12 year tax exemption for developers

Sunday, October 20, 2019

The Paceline Apartments on Aurora near N 175th
chose the 12 year affordable housing program
At candidate forums and in comments and letters there have been a lot of statements about the 12 year tax exemption for developers. Below is an excerpt from an article we published in 2018 about affordable housing. The entire article is here: Affordable Housing Explained.

By Sam Tilford

Affordable housing in Shoreline is made possible by the Property Tax Exemption Program (PTE), the Multifamily Tax Exemption Program (MFTE) and the U.S. Housing Act of 1937.

The Property Tax Exemption Program is offered to developers who meet affordable housing standards. Established in 2002 and simplified in 2015, the 12-year affordable program only applies to improvements on buildings; the land value continues to be taxed. After the 12 year period ends, developers will begin to pay both.

In order to qualify, developers must commit 20 percent of a project's units -- with a minimum of four units -- to qualified renters at affordable rates. These rates are determined by a person's income relating to the AMI and unit size.
  • Studios and one bedroom units must be affordable to those earning 70% of the King County AMI.
  • Two bedroom or larger units must be affordable to those earning 80% of the King County AMI.

The Multifamily Tax Exemption Program provides a tax exemption on new multifamily buildings in exchange for setting aside 20-25% of the homes as income- and rent-restricted. By supporting mixed-income residential development in the urban centers, the MFTE program ensures affordability as the community grows. Much like the National Affordable Housing Act, it seeks to provide affordable housing to families.

Established in 1937, the U.S. Housing Act -- or the Wagner-Steagall Act -- set a standard for low-income subsidized housing in America. This seminal legislation has been amended and expanded upon by Congress many times since to create a variety of housing programs.



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