SB 5287: Updating the MFTE

We just finished Week 2 of the 2021 legislative session, so this is a good time to take a moment and reflect on our highest priority bill coming into session and how you can take action to support it’s passage in Olympia.

Senator Mona Das (47-Kent) recently introduced SB 5287 to update the multifamily property tax exemption program (MFTE). With MFTE, the value of housing improvements is exempt from property taxes for either 8 or 12 years, when a project is approved by a local government. In its current form, the 8 year exemption doesn’t require any of the units created to be committed as affordable housing and, in the 12 year exemption, the developer must commit to preserving a minimum of 20% of the units as affordable housing units for 12 years.

SB 5287 would significantly amend the MFTE program, with many updates to the program. The bill would require a developer to commit 15% of units as affordable housing to qualify for an 8 year exemption, and 25% of units for a 12 year exemption. This legislation also creates formulas for household area median income (AMI) level to be served by different unit sizes. The details are many, but the general idea is developers would be required to provide affordable housing units in exchange for either an 8 or 12 year tax exemption.

The bill would also create a third type of property tax exemption for permanently affordable housing – either ownership or rental. If a developer commits 25% of units as permanently affordable units, the project may be granted a 20 year property tax exemption. Permanently affordable housing would require the units be deed restricted – whether via ground lease, land trust, or some other form of restriction – for the lifetime of the unit to serve low-income households earning no more than 80% of the AMI.

Habitat and many partners in the affordable housing world are excited about this new option, and hope that our supporters will also endorse this idea.

The final update that we’ll mention here is one that has been a priority for Habitat in this legislative session. We’ve asked the legislature to amend the definition of “multiple-unit building” to allow different types of developments to qualify for these exemptions. The new definition would potentially allow a building or group of builds with 4 or more units to qualify. For organizations building more townhome and small lot cottage developments, this may be an avenue to support lower income buyers.

(Photo courtesy of Washington State Senate via LinkedIn.)

SB 5287 has a hearing on Tuesday (Jan. 26) at 8:00 am in the Senate Housing & Local Government Committee and this is your opportunity to help!

If you’d like to support this legislation, please take one of two actions. You can either sign in “Pro” on SB 5287 or submit written testimony. Both are great options, and below we have laid out the process for participating.

Signing in as ‘Pro’ for SB 5287

This only takes a few minutes and can make a huge difference! You can do this up to one hour before the start of the hearing.

Go to this website

1. Select Committee: “Housing & Local Government”
2. Select Meeting: Select 1/26/2021 8:00 AM
3. Select Agenda Item: “SB 52387 Afford. housing incentives”
4. Select type of testimony: “I would like my position noted for the legislative record.”
5. You will be sent to another page.
   1. Select Position: “Pro”
   2. Fill out your information
   3. Submit Registration

Process to Submit Written Testimony for SB 5287

You can submit written testimony up to 24 hours after the meeting time, which will be 8:00 AM on January 26th.

Go to this website

1. Select Committee: “Housing & Local Government”
2. Select Meeting: Select 1/26/2021 8:00 AM
3. Select Agenda Item: “SB 5287 Afford. housing incentives”
4. Select type of testimony: “I would like to submit written testimony.”
5. You will be sent to another page.
   1. Select Position: “Pro”
   2. Fill out your information
   3. Write your testimony (limit 5000 characters)
   4. Submit Testimony

If you choose written testimony, consider these talking points:

• This bill would create a program to encourage the development and preservation of permanently affordable housing.
• This bill would allow more cities and counties the ability to encourage dense housing development through the usage of the MFTE incentive.
• The legislation would create a pathway to allow current 8 and 12 year projects to extend the exemption for an additional 12 years in exchange for the project committing a minimum of 20% of the projects units as affordable housing.
• Creates flexibility for different type of multiple-unit building developments to qualify for an exemption.

To learn more about Tacoma/Pierce County Habitat for Humanity’s legislative agenda, visit our Advocate page and/or join our Advocacy update list.