The Jackstraw, the housing and commercial development being built near The Box Factory, is seeking a 10-year property tax break under a relatively new city initiative called the Multi-Unit Property Tax Exemption program.

Developer Killian Pacific, which also transformed The Box Factory from a industrial hub to a retail outlet, had to prove The Jackstraw would be unviable without a tax break. It did, and now the project could receive an estimated $10.6 million tax break over 10 years.

The approval process is not a simple one, though, and requires the blessings of a majority of the taxing jurisdictions because they all benefit from property taxes. These include Deschutes County, Bend-La Pine School District, the city of Bend, Bend Park & Recreation District and Deschutes Public Library.

The 4.6-acre property near Industrial Way and NW Lava Road will be home to a seven-story commercial and residential building with more than 300 units of housing and commercial space on the ground floor.

Despite proof of financial hardship, which the developer attributed to inflationary pressures and high interest rates during a recent Bend Park & Recreation District board meeting, The Jackstraw’s progress won’t be delayed, said Chelsea Rooklyn, a spokesperson for Killian Pacific said.

Units are slated to be available in Fall 2025, she said.

While The Jackstraw would not have to pay millions in property taxes, to some, the community benefits outweigh the lost tax revenue. Namely, the developer intends to build two affordable ground-floor housing units that are large enough to also accommodate a child-care business.

The setup will be the first of its kind in Oregon, said Rooklyn.

The park district’s board unanimously approved the exemption on Dec. 5 despite initial worries about what kind of precedent the exemptions set. However, Bend Chamber CEO Katy Brooks, who backed the project, said it’s a sensical long-term investment.

“If you’re asking more of a developer, it makes a lot of sense to give them that break,” she said.

The city’s tax exemption program requires multiple things in order for developments to qualify. A project must offer proof from a third party economist that it won’t survive without the tax break. The project must also offer at least three public benefits to outweigh the break.

The Jackstraw will have a high standard of energy efficiency with LEED Platinum Certification. It will include pedestrian and bicycle focused infrastructure like a “woonerf,” a Dutch-concept for a “living street,” and the in-home child care units that will be ready-built for state licensing and can serve up to 20 children.

“They approached me over two years ago to say, ‘What type of assets do you think would make this a real community project?’ And we talked about child care,” Brooks said.

Brooks thinks the development will be a harbinger of things to come in the area, which is the subject of large scale growth with more apartments and mixed-use developments nearby.

Bend Mayor Melanie Kebler called the development “catalytic” and a “top notch development” because of the benefits it offers.

“This is a pretty high-level project that has a bunch of other things going on besides just building housing in the core,” said Kebler.

The City Council approved the tax exemption program in August 2022 as a way to incentivize vertical, multi-unit, dense, transportation and community conscious development, Kebler said.

“I think The Jackstraw is the type of project we were looking for,” she added.

The whole idea is that even in bad market conditions, housing can move forward.

The tax break has also been approved by the Deschutes County Commission, but it needs the approval of the Bend City Council and the school board to make it official. It’ll be before the councilors on Jan. 3 and the school board on Jan. 9, said Racheal Egan Baker, the city’s affordable housing manager.

The council approved a tax exemption on Dec. 6 for apartments on the old Les Schwab Tire Center site off of Franklin Avenue. Called the Platform, the project will include two 5-story buildings with a combined 199 units.

The Jackstraw and the Platform are two of four projects to apply for the city’s tax exemption program. The others are the Hiatus development, which after presenting to the park board has gone back to the drawing board, Kebler said, and the Timber Yards development, which will include 1,600 housing units on the old KorPine site.