Letters to the Editor

Letter to the Editor | Multifamily tax exemptions are a benefit to the city, not a boon to developers

As housing prices soar and rents continue to outpace incomes, the dream of stable, affordable housing slips further out of reach for thousands of families. In cities across the nation, the challenge is clear: we need more affordable housing — and fast. One proven solution lies in a policy tool that’s often misunderstood yet deeply effective: multifamily tax exemptions (MFTEs).

Multifamily tax exemptions offer temporary property tax relief to developers who agree to include a portion of income-restricted units in their residential projects. In essence, they incentivize the private sector to build what the market alone will not: housing that working families, seniors, young newly hired employees, and essential workers can afford.

A recent op-ed stated that these exemptions reduce city property tax revenues and thus will raise everyone else’s tax burden … while at the same time allowing local developers to construct dwelling units with massive tax breaks then leave the city with ‘pockets bulging with money.’ Although a great sound-bite, it is mistaken in many ways.

The op-ed maintained that the developers will not pay any property tax. This is categorically incorrect. The developers DO pay full property taxes on the land on which the units are constructed and on any commercial space included in the building.

Another aspect the op-ed ignored was the long-term economic, environmental and social benefits that affordable housing brings. Stable housing reduces homelessness, improves educational outcomes for children, supports local workforce retention, and decreases the burden on emergency and social services. Every dollar not collected in taxes today can be seen as an investment in a healthier, more resilient community tomorrow. Affordable housing can allow multi-generational families to stay in the town they love.

A City of Gig Harbor housing study found that over 95% of the people that work in Gig Harbor do not live here …they simply can’t afford it. If more people who work in Gig Harbor can afford to live in the city, commutes are reduced. Less out-of-town commute traffic results in fewer greenhouse gas emissions, fewer road expansion projects and fewer congested intersections. Workers who live here will shop here, thus increasing our sales tax revenue … a source that is critical to the financial well-being of our city.

There is also a sense of unease regarding allowing affordable housing into Gig Harbor … some of that is based on misguided perceptions of who affordable housing will serve. Many of the very people who serve us at our local restaurants, grocery stores, shops or working in our city government fall into the 50% to 100% range of the area median income. These are the faces of folks who need affordable housing.

Some say “but just let the developers build and fund affordable housing on their own!” Simply put, without MFTEs, few if any developers would decide to construct, maintain and manage affordable units — or won’t build at all in areas where construction costs are high and returns are uncertain. The result? Entire neighborhoods become financially inaccessible, and economic segregation deepens.

Cities like SeaTac, Vancouver, Spokane, Burien, Sumner, Puyallup, Fife, Edmonds, Everett, Bremerton, Shoreline, Olympia, Seattle as well as many counties in Washington state, have successfully used these programs to incentivize the construction of more affordable units in high-opportunity areas. MFTEs are flexible. The programs can be adjusted to ensure deeper affordability or longer-term commitments, depending on local needs.

To address this housing shortage, public/private partnerships must be formed. The belief that developers will reap massive profits from an MFTE program or even reduced utility hookups is contrary to the facts. Talk to a local developer about MFTE and their yearly reporting requirements, building maintenance costs, rental unit management costs, repair, advertising and unit turnover costs. This is not a massive money-making machine … yet it provides a benefit to all of us living in Gig Harbor.

Affordable housing should not be treated as a luxury or a market afterthought. It is a cornerstone of equity, mobility, and community vitality. As local governments grapple with how to address the housing crisis, expanding and strengthening multifamily tax exemption programs must be part of the solution.

Will a Gig Harbor MFTE completely solve the affordable housing shortage? No, of course not. Housing affordability is a complex problem that will take a multitude of actions, programs and efforts to solve. The city has to accommodate about 600 affordable housing units before 2044. We can choose to do it “the Gig Harbor way” and rise to meet the challenge … our version of “local control” … or push back and ignore the mandate. There are significant financial consequences for choosing the latter.

Now is not the time to pull back. It’s time to double down on smart policies that align private development with public good.

Roger Henderson

Gig Harbor City Council Member

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