2023/04/19 Council Agenda Packet

MARCH 2023 I DRAFT REPORT v.4.1 EVERETT WASHINGTON Other Housing Development Incentives Currently in use Elsewhere in Washington The City reviewed housing studies and incentive programs offered or considered by other public agencies in Washington. The analysis also considered Sound Transit studies related to Transit Oriented Development near light rail transit stations. The resultant list of housing development incentives was considered against the City's current list of available housing incentives to identify opportunities for new incentive structures to stimulate affordable multi -family housing. The review considered four types of incentives:1) regulatory, 2) administrative, 3) housing capacity near transit, and 4) affordable housing. The analysis concluded the City is already offering the majority of regulatory incentives in use elsewhere in Washington. The review did, however, identify specific actions to enhance existing multi -family development, including: • Study adjustments in parking requirements to increase parking flexibility, particularly around high -capacity transit neighborhoods. • Continue the Multi -family Tax Exemption incentive and expand its' availability to urban corridors. • Reinstate the system (special connection charges) fee waiver exemption for affordable housing projects. • Evaluation alternatives for reducing permit timelines. • Advance the Evergreen Way Revitalization Plan (Ordinance 3268-12) to improve investor interest in urban corridor housing. • Coordinate with Sound Transit on multi -family housing strategies for Everett Link Extension station areas. Housing development incentives considered in this study are summarized in Table 5.1 on Page 5-2. Individual Project and Cumulative Financial Impacts on City Finances To understand how specific incentives affect the City's finances the study included an analysis of the potential costs of offering the incentive programs. This involved using the development cost and rental rate information developed by Cushman & Wakefield and applying growth projections for incentive program projects over the next ten years. The analysis considered developing 36 Multi -family Tax Exempt projects with over 2,400 new multi -family units Combined with the recommended fee waivers, these incentives could provide for over 1,200 new affordable units. The financial impact analysis considered three types of financial impacts to the City:1) foregone tax revenues, 2) tax revenues that are shifted to other property owners in the taxing district, 3) the effect of the exemption on special taxing districts, and 4) the timing and administrative costs of managing the program(s). In addition to direct costs to the City, the analysis also estimated direct and indirect benefits the City may realize as a result of new multi -family housing construction. Based on the assumptions in the model the direct impact to taxes collected from exempt projects over the next 10 years could be up to $33MM, with the City's portion being up to $5.7MM. Portions of this tax could be shifted to other taxpayers in the Everett taxing district or foregone from City collection. The analysis considered the City's $5.7MM of foregone tax revenues to be approximately 5% of the estimated real estate equity created through the new multi -family tax exemption development projects and roughly equivalent to the estimated tax increase from project construction and retail sales increases resulting from the occupancy of new multi -family tax exemption projects. Project and cumulative financial effects will depend on the type, size, and timing of individual MFTE projects. A "hypothetical" financial model, based on reasonable assumptions, is described in Section 6.0 and presented in Attachment 6.1. ES-3