MID BIA Renewal:
gET tHE fACTS
WHAT ARE BUSINESS IMPROVEMENT AREAS (BIAs)?
Business Improvement Areas are funding mechanisms for business district revitalization and management. Local stakeholders oversee and fund the maintenance, improvement, and promotion of their commercial district.
BIAs in Washington State are established pursuant to RCW 35.87A
LEARN MORE about BIAs in Seattle
The City of Seattle's Office of Economic Development (OED) administers nearly a dozen BIAs
Contact Phillip Sit, City of Seattle BIA Advocate: firstname.lastname@example.org or call 206-355-2068
The Downtown Seattle Association (DSA) serves as Program Manager for the Metropolitan Improvement District (MID) BIA
CLEAN, SAFE & SUSTAINABLE
We all want Downtown Seattle to be clean and safe. How we get there MATTERS!
NOW is the time for our City Council, the MID Ratepayer Advisory Board and DSA as the MID Program Manager to truly re-imagine the program as has been promised.
Want to Know More? CONTACT & SUBSCRIBE to UPDATES
Only 40% of MID BIA Ratepayers voted to approve the renewal petition.
WA State law allows Business Improvement Areas to be renewed based on percentage of Ratepayer assessment base instead of Ratepayer popular vote.
The Seattle City Council will vote to approve a new ordinance in May 2023.
Sign up for remote public comment Wednesday, 4/12 @ 0730
The Economic Development Committee meeting beings at 9:30
Email representatives from the Office of Economic Development (OED):
OED is ultimately responsible for ensuring equity and accountable program administration
WHY SHOULD I CARE? ...
The MID BIA boasts the largest budget of any BIA in Seattle
MID BIA assessments proposed by DSA will total ~$250,000,000 over the next decade.
MID BIA assessment revenue growth is exponentially higher than inflation and City tax growth.
The 2023 renewal petition contains most of the same errors, inconsistencies, and inequities that have already resulted in a $10,000,000+ assessment gap since July 1, 2013.
Ratepayers are being simultaneously: under-assessed, over-assessed and not assessed at all.
Ratepayer delinquencies since 2013 exceed $3,000,000 and keep growing every year.
LEARN MORE ABOUT THE CONCERNS... (click here to expand)
Critical nuances of BIA implementation since 2013, driven largely by myriad assessment ceilings, are set to be copied and pasted into another decade of the MID BIA. Assessment ceilings simultaneously create unequal and inequitable discrepancies between similarly situated Ratepayers (+- $15,000/year).
100% of condominiums and co-ops are assessed for office, retail, restaurant and commercial space
36% of apartments and hotels are NOT assessed for 1,506,000 net square feet of office, retail, restaurant and commercial space
Annual assessment value of unassessed square footage: $362,000. That's $4,000,000+ for the next decade.
Consider AVA Belltown and Olympus apartments, owned by Avalon Bay and Equity Residential, respectively, that combined have a market cap of over $50 billion. One wonders why they aren't paying for the 20,000sqft of ground floor space at their properties while the 8+ condominiums within two blocks of them are assigned Ratepayer parcels assessed thousands of dollars a year the same situation.
The average difference between similarly situated Ratepayer parcels paying the Base Assessment vs. the SqFt Ceiling is 28.71%
Increasing the Residential assessment ceiling disproportionately impacts condominiums, 85% of which are assessed this ceiling
Only 45% of luxury and market rate apartments pay the residential ceiling
Only 61% of Hotels pay the Hotel assessment ceiling
Parcels owned by the University of Washington, including ultra-luxury Rainier Square, that are built and managed by large, for-profit companies, have paid half of the nominal assessment rate for the past decade. The difference? Over $260,000/year.
HOW DOES THE CURRENT ASSESSMENT CEILING MODEL WORK?
RATEPAYERS ARE ASSESSED THE LOWEST OF SEVERAL CEILINGS: Consider 3 unique 100,000net sqft Apartments:
Apartment A = 20 units of 5,000sqft each. Assessed @ Apartment Ceiling of $155/unit. TOTAL ASSESSMENT = $3,100
Apartment B = 100 units of 1,000sqft each. Assessed @ Apartment Ceiling of $155/unit. ASSESSMENT = $15,500
Apartment C = 300 units of 333sqft each. Assessed @ Base Assessment -OR- SqFt Ceiling. ASSESSMENT = $21,000 or less
HOW COULD THIS MODEL BE IMPROVED? Combine assessed value and square footage to create a uniform valuation methodology eliminating the binary approach to assessing properties based on ONE criteria: Value vs. SqFt vs. Unit Count, etc.
WHY? Does Apartment A with only 20 units benefit 5x to 7x LESS than Apartments B and C with 100 units or 300 units, respectively?
Did you know that Apartment A has a King County assessed value equal to or exceeding assessed values for Apartments B and C?
If it's all about unit count, Apartment A should pay 5x less than Apartment B and 15x less than Apartment C.
Put another way, Apartment C should pay at least $46,500 instead of only $21,000.
The current assessment model overwhelmingly benefits larger developments with smaller units / rooms.
Condominiums: residential (nonprofit) condominiums and commercial (for profit hotel, office, retail, etc.) condominium parcels are assessed as separate Ratepayers, generating more revenue for the BIA.
Apartments & Hotels: residential, for-profit apartment parcels and nearly all hotels are assessed as a single Ratepayer with their mixed use hotel, office, restaurant and retail spaces, reducing revenue to the BIA.
> 1,500,000 net sqft of commercial, retail and restaurant space in mixed use apartments and hotels reduces MID BIA assessments by $361,000/yr @ $0.24/sqft.
Open Letter: MID BIA Renewal Questions and Concerns
BIAs are intended to augment and supplement City services, not to replace them
MID services primarily provide for cleaning alleys and sidewalks, but also oversee certain City Parks and pay ~$2MM for security services including off-duty SPD overtime up to $150/hr
MID services appear to enable complacency from the City of Seattle
The MID BIA budget, borne entirely by Ratepayers, is 0.224% of Seattle's $7.14B budget in 2022
During the July 14, 2022 MID BIA renewal meeting coordinated by DSA, Jon Scholes responded to a question about the long-standing lack of City services stating that "we can't accept what the City has been providing," yet the MID: 1) is not authorized to campaign for change or lobby elected officials and 2) continues to assume additional levels of responsibility for 'core' services like safety and parks and for what many taxpayers consider essential to operating a built Downtown environment: clean public spaces.
Despite the same physical footprint, BIA assessments have increased nearly 300% while inflation has risen 36% since July 1, 2013
Assessments grew at an average 7.5% CAGR between 2018 and 2022
Draft recommendations for the renewal suggest 15% year-over-year assessment growth to an $18,000,000 budget
What business needs justify doubling the annual assessment growth rate?
Assessments should be more closely tied to inflation instead of increasing exponentially within the same footprint
If you wonder where your assessments will go, look no further: DSA is plugging the Seattle City Council with grand ideas for 3rd Ave.
Tree-lined 30' sidewalks sound lovely, but our City cannot appropriately care for our existing parks and public spaces. Look no further than Bell Street Park and Regrade Dog Park.
Ratepayer Advisory Board (RAB) members do not actively communicate with the Ratepayers they are supposed to represent
Ratepayers have no opportunity to vote for RAB members who they believe will best represent their interests
Over 95% of the 75 Downtown Seattle condominium Ratepayers have never heard directly from their representatives
Communication from DSA and the RAB is often reactive and based on a self-service model instead of proactive engagement
The renewal process is being driven by DSA (the Program Manager) through a closed process
99% of Ratepayers lack access to all the information driving renewal recommendations
BDS Planning was retained by the Downtown Seattle Association (DSA) in similar fashion to the renewal process a decade ago
DSA has called the renewal a "re-imagining" process despite a lack of transparency and imagination
The proposed services and assessment structure for the next decade is a rinse and repeat of what we already have
Ratepayer committee members assigned to assist with the renewal stated there is a "lack of political will" for change
See what DSA has to say on their MID Renewal page
Certain Ratepayers receive special rates
Surface lot parking Ratepayers (example) have enjoyed inflation-free assessments during the past decade
The Edgewater luxury hotel (232 rooms) has been assessed less than $500/yr despite a stated rate of $80/room ($22,586.73 with inflationary adjustments this assessment year). Cumulative under-assessment since 2013 = ~$200,000
The Thompson Hotel (158 Rooms) and Sequel Apartments (93 Units) are assessed a single rate at the Hotel Ceiling totaling $15,382 in 2022.
The assessment excludes 93 apartment units that would be subject to a 2022 Residential Ceiling rate of $14,147
How does this assessment methodology align with the rest of the MID BIA?
Condominium properties that share space with hotels, such as Olive 8, are assessed as separate Ratepayer parcels.
Hyatt at Olive 8: 346 Rooms are Assessed $33,685
Olive 8 Residential: 229 Condominium Units are Assessed $34,835
TOTAL Assessment for 2022 = $68,520
Some Ratepayers simply don't pay
Martin Selig properties owe $2,400,000 in back assessments, penalties and interest
Additional Ratepayers owe over $1,350,000 dating back to 2013
The City is responsible for collecting / enforcing the Ordinance, but doesn't seem up to the task
DSA has been unwilling to provide timely access to critically important records related to MID BIA operations
DSA refused to fully comply with this record disclosure request (PDR) initiated in December 2021
DSA has a private interest in renewing the MID
DSA has served as the incumbent Program Manager for over two decades
Failure to renew the MID would be a massive blow to DSA's influence in Seattle
READ THE EDITORIAL
eXAMPLE ASSESSMENT ALIGNMENT ERRORS
General Assessment Errors & Inconsistencies
The City and DSA have a responsibility to correctly assess all Ratepayers.
MID BIA assessments have been calculated based on over 100 'data fidelity' errors totaling $894,000+ in over-assessments between July 2019 and June 2023. LEARN MORE
Ordinance 124175 Section 12. Disputes. Any Ratepayer aggrieved by the amount of an assessment or delinquency charge may on request obtain a meeting with the Director or the Director's designee. If not satisfied, the Ratepayer may appeal the matter to the City's Hearing Examiner in the manner provided for a contested case under Chapter 3.02 of the Seattle Municipal Code. The Ratepayer has the burden of proof to show that the assessment or delinquency charge is incorrect.
The City is aware of these assessment errors and refuses to correct them according to its own Citywide BIA Policy.
Ordinance 124175 Section 13. Audit. The City may conduct random audits of Ratepayers to ensure that assessments are being properly calculated and reported.
The City admits that it has not thoroughly audited the MID BIA program and/or Ratepayer assessments to ensure they are correct.
Assessment Inflation Discrepancies
Approximately 37% (460+) of the 1,251 MID BIA Ratepayers are subject to the Base Assessment Formula
Ordinance 124175 that established the current BIA contains a mathematical error relating to the Inflationary Factor
Ratepayers have been under-assessed ~$500,000+ for assessment years '20-'21, '21-'22 and '22-'23 and over $1MM since 2013.
DSA architected the current Ordinance and the City has refused to address known 'fidelity' errors.
Section 3.5 of the MID BIA Bylaws (adopted and updated in 2013) states that Board members serve three (3) year terms with a two (2) consecutive term limit. N.B. 8 current RAB members have exceeded this limit.
Multi-family residential Rateapyer assessments (21.72% of 2021 figures) are woefully underrepresented by holding only 11.5% of RAB positions. Furthermore, owners and managers of multi-family residential housing (multi-billion dollar REITs, the CWD Group, etc.) do not represent market-rate apartment tenants, low-barrier and/or rent controlled unit tenants, nor condominium unit owners.
Business owners, nonprofits and voluntary Ratepayers and others hold 25.7% of RAB positions yet pay 0.38% of the assessments.
VOICE YOUR THOUGHTS and constructively engage about the MID BIA renewal...