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Everett staff propose MFTE expansion to spur small-scale housing; modeled tax impact modest
Summary
City staff proposed lowering the minimum MFTE-eligible project size from 16 to 4 units, expanding eligible zones citywide and incorporating state changes from House Bill 1494; staff say the change could add 15–100 units per year and would shift roughly $1.3 million in property tax burden across existing taxpayers.
City planning staff on May 19 briefed the Everett Planning Commission on proposed changes to the multifamily tax exemption (MFTE) program that would make the incentive available to much smaller projects and to more residential zones throughout Everett.
Frank Hong, the city’s housing policy and development lead, said the proposal would reduce the minimum eligible project size from 16 units to 4 — aligning Everett with Commerce’s state guidance — and would expand the residential target area to include most NR and UR‑4 zones. “We are proposing to reduce it back down to 4, consistent with Commerce’s state regulation,” Hong said, summarizing the core change staff will bring to council. He told the commission the city would also clarify that eligible projects may be either detached or attached buildings and would incorporate technical compliance changes from House Bill 1494.
Why it matters: staff modeling shows the program has supported significant development historically (12 projects currently in the program representing roughly 472 units), and Hong said the MFTE program contributes about 10% of a typical project’s development cost. Based on recent project assumptions, staff estimate the expansion could yield 15 to 100 additional units per year under the comp‑plan capacity assumptions; over a 10‑year horizon that equates to roughly 150–1,000 additional units. The estimated near‑term tax shift for Everett is about $1.3 million annually, which staff calculated would amount to roughly $25.78 per average single‑family homeowner on an annual basis given current assessed values.
Affordability and homeownership: Hong said the MFTE program includes 8‑, 12‑ and 20‑year options, with the 12‑ and 20‑year terms tied to affordability set‑asides. He acknowledged that using MFTE as a practical tool to create homeownership has been difficult and uncommon: “On a homeownership basis…the developer builds the product, they’re selling it off, and so they don’t really reap any benefits from the MFTE program,” Hong said. Staff are proposing to raise the income threshold used in the ownership pathway (from 80% AMI toward roughly 115% in staff modeling) to test whether that makes ownership uses more viable.
Displacement and compliance: Staff reported an anti‑displacement review that found minimal displacement risk in the NR/UR‑4 areas being added; staff also noted relocation assistance remains part of the MFTE framework. Hong told commissioners the city has drafted code changes to implement state permit‑processing timelines separately and will refine administrative guidance for monitoring compliance.
Next steps: staff said they will brief the city’s parks and built environment committee on June 10 and expected a council first reading on June 24. The planning commission will see the proposal again and staff committed to following up with examples of where MFTE has supported homeownership and with more detailed financial comparisons commissioners requested.
At the meeting developers and commissioners urged caution and asked staff to provide case studies and clearer mechanics for ownership projects before council consideration. The commission did not take a formal vote at the May 19 briefing; staff will return with additional materials and a planned public hearing before a recommendation is requested.
