Lakewood planning commission reopens debate on multifamily tax exemption and possible RTA expansions

Lakewood Planning Commission members heard a staff presentation and public comment on proposed expansions of the city’s multifamily tax exemption (MFTE) program and on code language to allow a 12‑year exemption in parts of the Central Business District outside the city’s tax‑increment finance area.

The discussion centered on where to designate new residential target areas (RTAs), how to preserve ground‑floor commercial space and how to ensure MFTE projects meet parking, sewer and affordability goals. Becky Newton, Lakewood economic development manager, told the commission the council asked staff to forward several candidate areas for planning commission review and a public hearing set for Feb. 5 with a return to commission planned for Feb. 19.

Newton said the MFTE is designed to encourage redevelopment and higher residential densities in targeted areas and provides a property‑tax exemption as a development incentive. "The exemption that we offer currently is an eight‑year market rate," Newton said. "We also offer a 12 year if 20% is affordable." She told commissioners projects must be at least 15 units, achieve at least 50% permanent residential occupancy of the building, and have a proposed completion within three years of approval.

Why it matters: Council and staff said the program is a primary tool to attract housing and support the downtown regional center designation, which helps secure regional transportation funding. Residents and some commissioners warned the incentive as proposed could accelerate demolition of small businesses or displacement in low‑income neighborhoods unless zoning and permit requirements preserve ground‑floor commercial space and address parking and infrastructure needs.

What staff presented and clarified

Newton reviewed current and proposed target areas including the Central Business District, Oak Brook, Springbrook and Tilikum and summarized existing program mechanics: an eight‑year exemption for market‑rate units, an optional 12‑year term when 20% of units are kept affordable at 80% area median income, and an application/approval process administered by the Planning and Public Works Department. Newton said council asked staff to draft a code amendment to Lakewood Municipal Code section 3.64 to clarify when an applicant files for MFTE and to allow the 12‑year option outside the tax‑increment finance (TIF) area in the central business district now that the TIF boundary is final.

Newton also provided project and capacity figures cited during the meeting: 614 units approved to date; pending applications including the Alliance project (staff said the unit count may be higher than 390 and may be closer to 420, pending a public hearing); Springbrook 2 at 76 units; and a planning estimate that the proposed Central Business District expansion could open roughly 9.25 acres of underutilized land with capacity for additional units along Gravely Lake Drive.

Public comment and commissioner concerns

James Dunlop, a Lakewood resident, urged commissioners to review academic evidence about whether MFTEs benefit cities and to consider long‑term fiscal effects. "I do think this is a bad idea," Dunlop said, adding he had found little evidence that such exemptions produce net benefits for residents.

Walter Neri, a Lakewood resident and former city council member, encouraged commissioners to listen to public input and to act independently of staff or council preferences. "Listening does not mean that you are weak in your convictions," Neri said, asking commissioners to weigh evidence and community comment.

Christina Klas, a downtown resident and small business owner, told commissioners the current draft does not require new downtown apartments to include ground‑floor commercial space. "If we want both businesses and apartments to operate together, we need to plan for them together," Klas said, urging the commission to require mixed‑use design in downtown permitting when MFTE is used.

Commissioners pressed staff on parking requirements, possible commercial displacement in shopping areas such as the Clover Park Shops, sewer‑extension costs for the Tilikum area, the program’s monitoring and enforcement process, and whether the 20% affordable threshold could be increased. Newton said the 20% threshold is the state standard for the 12‑year term but that the city may adopt more restrictive requirements; she noted that few developers can meet stricter affordability thresholds without other subsidies. On enforcement, Newton summarized the annual certification process for both affordable and market‑rate units and said the city had not yet revoked an exemption for noncompliance.

Staff also explained that the city’s TIF program is earmarked primarily for downtown parks and public open‑space projects. Newton said the MFTE incentive does not change zoning: it makes properties eligible for a tax deferral but does not alter allowed uses; requirements about mixed‑use come from zoning and any overlay standards.

Commissioner responses and next steps

Several commissioners asked for additional outreach and analysis before recommending expansion to council. Commissioner Robert Estrada and Commissioner Lynn Larson (who moved approval of earlier minutes during the meeting) both voiced caution about commercial displacement in currently active shopping areas. Commissioner Philip Combs and others said developers have told staff MFTE often is necessary for a project to "pencil" under current market and lending conditions.

No formal recommendation to city council was adopted at the meeting. Instead the commission signaled it wants more time for public outreach and analysis; staff said the matter will proceed to a public hearing on Feb. 5 and return to the commission Feb. 19, and that staff can add a study session or additional public‑facing events if the commission requests them.

Ending: What to expect

Staff recommended a code amendment to clarify the filing and certification timeline for MFTE applications and recommended consideration of a 12‑year option in parts of the Central Business District outside the TIF area. Commissioners asked staff to return with more targeted maps showing specific parcels under consideration, additional information on potential commercial displacement and sewer costs for Tilikum, and examples of how other cities have used MFTE successfully. A public hearing is scheduled for Feb. 5; the commission will revisit recommendations Feb. 19.