Council narrows multifamily tax exemption rules; short-term rentals debate divides members

The Spokane City Council on July 14 approved an ordinance amending MFTE (multifamily tax exemption) rules to require developers to disclose the number of short-term rental units at project approval and to exclude short-term rentals from units that count toward MFTE incentives. The measure passed 4–2 after extended debate. Council members raised competing priorities: Council member Klitsky (spelled in the record as Klitzke) and Council member Bridal argued the ordinance could disincentivize development by removing a revenue stream developers sometimes use to make affordable units financially viable. Klitsky warned developers could move projects to other jurisdictions if the MFTE became less attractive. Council member McClitsky (transcript label: McClitsky) said the change is intended to add predictability and to prevent taxpayers from subsidizing new short-term rentals via MFTE; he noted the ordinance "isn't to prevent a development from having short term rentals, but they cannot…count towards the multifamily tax exemption." Council member Bingle said administrative work currently separates short-term-rental square footage for assessor review and said the ordinance would prevent short-term rentals from being part of an MFTE project. Council member Bridal explained that although she sponsored the ordinance, she planned to vote against it because she feared it could reduce the number of projects that "pencil" and thereby reduce affordable housing production. Debate focused on trade-offs between program simplicity and maximizing housing output. The council voted 4 in favor, 2 opposed. The transcript shows no immediate implementation timeline; the ordinance changes the municipal code sections noted in the docket and will be administered by planning and assessor offices.