What does a city need to ensure residents with different incomes can afford housing? One of Seattle’s strategies is to provide a tax exemption for developments that include affordable housing.

How do developments qualify for the Multi-family Property Tax Exemption program?

An application must be submitted before the first building permit is issued and the following criteria must be met:

  • 20% of the units must be set aside for moderate-wage workers; meeting the affordability requirements

  • The development site must be located within the boundaries of one of 39 Multifamily Property Tax Exemption Program target areas (pdf format).

  • The development must be a residential or mixed-use project with a minimum of 50% of the gross floor area for permanent residential use.

  • New construction projects must have a minimum of 4 housing units.

  • Rehabilitation or conversion projects must include the addition of at least 4 new housing units.

  • Rehabilitation or conversion of existing buildings:

    • For vacant buildings, the residential portion shall have been vacant for at least 12 months prior to application.

    • For occupied buildings, there shall be no displacement as defined in SMC Chapter 22.210.030.

What are the affordability requirements?

The requirements differ for rental projects and home-ownership projects.

For rental projects, at a minimum, 20% of the units must be rented to those:

  • At or below 65% of median income for studio units

  • At or below 75% of median income for 1-bedroom units

  • At or below 85% of median income for 2-bedroom and larger units

For homeownership projects, the units must be sold to households

  • at or below 100% of median income for studio and 1-bedroom units

  • at or below 120% of median income for 2-bedroom and larger units

These income level of the buyer is determined by their income at the time of sale.

We’ll talk more in future posts about whether or not this actually works.