
By Erica C. Barnett
As the Seattle City Council prepares to update a program that gives tax breaks to developers who set aside apartments for low- and moderate-income renters, opponents of the changes called them a giveaway to developers for housing that will still leave its residents burdened by excessive rents. Proponents, including Habitat for Humanity and for-profit developers, said the changes would make it feasible for them to build affordable housing at a time when development of all kinds is slowing across the city.
The 12-year tax exemption program, called the Multifamily Tax Exemption or MFTE, currently has to be renewed every four to five years. The most recent renewal, in 2019, imposed new affordability requirements and restrictions on rent increases—making higher-income renters ineligible to rent MFTE units and imposing a 4.5 percent annual cap on rent increases, among other changes.
The latest iteration, known as “Program 7,” would bump up the cap on annual increases to as much as 10 percent a year and make higher-income renters eligible for some units, a change opponents say will make MFTE apartments unavailable to lower-income tenants.
Earlier this week, two dozen affordable housing providers and advocacy groups sent an open letter to the mayor and council objecting to the proposed changes, arguing that if the council approves them, “the purpose of the MFTE program would no longer be to ‘increase affordable multifamily housing opportunities … for households who cannot afford market-rate housing in Seattle,’ and would instead focus on increasing multifamily development in exchange for a modest share of MFTE units and no guarantee of rents meaningfully lower than market rate.”
At a meeting of the council’s housing committee on Wednesday—where the committee also took up 14 amendments aimed at various aspects of the program—renters’ rights advocates urged the city to reject the proposal and keep the existing program in place another year while the city comes up with a more equitable plan. (The MFTE update has already been delayed twice, and expired yesterday.)
Miram Roskin, the former deputy director of the city’s Office of Housing, said the program removes about $20 million in “invisible” dollars from the city’s budget every year in the form of foregone property taxes, in exchange for very limited benefits for lower-income renters.
“At the margin, there are certainly financially feasible, on the bubble projects that benefit and come to fruition thanks to the tax exemption. However, this is speculative. It is unquantified, it’s anecdotal. This is why the affordability component of the program matters so much,” Roskin said. “In many cases, rents would be indistinguishable from the market. And in fact, in some cases, the affordable rent would even be higher than the market [rent].”
For example, under the new proposal, renters making up to 50 percent of Seattle’s median income would be eligible to rent small studios (less than 320 square feet); the proposal bumps up the maximum rent for these units to $1,375 a month, just $91 less than the median similar apartments rent for on the private market. The maximum rent for a standard one-bedroom would increase to $2,209, or about $395 less than market rent.
Median incomes, and—indirectly—maximum rents are set by a federal formula that includes both homeowners and renters. The Seattle Renters Commission called out this issue in its own letter opposing the new program, noting that the median Seattle renter makes around $79,000, compared to about $181,000 for homeowner households.
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Developers, in contrast, said they the current standards have made them opt out of the tax exemption program, and argued that the changes would spur them to build more affordable apartments at a time when building permits have slowed down dramatically, a trend that will likely make Seattle’s housing crunch significantly worse over the next several years.
“We are evidence that the program currently is not working,” Kamiak Real Estate founder Scott Lien told the committee. “We rescinded our MFTE applications on four of our last five projects prior to occupancy, and now we have six buildings with 1,100 units in our pipeline, and have no plans to participate in MFTE for most of those” under the current program.
Developers also argued that the MFTE program was never designed to provide housing to low-income residents, but is supposed to create “workforce” housing for moderate-income renters.
A 2024 University of Washington study found that the MFTE program does cost the city money every year, but noted that developers won’t use the program if they can’t make a profit. The study also found that the city has historically seen a benefit of about 50 cents on the dollar, in the form of lower rents, over the life of the program, except under the most recent iteration, where rents decreased and the benefit to the city increased more dramatically.
Over the life of the program, which began in 1998, developers have built more than 7,000 affordable housing units, mostly studios and one-bedrooms, but those lower rents “may only represent a modest discount” compared to the rest of the market, the UW study found. Apartments in areas where rents are already higher, like South Lake Union, are more affordable relative to other available units than they are in areas where rents are lower, like South Park or Rainier Beach, where “there may be negligible differences between the rents of restricted and unrestricted units.”
“Some of the wealthiest neighborhoods in the city,” the study notes, have been categorically exempt from MFTE because they’re zoned for single-family houses. Given that most MFTE units are in three-to-five-story apartment buildings, this isn’t likely to change much, even with zoning changes that allow between four and six units per lot in these areas.
Several of the 14 amendments councilmembers introduced Wednesday would lower the income eligibility thresholds for various types and sizes of apartments, prompting Council President Sara Nelson to object that new affordability restrictions could force renters out of their homes. “We don’t want to be displacing people,” Nelson said. Making people who make more money eligible for MFTE units, she added, “means more access, not higher prices.”
Although a central staffer assured Nelson that the program has a “grace” component that lets existing tenants stay in their homes as their income rises (under the program, existing renters retain their rent discounts until their income rises to 150 percent of the eligibility level, and pay market rent after that), Nelson raised the exact same objection a moment later.
“There are people already living in these units, so what’s going to happen to them if you lower the income per unit? Then the person’s going to have to move out. … I feel like this is going to displace people and in fact that’s what happened to my friend.”
Councilmembers also proposed amendments to allow developers with projects already in the pipeline to opt in to the new, more developer-friendly program, a change the housing advocacy groups called “a bad deal for Seattle” in their open letter. Other amendments would require regular reporting on which developers are participating in the program and what kind of housing they’re building, and reinstate a sunset clause that would require the city to update the program again in 2029, which the original legislation eliminated. Rob Saka, the cosponsor of the sunset amendment along with Alexis Mercedes Rinck, said revisiting the program regularly was a matter of good governance.
“Deleting a sunset date whatsoever, in perpetuity, for something of this significance, and greater scale, and subject to fluctuating market conditions—I don’t know if it’s the best, most appropriate, prudent course of action,” Saka said.
Another amendment sought by developers, from Mark Solomon, would eliminate the requirement that developers who are replacing older, “naturally affordable” housing with (typically denser) new MFTE units add one new unit that’s permanently affordable to renters making 50 percent of median income to their new buildings for every tenant in the demolished building who qualifies for relocation assistance under the city’s Tenant Relocation Assistance Ordinance. Developers argue that this permanent affordability requirement has stopped the development of dense new housing under the MFTE program.
Councilmember Debora Juarez complained that the 14 amendments (including one that was so new it didn’t show up on the council’s online agenda) had been “dropped on us” at the last minute, with little time to analyze or understand them. The committee didn’t vote on the proposed changes; they’ll do that on September 22, with a full council vote likely on September 30.





