Lakewood planning commission reviews expansion of multifamily tax-exemption zones, holds off final decision

Lakewood Planning Commission members spent the bulk of their meeting reviewing staff recommendations to expand residential target areas eligible for the city’s Multifamily Tax Exemption (MFTE) program and to amend related code provisions, but took no final action and set a public hearing for further public comment.

City planner Odette “Miss” Newton presented staff’s review, saying the session was “another review of the multifamily tax exemption, for consideration of residential target area expansion,” and walked commissioners through program rules and recent project totals. The MFTE, staff explained, is an incentive intended to encourage multifamily development in higher-density areas; the program offers an eight-year exemption for market-rate projects and a 12-year exemption when at least 20% of units meet the program’s affordability threshold.

The discussion focused on which parts of the city to add as residential target areas, whether to add a 12-year extension option in the Central Business District (CBD) outside the Tax Increment Finance (TIF) area, and a proposed clarification to the MFTE application timing so applicants file after land‑use permitting or prior to building-permit issuance if no land-use action is required. Commissioners and staff also discussed potential benefits and negative effects of expanded target-area boundaries, and asked staff for additional data before making a recommendation to city council.

Why this matters: MFTE designation does not change zoning but can make projects financially more attractive to developers. Staff said approved and pending MFTE projects now total roughly 993 units citywide — 608 units approved to date, 309 units from an Alliance Residential proposal pending review, 76 units for Springbrook 2, plus a newly filed 48-unit downtown application — and that the program aims to accelerate development in areas the city wants to densify.

Commissioners pressed staff on fiscal and design impacts. Commissioner Robert Estrada asked whether staff had considered commercial displacement along Gravelly Lake Drive and Silicon Boulevard, noting existing commercial properties in those corridors. Jeffrey Mack, Lakewood’s director of planning and public works, responded that the CBD contains large amounts of commercial space and that city policy prioritizes intensifying housing in regional centers; “one of the reasons we wouldn't be as concerned in the CBD regarding commercial displacement is the large amount of commercial that we already have,” Mack said. Mack and staff also pointed to the city’s existing subarea plan and transition‑zone rules as mechanisms to manage design and scale.

Commissioners and staff discussed program mechanics and outcomes. Staff reiterated minimum MFTE requirements discussed in the packet: a minimum project size threshold (15 units), a residential occupancy requirement (50%), and a requirement that new construction be completed within three years of approval. Staff also said the city has seen rising property-tax revenue on at least one earlier project: “I actually did look at that one. I take that back and we are seeing significant tax increases,” Newton said of Oak Grove Village, and staff promised to add concrete tax-assessment data to future briefings.

Environmental and multimodal considerations were raised. Staff presented an illustrative revenue profile used in the packet showing relatively low municipal revenue during the exemption period and a later revenue spike after exemptions expire. Commissioners asked whether the city requires off-site multimodal improvements or contributions to bike lanes; staff said projects are required to meet frontage and engineering standards and that broader multimodal infrastructure typically accrues as projects cumulatively meet adopted cross sections in the Engineering Standards Manual. On transit, staff said the city had not yet performed municipality-specific before-and-after ridership analyses but offered to contact Pierce Transit and Sound Transit for available data.

Code changes on the table included (1) adding a path to permit a subsequent 12-year extension for projects in the Central Business District outside the TIF area “in exchange for continued or increased income restrictions on affordable units,” and (2) clarifying application timing and fee-handling language so applicants file after land-use permitting or before building-permit issuance when no land-use action is required. Newton said the application-timing edit is intended to reduce confusion and avoid delays when site-development and building permits are processed in parallel.

No final recommendation or vote was taken at the meeting. Chair Philip Combs told commissioners the body would hold a public hearing at their next meeting, saying, "February 19 is the date. And that again will be the public hearing on what you've been discussing this evening." Commissioners indicated they will seek additional public comment and more data — including tax-assessment information and transit ridership data — before forwarding a recommendation to city council.

What’s next: The commission will hold the public hearing at its meeting on Feb. 19 (public-comment period and any continuation to future meetings remain possible). Staff indicated they will compile additional data points requested by commissioners — property-tax assessments for projects after exemption periods end, and transit agency ridership or stop-usage data if available — and return with those figures as the commission prepares its recommendation to council.