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Richland staff outlines multifamily tax-exemption options to spur downtown housing
Summary
Director Rizzatello briefed the council on the state's multifamily tax-exemption (RCW 84.14) and the local choices (8-, 12- or 20-year exemptions), explained affordability set-asides (12-year: 20% at 80% AMI; 20-year: 25% homeownership), and recommended next steps if council wants staff to pursue an ordinance.
Director Rizzatello presented the multifamily housing tax-exemption (MFTE) as a customizable tool the council could adopt to encourage new multifamily housing and rehabilitation in designated urban centers under state RCW 84.14. He said cities may choose 8-, 12- or 20-year exemptions and can add local affordability or design requirements to the state baseline.
Rizzatello explained the most common models: the 8-year option is typically used for market-rate housing (no state-mandated affordability), the 12-year option requires developers to set aside at least 20% of units at 80% of area median income for rental housing, and the 20-year option (added in 2021) supports affordable homeownership with 25% of units for households at 80% AMI or below, often with nonprofit or public sponsors and resale restrictions. He used Walla Walla as a case study, saying one 12-year project cost the city an estimated $982,000 in foregone property tax over the exemption period while triggering more than $30,000,000 in private investment.
Why it matters: Council members asked how to design geography, monitoring and review periods; Rizzatello said target areas can be revised by ordinance, annual state reporting is required, and local code can add a periodic review (for example, five years). Several council members voiced support for staff to return with specific recommendations and an implementation timeline.
