Frequently Asked Questions
While we will be preparing Question-and-Answer information to respond to a wide variety of questions about the Housing Strategy, a few examples are provided for now. If you have suggestions for other questions, please send them to: firstname.lastname@example.org.
What is meant by a “housing strategy”?
A housing strategy is a set of ideas that the City can further explore to help meet future housing needs. A strategy is an approach, not the final action. Having a written strategy can help the community keep track of the general direction on issues that have been identified.
Why have a housing strategy for Edmonds?
The purpose of a housing strategy, based on the Edmonds Comprehensive Plan, is to identify how housing can be retained or added to meet a wide range of needs and incomes. (Note: While some people have assumed the strategy’s main purpose is to accommodate projected population growth, that is not really the case. The focus is on what the City can do to provide housing options for different needs and incomes, while also taking actions that complement the quality of life in Edmonds.)
Have other cities been working on housing issues?
The answer is yes. Examples include Shoreline, Bothell, Lynnwood, Olympia, Bellingham, Redmond, and Issaquah. Of course, cities can’t solve housing issues by themselves but they do have a role in making it easier or harder to plan for future housing and to assist people who want to stay in their community.
What does state law say about how cities should plan for housing?
One of the broadest requirements under state law is in the state’s Growth Management Act, especially RCW 36.70A.070(2), which calls for ensuring the vitality and character of established residential neighborhoods, identifying sufficient land for many types of housing, and making “adequate provisions for existing and projected needs of all economic segments of the community.”
If a housing strategy is adopted, must the City Council follow it?
While under state law, each local government must follow its Comprehensive Plan, the same requirement does not necessarily apply to a strategy. A housing strategy provides guidance on approaches and ideas as the City moves forward. But it is not mandatory, nor written in stone. Other factors will also be an influence.
Multi-family Tax Exemption
What is the multi-family tax exemption (MFTE) and what does it apply to?
The MFTE is a State-enabled program (pursuant to RCW 84.14) that local jurisdictions may implement in areas within their communities for which they have approved plans calling for growth in housing and jobs in proximity to transit, services and amenities. The MFTE is an incentive to encourage developers to construct multifamily buildings or mixed multifamily-commercial (“mixed-use”) buildings in these areas, while also setting aside 20% of the dwelling units for low- and moderate-income households. The exemption allows for the residential improvement value of a new project to be exempted from property tax for a period of up to 12 years. During this time any nonresidential improvement (e.g., retail first floor) value, as well as the land value are NOT exempted from property tax.
How does the MFTE program work in Edmonds and where?
In Edmonds this program has been approved for the Westgate area and the Highway 99 Corridor, both areas that underwent comprehensive subarea planning processes to encourage new development that would provide a range of housing opportunities, space for new businesses and services, as well as local jobs – all in proximity to good transit service and other amenities. Edmonds City Council approved the MFTE for these two areas in order to steer development to these areas as opposed to areas of the City less suitable to accommodate new development, as well as to bring new affordable housing opportunities to these locations. A project in these areas may qualify for the MFTE only if it provides at least 20% of the units for low- and moderate-income households. (In 2017, that meant a top annual household income for a two person household of $87,400 for a moderate-income family or $57,000 for a low-income family.)
Why is an incentive needed to attract housing for low- to moderate-income households?
Since its inception in the mid-1990s the MFTE has been implemented by over 30 cities in Washington, including most of the cities neighboring Edmonds. In order to attract new development that includes affordable housing to the Westgate area and the Highway 99 Corridor, this incentive is needed. Without this incentive, builders are likely to build only full-market rate housing due to the high-cost of land acquisition, construction materials, and labor.
What does this incentive cost Edmonds taxpayers?
The short answer is – nothing. The exemption essentially masks the value of the residential portion of a new development such that it does not contribute tax revenue during the exemption period. No one pays more in taxes. During the exemption period taxes accrue from the nonresidential portion of the project, from the substantially greater land value after the project has been completed, and the residents and businesses in the project will contribute substantially with sales and utilities taxes. What’s more, without the incentive, development may not occur at all in these areas – or at least be delayed by many years – leaving some sites vacant or substantially under-utilized and contributing very little in tax revenue to the City. Even during the 12-year partial exemption period, new projects on these sites would contribute more in tax revenue than existing conditions.