Das bill expanding affordable housing development becomes state law

Extends Multifamily Tax Exemption for developers on certain property taxes

A bill signed by Gov. Jay Inslee extends the Multifamily Tax Exemption (MFTE) for developers to pay certain property taxes in an effort to expand affordable housing building incentives.

“Now more than ever, we need to advance solutions to our housing crisis and get – or keep – a roof over our neighbors’ heads,” said Sen. Mona Das, D-Kent, the sponsor of the bill, in a May 3 state Senate Democrats news release. “This bill was a top priority for our community, and a broad coalition of local lawmakers, low-income housing advocates, associations of cities and counties, and housing developers came together to see this through.”

Inslee signed the bill May 3.

In Washington, where there are only 29 affordable and available rental homes for every 100 extremely low-income households according to a 2019 report, Senate Bill 5287 broadens access to housing during a critical period of economic recovery in the state, according to the news release.

The new law authorizes a 12-year extension of existing eight-year and 12-year MFTEs that were set to expire if they met certain affordability requirements. It also establishes a new 20-year property tax exemption for those who build permanently affordable homes. Additionally, the law expands the definition of a city for 10 years (through Dec. 31, 2031) to include those not currently eligible for the 12-year MFTE and the 20-year exemption for permanently affordable homes.

Developers who apply and qualify for the exemption would still pay taxes on the land but not on the residential buildings.

“This is a critical tool that can be used to support the development of missing middle-range housing,” said Rep. Alex Ramel, D-Bellingham, one of the bill’s champions in the House of Representatives. “Washingtonians have been advocating for real solutions to the lack of available housing in our state, and this is one way to sustainably promote the long-term development of affordable options.”

Without this extension, more than 7,000 currently rent-restricted units would shift to market-rate rents, ultimately exacerbating Washington’s shortage of affordable housing inventory, according to the news release. Extending the MFTE program timeline will help address the deadline for these thousands of units that were otherwise set to age out of the program.

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