Council approves MFTE 'Program 7' after extensive public comment and amendments

Seattle City Council on Oct. 14 passed Council Bill 121055, renewing and modifying the multifamily tax exemption (MFTE) program known as “Program 7” by a 9-0 roll-call vote. The bill, as amended during the meeting, adjusts income targeting, clarifies conversion and extension procedures for projects that want to convert from previous MFTE terms, and adds demolition-policy compliance consistent with state law.

The MFTE program provides a property-tax exemption to owners who agree to keep a portion of units at below-market rents; supporters say the program incentivizes workforce and middle-income housing and revives stalled projects, while critics say the city should attach stronger labor standards and preserve deeper affordability.

Councilmember Tanya Solomon, sponsor of the legislation, told colleagues the amendments approved on the floor were intended in part to bring the city into compliance with state law and to make the program administratively workable for the Office of Housing. “This amendment’s help ensure that Seattle’s MFE program complies with state requirements and better allows Office of Housing to administer the 2025 MFE program,” Solomon said when she introduced the first floor amendment.

Supporters from the development community argued Program 7 makes marginal projects financially feasible and will restart stalled pipelines. Patrick Foley, vice president of Lake Union Partners, said he has roughly 1,000 units in the developer pipeline that will not move forward under the prior rules: “This is a math equation… Program 6 as it is, we have a thousand units in the pipeline … and program 6 as is, we will not be able to move those projects forward.” Emily Thompson, a local developer who works on affordable and workforce housing, said: “This is the only tool that we have for middle income renters.”

Union representatives and some tenant advocates urged additional safeguards. Moana ’Oumowen, identifying herself as a union carpenter, said MFTE projects too often proceed with low wages on job sites and asked council to require prevailing wages and apprenticeship utilization if the city grants long tax exemptions: “No tax breaks without fair wages. No affordable units built by low paying jobs.” Several public commenters and labor advocates asked council to convene a 90-day stakeholder process to develop a labor-standards amendment tying MFTE participation to prevailing wage and registered apprenticeships.

Other speakers representing renters and community organizations argued that the program as proposed would reduce the public benefit of the tax exemption by raising AMI (area median income) thresholds and producing units that are near market rates. Hallie Willis, policy manager at the Seattle/King County Coalition on Homelessness, urged council to "project the proposed P7 MFPE, renew P6 for a year, and rethink the program to provide the level of affordable homes we actually need." Several tenants and managers described administrative burdens under the prior recertification rules and asked for a streamlined process for income certifications.

Councilmembers adopted two floor amendments before final passage. Amendment A (adopted) required the MFTE program to conform to state law requirements addressing demolition of existing structures, eliminated the now‑moot extension-application deadline for projects that expire in 2025, and struck a provision that would have allowed some units to retain original bedroom-designations in ways that conflicted with state law. Amendment B (adopted) established conversion procedures for projects seeking to convert from Program 6 terms to Program 7 terms and clarified that converting to Program 7 would not restart the clock on an existing 12-year exemption period.

The final roll call on passage recorded nine votes in favor and none opposed: Saka (Aye), Solomon (Aye), Strauss (Aye), Hollingsworth (Yes), Juarez (Aye), Kettle (Aye), Rink (Yes), Rivera (Aye), Nelson (Aye). Councilmember Solomon closed debate by urging passage and noting the measure’s intent to help housing production in the current market.

Clarifying details recorded during the meeting included: the program’s revised AMI targeting (discussions referenced expanding eligibility to roughly 70–90% AMI to increase access for “middle-income” renters), an option for projects to receive a 12-year exemption, and a committee-approved amendment to allow projects expiring in 2025 to pursue renewal under clarified timelines. Several speakers and memos referenced a University of Washington analysis on tax-shift effects and a prior Program 6 that had reduced developer participation when affordability requirements tightened.

Why this matters: MFTE is one of the few voluntary tools the city uses to encourage private investment in below-market units for workers such as teachers, first responders and service-industry employees who earn too much to qualify for subsidized housing but too little to afford market rents. Passage of Program 7 aims to restart stalled projects by improving financial feasibility while maintaining an on-site affordability requirement, though the final balance between affordability, labor standards and developer participation will require continued oversight.

Outlook: With the ordinance passed, Office of Housing will implement the revised application and conversion procedures. Councilmembers and public commenters signaled they plan to keep pressure on the Office of Housing and the city attorney to monitor administration, to pursue possible labor-standards language in future amendments, and to track the program’s effect on both housing supply and construction wages.

Ending note: Councilmembers repeatedly emphasized that MFTE alone cannot solve the housing crisis and presented Program 7 as one tool among many, including deeper-subsidy programs, the housing levy, and other city investments that councilmembers said will be necessary to meet broader affordability goals.