On Tuesday, December 12, Olympia City Council voted 6 to 1 to approved amendments to its Multifamily Tax Exemption (MFTE) plan that would expand the program to include eastside and westside residential areas and three new neighborhood centers – Division and 20th Streets, San Francisco and Bethel Streets, Fones Road and 18th Avenue, and 3900 Boulevard Road.
The changes aim to incentivize the construction of more multifamily housing in the city.
In addition to extending the areas eligible for MFTE development, the council approved increasing the exemption duration to 20 years for homeownership.
The city council also adopted a policy to collect a fee in lieu of taxes from properties receiving the exemption. This fee would be paid to the city to support affordable housing programs.
Part of the approved amendment includes establishing clear performance measures for the program and committing it to reevaluation every five years.
Since 2014, Community Planning and Development Director Leonard Bauer said 15 projects have been completed, with 704 total units developed under the MFTE program.
Bauer noted that Olympia has permitted around 350 housing units per year over the last four to five years. He stated that this amount has been consistent, which maintains housing production but fails to increase the total number of units built.
He pointed out that the city needs to permit an average of 600 units per year over the next 20 years to meet the goal of 12,644 total units completed by 2045.
Olympia Finance Director Aaron BeMiller discussed the tax shift effects of the MFTE program.
By exempting some property values through MFTE, BeMiller said the overall assessed valuation in a taxing district would be lower than if those exempted values were included.
He said the reduced assessed value is shifted to all other non-exempted properties, which leads to a slightly higher levy rate being applied to the non-exempted properties, allowing the taxing jurisdictions to collect approved revenue amounts.
BeMiller noted that state law allows districts to shift the tax burden of MFTE-exempt properties to other property owners in the district.
He presented data showing $183.8 million as the total assessed value currently exempted under active MFTE agreements.
BeMiller provided a slide showing how the tax shift could increase levy rates by around 3 to 3.5 cents per $1,000 in assessed value. He mentioned that Olympia's assessed value for regular property taxes in 2023 was approximately $11.7 billion, resulting in a levy rate of $1.74 per $1,000.
He said that with the current MFTE exempted value included, the combined levy rate for the city and Olympia Metropolitan Park District (OMPD) was $2.29 per $1,000 assessed value. Without factoring in the exempted value, the combined levy rate would be slightly lower at $2.25 per $1,000.
Larry Dzieza reiterated his opposition to MFTE, saying that the program "makes taxpayers pick up the bill" for the profit of wealthy developers.
Dzieza argued that there is no clear evidence to support the claim that without incentives like the tax exemption, market-rate housing development would not occur. "There are over 1700 market-rate multifamily houses in the pipeline, most of which are not eligible for the MFTE."
He added that other areas are growing more robustly with less reliance on the exemption program. Dzieza noted that Lacey is growing faster than Olympia but only has one development using the MFTE. Tumwater currently has none; Olympia has 11.
Judy Bardin was against granting a tax exemption to developers because it shifts the tax burden to all other property owners – including those on fixed incomes – through higher tax rates.
Bardin was also worried about low-income housing projects being created through the MFTE program, referencing her experience observing low-quality housing projects in New York City. She argued that the MFTE provisions would lead to economic segregation by requiring housing to be 80% AMI or below for the 12-year exemption and allowing market-rate housing for the eight-year exemption. "Future analysis of the impacts of the MFTE will be important to see if we are getting the diversity, equity, and affordability that we hope for,” Bardin said.
Walter Jorgensen echoed previous comments critical of the program, which he noted would exempt some property owners from paying property taxes and then shift the tax burden to other Olympia taxpayers through higher tax rates. He questioned why expansion of the program did not appear as a ballot proposition for Olympia residents to vote on.
All councilmembers voted to approve the MFTE ordinance amendment, except for Mayor Pro Tem Clark Gilman.
"When we're proposing an expansion tonight, we're forcing taxpayers to hold a blank check because we don't know how much the program will grow or cost, and we're talking about 3,000 potential new units in the Capital Mall triangle, compared to the five to 700 units that we've been running with these downtown projects," Gilman said. "So, I think there are ways to create a more fair program that makes a bigger impact and is more likely to show measurable success."
He advocated focusing housing efforts on units that are the most difficult to build rather than on market-rate apartments and recommended housing programs that would specifically address racial and economic divisions in the community.
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BobJacobs
Reverse Robin Hood. Average homeowners subsidize wealthy developers. No more housing is constructed.
At least we have one councilmember, Clark Gilman, who is not beholden to the wealthy.
Bob Jacobs
Thursday, December 14, 2023 Report this
Larry Dzieza
The full impact is 9.4 cents per $1,000 Assessed Value and is costing taxpayers $1.8 million a year in 2023.
The full impact of the proposal is not what BeMiller focused on at the meeting so it is understandable that the story missed the real bottom line. It is not the 3.5 cents per $1,000 being shifted ("BeMiller provided a slide showing how the tax shift could increase levy rates by around 3 to 3.5 cents per $1,000 in assessed value.) It is more than twice that amount.
BeMiller's other slide showed (if you did the subtraction) a levy lift of 9.4 cents per $1,000 assessed value and will increase our taxes by $1.8 million a year to pay for developer's tax break that will be greatly expanded by the action taken last night.
To be fair, Aaron BeMiller actually had a slide that showed this effect and it was shown last night and handed out in advance to the Council but the council members chose to focus on the 3.5 cents (rounded up during the discussion as 4 cents).
The real impact of the proposal was obscured by the slides that that focused only on the OLYMPIA City share of property taxes and not the full tax bill that the people pay which includes schools, libraries, etc. Yes, the entire tax rate for every taxing district is affected by the tax shift. Heck, the impact from Olympia schools is more than the city's at 4.7 cents per $1,000 AV.
And while taxpayers in Olympia will pay the lion's share, taxpayers county wide will be chipping in some money to pay a share of the $1.8 million a year -- for example Thurston County, Medic One, and Port of Olympia.
Thursday, December 14, 2023 Report this
hptrillium
Subsidies for market rate housing is ridiculous. Why would any counsel member vote for this? Does this mean that my property tax will be more than 5 times what it is now? I should think about move out of Thurston County.
Thursday, December 14, 2023 Report this
MikePelly
Thank you councilman Clark Gilman on watching out for Olympia's residents. It's shameful how low your fellow council members will go to do dirty deeds in service of the sleezy developers. A 2nd grader can see just how bad this deal will be for the city and it's residents.
Friday, December 15, 2023 Report this
nkhloly
Thanks for your reporting on this issue. I have no problem with the basic concept of using tax policy to advance community goals. I appreciate the geographic expansion of the MFTE to specific target areas that can use a boost and I think the four sites make sense.
Having said that, I agree with many of the comments from community members and Councilmember Gilman. I believe that tax breaks need to achieve more than just additional market rate apartments. They should be creating incentives to build the types of housing that are difficult to produce; units that we need. In particular, MFTE dollars should be spent on housing for lower income households.
Monday, December 18, 2023 Report this
JnNwmn
The so called "solve the housing problem" people state that the MFTE will increase housing availability for those that need housing.
There are some important points to acknowledge:
1. Tax breaks for builders and owners provides little affordable housing.
2. Tax breaks for builders does not reduce rents because rents are just as high as the market. The MFTE allows the builders and owners to pocket the high rent AND get the tax deduction.
3. All other renters and owners have to make up in taxes what other people don't pay in taxes to pay forcity police, schools, parks, fire protection, city employee health care, city employee retirement plansand city transportation costs. The MFTE tax reduction is the Grinch that makes rental housing more expensive for those 51% that rent in the City of Olympia.
Saturday, December 23, 2023 Report this
KimDobson
Dear Olympia Taxpayers , I agree with all of the comments previously posted . The MFTE shifts corporate property taxes for 8 years away from the wealthy Developers to the rank and file remaining taxpayers in the Olympia taxation district . This is a unapproved tax levy proposal for market rate housing with no requirement for forcing wealthy speculators to build truly affordable housing for low income citizens of Olympia . This has happened because the majority of the Olympia city council and their sponsors the Chamber of Commerce /Master Builders/ Private Equity investors falsely believe that building more market rate gentrified housing will result in more more housing for low income families . If the Neo Liberals in the Olympia Council actually believed in low income housing ,there would have been a Mandatory 20% low income requirement build out included in the 8 year MFTE tax exempt zoning legislation ? Why not put the MFTE tax exempt legislation to a vote of the Citizens each time there are proposed expansions into new zoning areas ? In addition, honest financial disclosure of the true cost per year to each taxpayer not in mils per thousand but true total cost of the tax shift in dollars ? The property taxes each year added to the already high burden on must be accounted for because homeowners with a fixed incomes are already struggling to pay their property taxes each year. The increases to Property taxes should be voted upon as a annual tax levy proposal such as the School and Fire districts use to fund construction bond measures ? To do other wise as Bob Jacobs notes ,we have a Reverse Robin hood situation with Olympia City Council functioning as the Sheriff of Nottingham . Taxation without representation . Yours , Kim Dobson
Sunday, December 24, 2023 Report this