Letter: Condominiums, apartments benefit the Edmonds economy

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Editor:

At last week’s city council retreat, council member Petso reiterated her opposition to view condominiums, in particular the Point Edwards development, as a form of economic development. Actually she expanded her opposition to include all residential housing. Some months ago I did an analysis of Point Edwards. I determined that there are 261 condos there having a 2012 tax value of $133 million.

Imagine the very significant amount of construction sales tax they have yielded, as well as the real estate excise tax (REET) our city gets every time one of those condos is sold. Much of the 2005/2006/2007 bubble in REET was surely attributable to Point Edwards.

Additionally, there’s the property tax our city collects every year – $274,757 in 2011. It would take retail sales of $32.3 million to generate that amount of revenue for us. And, of course, the 500 or so residents of Point Edwards are potential customers for our merchants.

In addition to the Edmonds property taxes, in 2011 Point Edwards owners paid $1.033 million in property taxes to the other taxing authorities. With the biggest chunk of that going to schools, their payments help to reduce the amount of school taxes paid by the rest of us. Ms. Petso, you can call those condos on the hill whatever you’d like to. To me there is no doubt that they have benefitted the Edmonds economy.

Now council member Plunkett thinks a lot like Ms. Petso – at least about this topic. Back in July he wrote that “taller buildings do not equal economic development. If downtown doubled the number of condos it would bring in an additional $360,000 in property tax revenue.”

The amount of property taxes from downtown condos is not a sum that’s readily available. Suspecting that $360,000 was too low a figure, I decided to determine the real number. So I walked the streets and collected the addresses of all of the condo buildings in the downtown. Then I went home and analyzed the tax records of 97 buildings containing 902 condos. A very time-consuming process!

The assessed value for 2012 taxes is $326 million. In 2011 the owners of those condos paid Edmonds property taxes of $685,427 – almost double Mr. Plunkett’s figure. And my figure still understates reality, because many of the 97 buildings are mixed-use buildings and I did not factor in the revenue received from the commercial portions of those buildings.

One final important point, if your position is that residential development is not a form of economic development then that means that you probably view mixed-use projects simiIarly.

Without the residential component of mixed use there will be few if any such projects, because we have learned that it’s the residences that make the mixed-use projects financially viable.

Once again, the facts clearly show that condominiums, and apartments, benefit the Edmonds economy.

Ron Wambolt
Edmonds

 

19 COMMENTS

  1. There will never be another Edmonds. It is the jewel of the Puget Sound area. If we once – just once – relax our height standards, we have lost Edmonds as the most livable small city in this area. All it would take to loose “It’s an Edmonds kind of day,” is one tall building. One ALWAYS leads to more. And, once lost, you can never get it back. If it is a matter of tax money, there MUST be another way. We have brains so let’s brain storm and keep our jewel.

  2. Since we refuse to raise property taxes, we need to bring in new residents who will not only pay their own fair share, but will also pay more than their fair share in order to cover our current deficits.

    Nor are there substantial costs associated with new condo or new neighborhood construction in Edmonds. That’s the bonus in the win-win situation: we bring in new residents, we get the benefit of all the taxes they pay, they cover our current shortfalls while paying their own way in full, and none of it costs the city anything: no costs to schools, no costs to roads, no costs to water mains or police or fire. No costs to the environment, no impact on traffic.. If we add 1000 new residents, the city wouldn’t notice and we’d be back in the red. Past development, especially Pt. Edwards, proves that.

    Since the residents who are already here are not paying enough to keep the government going, we need to bring in new residents who will do the right thing and cover our share for us. The proposed Burnstead residential neighborhood development offers a clear choice: we can have 27 new asphalt driveways, 27 more impervious roofs, 75 new cars, and 55 wonderful, problem-free new children … or an expensive soccer field the city has to take care of year after year.

    Why are residential development the opposite of soccer fields ? Because residential development has only has benefits and no costs, while soccer fields have only costs and no benefits.

  3. Steve, Interesting comments and food for thought. They do show that it is time for the varies factions of anti developement and developement need to work together to come up with ideas that work for both. Without reit money provided by development you cant afford soccer fields and without soccer fields you dont have the qualitity of life people want. No easy answers. So lets work together and not just say no.

  4. I agree that we have to work together to bring in more housing but still have benefits for our citizens beyond property taxes. Keeping a lower profile for condos near the water would be more palatable. I have not heard people favoring a 5 story wall of buildings in the Harbor Square area. Have we had a study that shows the financial feasibility of building three story buildings instead of five? With regard to “no benefit” from a soccer field, I see great benefits, but can we afford it? That’s the question.

  5. I know there is a lot of talk about development in Edmonds, But as I recall, there are many areas of Edmonds that are not on the waterfront, and could use some major redevelopment. Why not come up with a plan for condo/business communities in these areas and let those residences have the enjoyment of making a 5 minute drive to downtown and the waterfront It is a selling point to live near this! Once you take over our waterfront area with 5 story condos it can’t be undone. How is it that the bank on the corner of 3rd and main was JUST Built as a ONE story building? Our town can survive if we don’t ruin what most of us enjoy about living here (the waterfront, downtown, and the views) Look at real estate adds, with their agents praising our downtown charm, restaurants, and waterfront area (most of those restaurants are in one or two story buildings)
    As June Miller stated above, “Once lost, you can never get it back”
    We need to be smart about the money we do bring in as well.
    On a side note, did we taxpayers actually pay for the awful road surface on 5th avenue going up and out of Edmonds? I guess good help is hard to find…

  6. It’s really a very clear choice that every Edmonds property owner must decide. Either we agree to pay more taxes or we allow for increased development . The property owners in Edmonds can afford to pay more to fund our schools our police ;fire ,EMS. road maintenance, city government and the flower program. oops and our first class library.
    We can afford more but so far anyway we have decided as a group to let things all throughout our city to fall into disrepair. As we collectively continue to bury our heads in the sand the city is begining to crumble around us. I say we vote ourselves a modest tax increase encourage responsible development and keep the current height limit in Downtown Edmonds as is. No taller buildings downtown.
    Dave Page

  7. I’m with Leslie, what is the big push to have redevelopment down town? This city has been arguing about height limits for years. It’s pretty clear the people who live here do not want taller buildings! Only the developers want taller buildings so they get more revenue. I do not want our city to have a “Kirkland” feel. Edmond’s is known for its small town charm. Lets keep it that way.

  8. Aside from the post office property there is no redevelopment, that I’m aware of, being talked about for our downtown. The Port is planning the redevelopment of Harbor Square. There are concepts being discussed for Westgate, Five Corners, and Firdale Village.

    The paving on 5th as a result of a new sewer line is temporary. It will be redone properly when better weather allows it.

  9. Looking at the assessed value for one down town building you find the land is valued at about a $1m and the building has a value of $1m or a combined value of $2m. So the cost per floor in that building is $2m. If a second story is built for an additional $1m the embedded cost for that building is a total of $3m or $1.5m per floor. Going to 3 stories makes it $4m total or $1.33m per floor. Each added floor makes the cost per floor lower because the land cost is spread over more floors. So a 3 story building can have a lower rent per square foot than a 1 story building by about a factor of 30%. The cost of land in the bowl is much greater per square foot than outside the bowl. The challenge then becomes how land owners remain competitive in the bowl if they have to spread the cost of the land over a smaller building. What would be interesting is for a land use expert to put together some numbers for areas around town and around our neighboring areas in south Snohomish county. That may tell us all some of the economics about land use to help us see what the tradeoffs may be. There appears to be a cost to keep our small town charm and that cost may well be more taxes.

  10. With all the “for lease”and empty spaces around town, it seems like almost a joke that developers are still talking about building and “redevelopment”. This has been the answer around the country for ten years now, and all we have at the end of that is a lot more empty spaces and developers continuing with something that didn’t work……well, except for the developers to continue making money. We need to get creative and figure out businesses for those empty spaces. here now…..This is a dynamic community with a lot of creativity……

    Lets please not tear down more of Edmonds to please these developers who I would say have a conflict of interest. …….so do real estate entities!

  11. Darrol’s comments are not theoretical, they are reality. A current situation exemplifies what he has said. The owner of the post office property wants to construct a multi-use building on the property’s parking lot (that previously was used by mail delivery vehicles). The existing height limit will allow for the first floor to accomodate a smaller post office and some commercial spaces. The second and third floors will have apartments. If he’s allowed to build only 4 feet higher, blocking no views, he could have a third floor of apartments. Having that extra floor lowers the sq ft cost of the project, and would enable the owner to lower all of the apartment monthly rental charges by about $200.00. So Edmonds would not only get more property taxes, we would also get badly needed more- affordable housing.

  12. Ron,
    You must have some answers since you were on the committee for the Harbor Square Redevelopment, With the 5 story plan: how many housing units? What would the number be if 4 story;what is the number with 3 story buildings. I’d like to see the numbers. I also wondered how the plan is child friendly with the marsh close by and the railroad tracks also close by. Another question, how high are the tallest buildings at Point Edwards?
    Thank you. I appreciate your research on condos.

  13. Barbara:

    Lots of good questions. The conceptual buildings for Harbor Square are 3, 4. and 5 stories; the tallest ones border the marsh. The Port’s guiding principle for this redevelopment is that the built out portion of the property will be the minimum amount needed to provide a developer a reasonable profit. There’s a goal to have as much open space as feasible. The Port hired a consultant that did the financial analysis for different scenarios. I do not have this detail, but if you call the Port they’ll be pleased to give you all of the info that you’re looking for.

    I believe, but I am not certain because the project was approved before my time on city council, that the Point Edwards development had to comply with the 30 feet height limit. The buildings all have parking garages and 3 floors of condos above. Because the project is on such a steep sloop, the downhill side of each building will be higher than the average height limit – the city determines height by averaging the elevations of the building site’s four corners.

  14. Question for Dave Page: What are all the city properties etc. that are in disrepair. I voted for the street levy, but I had people question what streets were most in need of repair. So any enlightenment on what you can point to in items in disrepair would be helpful.

  15. @ 13 Barbara, at a public meeting last Thursday the port reinterated some of the residental numbers and size data. This data has been a part of at all the public meeting I have attended over the last 2 years. The concept plan as shown has around 300 residential units with an average size of 1200 square feet. Some will be 900 square feet and others larger. The location of HS with access to transportation could make the HS development a transit oriented one. Live in Edmonds and commute to DT Seattle. Walk to the train, walk home, shop in the shops in HS and you may be able to go days without using a car. The port has shown data about the concepts showing the amount of square footage planned for retail, living, and office. I am sure a call to the port would get more details to the concepts they are proposing and from that you could figure out what would change if a building lost a floor. This property belongs to all the people who are in the Port District and the Port has stated that the design principles they used is to just make the project concept “pensil out” not to create a concept that maximizes profit. The plan it is find a way to redevelop HS in the most responsible way possible to avoid leaving HS as is and see an erosion of tenents, and value to the owners, the tax payers in the Port District.

    All the questions are good one’s and as the Port continues to hold public meeting you are all urged to attend, ask questions and help shape how we may use this publicly owned land.

  16. Wondering how this will all fit in with those 19 daily coal trains passing by, or are we to assume that developers have not heard about this.

  17. Barbra:
    I didn’t say buildings I said things Barbra, without an increased income for our city before long we will all see the signs of deterioraton. We can only operate for so long with higher .demand and less money until something must give. Maybe that’s just my opinion but I think most city department heads would agree. We are dancing very close to the edge
    Dave

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