Alder Pointe at Scotton Landing. That existing project was developed by Principal Properties, and is currently owned and operated by the company.
The project fits in with the existing Millcreek Town Center and Scotton Landing project, anchored by Walmart and also developed by Principal Properties, Fontenette said.
“We believe that this will be a well-planned, compatible project that would just simply show a good, well thought-out phasing of multifamily (residences) going into that area,” Fontenette said.
The overall mixed-use center has been in development since 2007, Fontenette said. The existing 60 acres of development is valued at about $160 million, $12 million of which is infrastructure like Scotton Way. The development brings in about $4.3 million in annual sales and use taxes, Fontenette said.
A full buildout including the new apartment complex would give the larger development a construction value of $265 million, he said.
Principal Properties is looking to take advantage of a recently-passed tax abatement ordinance on Battle Ground’s books. Last year, the city council approved the ordinance, known as the multifamily tax exemption (MFTE), which waives property taxes on residential property if a development follows an affordability requirement.
To be eligible, 10% of a development’s units have to be “affordable.” Affordability is defined in code as rent that does not exceed 30% of a household’s monthly income based on 80% of adjusted median income for Clark County.
The developer argued the planned project would be a benefit for the city and its affordable housing goals. Fontenette said for a public agency to bring in an affordable housing unit, it would cost between 25% to 40% more than what a private entity could do.
Private development doesn’t have it easy either, Fontenette said. Since the time Alder Pointe broke ground for construction in 2015, those costs to build have increased 80%.
“In this case for multifamily, it’s going to be about double what we built Alder Pointe for,” Fontenette said.
Operating costs for salaries, insurance, utilities and property taxes add to the total, he said.
“The only lever that we’ve got is to raise rent,” Fontenette said.
Combined with increases to interest on loans and a slowdown on housing starts, “this problem’s going to get more acute before it gets better, and we’re going to see that,” Fontenette said.
The Alder Pointe complex is currently at 97% occupancy with a waiting list, Fontenette said. According to Alder Pointe’s website, prices range from $1,595 a month for a 575-square-foot, one-bedroom apartment, to $2,095 a month for an 1,190-square-foot, three-bedroom apartment.
Fontenette noted several residents will qualify for affordable housing under the MFTE program.
“We’ve got a couple veterans and a few others that, frankly, we provide a significant discount of rents for, but we can only do so much,” Fontenette said.
He said the project fit in with the goals of the MFTE ordinance, including encouragement of development near a variety of business types and public facilities.
He spoke positively of the first MFTE project the council approved, which was the West Main Commons development to the west of state Route 503.
“We think a rising tide lifts all ships,” Fontenette said.
Though he supported the West Main Commons project, Fontenette pointed to the existing and planned amount of commercial space for the whole Millcreek Town Center and Scotton Landing project. He said that square footage would eclipse that of the newer development by an order of magnitude.
“We don’t think it has to be an either-or. We’re just saying that there’s a significant amount of mixed use and urban center development there that’s on a very, very large scale,” Fontenette said.
The development isn’t limited to building more homes. The project will also construct Southwest 15th Avenue between Scotton Way and Eaton Boulevard, Fontenette said. That road-building will cost about $1.1 million and will fulfill part of the city’s transportation improvement plan.
The development also supports a new sewer pump station serving about 100 acres near the project, he added.
“This is not a project that’s going to be asking for public infrastructure, it’s going to be into the development of more infrastructure,” Fontenelle said.
Since the discussion took place during a workshop, the council didn’t vote on the approval of the exemption. Before it comes back to the council, the council requested more information on what financial impacts it would have.
Councilor Shane Bowman took issue with abating taxes not just destined for the city, but for districts with jurisdiction on the property, including fire protection and schools.
“It still blows my mind that we can do that,” Bowman said.
He noted although the dollar amount districts can collect won’t go down, it won’t increase based on the new development from the planned projects. Given those impacts, Bowman wants to hear from the other impacted districts to see how the tax exemption for the development would affect them.
“We can look at what it’s going to cost us,” Bowman said. “I would love to see what it’s going to cost the other agencies when we make this decision.”
