Mount Rainier eyes new tax bracket for small apartment buildings

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Mount Rainier City Council is considering a proposal to create a new property tax class for small apartment buildings. If seen through, the new property tax class would permit City Council to tax small apartment properties at different rates than other classes of real estate in the city, with an eye toward lowering their tax rate below that charged for larger apartment complexes. But the idea has a major policy obstacle to overcome to win the support of City Council members, who otherwise seem in favor of the concept.

The obstacle facing City Council is deciding where to draw the line between small and large apartment complexes, and how to do so without creating a tax class that could benefit large real estate companies if the city lowered the tax rate for small apartment buildings. Mount Rainier City Councilor Celina Benitez, who introduced the proposal on Mount Rainier’s Feb. 16 City Council meeting agenda, suggested 150 units or fewer as the dividing line, but she said she was open to discussing it further. Councilor Bryan Knedler said he thought the limit should be lower.

“I am not at 150. Those are corporations. I am down for maybe 25 units,” said Knedler during the meeting.

Mayor Malinda miles agreed 150 was likely too large for her comfort.

“If I look at Rainier Manor, it has 150 or 140. They are owned by Humphrey Management, and I am not fixing to give them that tax class,” said Miles. “We were talking about the person who owns a 25 unit building, like the Singer building. I am not even sure we should give it to them. Corporations own half of the buildings in my city. So we need to come up with some parameters or else I would be voting against that.”

Councilor Luke Chesek suggested an even-lower limit.

“I think we were talking about 10 or 5 [units],” said Chesek, referring to earlier discussions around property tax classes for apartments. “Our focus was also houses that were converted to apartments.”

But Miles strongly objected to creating a tax class that might benefit well-heeled corporations.

“If you are Humphrey Management and you have an apartment with only 10 units, I still don’t want that tax class for you,” said Miles. “If a real big corporation owns 10 small apartment buildings in Mount Rainier, they are not small apartments to me.”

This hurdle also vexed Councilor Scott Cecil, who first got involved in city politics during debate around a similar proposal in 2019 that divided city real estate into five tax classes and resulted in City Council raising taxes on all apartments while cutting them for single-family home owners.

“I thought this was going to be so cut and dry,” said Cecil. “I haven’t really thought about huge mega corporations. Maybe their building only has eight units. Do they really deserve a different tax class?”

The idea to carve out a new property tax for small apartment buildings class has its roots in Mount Rainier City Council’s 2019 decision to create separate property tax classes for apartment buildings, single-family homes, townhomes, commercial and industrial properties. Previously, all real estate in the city was taxed at the same rate. Most controversially, the 2019 proposal lowered the tax rate for the city’s predominantly-white and wealthier single-family home-owners and raised the tax rate for the city’s apartment properties, which house a population that is majority African-American and extremely cost-burdened when it comes to housing.

Former Mount Rainier City Manager Miranda Braatz said at the time the apartment tax hike was needed in part to fund the police department, which Braatz alleged was spending a disproportionate amount of resources responding to calls at the apartment complexes. A Route 1 Reporter analysis found most police activities take place in the city’s commercial corridors along Rhode Island Avenue and Queens Chapel Road.