HomeMy WebLinkAbout10/28/2025 - Regular - Additional Doc-MFTE Presentation4ULti�FamiLy Tax
(emption (METE)
City Council Public Hearing
October 28, 2025
MFTE Types
• 8 -Year Property Tax Exemption
• No strings attached.
• City can choose to impose eligibility requirements.
• 12 -Year Property Tax Exemption
• 20% of units must be affordable.
• City must adopt minimum density requirements.
• City defines affordability with some state parameters.
• Extensions now possible.
• 20 -Year Property Tax Exemption (new)
• 20% of units must be affordable for 99 years.
• Must be located near transit with 15 -minute service.
• City must adopt inclusionary zoning.
• All MFTE projects must be in urban center (to be defined by City)
MFTE - Basics
• Developer/owner does not pay property tax on
value added to property for residential units for
8, 12, or 20 years.
• Developer/owner pays property tax based on
pre -development valuation plus value of any
non-residential development added to
property.
• The savings to the developer/owner is not lost
revenue to City or junior taxing districts. It is
shifted to the rest of the tax base
proportionately based on assessed valuation.
• Tax shift for Overlook Apartments added about
$10 to the average annual property bill.
exempted from property taxes through the MFTE,
property tax obligations will be shifted to the rest of
the tax base:
Tax exempted properties add to the
property tax levy limit...
J � '
...but these tax obligations will be
0 covered by non-exempt properties
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Year
Previous MFTE Approvals
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Affordable 12 Year MFTE Projects:
• Overlook Apartments (The Charleston
(shown)): 39 Units
• Sedgwick Apartments (Pottery Creek
Phase 2): 192 Units
• Salmonberry Apartments: 24 Units
• Plisko Apartments: 58 Units
Market Rate 8 -Year MFTE Projects:
• Sedgwick Multifamily (Pottery Creek
Phase 1): 136 Units
• The Ramsey (In permitting): 99 Units
• Blueberry Apartments: 108 Units
City Stabilized Vacancy
Stabilized Vacancy
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City
❑ Sumas
❑ Sumner
❑ Sunnysic
❑ Tacoma
❑ Tenino
❑ Toppeni≤
❑ Tukwila
❑ Tumwati
❑ Universi
❑ vancouv
❑ Walla Wt
❑ Wapato
❑ Warden
❑ Washow.
❑ Wenatcl-
❑ West Ric
❑ Winlock
❑ Woodinv
❑ Yakima
❑ Yelm
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City (Stabiliz
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Port Orcl
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Average Rent
Average Rent
$2,000
$1,500
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$1,000
$500
City
❑ Aberdeen
❑ Airway Heights
❑ Anacortes
❑ Arlington
❑ Auburn
❑✓ Bainbridge Island
❑ Battle Ground
❑ Bellevue
❑ Bellingham
❑ Black Diamond
❑ Blaine
❑ Bonney Lake
❑ Bothell
❑✓ Bremerton
❑ Buckley
❑ Burien
❑ Burlington
❑ Camas
❑ Carnation
❑ Centralia
❑ Chehalis
City (Average Rent)
$0 •Bainbridge Island
. Bremerton
a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a
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Proposed Ordinance —8- and 12 -Year
Requirements
• Projects must satisfy one of the following:
• Mixed use building (40% of ground floor or 4,000 square feet must be
commercial, half of this can be live -work units)
• Minimum 4 -story building and 40 units per acre
• Middle housing (4-12 units) on lot less than 15,000 square feet
• Structured parking (any required parking located within building
footprint)
Proposed Ordinance —Additional 12 -Year
Requirements for Affordable Housing
• 20% of Units Must be affordable
• Units must rent at 25% below HUD Fair Market Rent
• See staff report concerning request to lower this from 25% to 20%.
• Units limited to persons earning incomes between 40% and
80% AMI, depending on unit configuration.
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Pros and Cons of MFTE
• Increases housing supply helps to help prevent rent increases.
• 12 -year exemption provides rent relief to tenants.
• Helps City achieve goals (development in centers, downtown redevelopment, etc.)
• Some projects do not pencil without MFTE (423 units permitted but not moving forward). MFTE could help these projects pencil.
• New infrastructure (parks, sidewalks, road improvements, water/sewer improvements), one-time fees, sales tax, utility tax
• Can be structured to make the city more fiscally sustainable.
• Tax Shift - Tax burden for these units shifted to other property owners in Port Orchard.
• High administrative cost for affordable units
• Annual reporting
• Annual auditing
• Annual calculation of utility allowance
• Contract administration
• Application processing