Today at 9:30AM the Seattle City Council’s Committee on Housing Affordability, Human Services and Economic Resiliency will begin the process to renew the City’s Multifamily Tax Exemption (MFTE) Program. The program has created over 4,000 affordable housing units all over the city, and very efficiently. Here’s a quick rundown from a previous post:

Multifamily Tax Exemption Program (MFTE)

The MFTE program grants a property tax exemption to housing projects that set aside at least 20 percent of its units for housing for people who earn between roughly 60 and 80 percent of AMI.

There are currently 4,369 units in the MFTE program. The total annual cost of the program in deferred property tax is $3.6 million. That means that, on average, an MFTE unit costs the city under $900 per year. [1]

Costs to Produce 1400 Units Using MFTE

• $860 X 1400 = $1,204,000
• Cost: $10 for a median valued single-family home per year[2]

The program works. But Council consistently frets over it being a giveaway, which, of course it is: to renters! The exemption certainly benefits the pro forma of a builder, but it also creates rent contolled units and certainty for thouands of tenants who pay less money for rent in regular, market rate buildings all over town.

That fretting ends up, sometimes, in changes like moving the Area Median Income (AMI) threshold down rather than up. That means the subsidy granted to the renter exceeds, usually, the benefit to the builder. In fact, as we took lots of pains to point out, lowering that threshold ends up meaning the projects lose money, and thus opt out of participating in the program. That means fewer affordable units.

We explained the math in a letter to the Council:

We’ll see what the fact impervious Council comes up with when it renews MFTE. We’ll ask tomorrow that they work on improving it — not ruining it with requirements and AMI levels that insure nobody will use it resulting in fewer affordable units.