Multifamily Property Tax Exemption (MFTE) Program Reauthorization
Overview
The City of Seattle first adopted the Multifamily Property Tax Exemption Program (MFTE) in 1998 and has reauthorized the program five times since then. The current MFTE Program is codified in SMC Chapter 5.73 and is scheduled to sunset on September 10, 2025. As such, the Seattle Office of Housing (OH) is overseeing an in-depth evaluation of the MFTE Program to inform recommendations for reauthorization legislation in Quarter 4 of 2025. Please note that separate legislation allowing OH to approve 12-year extensions of property tax exemptions scheduled to expire in 2025 was approved by City Council in March 2025.
What is MFTE?
The Multifamily Property Tax Exemption (MFTE) Program provides a tax exemption on eligible residential improvements in multifamily housing developments in exchange for income- and rent-restricted homes. Seattle’s MFTE program is the largest in the State of Washington, with over 6,600 MFTE homes currently part of the program.
What does reauthorization entail?
Over the last year, the Mayor's Office and OH have analyzed key information about the MFTE program to understand which aspects should be improved or changed through the legislative reauthorization process. OH has gathered feedback from constituents (renters, developers, property owners and operators); analyzed housing market and MFTE program data; and collaborated with the University of Washington to evaluate the costs and benefits of the MFTE program. This information informs proposals for the next iteration of MFTE (“Program 7” or “P7”).
Proposed Program 7 Legislation
The Mayor's Office and OH will be presenting the proposed legislation to Seattle City Council for Program 7 of the MFTE program on Wednesday, August 13 at 10 a.m. during a special meeting for the Housing and Human Services Committee.
You can view the agenda and read the full proposed legislation by clicking this link.
Proposed legislation for Program 7 includes:
- Reducing MFTE program participation fee to $2,000 base fee, plus $200 per unit, up to a maximum of $10,000 per project.
- Increasing the allowable rent and income limits for MFTE units, based on the area median income (AMI) levels.
- Establishing MFTE affordability requirements for standard and alternative bedroom configurations.
- Modifying comparability requirements and the distribution of MFTE units and unrestricted units.
- Replacing the Program 6 rent cap with the State rent cap authorized by HB 1217. A current 4.5% rent cap remains in place for current renters in MFTE P6 properties.
- Allowing developers to change their agreements to reflect new MFTE P7 rules, if a Final Certificate of Tax Exemption has not been issued yet.
- Clarifying various definitions and application, reporting, and administrative processes.
OH Engagement on MFTE Reauthorization
- Survey Feedback: Over 600 MFTE renters shared their experiences via a survey.
- Virtual Meetings: Two webinars (May 17 and October 23) provided updates and gathered input from stakeholders.
- Written Feedback: Constituents submitted written input to highlight program strengths and areas for improvement.
- Data Analysis: Reviewed renter demographics, income, housing costs, and market data to propose updates to rent and income limits for Program 7.
UW report
A team of researchers at the University of Washington evaluated MFTE’s costs and benefits. The researchers compared tax exemption values to the amount of rent discounts for MFTE-designated apartments. The report also highlights program challenges and considerations for reauthorization legislation. Read the final report here.