City’s property-tax-break program for apartment buildings up for extension, including two in West Seattle

Almost all the sizable apartment buildings that have gone up in West Seattle in the past decade-plus are participants in the city’s Multi-Family Tax Exemption (MFTE) program. It’s a voluntary program that enables building owners to not pay property tax on the residential portion of their projects, as long as they provide a certain number of units at lower rents pegged to tenants’ income levels. Tomorrow (Friday, September 10th), the City Council’s Finance and Housing Committee looks at legislation that among other things would extend the program – otherwise, nine participating properties will expire this year, after 12 years, including two in the West Seattle Junction, Mural and Altamira. (For an example of how the exemption works, you can look at Mural on the King County Assessor website – the property’s assessed value is $47.7 million, but it’s taxed on $5.7 million of that.) The slide deck for tomorrow’s meeting says 28 apartments at Mural and 32 at Altamira have MFTE-restricted rents. The proposed MFTE changes also could mean lower rents for tenants if they meet new, lower-income levels; otherwise, they’d be grandfathered in at the current rent level. The city says the proposed updates are the result of recent changes in state law. Tomorrow’s committee meeting is at 9:30 am, online; see the agenda for how to comment and how to watch.

K September 9, 2021 (1:07 pm)

Surely there would be more impact if those properties were taxed to their full tax liability, and then some portion of those taxes were given as rent vouchers to low-income folks? This seems like a very ineffective plan that lets large apartment buildings get away with not paying their fair share.

hj September 9, 2021 (3:58 pm)

Rent vouchers do not directly address the lack of affordable housing. A low-income renter armed with a voucher would still be subject to whatever income requirements a landlord has, so they could still be priced out even with a voucher. Whereas MFTE works by setting aside a guaranteed allocation of units for low-income renters, and avoids the potential market distortions that vouchers could bring. Whether or not any of this makes any sense for the city to handle is another matter, but I just wanted to point out the differences between the two approaches.
- K September 9, 2021 (6:02 pm)
  
  Fair enough. Details aside, my point is that it seems like a FAR bigger benefit to those who own the apartment buildings (a 42 million dollar tax exemption in this case), than it is to those it’s supposed to help.
  - alki_2008 September 11, 2021 (12:06 am)
    
    Calculate the property tax of the $42 million that’s being exempted. Let’s say 1% prop tax, so I don’t have to get out my calculator, and that’s $420k annually.Then how much is the rent reduction for the 28 units? A 1/1 MFTE unit is on the website at $1500 monthly. While non-MFTE ranges from $1800-$3000 for similar floorplan, but less square footage. So, let’s take average of $2400. So $900 x 28 units x 12 months = $302k. So, the apartment benefits by a mere $118k each year. Which is not much for such a property. And that incremental amount is unlikely to be more effective for people looking to housing because the city/county will certainly use much more than that just to administer the voucher you think is better.

wsalien September 9, 2021 (2:38 pm)

A lot of the “low income” units are close to or over $2000.00 per month, is that really affordable for low income people?

WSB September 9, 2021 (3:55 pm)

This is not a “low income” program. Lower, but not low.
- wsalien September 9, 2021 (5:04 pm)
  
  That makes sense, thanks.
alki_2008 September 11, 2021 (12:11 am)

The Mural website shows MFTE 1/1 unit at $1500. Where are you getting “over $2000 per month”? Both of the apartments include fitness centers and other amenities like BBQ areas or game rooms, which is a big reason for the higher rent.
- wsalien September 11, 2021 (3:39 pm)
  
  For a 1 bedroom yes, but a family can’t live in a small 1 bedroom apartment, anything bigger than that is hard to find for less than $2000, you can go look, I’m sure you’ll find a few for 1890 or something but they’re mostly always closer to 2000 or more. Even 1890 is no good for low income families.

K September 9, 2021 (2:40 pm)

Why aren’t they showing the numbers for how much tax revenue they are giving up vs how much rent savings are being passed on to renters? Seems like some easy math to do.

Craig September 9, 2021 (2:43 pm)

Agreed with K. Money in the system to fund a large range of services has to be a better model.

Brian September 9, 2021 (2:44 pm)

This is a misguided program. It’s not as if those same buildings are offering cheaper rents (other than the bare minimum ones they’re required to provide for the tax break).

NotOnHolden September 9, 2021 (8:25 pm)

Are any of you renters? What is your household size and income? How much is your rent? How much is your mortgage and the current value of your home? The rents are not cheap but I’m sure part of that was written in such a way to keep the “dirty” poors out of your neighborhoods. All that money, maybe they could fix the bridge with it? Oooh, maybe gondolas! Folks living in these units are your neighbors. While I understand a need for revenue; we also need to be a little more mindful when we start doing an internet audit of someone’s home.

anonyme September 10, 2021 (7:03 am)

A person making at or near $15 per hour makes far less than $2000 per month, which makes these rents impossible. Most hourly workers are in this category. I’m with K; there must be a better model, as the current program seems especially designed to benefit landlords and property developers. I, too, would like to see the numbers in regard to taxes saved vs. actual rent relief provided. I know Seattle (especially the City Council) isn’t fond of having to prove that programs actually work, but it’s about time that changed.

Seek_Peace September 10, 2021 (10:54 am)

This is a good program because it’s Positive Re-enforcement for good behavior (reduced rents rewarded with reduced property tax obligations) and not the usual Punishment model government is so fond of.

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