Maple Valley Pulls Plug on Housing Incentive Program in Face of Backlash
The Maple Valley City Council voted Monday night to scrap a tax incentive program intended to encourage the production of affordable housing, following a cavalcade of public opposition to the proposal over the past few weeks. Despite already voting to create a Multifamily Tax Exemption (MFTE) program earlier this spring, a 5-2 vote fully repealed the program, with the council turning down a separate ordinance that had been drafted to implement it.
MFTE is a common tool used across Washington State to incentivize below-market-rate units as part of new housing developments. Builders setting aside a certain percentage of new units to lower-income households receive a property tax break, and are only charged property taxes on the land itself and any non-residential improvements made like ground-floor commercial spaces. Under Maple Valley's proposed program, the threshold to meet would have been 20% of units affordable to households making 70% of King County's area median income – around $90,000 for a family of two. After the length of the program – in this case 12 years – the entire property goes back onto the tax rolls.
Rather than making local governments take the hit from those reduced property tax revenues, under MFTE the tax rates "shift" across all of the districts providing the exemption, slightly bumping up rates during the term of the MFTE program – at least compared to the alternate reality where building was still constructed without the tax break. This has been one of the most contentious parts of the Maple Valley proposal, despite the fact that MFTE programs are currently active in nearby Covington and Enumclaw among major cities like Seattle, Bellevue, and Tacoma.
Because Maple Valley's city limits make up only a portion of the larger Fire Prevention District #43 and Tahoma School District boundaries, where taxes would also shift following potential participation in an MFTE program, residents in unincorporated King County have protested the proposal as "taxation without representation." But this type of tax shift isn't unique to MFTE and occurs whenever local governments buy property or new churches open and receive tax-exempt status.
https://www.theurbanist.org/maple-valley-pulls-plug-on-housing-incentive-program-in-face-of-backlash/