Let’s see … take $500,000, subtract $2.78 million … yep, we’re having trouble seeing how this adds up for the city of Vancouver. On the other hand, journalists are notoriously math-challenged, so maybe a tax break for a developer at The Waterfront Vancouver site will pay off in the long run.
Jackson Square Properties, a California-based company, has proposed a $60 million apartment complex at the development that is popping up next to the Columbia River. The developer wants to build a seven-story, 248-unit structure on Block 20 — four blocks west of the Grant Street Pier.
Good idea. A mix of residential units, office space, restaurants and retail outlets will be essential for the site to reach its potential.
But this particular deal will require scrutiny to ensure that it computes. Under Vancouver’s multifamily tax exemption, city councilors are considering a $2.78 million, eight-year tax break for Jackson Square Properties. In exchange, the company would provide $500,000 to install an inclusive play structure at Esther Short Park.
Also a good idea. The current structure, according to Parks and Recreation Director Julie Hannon, is “definitely showing wear and tear. It is extremely well-used.” A new playground would be the first phase of renovations at the park, which serves as Vancouver’s collective living room. The second phase would replace the restrooms with loo-style restrooms.
And why not? With the nearby waterfront undergoing a makeover, it makes sense to have Esther Short Park reap some benefits.
But according to our calculations, putting a half-million dollars toward the park does not equate with a tax break of nearly $3 million. It’s not as though Jackson Square Properties would be getting by scot free; the city would collect an estimated $6.14 million in taxes from the project over the eight-year period.
And it’s not as though tax breaks to encourage development are anything new for city governments. The transformation of the downtown area over the past two decades has been somewhat fueled by tax breaks for developers. For example, Heritage Place — a condominium development just north of Esther Short Park — was given a 10-year state property tax abatement and helped trigger a downtown revitalization.
But cities must frequently evaluate their tax break programs — particularly when the economy is strong. If market forces dictate that a development would be built even without incentives, then cities are simply giving away money that in one way or another will have to be covered by residents. In the case of The Waterfront Vancouver, there likely is no shortage of builders eager to be a part of the attractive development.
It also is difficult to compare the benefits of incentives for housing against tax breaks for corporations. Vancouver has wisely conceived tax breaks for companies that meet benchmarks for the number of jobs and the median salary they will provide. Housing requires slightly different metrics.
The city’s housing program allows for tax breaks that last eight, 10 or 12 years in exchange for a public benefit. Or developers can agree to reserve a portion of the housing units for low-income residents. According to city officials, 25 applications have been approved under the program, accounting for more than 2,300 new housing units.
All of that has resulted in a proposal from Jackson Square Properties to receive an estimated $2.78 million in tax breaks in exchange for $500,000 toward a play structure. We hope that city councilors check their calculators before approving the deal.
