Issaquah council adopts Central Issaquah Pioneer Program, adds developer option on affordability
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Summary
The council voted 5-2 to adopt the Central Issaquah Pioneer Program ordinance, creating a short-term pilot to encourage mixed-use housing in the urban core and authorizing an 8-year multifamily tax exemption. An amendment passed 4-3 allowing developers to choose between 8% units at 60% AMI or 10% at 80% AMI.
Issaquah City Council on March 18 adopted an ordinance establishing the Central Issaquah Pioneer Program, a pilot intended to spur mixed-use housing in the city’s urban core and better position the city for a planned Sound Transit extension. The ordinance passed as amended in a 5-2 voice vote.
The program authorizes a targeted multifamily property tax exemption (MFTE) for qualifying projects in a defined Central Issaquah area, gives projects an eight-year residential tax exemption, and requires the affordable units that are built under the program to remain affordable for the lifetime of the building. The ordinance as amended allows a developer to choose between the administration’s recommended option — 8% of units at 60% of Area Median Income (AMI) — or an alternative of 10% of units at 80% AMI, a change added by an amendment that passed 4-3 during council debate.
Economic Development Manager Jen Davis Hayes told the council the proposal responds to limited redevelopment in parts of central Issaquah and was recommended by the Planning Policy Commission. She described the program as a pilot that provides incentives to encourage the “first in market” projects in the central area. In presenting fiscal context, staff cited an illustrative foregone-revenue estimate of about $33,000 per year (roughly $270,000 over eight years) for the modeled projects and an analytical model that showed the value of reduced rent for the 8% at 60% AMI scenario at approximately $268,677 (model-specific), compared with roughly $132,845 for the 80% option.
Public commenters from the development community urged the council to keep optionality. Karl Charette of AvalonBay said the pilot should remain a learning opportunity and urged approval of the MFTE and the optional affordability language. Brian Runberg, representing the ownership group of the former Red Robin site at Pickering Place, said his group supports the program but needs the range of incentives and options to secure capital for projects. Jessie Clausen and consultant John Schwartz also urged the council to retain flexibility so a broader range of developers and financing sources can participate.
Council debate focused on trade-offs between maximizing affordability levels and improving the chance that a private developer will take on the upfront financial risk. Supporters, including the ordinance mover (Council Member Hunt) and others, argued starting with a stricter affordability requirement (60% AMI) delivers the most community value and can be adjusted later if it proves infeasible. Opponents, including Council Member Martz, argued Issaquah has recently seen significant development and questioned whether the subsidy and foregone revenue are needed, citing concerns about impacts on other taxing jurisdictions and infrastructure capacity.
Deputy Council President offered the amendment to add the 80% AMI developer-option; proponents said the option responds to repeated, unanimous input from the development community and increases the chance of getting projects built. After debate, the amendment passed 4-3 and the council adopted the ordinance as amended.
The council’s action establishes the policy framework; the MFTE designation and implementation steps remain separate and require subsequent administrative and council actions.
What’s next: The council set a public hearing on the MFTE designation for April 15 (see related item). If the MFTE area is designated after public hearing, a final council vote on MFTE implementation will follow in the next available meeting cycle.
