Three community members spoke against the expansion of the Multi-Family Tax Exemption (MFTE) program, which they said was a tax shift subsidizing developers at the expense of the homeowners.
On Tuesday, the Olympia City Council approved the consent calendar, including an MFTE resolution that establishes a public hearing on November 14, 2023.
The city is proposing the inclusion of additional residential targeted areas in Olympia’s west and eastside neighborhoods within the MFTE program.
The eastside residential target area includes properties along State Ave. and 4th Ave., between Eastside St. and Sawyer St.
The westside residential target area includes properties along Harrison Avenue, between Cushing Street and Foote Street. It also includes some additional lots adjacent to Harrison Avenue.
When Mayor Cheryl Selby opened the public comment segment, Judy Bardin was the first to criticize the program.
Bardin commented that the current MFTE program already represents a tax shift in which the city foregoes taxes on development, but property owners pay the cost. She cited Larry Dzieza’s estimated additional property tax to around $83 per year for the average home. Dzieza is one of the community members who criticized the MFTE program in previous committee meetings.
She added that the proposed expansion of the tax exemption area would result in an even more significant tax shift, which could raise rents as landlords try to cover higher property taxes.
"Many homeowners are just barely able to cover the costs of owning a home, especially with higher mortgage rates and inflation. People on fixed incomes are particularly affected," Bardin said.
Before approving the policy, Bardin suggested that the council and public should know the fiscal impact of alternative development scenarios. "Why go the circuitous route in the first place, since voters are being taxed with the MFTE to subsidize development, which today has not produced affordable downtown housing? Why not instead ask voters directly to improve a property tax to build and guarantee affordable housing?"
Community member Lisa Riner noted that the proposed expansion area for the MFTE includes parts of her neighborhood on the west side of Olympia.
Like Bardin, Riner expressed concern that the exemption would subsidize developers by allowing them to build apartments without paying taxes while other property owners still have to pay taxes.
She added that many residents in her neighborhood are retired and on fixed incomes, making the potential tax shift more difficult for these residents to afford. "Many of us have been hit hard with medical bills. Many of us are having to move out, leave our homes…These exemptions for the developers to build in these neighborhoods and pay no taxes don't make sense to me, especially since it is not affordable housing being built."
Former Olympia Mayor Bob Jacobs reiterated his objection to the MFTE program on the grounds that it forces residents to pay the taxes of wealthy developers and investors. "These people rake in tens of millions in profits on the properties whose taxes we are forced to pay."
He argued that the program is unfair and based on a faulty notion that developers will not build without tax incentives.
"It is also based on bad analysis, misinterpreted statistics, and ignorance of the fact that land values are residuals in development finance. I urge you not to vote as suggested in the agenda item and instead to vote to eliminate this program immediately," Jacobs urged the councilmembers.
If a hearing is set, Jacobs asked the council to find out how much developers are profiting from increased property values alone on exempted properties. He also urged the council to learn about residuals and land values in development to help them in further dealings with the program.
In the same council meeting, Housing and Homeless Response Director Darian Lightfoot gave a presentation explaining that the proposed expansion is focused on urban density areas and neighborhood centers to meet housing and climate goals through increased density.
She said the goal of the proposed changes to expand the boundaries where the MFTE could be used is to better target the incentive to encourage affordable housing development through relationships with affordable housing developers.
During the public hearing, Lightfoot explained they would be covering the proposed boundary changes to allow people to see the changes within the program and will enable them to comment on the same.
After the public hearing, Lightfoot said they would come back on December 12 for a detailed discussion of the proposed changes.
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JulesJames
The City of Olympia is fooling itself believing a tax break influences developer decisions. Quality schools, good roads and low crime -- location, location, location -- drives real estate decisions. MFTE is just a tool to reward friends -- and those who should learn to be friendly with those in charge.
Wednesday, October 25, 2023 Report this
AugieH
Smells suspiciously like graft and corruption. But, hey, Olympia's bottom rung politicians wouldn't resort to that!
Thursday, October 26, 2023 Report this
susanh
Developers do not need more tax breaks. They will build wherever they can make money.
Thursday, October 26, 2023 Report this
Yeti1981
MFTE helps spread low-income housing units across multiple projects and in different areas. Low-income housing is hard to make pencil otherwise. Unless you want to give all the low-income housing projects to those organizations who specifically do them. Then, all your really advocating for is to build what we use to call "the projects" and section specific people off from the community. Thereby, once again, creating a town that puts some people on what we used to call the "wrong side of the tracks" and away from typical services and features of the community that those who are already comfortable and in housing get to use everyday. I think we made segregation illegal, but we always seem to find a way to exclude people.
Thursday, October 26, 2023 Report this
Yeti1981
Also, those low-income housing projects are very expensive, often more expensive than if a private developer handled them, and the tax payers actually pay for it anyway.
Thursday, October 26, 2023 Report this
PCBigLife
The MFTE appears to have worked for getting residential units built downtown. That was the original goal for the program many years ago, the concept being that people living downtown support the business (that’s what a downtown is) and makes the area safer. It was explained to me whan I first inquired about the program that the tax was simply forfeited on the residential portion of a project for the initial time period. I though that was appropriate, the logic being that if the program is working, then that is tax revenue the city wouldn’t have otherwise received; the projects wouldn’t be built. Seemed reasonable. Come to find out that’s not the case, that the tax is “shifted” to the other taxpayers in the city. I think this is bad policy, inappropriate, a complicated, deceptive, and indirect subsidy, and absolutely should be changed if the program is kept.
Thursday, October 26, 2023 Report this