A controversial tax exemption for a local development is on its way to full approval.
The Bend City Council approved a request for a 10-year tax exemption of approximately $10.6 million for mixed-use development, Jackstraw, on Jan. 3. The developers, Killian Pacific, requested the tax break through the City’s Multiple Unit Property Tax Exemption program, which incentivizes multifamily housing. The development still needs approval from Bend-La Pine Schools on Jan. 9 to get the full $10.6 million tax exemption it is seeking.
To qualify for the program, a project seeking an exemption is required to have three or more residential units, multiple stories, justification for the elimination of any existing housing or businesses on the site and provide at least three public benefits, including at least one priority public benefit.
In its application, Killian Pacific proved to have a number of these requirements, which ultimately led Deschutes County, Bend Park and Recreation District and the City of Bend to approve the application. Jackstraw, which started construction in April 2023, submitted a review by PNW Economics, stating that it would not be financially feasible without the tax exemption – another requirement for the MUPTE program.
“If it weren’t for MUPTE, we would not be able to proceed with this project,” said Michi Slick, a director of development at Killian Pacific.
Jackstraw started construction before applying for the MUPTE, a point of contention for some community members who wondered why the developers began before applying for the program. Mayor Melanie Kebler asked Slick at the Jan. 3 meeting why they started construction when they did. Slick explained that most programs like MUPTE are typically compliance-driven, meaning they would just have to meet the requirement to receive the exemption.
“We did not understand that there was a discretionary review by all of the taxing districts, and we did not learn of that until a few months ago, and so that is why we started construction, we did not perceive that there was going to be actual risk of us not receiving this tax exemption,” said Slick. “If we had been aware of that, we certainly would not have started construction. There is no chance that we would have done that.”
To avoid future confusion, the city council advised City staff to review the MUPTE program, to establish clearer parameters. On Jan. 17, the City will have a joint work session regarding the program.
“As for MUPTE and its requirements, the community has raised their concerns and council has taken that very seriously,” said Jonathan Taylor, the City’s urban renewal manager. According to Taylor, the City will review whether the steps required are too confusing, whether the barriers to entry are meeting the city’s needs or if they are set too low, and how to maximize community benefit.
Resident and owner of local Box Factory business Immersion Brewery, Sean Lampe, also had concerns about the project, which he voiced to locals through social media.
“The new construction and removal of the majority of our parking spaces has had a devastating effect on tenant and decimated our business,” wrote Lampe in his post. “Seeing how they let the Box Factory decay, it’s safe to assume that they have no interest in community building.”
Lampe argued that the construction of the Jackstraw project was disrupting the parking and breaking up traffic. “There’s one entrance and one exit that’s very narrow,” Lampe told the Source Weekly. “It’s this ongoing frustration. They won’t even do the simplest things like get us better signs,” said Lampe.
Lampe, who was already against the construction, did not think Killian Pacific deserved the tax exemption. “I’m very much in support of supporting affordable housing. But luxury housing, I can’t find any real evidence that that’s good for a community,” said Lampe.
On Jan. 3, Kebler expressed her support for the project, stating that it met all of the MUPTE requirements. However, she advised Killian Pacific to pay more care and investment to the local businesses suffering because of the construction. “I would really like to see Killian step it up on the impact of it,” said Kebler. “You saw the way that the community supports our small businesses and wants to see them succeed and wants to make sure that this is not going to impact them so poorly that they can’t exist.”
City Councilor Mike Riley, the one vote against Killian getting the tax exemption, shared his support for multi-housing developments, but ultimately decided that he couldn’t approve the project. “My conclusion is that the decision of Killian Pacific to begin construction prior to submitting the MUPTE application made it clear that this project, with all of those benefits, is financially viable without the MUPTE,” said Riley.
Riley, the executive director of local nonprofit, The Environmental Center, mentioned at the start of the Jan. 3 meeting that Killian made a contribution of $5000 to his organization in December, which he opted to return. “It allows me to fully engage in the deliberation and decision-making tonight on Killian’s application for tax exemption, which I intend to do.”
Councilor Athony Broadman disclosed that he also recently received two campaign donations from employees of Killian Pacific. While he did return the donations, he decided not to participate in the agenda item. “The timing of the contributions could give the appearance of unfairness,” said Broadman at the city council meeting.
“We would like to express our gratitude for the time the City Council dedicated in their recent meeting. We genuinely appreciate being a part of the Bend community,” a Killian Pacific spokesperson told the Source Weekly in an email.
This article appears in Source Weekly January 4, 2023.
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Again, the city council and city has allowed developers to have their way and without regard for the impact to community members and businesses. The Jackstraw development met the requirements for this tax deferment but there are two issues here. One is that they are a very sophisticated developer and they know the processes and how they work and they should not be able to get this tax exemption after construction has already started. With the money involved in developing this project they would not have started construction if it was not viable. Mike Riley is correct they don’t really need the exemption. I would like to commend Mike Riley on his very thoughtful comments and his vote of no. Secondly, although they met the requirements, the bar of MUTPE is extremely low and that is on the city. They will have housing units, over 300, and only two will be “affordable” and these are for the childcare workers in the childcare center in that development. We need affordable housing not unaffordable high rise apartments. Our city council is completely out of touch. Teachers, mail carriers, servers, and people working in that development will not be able to live there. The city is creating this urban center where only wealthy people will be afforded to live. The City Council voted to approve this change but there were no real demands placed on the developer, only said expectations. This developer needs to be held accountable to be a good neighbor to both the tenants in the Box Factory as well as community businesses and residents around the area and there should have been stipulations in place if they were to receive this tax deferment. Lastly, Anthony Broadman recused himself from the conversation and I truly feel if a City Councilor can not be fully engaged in important decisions such as this, he should resign his position and focus solely on his running for the Senate seat and being a politician. We don’t need politicians running our city, we need community members who are stewards and can be fully engaged in our city.
What the heck! Another poorly thought out decision by council in support of a giant vanity project. Killion Pacific did not need this break. In fact the project was already underway. Our tax dollars are easy come, easy go in council’s eyes it seems.
We need housing for all income categories; we now have a report showing retired, well-heeled Boomers now preferentially choosing Bend. When they move to developments like Jackstraw they free up housing that is more affordable for the rest of us. The City Council was faced with a Hobson’s choice: Either reject the MUPTE and lose 300 much needed housing units–or grant it and create a political firestorm. I think that the financial predicament of Killian-Pacific is real; an independent auditor verified that to be the case. I don’t see any evidence of corruption or political shenanigans at play here. My understanding is that the leadership of Killian Pacific has been reaching out to its small business tenants to resolve some of the complaints.
With the latest project approval over by the Old Mill, Bend has really created a monster. The MUPTE program is a route for developers to claim financial issues and gain a 10 year tax exemption. The stated qualifications for approval appear to negatively incentivize fiscal mismanagement. If a project shows 6% or less return on investment the developers qualify for the tax break.
Since when is the city responsible for guaranteeing private investment on the backs of long term residents (see latest transportation fee, school bonds, etc)?
Additionally the applicant could do as little as providing open park space on 10% of the acreage to meet the priority benefits requirement. How is that helping people who need low or mid income housing? The only people benefitting from the MUPTE are landlords who buy the building, manipulating rent annually, and paying no property taxes for 10 years.
I think MUPTE missed the point. It’s disingenuous.