Clark County Council may lift urban holdings at I-5/179th Street

Last year, a consultant found that developing the land currently in urban holding would add 4,815 housing units, 2,850 jobs and generate an initial $188 million in taxes with $23 million annually in ongoing tax revenue.

Councilor John Blom, who supports developing the area, said it’ll ease the county’s housing crunch and create jobs so fewer residents have to commute to Oregon for work. Developers are also on board.

“One way to address the housing affordability crisis Clark County is now experiencing is by adding developable land to the supply,” said Ryan Makinster, government affairs director for the Building Industry Association of Clark County, in a statement. “Lifting the urban holding on 179th and the surrounding area is a step in the right direction and one of the mechanisms specifically created by the growth management act to do so.”

A majority of the council has indicated they’re comfortable using public funds for the project, arguing it will pay off. Others have been uneasy asking taxpayers to pitch in.

“The real question is, is the council going to fund the public’s share of that improvement?” said Steve Horenstein, a land-use attorney representing Killian Pacific, one of the developers. “You have the private sector stepping up in a very big way to fund those improvements.”

He said developer support won’t happen unless the council makes what he said are necessary investments. Regardless of the direction the council takes on Tuesday, it’ll still have to balance different interests.

Here are four things to know about it.

Why is this happening?

The urban holdings were applied to the claw-shaped area of land in 2004 and 2007 with the expansion of Vancouver’s urban growth area, land designated for future growth. The rural and sparsely populated area was given the designation because its roads are inadequate for more urban development. With less land available, developers have turned to the county and volunteered to enter agreements to pay for infrastructure upgrades if urban holding is lifted.

In December, the county council approved an agreement with developer Lance Killian of Killian Pacific, for a 40-acre project. Under the agreement, Killian agreed to cooperate with the county on road improvements, pay for construction needed to access its building site and pay fees for the increased traffic that will be calculated based on permits. Since then, Holt Homes, Hinton Development and Wollam & Associates have approached the county seeking to strike similar agreements.

Horenstein said that the county would be blocked from further expanding its urban growth boundary without first facilitating development it has in urban holding. Lawyers for developers could also challenge the county before the Growth Management Hearings Board, a quasi-judicial land-use panel. But none of that seems likely.

“There are legal consequences we are trying to stay away from,” said Horenstein.

Who will pay for what?

On Tuesday, the council will select a financing option for infrastructure improvements to be formalized later this year.

Although the state has earmarked $50 million to rebuild the Interstate 5 interchange near 179th Street, that money won’t be available until 2023. In the meantime, the county and developers have started looking into other ways to provide funding to lift urban holding and formed a committee to evaluate financing options. During a work session in March, the council was presented with seven financing options for the $19 million funding package. The package will pay for four road projects needed to make new development possible.

Option 1, the committee’s recommended option, would increase the levy used to support the county’s general fund, its largest pot of money.

Under Option 1, the levy increase is expected to add about $7.19 annually in property taxes to a median-priced home and generate $7.17 million over five years beginning in 2020. Developers would contribute $6.8 million. The remaining $5.12 million would be financed by bonds, with an annual debt payment service of $394,000 to be paid with either $66 developer surcharges or a $31 traffic impact fee assessed on the number of trips a development was expected to generate.

So far, this option has the support of a majority of the council, including Temple Lentz, Julie Olson and Blom, who have characterized it as an investment in a regional project that will benefit the county.

The other options vary in their proportions of bonds and public funds. One option would require no increase in taxes and would rely solely on developer contributions. This option would increase the bond amount to $12.3 million, with a higher service payment that would be paid for with either higher developer surcharges or traffic impact fees.

“Long term, I understand the reluctance not to raise revenue or taxes. But at the same time, we have an obligation to get this infrastructure built,” said Olson, a Republican.

She said the financing option should use as little bonding as possible because development could slow down, leaving the county on the hook for bond payments. “I think that’s a fiscally conservative position,” she said.

Lentz, a Democrat, also backed the committee’s preferred option at the work session. She said she was still leaning toward it in a follow-up text because it relied the least on bonding. She also said she preferred it because it used the general fund’s “banked capacity” — levy hikes the council didn’t take but could use later.

Blom, a Republican, mentioned the county’s structural deficit, where costs continue to outpace its revenue as a reason for supporting the project.

“If we don’t do something to spur economic growth, that deficit is only going to be more costly,” he said.

Republican Councilor Gary Medvigy said during the work session that he would opt for more bonding over an increase in taxes. Council Chair Eileen Quiring hasn’t said where she stands and didn’t respond to a request for an interview. During last year’s campaign for council chair, Quiring touted her record of voting against tax increases while also supporting economic development.

What will be built there?

Although most of the developments proposed so far are housing-oriented, Medvigy, Olson and Blom say they want to see the land in urban holdings used for office space and light industry.

“We have an unbalanced ratio of housing land to job land,” said Blom.

In addition to residential, Killian Pacific is planning on building a commercial center. Holt Homes is planning on 606 single-family homes and 99 townhomes. The Hinton Group is pursuing 129 homes, and Wollam has proposed 220 homes.

Much of the area’s zoning is residential, but land zoned for office and light industrial is nearby. There are large landowners in the area, as well as smaller owners who will be able to cash in on their newly valuable property.

During Wednesday’s council time meeting, Medvigy said he’d also like to see affordable housing. Blom has said lifting urban holding will boost the area’s housing supply. Construction won’t happen until 2023, and it’s not clear how much housing would cost in the area by then. But in a recently completed development by Holt Homes in nearby Ridgefield, homes start at $362,400.

The council also discussed whether to use surcharges, traffic impact fees or a combination of them to pay the bonds. They also discussed how payments would be collected as more development comes in.

Surcharges would be collected through developers’ agreements. Once urban holdings are lifted for the area, developer agreements would no longer be required.

“I do not want to move forward with lifting urban holding if other people can come in and do development without DAs,” Blom said during the meeting.

Senior Deputy Prosecutor Christine Cook replied that the county could impose layered traffic impact fees. But Blom said developer agreements give the county a tool to control how the area develops. In a follow-up text, he said the agreements could be used to incorporate smart growth, making areas more walkable and transit friendly.

Who is opposing it?

Futurewise, a Seattle-based land-use group, has already raised concerns about the county’s plans.

In November, Tim Trohimovich, the group’s director of planning and law, sent the Clark County Planning Commission a letter stating the county already was underfunding its 20-year transportation facility plan. The letter opposed lifting urban holdings for the 143 acres Holt Homes is planning to develop.

When asked if Futurewise’s position had changed since then, Trohimovich wrote that the county still hadn’t financed its capital facilities plan.