The Port Orchard Land Use Committee on Aug. 28 reviewed a draft map and layered code for reintroducing a multifamily tax-exemption program that would offer 8- and 12-year exemptions in designated center areas of the city.
The committee considered a single consolidated target-area map aligned to centers in the comprehensive plan and a code structure in which the 12-year exemption would require deeper tenant savings than the 8-year option.
Committee members said the change matters because it aims to encourage mixed-use downtown redevelopment and middle-housing infill without broadly subsidizing garden-apartment growth. "If we're gonna offer MFTE, let's let's offer all of the types of MFTE," Community Development Director Nick Bond said, explaining the draft collapses multiple prior maps into one and layers 12-year requirements on top of the 8-year baseline. The draft ordinance would let projects qualify for 8- or 12-year exemptions if they meet at least one of a set of form and performance standards. Those standards include: mixed-use buildings with at least 4,000 square feet or 40% ground-floor commercial (option 6a); buildings of at least four stories and about 40 units per acre (option 6b); middle-housing projects of 4–12 units on lots under 15,000 square feet (option 6c); or projects with all on-site parking below grade (option 6d). For the 12-year exemption, the draft raises the affordable-unit requirement from the prior 10% below HUD fair-market rent to 25% below fair-market rent "including utility costs," the staff report says. Bond and staff said that change produces materially larger tenant savings but could reduce developer interest: Bremerton and Kitsap Home Builders representatives told staff that four-story requirements and deeper affordability may make projects harder to "pencil." "You're giving quite a bit more savings for those affordable units," Bond said of the 25% proposal, noting tenants could see hundreds of dollars less per month compared with the earlier framework. Committee members also raised administrative and fiscal questions: staff warned that the affordable (12-year) exemption requires substantially more reporting and city staff time; Bremerton staff estimated one senior planner might spend about 10% of an FTE on a similar program. Bond said the city can refine the draft map to remove institutional parcels (schools, churches) that lie inside center boundaries but are unlikely to redevelop. Committee chair Jay Rose Pepe said members should be prepared to explain the program's subsidy nature to residents; Bond described the exemption as a tax shift, not a new revenue source, and said the assessor will spread the forgone tax increment proportionally across property owners while new ratepayers added by development can help stabilize utility rates. The Land Use Committee directed staff to refine the map (remove clearly ineligible institutional parcels) and bring the draft to a full-council work study in September for broader council discussion.