Tacoma City council approves tax exemption for multifamily housing development

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The Tacoma City Council has given its approval for an eight-year property tax exemption agreement to facilitate the construction of a multifamily housing project in the Tacoma Mall Mixed Use Center. The development will comprise 171 market-rate multifamily units and eight live-work units. The estimated completed value of the apartment complex is around $75 million, with a projected property tax exemption of $6.9 million over the next eight years. However, this exemption is expected to lead to a loss of potential property tax revenue amounting to $1.4 million for the city.

Despite the tax exemption, the city stands to benefit from a projected total sales tax revenue of $2.4 million, resulting in a net positive impact of approximately $1 million from the tax-exempted apartment building. The project is proposed by AVA 200 LLC and aims to create a mix of rental units, including 15 studio units, 70 one-bedroom units, 53 larger one-bedroom units, and 33 two-bedroom units.

The live-work spaces within the development offer a unique opportunity for small businesses to operate on the ground floor while providing separate living quarters for business owners. The move to increase multifamily housing comes as Tacoma’s rental market experiences a low vacancy rate of 4%, indicating high demand for housing. The city hopes that by adding more units, the pressure on the market will ease, leading to stabilized prices.

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Debbie Bingham, Project Manager at Tacoma Economic Development Services Division, presented the proposal, noting that the construction of the apartment complex is anticipated to cost $75 million and will contribute to around 350,000 labor hours. This development is poised to play a crucial role in addressing housing demand and economic growth in the area.