Olympia has a long history of providing incentives to facilitate different types of housing throughout the city.
Its goals may include encouraging higher density to manage growth, support public transportation, provide affordable housing and consolidate services in the urban area. The city has also worked steadily to support the downtown, providing funding for things like the Walking Patrol, or Downtown Ambassador program. We are fortunate to have a bona fide downtown; it is made up and dependent upon small businesses, a willing public and constant efforts to respond to different economic and social changes.
The Multifamily Tax Exemption (MFTE) is one of those incentives. It was instituted in the 1990s to get developers to build housing downtown. The concept was to support the downtown, particularly the businesses there and make it feel safer – because that’s what happens when more people are around. We needed to get more housing built downtown. This program is now being reviewed; there are two hearings scheduled, including one this coming Tuesday at the regular city council meeting. It’s time for residents to let the council know what they think of the program. Here is a link to the proposal and policies: MFTE Proposal Plan and Policies
The MFTE was never solely an “affordable housing” program; it had different level incentives for both market rate and affordable housing. As it turned out, most of the projects using the program were market rate. Developers didn’t find enough incentive in the lower income portion of the program to use it.
The reasons to continue and expand the program come from the belief that we lack enough housing to keep housing prices reasonable and affordable, especially for renters. The city has an Olympia Housing Action Plan that details its intent with respect to housing. The plan makes the case that we need more housing to keep prices lower, and that we need to focus on efforts to “increase the supply of permanently affordable housing for low-income households (those making 80 percent or less of the area median family income)
There are a number of financing scenarios in the staff recommendation, but I can’t tell if any of them are viable. I don’t see in any information on-line if the city involved stakeholders, people who might actually use the program. So while there are a number of ideas in the plan, one can’t tell if any of them would actually work.
Independent of the area or housing type, when the financing for the current plan was explained to me I was left with the impression that the tax was foregone during the 8- or 12-year period. That seemed reasonable to me, my assumption being that if the program was indeed working, and the recent housing projects using the program wouldn't have been built without the program, then the city wasn’t really giving up revenue; it wouldn’t have gotten any money if the projects weren’t built. Plus the city would get the revenue from commercial parts of the projects. So, fine, there is a financial deal to get something the city leaders want, which is what cities do. Seemed reasonable.
Come to find out that’s not the case; the tax is “shifted” to the other taxpayers in the city. Thus rather than forego the tax, the tax is collected from the other city taxpayers. This is in essence raising the property tax to pay for part of these projects over the life of the incentive agreement.
I believe this tax policy is inappropriate, an indirect yet clear subsidy, and absolutely should be changed if the program is kept. I don’t find this funding choice mentioned in any of the documents or in the proposal and policies. This is a significant policy decision and one that ought to be openly and publicly discussed. This program choice should be prominent and made clear on the city’s website, and an item for the public hearing.
There is a hearing scheduled for the MFTE, on next Tuesday, the 14th, to talk about the proposed program border. But there is also a staff presentation on December 12th to provide a longer presentation on the MFTE policy changes, the new fee in lieu proposal, and the tax shift. As significant as these items are, the hearing should be after that presentation and discussion to inform the community adequately. What happens to the deferred tax concerns everyone and is of primary importance. It is disingenuous to have a hearing without all the information available.
If the city decides to keep the program, it should find a way to make it work for affordable housing; that is the priority. Numerous discussions, meetings, and policy documents have made that clear. The city has done an admirable job so far providing funds for housing. The MFTE, if implemented carefully and mindfully, is an opportunity to continue that good work without directly costing the taxpayers.
Editor's Note: To register to attend the city council meeting next Tuesday, November 14 at 6 p.m., click here.
Pat Cole - email@example.com - is a former Olympia city council member. As a private citizen, he seeks to set a positive tone and lead informed discussion about local civic issues.
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