Council proceeds with tax break rules

In a rare 4-3 split, the Federal Way City Council voted this week to proceed with plans to offer property tax breaks for qualifying apartment and condominium developments downtown.

The councilors heard from staff, planners, developers and residents before discussing the issue among themselves at length. They may pass the measure in coming months if some councilors’ concerns about revenue losses are addressed.

At issue is whether or not stimulating residential development downtown to meet Growth Management goals is worth a property tax break to developers who construct certain apartment or condominium complexes.

Deputy Director for Economic Development Patrick Doherty said the break is needed.

In a detailed presentation, Doherty showed successes in Seattle — the city he spent 16 years working for — and other cities that led to attractive downtown buildings, increased sales tax revenues and increased values for nearby properties. Those values actually drove up revenues for some cities, school districts and fire departments.

The tax breaks, which apply to the residential portions of qualifying buildings but not the land, would end after 10 years. If passed, the pilot program would sunset in five years unless it was re-upped by a future council body.

Some, including resident Chad Savaikie, supported the concept. Savaikie said he hoped the measure would drive developers to think vertically when considering new residential buildings.

“It would be nice,” Savaikie said, “to be able to tell where downtown is without having to look for signs.”

Another supporter was Tim Trohimovich, Planning Director for 1000 Friends of Washington and a member of the Building Better Cities Coalition.

“Without some incentives, you’re not going to be getting the ball rolling,” Trohimovich told the council, addressing state Growth Management goals.

But others stepped forward to disagree.

Gateway Center developer Dan Casey said pushing residential units into the City Center before more urban redesign has been completed could be foolhardy. He noted that high-end multifamily residential housing is usually the last puzzle piece to fall into place as urban centers mature.

“It’s not as simple as it might seem,” said Casey, later adding, “I’m not against an incentive program as a concept.”

Casey found a sympathizer in resident Aaron Nelson who said the tax exemption for developers would come on the backs of folks like himself, a Federal Way resident since 1949.

“You’re giving somebody a free ride. Nobody gives me a free ride,” Nelson said. “I suggest you take a good, hard look at it.”

Which is exactly what the council did.

Councilors Mike Hellickson, Linda Kochmar and Dean McColgan lined up against the exemption plan.

“I think it’s a noble adventure, but I’m not willing to do it at all costs,” said Hellickson, a real estate agent.

Deputy Mayor Kochmar concurred by saying, “I think this might be an idea whose time might not have come yet.”

Ultimately, it was Mayor Mike Park who voted with councilors Eric Faison, Jeanne Burbidge and Mary Gates to send the issue to back to staff. Staff will do more research about impacts of the tax revenue losses on the library system, fire department and school district.

Gates said she would like the council to confer with staff to decide what sorts of development the city should try to attract. She mentioned condominiums that would be suitable for retirees.

“We’re talking about raising property values (downtown),” she said. “We’re not trying to raise property taxes helter skelter.”

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