The public hearing on the proposed additional residential areas for the Multifamily Tax Exemption (MFTE) changes revealed significant disagreement among residents.
Somesee the tax break as an opportunity for affordable housing;. In contrast, others view it as subsidizing wealthy developers at taxpayers’ expense.
On Tuesday, November 14, the Olympia City Council held a public hearing on the expansion of the MFTE program. The city intends to designate additional areas to the program, including the eastside and the westside residential target areas, and three new neighborhood center areas – Division and 20th Streets (Handy Pantry), San Francisco and Bethel Streets, Fones Road and 18th Avenue, and 3900 Boulevard Road.
The MFTE program incentivizes developers to build multifamily housing in urban centers by exempting property taxes on new developments for 8 or 12 years. Director of Housing & Homeless Response Darian Lightfoot proposed expanding the geographic boundaries where developers can receive the tax break. She also recommended targeting the 12-year exemption specifically for affordable housing projects where all units are affordable to those earning 80% or less of the area median income.
Lightfoot said the updates aim to help meet a projected shortage of more than 12,000 housing units in the city by 2045.
Mayor Pro Tem Clark Gilman called for more data-driven decisions, requesting estimates of tax shifts, program costs, and funds generated for affordable housing.
Councilmember Dani Madrone asked Finance Director Aaron BeMiller to provide numbers on estimated tax impacts. Bemiller said the city will analyze costs and benefits in more detail
Thirteen community members participated in the public process held in person and virtually.
At the council chamber, Mike McCormick testified to support the MFTE program updates, citing the crucial need for comprehensive tools to address Olympia's housing affordability and homelessness challenges. He acknowledged limitations like property tax restrictions but emphasized that the MFTE program has facilitated over 700 new housing units.
"Affordable housing is expensive. There has to be a resource. The fact that you're going to have a monitoring program, you're going to evaluate it. I'm confident that it needs to be adjusted; you will do that. I encourage you to move forward and adopt it," McCormick said.
Likewise, Janae Huber supported the MFTE program updates. She argued that concentrating new development in areas with existing infrastructure, rather than expanding into open spaces, is key to reducing the city's environmental impact.
Huber cited data from Washington State University showing that over 100,000 acres of farmland in Thurston County have been lost to urbanization since 1950. She emphasized that Olympia's housing policies directly impact the region's ability to maintain healthy farms and forests for future generations. She said multifamily development is the most affordable and environmentally friendly approach, with units using half the energy of single-family homes on average.
Cary Retlin spoke in support of the proposed MFTE updates. He provided examples from recent rental listings in downtown Olympia to demonstrate that developments using the tax exemption are passing the savings on to renters in the form of lower rents for larger units.
Retlin noted that a non-MFTE building is advertising a 327-square-foot studio for $1,550 per month, while an eight-year MFTE unit nearby rents a 467-square-foot studio for $1,385. Another eight-year MFTE property on Percival Landing offers a 426-square-foot studio for $1,300, representing savings of $250 per month for an additional 100 square feet of space compared to non-MFTE units.
Greg Laura, South Puget Sound Habitat for Humanity interim chief executive officer, stated that the MFTE updates would help significantly in providing more affordable homeownership opportunities through Habitat's developments. He believed the program would enable Habitat to build additional homes to serve local families needing an affordable home.
Former Olympia Mayor Bob Jacobs argued against the MFTE program, calling it a "fraud" that purports to increase housing development but instead subsidizes wealthy developers, investors, and land speculators. He recommended scrapping the program except for existing contracts.
"Stop saying that the MFTE is 'effective' or 'successful' in producing additional housing, which the staff report and ordinance do. Don't be part of the big lie campaign," Jacobs told the councilmembers.
The former mayor suggested that the city stop subsidizing market-rate housing and, instead, invest in permanently affordable housing for people, like the one on Martin Way.
Criticizing the MFTE program, Larry Dzieza presented specific examples of how successful developers are with their investments in Olympia housing; they have experienced increased property values, which he said calls into question the need for the taxpayer subsidy. He provided two examples: .
Dzieza said that if the city had used the $138,000 in property taxes shifted to taxpayers directly towards affordable housing instead, it could make ten units affordable for families at Housing and Urban Development's (HUD) very low-income level of 50% AMI and subsidize the remaining 26 units to be affordable for low-income families at 80% AMI.
In his other example, Dzieza said that 500 Columbia Place – with 232 units - started under the MFTE in 2021 with a value of $31.6 million. By 2023, its value had increased to $70.6 million, representing a $39 million or 124% increase over two years. He noted that taxpayers are being billed $704,000 this year to pay for the developer's taxes through the MFTE. “Each unit is getting an annual subsidy of over $2,500 per unit to help pay for their waterfront views. A one-bedroom unit is currently being offered at $3,721 a month. We don't need to be subsidizing that."
Dzieza was also concerned about the plan to build 3,000 units in the Capital Mall Triangle subarea and other expanded areas. He said Olympia's current tax rate is $1.83 and could increase by 68 cents if all of these buildings are subsidized. He estimated that this would increase taxes for the average homeowner by about $375 more per year.
"With developers getting 100% plus profits on their Olympia housing investments, developers don't need another incentive, especially one being paid for without the voters' consent," Dzieza said.
Dzieza suggested requiring mandatory affordability units in all the developments, especially in the Triangle area. "We should lean against segregating where people can live based on income when we can."
Other community members expressed opposition to MFTE updates. Robert Vadas Jr. said the proposals are a "paper tiger" that would not truly address housing crisis issues.
"If you want to make a difference for the disadvantaged, you must focus on them. They shouldn't just be a side project like this has been proposed. If you want to do something, do something directly for them. Otherwise, they're just going to still be ignored, just like they already are," Vadas said.
Lisa Riner and Bev Bassett agreed with Vadas, stating that the MFTE does not address housing needs, homelessness, or climate change as claimed.
"The people I talk to strongly oppose this blatant-sounding corruption of the MTFE. They don't want any part of it. They don't want any more taxes," Bassett said. "It does nothing to address the real problems of homelessness. It's an obvious, corrupt giveaway to rich developers."
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AugieH
At this same meeting, the council considered and passed an ordinance requiring that rental property owners register as a business, obtain a business license, and undergo periodic inspections. At the beginning of the meeting, comments were heard from those opposing the measure. None spoke for it. The objections to the ordinance included arguments that it would corrupt the relationship between tenants and mom and pop landlords, and that it would cause property owners to sell their properties removing them from the rental pool. Furthermore, the council was asked to exempt those landlords whose properties are already managed by professional management companies that themselves do inspections; that request was denied and city mandated inspections will now simply duplicate the effort. The registration process and acquisition of a business license both involve paying a fee. The money grab continues via a solution in search of problems.
Wednesday, November 15, 2023 Report this
BobJacobs
My thanks to the JOLT for a thorough and accurate description of this hearing.
Bob Jacobs
Wednesday, November 15, 2023 Report this
JulesJames
This ultimately comes down to two questions. Would these housing units have been built if MTFE did not exist? Did MTFE change the housing types and floorplans to be more conducive to affordable housing? (More than 2BR/2BA) The actual rents verses taxes can be re-balanced. My guess two the two questions is YES and NO.
Thursday, November 16, 2023 Report this
Southsoundguy
Abolish zoning, end democratic control over land, end urban growth programs, and permit owners of land to do as they will within the confines of an ordered and enforced market that is subject to common law. The alternative is we inevitably end up looking like federal way or sea-tac. Just another disgusting and inhumane concrete wasteland along I-5.
Thursday, November 16, 2023 Report this
MrCommonSense
I own some rental properties in Olympia and have them professionally managed. I think it's interesting that both Tumwater and Olympia have enacted regulations without ever notifying affected landlords of the changes. Tumwater sent their new regulations to me AFTER passing them. I'm now waiting for Olympia to do the same.
If there are issues with landlords not maintaining properties or other tenant related issues, tenants have a multitude of resources and rights already in place. Adding more simply increases a landlord's expenses which will be passed along to the tenants in the form of higher rents.
I sold a commercial building in Olympia because the City did not deal with the homeless crisis and now most likely will sell three small, affordable single family rental homes. At some point the City must realize that those of us who must trust "loaning" an expensive asset to tenants deserve proper consideration given that expectation.
The day of the non-corporate landlord is rapidly dying.
Thursday, November 16, 2023 Report this
Yeti1981
A glaring point of ignorance here is the multitude of anti-growth folks who clearly have no clue what it actually cost to build housing. Ending programs such as the MFTE would do exactly what they are complaining about. It would either kill most of these projects or hand them over to the so-called "rich developers." Do they not understand the impact the various rules they lobby for have on our local builders? Who are not some dragon sitting on a pile of gold by the way. They're your neighbors.
Thursday, November 16, 2023 Report this
Yeti1981
$138,000 = 4 units of affordable housing? That would barely break ground for one unit in Olympia.
Thursday, November 16, 2023 Report this
RetiredPoliceChief
Finance Director Aaron BeMiller stated, "Yes, this is tax shift". He added that it was not clear to him as to the impacts and amounts of the tax shift burden. I"m looking forward to hearing more specifics about this plan to shift more of the tax burden to homeowners.
Thursday, November 16, 2023 Report this
JW
No more affordable housing. It is not the city's job to make affordable housing which ultimately drains the city's resources. Market rate development and growth is what fuels the bottom line.
Thursday, November 16, 2023 Report this
MightyEK
The information provided by Dzieza is NOT accurate information regarding 500 Columbia Place. I believe he may be confusing it with another apartment community in Olympia.
Thursday, November 16, 2023 Report this
Larry Dzieza
Dear MightEK, I'm always open to the possibility of being wrong but need to see what information you believe is wrong.
The property I'm referring to can be found on the assessor's website as parcel #91000900000. The owner is 500 COLUMBIA PLACE LLC and the situs address is 500 CAPITOL WAY NW.
By way of reference, the Cynara restaurant occupies a ground floor area (that is fully taxed by the way).
If, I'm wrong, thank you in advance for helping me improve my analysis.
Friday, November 17, 2023 Report this