Lakewood planning commission holds public hearing on expansion of multifamily tax exemption and proposed code changes

City economic development staff opened a public hearing Feb. 19 on proposed changes to Lakewood’s multifamily tax exemption program and a recommendation to expand residential target areas to the Central Business District (CBD).

Becky Newton, Lakewood economic development manager, told the planning commission the staff package includes two code amendments and proposed expansions to residential target areas. Newton said staff recommends expanding the RTA in the CBD because the district is designated for new housing in the comprehensive plan, has infrastructure capacity, and qualifies the city for regional transportation grants.

The proposed code amendments would (1) add a 12‑year extension option for projects that received an initial 8‑ or 12‑year exemption, allowing projects in the CBD (outside the tax increment area), Lakewood Station District and Springbrook RTAs to apply for a subsequent 12‑year extension in exchange for continued or increased income restrictions on affordable units; and (2) clarify application timing by requiring the application be filed after land‑use permitting is complete (or prior to building permit issuance if no land‑use action is required) and that conditional agreements be fully executed before final certificate of occupancy issuance.

Newton summarized program eligibility: property owners who build new residential units or rehabilitate existing units in RTAs may apply for an eight‑year exemption for market rate projects or a 12‑year exemption if at least 20% of units are set aside as affordable to households at 80% of area median income or below.

Public testimony ran nearly two hours and included voices both for and against the expansions and amendments. Supporters — including developers, a regional affordable‑housing nonprofit and some residents — argued the MFTE makes hard projects financially feasible, produces middle‑income housing and generates long‑term tax revenue that outweighs temporary exemptions.

"[MFTE] encourages density and mixed‑income housing ... without direct public subsidy," said Adria Buchanan, executive director of the Fair Housing Center of Washington, who testified remotely in favor of the program. Jason Gano, a consultant who said he grew up in Lakewood, cited data from Tacoma projects and argued the program helps attract residents and commercial investment.

Proponents also included James Guerrero, a local architect who confirmed he has a project in an MFTE zone and urged commissioners to adopt the expansion. Guerrero said the exemption does not change zoning but provides a necessary financial incentive for construction in today’s high‑cost market.

Many nearby residents spoke in opposition to proposed expansions down parts of Gravelly Lake Drive and other transitional corridors, raising concerns about traffic, parking, loss of small businesses, reduced green space, building height and the displacement of manufactured‑housing parks. Speakers repeatedly asked for more traffic analysis and larger private open‑space requirements for new multifamily projects.

"Most of the space proposed for development is occupied by current, active, thriving businesses," said Christina Claes, a small business owner. "Extending the RTA makes it possible for developers to come in and build high‑density housing ... leaving very little room for green space and local businesses."

Michael Branstetter, a Lakewood council member who spoke as a private resident, urged the commission to consider that some manufactured‑housing parks within Springbrook provide affordable homeownership and to reconcile comprehensive‑plan policies (HO‑3.9) that seek to preserve those parks with any RTA boundaries that might incentivize replacement.

Commissioners asked clarifying questions about the recommended boundaries, income‑restriction terms, and the relationship between RTAs and zoning. Taylor Lee, who said her family owns a vacant commercial lot at 11225 Pacific Highway Southwest, urged the commission to extend the Lakewood Station RTA to a 0.25‑mile radius around the transit hub so more parcels with pedestrian access and existing sidewalks become eligible for MFTE incentives. Lee cited Lakewood Municipal Code 18C.606.10(b)(4) when describing reduced parking allowances for sites within 0.25 miles of a center station.

The commission did not take final action on the RTA map or the code amendments on Feb. 19. Commissioners unanimously approved a motion to keep the public hearing record open for additional written comment through noon on March 5. Commissioners also postponed further discussion of middle‑housing regulations until a later meeting by consensus.

The planning commission will receive written comments submitted through March 5 and may hold additional study sessions or take action on March 5 or March 19, depending on its schedule.

Votes and procedural actions taken at the Feb. 19 meeting included approval of the prior meeting minutes and a unanimous vote to keep the RTA/MFTE public hearing record open through March 5 for written comment.

Why it matters: The MFTE and RTA decisions affect where developers can access a significant tax incentive tied to project affordability commitments. Expanding RTAs or altering MFTE terms can incentivize new multifamily housing in corridors and downtown areas, with implications for neighborhood character, traffic, city tax receipts and availability of lower‑cost housing in Lakewood.

Next steps: The comment period remains open through March 5 at noon; staff will compile written comments for the commission and the commission will determine whether to continue the hearing, hold additional study sessions, or vote on the proposed code amendments and RTA boundary changes at a future meeting.