March 2011: 11 Developers in under the wire for MFTE tax subsidies worth $38.6 million - See story and chart which follows listing those developers and what we got (or rather didn't get) in return
Press release:
For more information, contact John V. Fox Seattle Displacement Coalition
206-632-0668
City Council about to approve $38.6 million in tax breaks for 11 developers
getting in under old 'MFTE' rules
And what do we get in return..... a few rental units priced hundreds of dollars
above what most Seattle tenants can afford
Since 2004, the "MFTE" program has cost taxpayers over $117 million and will
rise at current rates of use to over $150 million by 2013!
How can we allow a program like this to continue at the expense of taxpayers for
no public benefit? Whose going to blow the whistle?
After learning that the City Council was about to make a modest adjustment in
the Multi-Family Tax Exemption (MFTE) Program, 11 developers lined up at the
City's Office of Housing to obtain $38,620,368 dollars worth of tax
breaks before the new rules were adopted. These costs will be passed on
directly to other taxpayers county-wide and city-wide. Reportedly, another two
developers followed suit but no city records are yet available nor how much this
will add to the taxpayer's price tag. The list of those eleven obtaining these tax
breaks are on chart below.
In return for these tax breaks, these developers were required to 'set-aside'
only 20 percent of their new units at rent levels ranging from $1199 a month for
a studio, $1370 for a 1 bdrm, to $1734 for a 2 bdrm unit (rent levels ostensibly
affordable to those with incomes between 80-90 percent of area median). The
majority of tenants in our city earn about 55% of median so these units are
priced hundreds of dollars above what most tenants in our city can afford and
far above what low income people can afford whose incomes are at or below 40% of
median.
Rather than reject these applications or even ask questions over the amount of
the giveaway our City Councilmembers already have approved most of them, and
will give their approval to the remainder this coming Wednesday. afternoon March
23rd 2pm in Councilmember Nick Licata's Housing Committee. This $38
million in tax breaks is passed on to other city and county taxpayers.
The modest change in the program that prompted such a rush to the city's permit
counter was a proposal, subsequently approved, to drop rents "down" on the 20%
developers are required to set aside - "down" to ($974 studio) ($1285 1bdrm
unit) and ($1638 for 2bdrms) serving those at 65%, 75%, and 85% of median
respectively. Even at these so called reduced rent levels, they are hundreds of
dollars above what most tenants can afford and most in need in our city.
There is no shortage of rental units in this town affordable to those from 65-85
percent of median. There's a 37,000 unit surplus in fact according to the
County Housing Benchmarks data. Further, units priced at these rent levels are
at a hundred dollars or above above what the average tenant can afford whose
income is at 55% of median. The units also are priced above average rents -
the going rate - in nearly every single city neighborhood. The need, the
shortage of units clearly is further down - below 50% of median and lower.
Developers taking advantage of this program are simply getting a tax break for
housing they would have built anyway. And once they are built, market demand
will require the developer to offer ALL their units (not just 20%) at rents
below these set aside thresholds! In fact, a review of projects that already
have received these tax breaks shows that this is in fact what is happening
now. Also, a look at rental housing websites shows an ample supply of units
priced well below these set-aside rent levels in just about every neighborhood
of the city. If councilmembers had taken any time to actually review reports on
the performance of this program to date, or done their own minimal research,
they would have found this out.
Since 2004, approximately 50 developers have taken advantage of the MFTE program
and received over $117 million in tax breaks. And at the current rate
developers are tapping this program, by 2013, this program will cost taxpayers
well over $150 million (exceeding the amount of the recent voter approved
housing levy which raises taxpayer funds to provide housing for the truly needy
whose incomes are below 40% of median)
The public needs to know about this giveaway and what they are paying for!
Whose going to blow the whistle?
2008:
Displacement Coalition Bulletin #25 - Call or E-Mail Your Councilmembers Today!
(please circulate)
City Council poised to give
away tax breaks to developers, passing on to you another $20-$30 million in
added property taxes while homeowners and Seattle tenants will face higher
rents!
- Call your councilmembers today and oppose the proposed
“multi-family tax abatement” giveaway!
Full Council Vote Next Monday – March 15th! With your calls and
e-mails, we can still turn 'em around on this one. If we don't, it means
millions passed on to you in higher taxes (and higher rents for those of you who
are tenants)! We really need you to call 'em on this one ASAP!
CITY COUNCIL HAS NO IDEA WHAT
AFFORDABLE RENTS ARE IN SEATTLE– They’re set to give these tax breaks
to developers who ‘set-aside’ 20-30 percent of their units at rents between $850
and $1100 per month – Councilmembers seem to think that’s “affordable”.
IF YOU ARE A RENTER, CALL OR E-MAIL THEM AND TELL THEM
WHAT YOU PAY IN RENT (see below for details).
The program was designed to help low income people. Now it will simply
provide huge subsidies to big developers who are building in many neighborhoods
anyway while actually hurting many low income tenants! First adopted in
1998, locally, the multi-family tax abatement program was intended to to
stimulate affordable housing in a few low income communities. Now, however,
pushed by big developers in South Lake Union, Northgate, U-District, and Capitol
Hill, the Mayor and several Councilmembers want to extend the program from 9 to
17 areas including many affluent neighborhoods. In doing so, the Mayor and
Council would simply be giving away huge tax subsidies to developers who are
building anyway in most of these areas – neighborhoods where housing growth
targets are easily being achieved.
The Mayor and Council’s current proposal (up for a vote in full Council Monday
March 15th) would give tax breaks to developers who agree to set aside 20-30
percent of their new units at prices between $850-$1100 a month with the other
70-80 percent of units allowed to rise to whatever stratospheric level the
market will bear. Only the upper tier of Seattle renters can afford even the
set-aside units in these benefiting apartment buildings. Census data shows that
60% of all of Seattle tenants (approximately 75,000-80,000 households) need
units priced at or below $850 a month with most in the $550-$700 range. Some
councilmembers say the program’s higher priced set aside requirements are OK
because they will ensure that developers include some “affordable” units in
their projects that otherwise would not get developed. Obviously, the Mayor and
most Councilmembers have no idea what constitutes is truly affordable to a
tenant in living in real world Seattle.
Over a ten year period the total subsidy may amount to 20-30 million dollars.
Under our current tax system it also means that this amount must be made up by
the rest of us taxpayers. These added costs will be passed on to us and
translate directly into higher property taxes. Low income and senior citizen
homeowners will pay more. It also means that existing low income apartment
owners charging reasonable rents will face higher taxes as one landlord stated
in testimony before the council, “we’ll be forced to charge higher rents”. So
the average tenant, not just low income tenants, actually will be hurt by this
proposal.
Specifically when you call or write councilmembers - urge them to vote ‘NO’
on the Mayor and Council’s Multi-Family Tax Abatement Proposal. In addition:
Specifically urge them to limit use of this program to only a few low income
communities not now experiencing growth such as Southeast and/or SW Seattle and
the Central District and not for South Lake Union or other affluent areas that
don’t need this stimulus at all. Also urge them to require any developer
receiving these tax breaks to set aside at least 30% of their units for truly
low income people – those with incomes below 50% of the Cities area median and
below market rents for those neighborhoods. For example, instead of giving tax
breaks to a developer setting aside a few units at $850 a month, require the set
asides to be priced at or below $600-$700 a month or below what you can afford.
If you are a renter, when you call or e-mail, also be sure and tell them how
much you pay in rent and how much less that is than the price of “set-aside”
units under this program. The “set-asides” are units the landlord is
required to provide in exchange for the reduced taxes. The “set-aside” for a
studio is $885/month, for a one bedroom $949/month, for a 2 bedroom $1,139 and
for a 3 bedroom $1,316. (I’ve included the correct set-aside rent in the sample
scripts below) These are not affordable rents and are above market in most
neighborhoods; so what are the developers actually giving the community who
participate in this program? At most they're giving us a bunch of "expensive"
and "very expensive" units.
If you are a renter or homeowner, for more details on what
you could say when you call to oppose the program, see below
Please call or e-mail if you can...it will really make a
difference for you and our city. Councilmembers addresses:
mailto:Tom.Rasmussen@seattle.gov
684-8808
mailto:Richard.McIver@seattle.gov
684-8800
mailto:Peter.Steinbrueck@seattle.gov
684-8804
mailto:Jean.Godden@seattle.gov
684-8807
mailto:Nick.Licata@seattle.gov
684-8803
mailto:Richard.Conlin@seattle.gov
684-8805
mailto:Jan.Drago@seattle.gov
684-8801
mailto:David.Della@seattle.gov
684-8806
mailto:Jim.Compton@seattle.gov
684-8802
If you rent a studio apartment:
“About 50% of Seattle renters make about 50% median income (about $27,250 for a
household of 1). I pay $ X a month to rent my studio apartment. This program
would cause me to subsidize, through my rent, the development of an $885 studio
apartment. Why should I subsidize the development of an apartment that will cost
almost $ X more a month than mine? Limit this program to low income communities
like Southeast and/or SW Seattle and the Central District. Don’t include South
Lake Union or other affluent areas that don’t need this stimulus. Set aside at
least 30% of the units for people like me–with incomes below 50% of the median
income and below market rents. Instead of giving tax breaks to a developer
setting aside a few studio units at $885 a month, which I can’t even afford,
require the set asides to be priced at $600 a month (housing unit affordable to
50 % median income).”
If you rent a one bedroom apartment:
“About 50% of Seattle renters make about 50% median income (about $31,150 for a
household of 2). I pay $ X a month to rent my one bedroom apartment. This
program would cause me to subsidize, through my rent, the development of a $949
one-bedroom apartment. Why should I subsidize the development of an apartment
that will cost $ X more a month than mine? Limit this program to low income
communities like Southeast and/or SW Seattle and the Central District. Don’t
include South Lake Union or other affluent areas that don’t need this stimulus.
Set aside at least 30% of the units for people like me–with incomes below 50% of
the median income and below market rents. Instead of giving tax breaks to a
developer setting aside one bedroom units at $949 a month, which I can’t even
afford, require the set asides to be priced at $700 a month (housing unit
affordable to 50 % median income).”
If you rent a 2 bedroom apartment/house:
“About 50% of Seattle renters make about 50% median income (about $35,000 for a
household of 3). I pay $ X a month to rent my two bedroom apartment. This
program would cause me to subsidize, through my rent, the development of a
$1,139 2 bedroom apartment. Why should I subsidize the development of an
apartment that will cost almost $ X more a month than mine? Limit this program
to low income communities like Southeast and/or SW Seattle and the Central
District. Don’t include South Lake Union or other affluent areas that don’t need
this stimulus. Set aside at least 30% of the units for people like me–with
incomes below 50% of the median income and below market rents. Instead of giving
tax breaks to a developer setting aside two bedroom units at $1,139 a month,
which I can’t even afford, require the set asides to be priced at $850 a month
(housing unit affordable to 50 % median income).”
If you rent a 3 bedroom apartment/house:
“About 50% of Seattle renters make about 50% median income (about $40,000 for a
household of 4). I pay $ X a month to rent my 3 bedroom apartment. This program
would cause me to subsidize, through my rent, the development of a $1,316
three-bedroom apartment. Why should I subsidize the development of an apartment
that will cost more than $ X more a month than mine? Limit this program to low
income communities like Southeast and/or SW Seattle and the Central District.
Don’t include South Lake Union or other affluent areas that don’t need this
stimulus. Set aside at least 30% of the units for people like me–with incomes
below 50% of the median income and below market rents. Instead of giving tax
breaks to a developer setting aside three bedroom units at $1,316 a month, which
I can’t even afford, require the set asides to be priced at $1000 a month
(housing unit affordable to 50 % median income).”
If you are a homeowner:
Tell them how much your property taxes have gone up recently and how it is
affecting you. Tell them that you cannot fathom why you should be forced to pay
higher taxes, just so a few developers who offer rentals at $850 - $1100 and up
can walk away with $20-30 million in tax breaks.
See link for info on income and affordable rent:
http://www.seattle.gov/housing/
In sum & how councilmembers voted in committee:
The Mayor has sold this program to most Councilmembers as an “affordable”
housing program, but obviously it is not. This measure goes before the full
Council for a vote next Monday March 15th so call our e-mail your councilmembers
today. It passed out the Council’s Housing Committee last week on a 3-2 vote in
favor of the proposal. Councilmembers Nick Licata and Richard McIver shared our
concerns and opposed it in Committee. Tom Rasmussen, David Della, and Jan Drago
voted in favor of it.
But again, there is still time to act so
please call or e-mail ‘em ASAP or find yourself footing a bigger tax bill just
so Paul Allen can get a few more tax breaks in South Lake Union. For more
information, contact 632-0668