Seattle Metropolis Council is contemplating laws that would significantly change Seattle’s Multifamily Tax Exemption program. Since 1998, varied variations of this system have supplied multifamily housing builders a property tax exemption in trade for setting up properties wherein at the very least 20% of the items are reserved and inexpensive for moderate-income households — those that can neither afford market rents nor qualify for conventional sponsored housing.
The council ought to reject this proposal.
I labored in Seattle authorities for almost 20 years, together with greater than a decade on the Workplace of Housing. I believed then, as I do now, that ample housing provide, when coupled with sturdy insurance policies and applications to advance fairness and affordability, are key to our metropolis’s well-being.
Once I was assigned to supervise the MFTE program in 2012, new metropolis audit findings asserted that this system was poorly structured and loosely administered. We on the Workplace of Housing, along with the Metropolis Council, set about introducing some much-needed rigor. We progressively tightened the earnings and lease thresholds for the inexpensive residences and adjusted many administrative particulars. We devoted ourselves to a cautious balancing act: a program that ensured significant public advantages whereas nonetheless attracting enough curiosity from the event group.
Over time, builders’ participation in this system has remained sturdy, aligning carefully with the general actual property market. Final yr, beneath current program guidelines, a file variety of MFTE-supported buildings accomplished building. Of their 4,621 items, 961 are put aside for and inexpensive to individuals with incomes from $38,600 to $112,000, relying on family measurement. Month-to-month housing price limits for the inexpensive residences constructed beneath current guidelines vary from about $965 for a small studio to $2,640 for a two-bedroom. Averaged throughout these unit varieties, MFTE lease limits are 25% decrease than market-rate rents in residence buildings constructed since 2020 — although price financial savings to MFTE renters range extensively by neighborhood and unit kind.
The brand new proposal would crater these outcomes at the same time as this system’s yearly compounding prices proceed to extend. In 2024 alone, Seattle’s MFTE program generated tax income losses of over $39 million. Individually that yr, $80.4 million of property tax burden shifted to nonexempt Seattle taxpayers, or about $145 for the proprietor of a median-value dwelling. The query public servants and elected officers should ask is whether or not the general public profit continues to be price it.
As I assess the proposed adjustments, I’m pressured to conclude that the reply is not any. The proposal would, amongst different detrimental points, chill out current affordability requirements, with lease limits for “inexpensive” MFTE items rising by 14% to 22%, relying on the unit kind — typically indistinguishable from market rents. The laws would considerably undercut annual lease improve protections for MFTE renters. It will minimize software charges that fund the very oversight actions we created in response to town auditor’s prior critiques. And it could permit builders of each constructing already within the MFTE pipeline to proceed beneath the brand new, much less renter-friendly guidelines, even for initiatives which are evidently possible and beneath building beneath current MFTE guidelines.
Doubtless, new housing provide is crucial, and present market circumstances are powerful. Structural issues like excessive rates of interest and inflation make it exhausting to finance improvement that would have simply moved ahead three years in the past. Sadly, the proposed laws seeks to handle these circumstances on the backs of moderate-income renters.
Some builders allege that with out the proposed adjustments, they received’t take part within the MFTE program anymore. That’s OK, for should you cut back this system’s public profit necessities to the extent that the tax incentive pays off for each developer, on each undertaking, each time, you understand you’re freely giving the shop. Policymakers shouldn’t take the bait. I urge Seattle residents, voters and taxpayers to talk up earlier than this costly tax exemption program is allowed to perform much less whereas costing us much more.
