Council reviews draft multi‑unit property tax exemption aimed at enlivening Halsey mixed‑use corridors

Cascadia Partners consultants and Fairview staff used a March 19 council work session to present a draft multiple‑unit property tax exemption (MUPTI) program intended to encourage mixed‑use development and ground‑floor commercial activity along Halsey Street and other priority corridors.

Allison Platt, senior associate with Cascadia Partners, told the council the draft program would exempt improvements (not land) from property taxes for up to 10 years and would be available only for mixed‑use projects that could not be built feasibly without the incentive. "This is really intended to help support projects in achieving that financial feasibility that may not exist under current market conditions," Platt said.

The draft sets baseline eligibility and a points system that applicants must meet. Projects must be at least five units and new construction, a significant addition or conversion; stand‑alone residential projects, auto‑oriented uses and hotels/short‑term rentals are excluded. The consultants recommended a site‑size calibration: small sites (under 2.5 acres) would need a minimum of 125 points to qualify; larger sites would face a higher minimum. Priority points are available for ground‑floor customer‑oriented uses, enhanced storefront treatments, on‑site gathering spaces and targeted housing affordability measures.

Sarah (city staff, Community Development Director) summarized program mechanics: applicants would do a pre‑application meeting with staff, submit a project pro forma showing financial feasibility with and without MUPTI, and pay an application fee to cover a third‑party pro‑forma review. City council would have up to 180 days to approve, approve with conditions, or deny an application; state statute provides that an application is automatically approved if council does not act within that timeframe. If council approves an application, staff would negotiate a program agreement (similar to a development agreement) that memorializes the public benefits, reporting requirements and thresholds for staff vs. council review of later changes. Completed projects would be certified to the assessor before the exemption takes effect, and developers would file annual reports during the exemption period.

Consultants emphasized that the program is being scoped to operate inside Fairview's urban renewal area so that only the urban renewal taxing district would absorb the exemption revenue impacts. Platt said coordinating taxing‑district support will be important: by statute, 51% of the combined levy of affected taxing districts must adopt a supporting board resolution for a developer to receive the full combined‑levy benefit.

On timing and limits, staff recommended including a local sunset: projects must achieve certificate of occupancy by Dec. 31, 2032, to be eligible, ensuring exemptions do not extend beyond the urban renewal lifetime unless the state extends the MUPTI sunset. Platt said pending state legislation could change the statewide sunset date, but the local date offers the city control.

Councilors expressed mixed views. Councilor Marker said the city had tried incentives for years with limited effect and urged caution, saying, "I feel like a carrot farmer — we keep growing carrots and nothing ever happens." Councilor Todd pushed for stronger enforcement options in program agreements to address prolonged vacancies and for possible "clawback" provisions if a project fails to deliver promised public benefits. Staff and consultants responded that the statute allows staff to terminate an exemption if a project is found noncompliant and that program agreements can add local operational details and vacancy thresholds for council review.

Council members asked to see a draft program agreement and stronger language on vacancy allowances and potential penalties before final adoption. Several members also asked for additional briefings with the school district and county to secure taxing‑district support before bringing an adoption ordinance to a future meeting. Platt and Alex Joyce of Cascadia Partners said they will revise the guidelines and scoring criteria based on council input and return with an adoption ordinance and a proposed program agreement template.

The work session produced direction to refine the draft (eligibility, scoring thresholds, program agreement language and a recommended local sunset) and to schedule further briefings with taxing districts. No formal action was taken at the work session.