Another new rule regarding microhousing units is about to go before the City Council. With two micro buildings open here, two more under construction, and one in the pipeline, you might find it of interest.
BACKSTORY: Right now, if a microhousing building is eligible for the city’s Multi-Family Tax Exemption tax-break program, the maximum rent and income eligibility numbers are the same as for studio units in non-microhousing buildings. A proposed rule change going before a council committee this week would lower those numbers for microhousing – now formally known as SEDUs (small efficiency dwelling units) –
The MFTE program, explained in full here, currently involves more than 140 of all types around the city. Participating property owners must rent out at least 20 percent of their units at a city-set affordability level, and in exchange, they don’t have to pay property tax on the residential portions of their buildings for 12 years (they DO keep paying the tax on the land and on any non-residential parts of the structure, such as retail space).
The current list of participants of all types, citywide, includes both completed West Seattle microhousing buildings, Footprint Avalon I (3266 SW Avalon Way) and Footprint Delridge (4548 Delridge Way SW). (The exemption is only available in certain areas.)
WHAT WOULD CHANGE: It’s explained in a memo to the council – here’s an excerpt:
What prompted the need for this legislation?
* In 2014, the Council passed an ordinance establishing SEDUs as a new unit type, distinct from other unit types. Because existing Code does not set affordability requirements specifically for SEDUs in MFTE, the MFTE program would regard a SEDU as a studio, restricted at 65% of AMI. This translates to a maximum monthly housing cost of $1,004 and a maximum annual income for a one-person household of $40,170. However, typical SEDU market-rate rents are anticipated to be less than not only market-rate rents but also the restricted, affordable-rate rents for studios.
What would be the result of the lower affordability threshold in terms of affordable rent and annual income limits?
* The proposed legislation would reduce the maximum rent threshold for income-restricted SEDUs in MFTE projects to a level affordable to individuals earning 40% of AMI [area median income], resulting in a maximum monthly housing cost of $772 and a maximum annual income for a one-person household of $30,900.
Again, this wouldn’t cover ALL units in a microhousing building participating in the tax-break program – just the 20 percent required for eligibility. In some areas, this might not mean much of a change – doing a spot check online, for example, we note Footprint Avalon I is advertising rents $800-$899 right now.
Two more microhousing/SEDU buildings are under construction in West Seattle right now, 3268 SW Avalon and 5949 California SW, with another one planned at 3050 SW Avalon. Both of the latter have been approved for participation in the MFTE program, according to this report to the City Council last spring (which also includes data such as how much tax was *not* collected because of the exemption – scroll all the way down the document). The proposed changes will be discussed when the council’s Committee on Housing Affordability, Human Services, and Economic Resiliency, chaired by Councilmember Sally Clark, meets at 9:30 am this Thursday (February 5th) at City Hall.
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