The July 2018 Edmonds Housing Strategy document (prepared by the City Development Services Department, a Task Force appointed by the Mayor and BERK Consulting) appears on its surface to generate additional single family, multi-family and accessory dwelling units that will add value to the City real estate inventory, thus bringing in additional tax revenue to support the City budgets.  On its face and considering just those items, that may in fact be true.  However, there are additional impacts and costs, some apparent and others hidden, that will result from this program.

  • PARKING IMPACT – Parking reductions are encouraged in 1. Multi-family Housing (Item 1.3) and 2. Missing Middle (Item 2.1). The opposite should be the case. Additional parking spaces should be required wherever multi-family or additional smaller residences (ADUs, Cottages, etc.) are proposed.  Failure to provide added parking will lead to more on-street parking, which is already a problem in many neighborhoods.  Parking spaces per unit should be provided based on need, not reduced to increase developer revenue.
  • TRAFFIC & DENSITY – Adding two more structures to existing single family residential (Accessory Dwelling Units, Cottages) in addition to creating parking issues (see above) will reduce open space and tree canopies in the neighborhood. Also affected will be sidewalks, cars on the streets, cars parking on property adjacent to the streets and pedestrian risk.
  • RELAXATION OF HEIGHTS & DENSITIES – Relaxation of heights and densities are proposed in Multi-family Items 1.2, 1.5 and 4.6 Inclusionary zoning. Increasing existing height and densities should not occur and in fact, if current height standards impact the views of others, height reductions should be considered.  This is especially critical in the Downtown Waterfront Activity Center – the current zoning should be retained in that area and that requirement should be clearly stated in the Housing Strategy.
  • HOUSING & THE GROWTH MANAGEMENT ACT – Our target for housing growth is 112 additional dwelling units per year. Since 2014 we have added an average of 107 units per year.  This “need” for additional housing to comply with the Growth Management Act is not actual.
  • INCREASE IN ADDITIONAL POLICE, FIRE & EMERGENCY MEDICAL SERVICES – The population increases associated with the Housing Strategy goals will require increases in all of these services. Who will pay for these increased costs?  Existing land/single and multi-family residents and business properties will.  How will the level of service be impacted by the proposed changes?
  • INFRASTRUCTURE, CITY MAINTENANCE AND SUPPORT COSTS – Costs to the City to maintain all of the maintenance costs related to the additional support related to the added parking and other infrastructure costs will be borne by Edmonds’ taxpayers. Item 4.7 in the Affordable Housing Item 4 alludes to discounting impact fees to finance capital spending for community infrastructure, utility connection fees and permit fees.
  • SCHOOLS –The Edmonds School District would not be able to collect any of the property tax typically due from the residential units associated with the Multi Family Tax Exemption (MFTE). This would negatively impact the school district’s finances.
  • MULTI-FAMILY TAX EXEMPTION (MFTE) COST – The loss of revenue related to this relatively new program is substantial. In 2016 the City implemented Multi-Family Tax Exemption Chapter 3.38, (pursuant to 84.14 RCW) providing for an MFTE on the residential component of a qualifying project value of 100% of the value of that residential property (even though the developer is only required that 20% of the residences in the multi-family development be rented at affordable rates.  That exemption is for 12 years, after which the units can be rented at market rates and no longer need to be rented at affordable levels. This program and its expansion are referenced in Item 4.5 and in the next steps for Action Item 4.

Using the 89-unit Compass Apartments on SR 104-Edmonds Way built in 2011-2013 as an illustration and assuming the MFTE applied to that construction, the assessed value of those residential units (i.e. excluding land value and retail) grew from $3.7 million in 2013 to $7.8 million in 2018 (6 years).  A property tax rate of 10.73 per $1,000 and an average increase in value each year of $820,000 provides a tax savings to the developer (and thus a loss to the City of Edmonds that will have to be made up by Edmonds taxpayers) of almost $700,000 over the 12 year period.  The City should explore changes to Chapter 3.38 for any future MFTE areas.

Clearly these additional and hidden costs are substantial and will result in higher annual tax rates.  The City needs to take this into account and take steps to minimize the impact to existing taxpayers.

John Reed, on behalf of

The Alliance of Citizens for Edmonds (ACE)