New apartment complex project looks to cut costs

by: TIDINGS FILE PHOTO: JORDY BYRD - Construction of Trillium Creek Primary School in West Linn and Lowrie Primary School cost the district about $16 million. The West Linn-Wilsonville School Board denied a construction excise tax (CET) exception request by Parker Development Northwest Inc.

Owner Jeff Parker requested the exemption before the school board on Dec. 6.

Parker Development Northwest Inc. builds custom homes and housing developments. Parker requested the exemption on his property located across from Albertsons, at the northwest corner of Blankenship Road and Tannler Drive in West Linn.

The property is approved for office space; however, Parker hopes to construct a mixed-use apartment project.

“I’ve been working on the project for about a year and a half,” he said. “It’s been very difficult to try and get this project going. The market on the office building is gone. Right now there is no other use for the property.”

In order to move the project forward, Parker requested that the school district exempt the CET fee — meaning Parker Development Northwest Inc. would pay the school district $108,103.67 instead of $264,168, based on the anticipated number of units — about 91 — that may house children.

Parker said the Trammell Crow Company of Portland is interested in investing in the residential project, but its permit fees cannot exceed $16,000 per unit.

“I’ve been able to work with the city and I’ve been able to get it down fairly close to $16,000 per unit,” Parker said. “Now we are down to this CET fee. I’m trying to figure out a way that we can work together here.”

The CET falls under the jurisdiction of Senate Bill 1036 and is an intergovernmental agreement to collect and remit tax between the school district and the city of West Linn.

The tax is collected by the city or county and is paid by the person undertaking the construction at the time a building permit is issued. The city or county collecting the construction excise tax then passes on the funds to the school district.

The Oregon Legislature passed Senate Bill 1036 in 2007 to help growing school districts pay for a portion of the cost for new or expanded facilities needed to accommodate growth. Senate Bill 1036 allows school districts — in cooperation with cities and counties — to tax new residential and nonresidential construction.

The law exempts private schools, public improvements — schools, libraries, fire stations — affordable housing, hospitals, religious facilities, agricultural structures and limited developments on environmentally contaminated sites.

The total amount a school district may collect varies based on the amount and type of new construction in the district. School districts may collect a maximum of $1 per square foot of new residential construction and 50 cents per square foot of new nonresidential construction, which is subject to a cap of $25,000 per nonresidential project.

Dale Hoogestraat, vice chairman of the West Linn-Wilsonville School Board, said he feared the CET exception would set an unfair precedent and that the CET collection fees seemed reasonable.

“I mean, I don’t know what your building costs are ... but the dollar a square foot seems to be not that onerous,” he said. “I understand your investors need to get the total cost down, but particularly in a district like ours, that seems to be a fair number.”

Board Chairman Keith Steele agreed.

“This is a quality school district,” he said, “the best one in the state, and I say that without any reservations. It’s a place that people want to come, but it doesn’t come inexpensively.”

Steele reflected on the district’s recent construction of two new primary schools, which cost about $16 million in construction costs alone.

“When you divide that into the capacity of those schools it comes out to more than $30,000 per seat,” Steele said.

Parker’s proposal assumes the maximum of 91 children that would be added into the school district if his project were to proceed. Steele said the cost-to-gains ration for both taxpayers and the school district did not warrant the CET exemption.

“It seems like the bargain of a century,” he said. “Your funders hopefully will realize that this is a place where people will want to come and that is something that is well worth the small amount of money you will have to pay.”

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