Housing & Human Services Committee 4/24/2024

and the April 24th meeting of the Housing and Human Services Committee will now come to order.

I'm Kathy Moore, chair of the committee.

Will the clerk please call the roll?

Council President Nelson?

Present.

Council Member Saka?

Here.

Council Member Wu?

Present.

Vice Chair Morales?

Here.

Chair Moore?

Present.

Five present.

All right, thank you.

If there's no objection, today's proposed agenda will be adopted.

Thank you.

Hearing no objection, the agenda is adopted.

So thank you everyone for being here today for the April 24th meeting in the Housing and Human Services Committee.

And also thank you to everyone who's participating in the city's Denim Day, helping bring awareness to the pervasive victim blaming that happens in all too many sexual assault cases.

So thank you for that.

Today we have 13 items on the agenda.

First, we have eight appointments to the Seattle Human Rights Commission.

Second, we have three appointments to the Seattle Women's Commission.

And finally, we have a discussion and possible vote regarding the multifamily tax exemption extension.

We will start this conversation with some background from central staff before turning it over to the Office of Housing to walk us through their legislation, which is listed on the agenda for possible vote.

Before we do that, though, we'll move on to public comment.

We will open now for hybrid public comment.

Public comments should relate to items on today's agenda or be within the purview of this committee.

Clerk, how many speakers are signed up today?

Currently, we have one remote speaker.

All right.

Thank you.

Each speaker will have two minutes.

As we have remote, we will begin with our only speaker.

remote speaker.

Clerk, can you read the public comment rules?

The public comment period will be moderated in the following manner.

The public comment period is up to 20 minutes.

Speakers will be called in the order they registered.

Speakers will alternate between sets of in-person and remote speakers until the public comment period has ended.

Speakers will hear a chime when 10 seconds are left of their time.

Speakers' mics will be muted if they do not end their comments within the allotted time to allow us to call in the next speaker.

The public comment period is now open, and we'll begin with the first speaker on the list, who is Sarah Jane Siegfried, and she is remotely.

Sarah Jane, please press star six when you hear the prompt of you have been unmuted.

Good morning, are you there?

Yes, this is Sarah Jane Siegfried.

Thank you.

Please proceed.

Thank you.

I am calling to protest the multifamily tax exemption program in total because I don't think it's been analyzed from the proper perspective.

I realize that this is an extension of just 15 of the potential...

350 or so total units.

I have read the materials in the presentation and nowhere does it look at opportunity costs.

In other words, most of us are homeowners and if you chose to be a renter, would you choose to be a renter instead of a homeowner?

Basically that's what we're doing.

We're giving the property owners funds every year that should be collected in property taxes and could otherwise be invested by the city in either infrastructure or other affordable housing and we don't look at it that way we don't say well the office of housing has x funds and it matches those x funds three to one so instead of the 1.5 million that's cited here as not collected we would have three to four times that and, um, that money would go to permanent supportive housing or permanent housing for 50 years.

That's the standard.

Nowhere in this legislation does the city define affordable.

So that's a huge mistake.

However, we now have a statewide definition of affordability under House Bill 1110, which should be universally adopted by the city.

And that is affordable is less than 60% of area median income for renters.

period, not the sliding scale that's all over the place in this bill.

So I think it's not been properly analyzed by the staff

All right, thank you very much.

I believe there are no additional registered speakers, so we will now proceed to our items of business.

Members of the public are encouraged to either submit written public comment on the sign-up cards available on the podium or email the council at council at seattle.gov.

We do read the comments, so it is an important part of this process.

Right.

That concludes our list of speakers.

We'll now move on to the first item on our agenda.

Kirk, will you please read the first one through eight agenda items into the record?

Agenda items one through eight.

Appointments 2834 through 2841. Appointments of Mariam Suleiman Koss, Emeka Alozi, Christina R. Diego, Ali Tufal Khan, Nicholas G. Layden, Christina Sawitchi, and Chelsea Stevenson for terms to January 22nd, 2026, and the reappointment of Tricia Diamond for a term to January 22nd to the Seattle Human Rights Commission for briefing, discussion, and possible vote.

All right.

Thank you.

Today we have with us Marta Idewu from the Office of Civil Rights joining us remotely to present our appointees.

We have her.

Good morning.

Oh, good morning.

All right.

I will turn it over to you, Marta, to talk about the work of the commission and to introduce the appointees.

Thank you.

Certainly.

Thank you.

Good morning.

My name is Marta Idewu and I'm a civil rights advisory commission liaison.

for the Seattle Office for Civil Rights.

We have four advisory commissions, which are the Seattle Human Rights Commission, Women's Commission, LGBT Commission, and Disability Commissions.

These commissions advise the mayor, city council, and city departments and offices on issues affecting their commission, and they also make recommendations.

We have mayoral, city council, and commission seats, totaling 21 commissioners on each.

There are four commission seats.

There are eight mayoral seats, plus one get engaged, which is a youth commissioner that stays on for a year, ages 18 through 29, and eight city council seats for a total, of course, 21.

Thank you.

And would you like to introduce the appointees?

Yes.

First, I will talk about Miriam Salaman-Cost.

She was born and raised in Seattle and is a proud Seattleite.

She has a Bachelor of Arts in Communications from the University of Washington.

After spending 12 years in the digital marketing and e-commerce space, she is now taking some time off to be a full-time mom.

She is excited to join the Seattle Human Rights Commission to help serve the community and people of Seattle.

The next person is Amika Alonzi, who I believe is here and he will speak for himself.

Thank you.

Thank you, Marta.

I'm interested in serving on the Human Rights Commission because using my lived experiences to improve the lived experiences of others is very important to me.

Thanks for having me.

Thank you.

And then I will go on to Tricia Diamond.

Tricia Diamond is a reappointment to the Seattle Human Rights Commission and served on committees and is currently one of the co-chairs of the commission.

She has completed both undergraduate and graduate university studies in aerospace engineering, English and mathematics.

She spent her youth in the United States as well as experiencing living internationally instilled in her to dedication to STEM, linguistics and human rights and looks forward to continuing her work on the commission.

Christina R. Diago hopes to join the Seattle Human Rights Commission to elevate community voices concerning human rights and to influence Seattle's administrative, executive, and legislative actions regarding human rights concerns and priorities of the people.

As an individual that identifies with communities that are historically and institutionally underserved and underrepresented, She offers insight and an understanding of the systems that influence government action, institutional policies, and community participation in civic engagement.

To further the goals of the commission, she would be interested in supporting the development and progress of actionable objectives to advance human rights.

Ali Tafel Khan has a diverse background encompassing medical training, public health expertise, and a commitment to human rights.

He is eager to contribute to the commission's vital work in advocating for justice and equal opportunity.

His academic journey has equipped him with a unique perspective, holding an MD from Northwestern University fine Berg School of Medicine and currently pursuing a master's of public health at the University of Washington.

As an occupational and environmental medicine physician trainee, he is developing a comprehensive understanding of the intersectionality between health, social justice, and environmental factors.

He is eager to bring his unique skill set, passion for human rights, and commitment to inclusivity to the Seattle Human Rights Commission.

Nicholas Layden has served as secretary for the Seattle Human Rights Commission since 2014. As senior program officer at the Bill and Melinda Gates Foundation, he works, excuse me, His work focuses on global HIV.

Before his move to Seattle in 2017, he served on the Cambridge Human Rights Commission in Cambridge, Massachusetts, and executive director at the North Shore Medical Center, where he led a department of quality and patient safety.

As a former job, physicians for human rights during the period of 2002 to 2006, He was a national grassroots community organizer, linking advocates to global public health policy.

He is a graduate of Boston College with a BA and Boston University with an MPH and MBA.

Christina Saki is a Seattle University senior working on an interdisciplinary studies degree with hopes on going to law school.

She has seven children from 14 to 29 years of age.

She is multicultural, holding many identities close to heart.

She was in the US Navy from 1987 to 1992, from which she became a disabled veteran.

She is active on many issues, including homelessness, emergency management, disaster preparedness, transit, food insecurity, and grassroots organizing.

She is interested in working on policies and legislation that affects individuals and families with disabilities.

Since 2018, she has been serving as a commissioner on the Seattle Disability Commission and recently termed off this month and looks forward to her work on the Seattle Human Rights Commission.

Chelsea Stevenson.

works in youth violence prevention, intervention, and is extremely passionate about reducing harm to individuals disproportionately impacted by systems of oppression.

She would like to become more civically engaged through the Seattle Human Rights Commission.

She works with individuals impacted by the legal system and or facing housing instability and has firsthand knowledge of the challenges and barriers.

She has connections to Southeast Seattle, where she works and has a desire to engage community, specifically elevate the voices of young people that are not commonly, excuse me, that are not commonly heard or elevated.

Emily Rose Barr is delighted to be part, oh, I think that's where I stopped before, and then with the first eight, I'm sorry.

But I'll stop there until you're ready for the other ones.

And also the reappointment of Trisha Diamond?

Okay.

Oh, I think I did her already.

Oh, I'm so sorry.

I beg your pardon.

She was, I think, number three.

OK.

All right.

So thank you very much for those biographies.

They all sound very well-defined and certainly passionate and people who will bring immense knowledge and passion and commitment to the city.

So thank you for that.

Colleagues, are there any questions or comments before we move to a vote?

All right.

Not seeing any.

So seeing no further questions or comments, I now move that the committee recommend confirmation of appointments 2834 through 2841. Is there a second?

Second.

Thank you.

It has been moved and seconded to recommend confirmation of the appointments.

Are there any final comments before we vote?

I do have a comment, which is that I very much appreciate people giving of their time and expertise to serving on our commission.

Thank you very much.

Thank you.

Madam Chair, if I may echo that sentiment, having served on multiple volunteer boards and commissions at the nonprofit, philanthropic organization, and in government, local government, various local governments, I know firsthand the commitment involved, and I'm grateful for those who have stepped up to serve today in this capacity and all those.

who serve our city in these really, really important foundational service-oriented roles, and they dedicate their time and efforts towards making our city greater, and I'm grateful for that.

Thank you.

Thank you.

All right, will the clerk please call the roll on the recommendation to confirm the appointments?

Council President Nelson?

Aye.

Council Member Saka?

Aye.

Council Member Wu?

Yes.

Vice Chair Morales?

Yes.

Chair Moore?

Aye.

Five in favor, none opposed.

The motion carries and the committee recommendation to confirm the appointments will be sent to the April 30th City Council meeting.

Again, thank you to the appointees who were able to join us today and thank you to all the others for your interest in joining the Human Rights Commission.

Clerk, will you now please read agenda items nine through 11 into the record.

Agenda items nine through 11, appointments 2842 through 2844, appointments of Emily Rose Barr, Mariah Rivera, and Jennifer Tran as members to the Seattle Women's Commission for terms to July 1st, 2025 for briefing, discussion, and possible vote.

Thank you.

Marta, will you walk us through the appointments to the Seattle Women's Commission?

Yes, and just before I start, did Maria Rivera get on the call?

Otherwise, I will speak for her.

She is not on the call.

Okay, thank you.

Emily Rose Barr is delighted to be part of the Seattle Women's Commission.

She is a strong advocate for women's rights worldwide.

Emily believes that as a woman, it is her responsibility to promote gender equality, honor women's legacy and empower women to go after their dreams in a society that often encourage otherwise.

As a new resident in Seattle, she is excited to contribute to the city's growth and development.

She currently is a mental health therapist in private practice and enjoys connecting with others through volunteerism.

Mariah Rivera works in an environmental health and safety specialist for the Boeing Company in Renton, Washington, and will celebrate her one-year service in July, as well as one year of time spent here in the Puget Sound.

She has a master's in environmental policy from the University of Denver, and her bachelor's is in environmental science from Sonoma State University in California.

Prior to her relocation to Washington and role at Boeing, She worked on many travel assignments from Ball Corporation as a corporate environmental health and safety engineer, which is what charged her dream to relocate to Seattle.

She is looking forward to further assisting the city of Seattle through the Seattle Women's Commission.

Jennifer Tran is a developer relations engineer at DFINITY, where she empowers technologists to learn about blockchain technology, excuse me, technology.

She moved to Seattle to discover new opportunities for a digital collectibles business that she co-founded.

She would like to help empower women with economic opportunities on a larger scale.

She has personally been impacted by a layoff and closure of a business in the past years and emphasize with emphasis empathize with those trying to build a better life in Seattle.

The recent mass layoffs of companies have led Seattleites to realize how fragile the business world is and how that need to make their city and community resources more resilient.

She wants to help those of different socioeconomic backgrounds connect and help them build more safe and equitable communities.

On the commission, she is interested in improving public safety for women and bringing wide economic opportunities for women.

Thank you so much, and I will turn it back over to you, Council Member Moore.

Thank you.

I'm sorry, is Mariah on the line?

No, okay, thank you.

Thank you so much, Marta.

I really appreciate you walking through, again, those additional biographies.

And again, it seems like a very well-qualified group of people who are choosing to volunteer their time to better the lives of everyone in our city.

Colleagues, are there any questions or comments?

All right, thank you.

So seeing no further questions or comments, I now move that the committee recommend confirmation of appointments.

Let me make sure I've got the right numbers here.

2842 through 2844. Is there a second?

Second.

Second.

It's been moved and seconded to recommend confirmation of the appointments.

Are there any final comments?

Okay.

Seeing none, will the clerk please call the roll on the recommendation?

Council President Nelson?

Aye.

Council Member Saka?

Aye.

Council Member Wu?

Yes.

Vice Chair Morales?

Yes.

Chair Moore?

Aye.

Five in favor, none opposed.

Thank you.

The motion carries and the committee recommendation to confirm the appointments will be sent to the April 30th Seattle City Council meeting.

Again, thank you Marta for joining us today and please pass along the committee's gratitude to everyone for their interest in serving on those two vital city commissions.

All right, thank you.

Okay, moving on.

Will the clerk please read the 12th agenda item into the record?

Agenda item 12, multifamily tax exemption background for briefing and discussion.

Okay, thank you.

So today we have two of our central staff analysts, Jennifer Lebrecht and Tracy, to do some stage setting before we address the MFTE extension legislation that's next on the agenda.

So with no further ado, we'll turn it over to the two of you.

Thank you, Councilmember Moore.

Councilmembers, good to be with you this morning.

Tracy Ratseff, Council Central staff.

I'm presuming that you all have up on your computer screens as well.

I think we have it now up on the screen.

Jen and I are happy to be here today to do a little bit of ground setting for the Multifamily Tax Exemption Program.

Councilmembers, you will have in front of you this year, we anticipate two pieces of legislation.

The first today will deal with only the extension of the property tax exemption for 15 properties that...

are expiring this year.

The second piece will come sometime this summer, we hope, which will be a full reauthorization and evaluation of the program that will result in your potential approval of an extension of that program.

But both of those will be things that we feel like you needed a little bit of background on, and the public might benefit from a little background on the program.

So that's what we're gonna do today.

So today we'll talk about a little bit of the history, the key policy considerations when considering this program, what's happened in terms of production of the program.

The current program that we operate in the city does have two pieces.

It has the rental production program.

It also does have a home ownership program.

The home ownership program really sees very little action, primarily because of the cost of housing and the benefit of the property tax, which accrues really to the owners of the eventual homeowners.

And who's really doing that program are the nonprofit providers.

The rental production program, vast majority, if not most of the majority of the units are being developed by for-profit developers.

And that's where we see most of the action, have seen most of the action on this program.

We'll look at the current provisions of the P6, Program 6 MFTE program.

We'll talk a little bit about the cost implications of the program.

We will talk a little bit about expiring projects and what that looks like going forward.

And then we'll talk a little bit about next steps.

So in terms of background, the MFT program provides a tax exemption on the residential portion only of a development in return for the property owner agreeing to a certain percentage of units that are income and rent restricted.

The property does continue to pay taxes on the land.

It is only the residential improvements that get the tax exemption.

But the tax exemption applies to all of the units in a project, not just to the units that are being set aside as income or rent restricted.

It's how the equation really works for the developers is they get the tax exemption for the whole project, but they only have to rent restrict on a certain percentage, and we'll talk a little bit about what those percentages are.

It was authorized in 1995 by the state legislature, which sets minimum requirements for income limits, percentage of affordable units, as well as other provisions related to tenant protection and reporting.

Jurisdictions can choose to implement and have flexibility to go beyond the minimum requirements that are set out in state law.

I will say that the state law does have an exemption program, an eight-year exemption program.

We have not ever chosen to implement that eight-year exemption.

It has basically no requirements related to affordability or income restriction.

We have always adopted a program that has those kinds of provisions related to it.

The council first approved the MFT program in 1998, and we've reauthorized the program five times since.

The current program does expire in December of 2024, which is why we will be looking at this program in terms of reauthorization before the end of the year.

And we have had different program iterations with the five times that we have reauthorized the program that have done things like change the affordability levels, looked at and changed the set-aside percentages, and also made changes in terms of where the program can operate in the city.

In terms of key considerations as it relates to this program, so for the city, it really is how many affordable units at what income level or affordability level can we get in exchange for the value of the property tax exemption that's provided.

For the developer, it really is what's the benefit of the property tax exemption on an annual basis, and then what are we losing in terms of the rental income that we could charge on those rent-restricted units, but that we can't charge because we have to to set them at a lower affordability than the market rate units that they would otherwise charge.

Those are really the two considerations that the city and the developers look at as it relates to the program.

This next slide shows you some information about the current 6,100 income and rent-restricted MFTE units.

You can see on the left-hand side, it looks at the size of the units in the MFTE portfolio.

And we can see that 50% or 3,300 of the units that are MFTE-restricted, rent-restricted units are one bedrooms.

37% or 2,400 are SEDUs or studio apartments.

13% or 845 are two bedrooms and then a small number of three bedrooms.

Council Member Nelson.

Yes, I'm sorry.

I was trying to follow along with my questions that are in my printed out presentation.

Is this a new version of the presentation?

I don't think so.

Okay.

Got it.

Thank you very much.

I was following in the wrong one.

There are some similar slides.

Thank you.

Go ahead.

No worries.

Okay.

The second pie chart looks at the income slash rent levels that are assigned to the MFTE units.

So we can see that 52% of the units are affordable at 75 or 80% of AMI.

We see that 31% are affordable to folks at 65 to 70% of AMI.

13% are available to those at 85% to 90% of AMI, and 4% are available to those at less than 60% of AMI.

What this right-hand slide really shows is kind of the different affordability levels that have been in play for the different programs.

Remember, I referred to the five times we authorized, and each time we've had slightly different affordability levels, and this really kind of shows how that's evolved over time and what the percentages are related to that.

Next slide.

In terms of the current program six MFT provisions for the rental program, currently 20% or 25% of the units must be income and rent restricted.

That really depends on the number of two plus bedrooms that are in the project.

If they have more, 8% or more units that are two bedrooms, then they only have to set aside 20% of their MFT units as rent and income restricted.

If they have less than 8%, then they have to actually do 25% of their units as MFT units.

And this is one small way over the years that we've tried to tweak and incentivize the inclusion of two-plus bedrooms into the projects and projects who participate.

Project type must be multifamily building with at least four units.

MFT units must be generally comparable to the other units in a project and distributed throughout the building as the other units.

There is a slight variation allowed for high rise towers that have slightly different distribution rules.

What we mean about comparability is really a type of unit, so studio, one bedroom, two bedroom, size of the units, finishes on the units, access to amenities, all those things have to be comparable to the market rate units in a project.

They can't dumb down or or make lesser quality the MFT units.

They have to be comparable to the other market rate units in the project.

And then finally, for the program six, we do have a maximum allowable rent that can't be charged each year, and it can't be more than 4.5% per year from the year before.

In terms of the affordability levels for Program 6, you can see this chart shows you what those affordability levels are.

You will note that the smaller units, we have a lower affordability and rent associated with them, and this is obviously something you all understand in terms of the rental market, that smaller units achieve smaller units because of the square footage.

It really is driven by the square footage here.

And so as you go into larger units, you can see the affordability level goes up and the rent levels go up as well.

This is something for every program that we look at in terms of the affordability levels, and it really is something we do in terms of the modeling to figure out what is the maximum level of affordability we can charge for the property tax exemption given.

And so we will see with the reauthorization, we will be looking at the modeling to see what can we charge in terms of affordability in exchange for that property tax exemption.

So key thing we'll look at in the next reauthorization.

So in terms of the costs or impacts of the MFTE program related to taxes collected or not collected, because there is a situation in which we have one where we forego the taxes that would be collected otherwise from a project.

And we don't collect those property taxes for the entire length of the property tax exemption.

So that's situation one.

The second situation is when we actually have a shift of the property taxes that can be collected, and those get shifted to the other taxpayers.

So the MFT owner gets the exemption, doesn't pay it.

but we shift that taxes.

We're allowed to shift those taxes to the other property owners.

Which situation we face with individual MFTE projects is all about what the King County Assessor does in terms of assessing the properties and when the tax exemption gets recognized.

So it is all in the hands of the King County Assessor as to whether a project has a foregone rent revenue impact for us as a city or whether it's a shifted impact.

And I would just add to that that most buildings have a combination of a foregone and shifted impact, but what percentage it is, what that breakdown is, is exactly, as Tracy said, dependent on when the assessor goes out and does the assessment and when the tax exemption is recognized.

Okay.

Next slide.

So in terms of exploration and extensions, so in 2021, the state law authorized cities to offer an extension of the property taxes for projects that had an expiring exemption.

And they allowed that exemption to be provided for 20, for 12 additional years.

So in response to that state law change, the council has authorized a 12-year extension option for MFT properties with expiration dates in 21, 22, and 2023. Property owners desiring to extend their property tax exemptions must agree to deeper affordability limits than new projects just entering the MFT program.

To date, eight out of 14 market rate rental properties have requested and been approved for extensions.

Over the next five years, tax exemptions are scheduled to expire for 130 market rate rental properties with 2,500 MFT units.

And this next slide will show you kind of what we're looking at in terms of the number of units that begin to expire.

And you can see that the numbers continue to go up as we get beyond 2024 and beyond.

Next steps.

So today we'll deal with the legislation that only pertains to the extension for 15 existing projects that are expiring in 2024. And then, as I said, later this year, OH intends to submit legislation to reauthorize the MFT program.

And at that point of reauthorization, we will have a number of policy changes to consider at that time.

Happy to answer any questions you might have.

Mr. President.

Yes.

So you made a distinction that I want to make sure I understand early on.

You said that the tax exemption applies to the whole project, but not the land, rather the rental improvements.

Could you please explain that more?

Because that could inform my other questions.

It's the residential improvements.

Residential?

Yes, exactly.

What is the residential improvement?

So that's the housing units themselves.

It would be anything related to those supporting those rental, those residential units like the parking, I believe is covered by the exemption as well.

So what is the breakdown of the taxes collected for a whole piece of land and building and how does that break down?

I just don't know if they're...

So you're saying that they don't get it on the land?

Correct.

They continue to pay property tax on the land.

Yeah, but basically the rest of the commercial, that probably would be subject to the tax.

It would be subject to property tax as well.

So it's only on the residential improvements related to the MFT program being implemented that gets the tax exemption.

And is the breakdown of the different taxes about what, 20% of the land versus...

What is the breakdown of land versus structure?

It's got to be the majority of the property is the residential improvements.

That's what I was wondering.

We've never really looked at that issue.

I just was wondering why it was mentioned because I had never heard that distinction.

So I wanted everybody to understand there is a portion of this that we do collect taxes on, but the majority of what is being exempted is...

Okay.

The residential units.

So then have you on page seven, when you talk about the foregone tax revenue, is there a ballpark total amount that we are foregoing because of our MFTE program, regardless of which version?

Really good question.

This is a place where OH is doing some of that really good analysis work to get a truing up of and understanding really what has been the impact historically for us of the tax exemption, both in terms of foregone as well as shifted taxes.

And we would hope to have that information when reauthorization happens.

We do have, and they will talk about what we have in terms of that information for the 15 properties that are up for exploration or extension.

But in terms of the cumulative overall look, that's the information we will wait to see when reauthorization is before you.

Okay, well, I see the Office of Housing in the House, so I would like that that number, if it's ever arrived at, could be compared to the cost of housing production.

So how much do these affordable housing...

If we were to not do the program, how much would those units cost?

And when we're talking about shift in tax burden, we do have a housing levy, and so we are shifting.

So not just the units that are supported by the levy, but also the units supported by the MHA and Jumpstart, et cetera.

Exactly.

I believe your questions are exactly what they're going to be looking at in terms of the analysis that they're preparing for the reauthorization.

We've had a number of conversations about this.

Yeah.

And also maybe time to produce such units as well, because we have heard that there is delay on some projects supported by the Office of Housing because of some financial difficulties or just some changes in assumptions on financing and the cost of the projects.

That was brought up at a previous meeting.

We do have to look at it.

How do we get more housing faster?

That's my goal.

Affordable housing faster.

Yeah.

Excellent questions.

Thanks.

Thank you.

Council Member Morales.

Thank you.

Well, you sort of addressed my first question, which I was interested in a kind of a preview of what will be evaluated in this program.

And I know we've got some time, so we will have more conversations.

Can you talk a little bit about how the affordability mix affects the cash flow stability of the projects themselves?

Is that something you can address?

What I'm trying to understand is if this is a 12-year exemption, you know, presumably that helps support the fact that there are some units that are not paying market rent, right?

Correct.

But at some point, it seems like rents will increase.

There might become a time where that cash flow issue is no longer really an issue, but the exemption continues to exist.

And so...

Again, this is probably part of the conversation about how to change the affordability requirements or the number of units that are required to be affordable, but that's the, what I'm trying to figure out.

So we do the analysis, OH does the analysis, we have done the analysis when we're doing reauthorization to look at what is the cost of construction, what are the market rents that could be charged, and there's a lot of things that go into that in terms of location, the type of projects and so forth.

So we are trying to figure out, kind of based on different models, at different affordability levels, where do they still get a benefit that has to be bigger, can't be equal to, has to be bigger than the value of that annual property tax?

So remember, this is on an annual basis, right, they're looking at.

What is the rent they can bring in on an annual basis, and then what's the annual tax exemption they get?

And so we're trying to figure out, when we come with reauthorization, how much can we get in terms of that affordability and at what percentage rates?

based on what we believe will be their value of their tax exemption.

And we try to get it as close as we can, but it is at the point of reauthorization.

And as we've seen, we've reauthorized five different times.

And each situation we have dealt with a different kind of rental real estate market because, of course, our market changes.

And probably a little bit more in the past, did we have these dips where we may have gone a little bit deeper in affordability, could do that.

And then more recently, maybe a little bit more of a robust real estate market.

But that's exactly what we're looking at in terms of reauthorization is at that point, what's going on in the real estate market and what are the rents being charged?

What are the affordability levels?

What can we estimate to be the value of the rent foregone on those units?

Again, only a percentage of those versus the value of that tax exemption.

And that holds for the entire period of the exemption.

You can't go in, we don't go in and say, oh, in year two of your exemption, we actually think we should get more affordability because the market has changed.

Now, what we set for the affordability level stay for the entire period of their tax exemption.

The only time we have the ability to modify that is in the case where we're dealing with an extension.

And you will see that, in fact, if you should sign up for an extension, you actually have to sign up for a lower affordability level than what the current program requires for obvious reasons.

The current program is for new construction.

You now have a 12-year-old property.

You can't get the same affordability levels for a new project.

It just makes no rational sense.

Does that help?

Yeah, thank you.

And, you know, just speaking to the issue of these particular buildings that are up for renewal, just for the committee's sake, I did ask Tracy and Jen, you know, Given that we are going to be revamping the program altogether this year, if it made sense to give these particular buildings another 12-year extension, if that was possible, maybe just to give them a two-year extension so that we could just bring everybody into the same program.

And Tracy's answer was?

State law only allows us to give a 12-year extension.

They don't allow us to give us one or two or five years.

Same thing.

The other thing they wanna remind you all about is that this program is entirely voluntary.

At any point, a property owner can say, ah, the value of the tax exemption isn't worth the rent I'm foregoing, and so I'm gonna opt out of the program.

And they do, and then they start paying their taxes, and that's really the only implication for them.

So it is a voluntary program that they can pull out of at any time that equation doesn't make sense for them for whatever reasons.

If I might, Chair, just one more question.

When I got the briefing from Office of Housing, maybe I should wait.

No, I'll just continue.

We'll speak for them.

We always do.

Yeah.

So they informed me that some properties force income-restricted apartment dwellers to live on lower floors or don't allow them to access amenities that are in some of these buildings.

And so Just speaking to the point that you made about comparability and a requirement that everybody gets access to the same things, I want to make sure maybe as we are contemplating a renewal of this program that we are putting in place something that enforces that aspect so that we aren't having lower income people in different kinds of units or with less access to what everybody else gets.

So that'll be a conversation for later this year, but just want to flag that.

And enforcement and penalties will be one element that will be coming back with reauthorization.

Prior to a few years ago, we actually didn't have a lot of ability to impose penalties.

Basically, the penalty that existed was if you were out of compliance with your tax exemption, you lost the tax exemption for that year.

There was no, like, back penalty.

There was no other kind of penalties you could impose.

And the state legislature has given us more authority in that regard.

So that is an issue that we've already been, again, talking to the Office of Housing about to want to address when reauthorization comes forth.

Thank you.

Thank you, Chair.

Sure.

And I just wanted to note that when this first came to my office, there was a request to include 2025 in the extension.

And my position was we should hold off until we'd had the reauthorization conversation.

So these expired December 2024. So we did hold off on 2025 because we are going to be doing a deep dive into determining if and what this program should look like.

So, thank you.

I believe, Council Member Saka, you had a question?

Yes, thank you, Madam Chair.

And thank you, Jennifer and Tracy, for this really insightful presentation and kind of overview, teeing this up here for our colleagues at OH.

Just curious, so...

This program, MFTE program, locally is made pursuant to a state law.

It's been in place for multiple decades, 98, I believe.

How many jurisdictions across the state have implemented similar MFTE programs pursuant to the state statute?

And then question one and question two is, are there any analogous kind of programs In other states that we can look to for performance and industry kind of best practices and how it's worked out elsewhere?

So I haven't done a cataloging of how many other jurisdictions have the MFD program.

We know that Bellevue, Bothell, Woodinville, Tacoma, Kirkland, those are the ones in the area that I know.

Spokane has a large one.

Okay.

Vancouver, actually.

Vancouver, Washington.

All of them have MFT programs, and a number of them have had them for quite a number of years.

Tacoma was actually the one that first proposed this program down at the state legislature, and I know that because I worked on the legislation down at the state legislature.

So they've had a program in existence for a very long time.

We have looked at what they've done.

Again, hearkening back to the comment I made earlier about the current real estate market drives how you structure your program, and in particular, how you structure the affordability and income limits.

And so you can't really take lessons learned from Seattle or from, I'm not from Seattle, but from Bellevue or Tacoma and apply them exactly to the city of Seattle because we have a different real estate market.

Not that there's not lessons to be learned and we've had conversations with some folks who operate programs over on the east side.

There are some things to be talked about related to their program.

One of those things is their ability to match up or to marry the MFT program with our MHA program.

A number of jurisdictions do that.

So there are things that we can learn from those other jurisdictions, but we've also been in the game for the longest period, probably, aside from Tacoma.

So in terms of your question about other jurisdictions and other things that I'm thinking you're talking about more than just the MFTE program, but other innovative programs.

Like analogous programs outside of Washington State.

So MFTE specifically or other programs?

Analogous MFTE programs outside of Washington State.

I haven't really looked at the MFTE program beyond, I mean, there's a variety of programs that are kind of exemptions, like property tax exemption kinds of things, but I haven't looked specifically to say, oh, what other states have MFTE operating?

Yeah.

And thank you for your initial answer on that.

And that isn't necessarily a problem or, you know, like an analysis that I would expect, you know, you both solely to decide.

I think, you know, in partnership with our colleagues at OH, you know, like should definitely be talking, I know if they're not already, I know they are to to other jurisdictions and outside of Washington state that have analogous to the extent there are to understand best practices.

And you are absolutely right that local market conditions dictate, you know, like like help us better assess and understand performance and like performance.

better gauge and be able to determine what the specific levers are and the guardrails and the dynamics and help us craft our specific program here locally.

That is absolutely true.

Well, that's true.

That said, I also think that at a high level, there are certain key learnings and insights that we can derive because even within our own localized Seattle housing market, there's a huge difference depending on what neighborhood.

And these, of course, You know, especially at the local level, these are these are manmade boundaries only.

And the Seattle Tacoma metropolitan market is the Seattle Tacoma broadly and captures multiple counties.

And so so I think there are some important lessons to be learned and assessing what the impact of our program here locally has been against other sort of programs, you know, in the region.

And even again, analogous ones across the country.

And, you know, I'll emphasize things that have been mentioned just for purposes of this discussion, emphasize some things that have been mentioned already.

You know, I think this...

End of year reauthorization does present us with a terrific opportunity to really perform a very rigorous, thoughtful, all up analysis end to end of the program to align with the current goals and priorities of this council, six net new members turnover, this current administration, the current policy direction and guidance that we've set.

And yeah, this pending forthcoming end-year analysis, in turn, it also provides us with the urgent opportunity to take a fresh look, evaluating for efficiency, Comparing, again, performance metrics against similar programs in other cities, deriving those high-level themes to help us make our own, inform our own decision-making.

And then broadly answering the question that I think we're all curious about, does this specific program actually work?

Does it actually live up Help us live up to its intended goals of incentivizing development of affordable housing.

And to what extent?

And how should we modify or tweak or make it better, expand it if needed, or even potentially reshift and adjust resources into other areas that are more proven.

But again, I think that end of year analysis will provide us that opportunity to do exactly that And I'm looking forward to that analysis, but you all, and I'm talking to you at the table, but I'm also talking to our colleagues at the Office of Housing who are up next, who've been good partners on this so far and looking forward to continuing to work with them on these important matters.

But yeah, definitely looking forward to that.

seeing what that thoughtful analysis looks like and better assessing the true impact of this program and hearing recommendations on what, based off of how we've operationalized it so far, what additional tweaks, changes we might need to make.

So thank you.

Thank you.

Council Member Wu.

I'm very supportive of this program because I believe it works.

I know many building owners and it's a tough market out there to provide affordable housing.

Many come to me telling me that their insurance companies have dropped them.

They can't find insurance and it's very unaffordable.

And so having a program that helps them being able to be able to have affordable housing, I think, contributes.

Because if we think about if we were to not provide this programming, how many of these units would we lose?

And so I think this is the, you know, it's a good incentive, and also it helps with trying to provide affordable housing.

I know it's a very complicated program as well.

All of the formulas that go into determining the units versus the tax incentive.

But at the same time, there's also a lot of work that the building owners have to go through in order to qualify for this program.

It's voluntary.

And so I think it's helpful.

And I'm afraid that if we were to lose this program, all these affordable units would be lost as well.

Thank you.

Council President Nelson.

Thank you very much.

I voiced my support for the MFDE program many times in the past on the public record, so that should be no surprise.

I believe that we need to use every legal tool at our disposal to build more affordable housing faster, and this is permitted under the RCW, and so we might as well use it to our greatest possible advantage.

I appreciate that our programs have always taken into account the existing land or real estate market, and you were mentioning that THAT WILL BE TAKEN INTO ACCOUNT.

I ALSO BELIEVE THAT WE SHOULD TAKE INTO ACCOUNT THE WHOLE MIX OF OUR PROGRAMS AND WHAT IS BEING PRODUCED BY THE HOUSING LEVY, WHAT IS BEING PRODUCED THROUGH MHA AND OTHER PROGRAMS WITHIN THE JUMP START BUCKET IN OFFICE OF HOUSING.

THE BILLION DOLLAR LEVY ALLOCATES ONLY 50 MILLION, I BELIEVE, TO WORKFORCE HOUSING AND THAT IS HOME OWNERSHIP.

THE VAST MAJORITY OF UNITS BEING PRODUCED ARE ZERO TO 30% AMI.

SO WE DO HAVE TO ROUND OUT OUR PORTFOLIO OF WHAT WE CAN OFFER TO OUR RESIDENTS.

I LIKE, COUNCIL MEMBER SACA, THAT YOU TEND TO ASK THE QUESTION, WHAT ARE OTHER JURISDICTIONS DOING?

AND YOU DID THAT YESTERDAY WITH derelict buildings as well.

And I do think that we, although the market across the lake is different, we should be looking at comparing the success of the other programs around us in terms of the participation rate.

So that is one indicator of whether or not a program is working, is are we getting developers to participate in our program?

And so I would like to know, how has participation rate changed over time as the programs have changed over time from one to six?

Do you know?

We have some information about the number of units that have been produced by each of the programs.

It's slightly different because some of the units, or some of the units, some of the programs were actually very narrowly focused geographically.

So I think the first couple of, so I don't think we can compare all of the programs to one another, but I think the later programs we probably can in terms of looking at participation.

I will say that for program six, slightly different situation than we faced with P5 and P4 because we were in the middle of a pandemic.

and we are in the middle of a downturn in the real estate market.

And so I think we'll have to take those things into consideration when looking at the participation rate in addition to geographic spread and where was the program authorized so that we are kind of apples to apples making comparison versus not.

And that question flowed from your point that there is a sweet spot.

The exemption has to be greater than the cost of

The rent loss, yes, the loss of rent.

And so where that sweet spot is, I think, does determine participation in the program.

And so let's, from my perspective, get it right so that we can build more affordable housing faster.

And also, I will note that people do express the policy goal quite often of either requiring or better incentivizing onsite performance of units produced with the mandatory housing.

affordability program.

There is consternation that instead of building units on site, developers pay a fee and that's married with other monies and then units are produced elsewhere and what ends up happening is a segregation of where those affordable units are.

I think that that is the concern with that.

And here we have a program that builds affordable housing in the same building as market rate.

And so that is something also to consider.

And citywide.

Yes.

Yes.

Yes, Council Member Saka.

Thank you, Madam Chair.

And I just want to clarify and emphasize, actually, by all accounts, the program, just generally taking a step back for a moment, is a good thing.

If anything, I'm hearing it needs to potentially be expanded.

It's not before us today.

But my broader point is, for me personally, I intend to keep an open mind on this, particularly during the end of year reauthorization process.

And at a bare minimum, even if the assessment of our performance metrics and how this program performs is marginal or limited, I think it probably would make sense to have to see the whole all the factors, but it probably would make sense to keep it as one and make it better as one tool in the toolkit.

Because complex problem, we need multiple approaches.

We need a multi-layered strategy, including this.

But I do intend to keep an open mind, just for crystal clarity there.

But one thing, and further to that, my other comments about the end-of-year analysis that's coming and what that should ideally look like from my perspective, I think one of the outputs that I would like to see, you know, from our Office of Housing is...

And one thing I'll be looking for is recommendations on how to make it better at the local level.

Obviously, that's inherent in the process, but also, what tweaks do we need to make potentially at the state level to improve it.

We just learned, for example, that you can't temporarily extend for two years.

Under the state law, 12 years is the only option.

Maybe that's worth advocating a change for an Olympia next session.

I don't know.

I don't have an answer.

But my point is, I think as part of that reauthorization process, we should be robust, comprehensive, and assessing changes potentially needed to make at the program locally and at the state level that we can go and lobby to Olympia next year.

So thank you.

Any further questions?

Okay, thank you.

I'll just make a few additional points as well.

One thing that I've noted for some of the MFTE buildings is that they will fill the MFT units and then the other market rate units remain vacant and that they have high vacancy rates amongst the MFTE.

And they're not willing to bring those rates down because they can claim a tax exemption as a loss.

So that's something that it would be worth looking into what the vacancy rates are in the MFTE buildings and why they're having those vacancy rates.

And is there something that can be done to incentivize?

filling them because in a housing crisis we shouldn't be having things just sitting empty secondly i would note that i think it is important to look at how mfte and mha can work together to maximize to amplify the benefit and then the other last point that i'll make is This program is important in that it is a voluntary rent stabilization program.

So there's been a lot of talk in Olympia about rent control and rent stabilization.

MFTE, in my opinion, is a voluntary rent stabilization program.

So something that it's valuable to keep, to look at ways that we can expand and make it more effective.

So thank you.

That said, I really appreciate you setting the table for us.

All this to come in front of you.

Yeah.

And just a preview of what's to come when we get to the bigger issue.

And I think a good input from the council members.

Thank you for your thoughts about the reauthorization.

And we will work with our counterparts in the Office of Housing to make sure that they address the issues that you have raised today.

Great.

Thank you.

I know we will be well served by your research and presentation.

So thank you so much.

All right.

Well, we'll move on now to the big show.

Will the clerk please read the final agenda item into the record?

Agenda item 13, council bill 120772, an ordinance relating to the multifamily housing property tax exemption program, amending section 57390 and section 573120. of the Seattle Municipal Code to allow extension of tax exemptions scheduled to expire on December 31st, 2024 for briefing and discussion and possible vote.

All right, thank you.

Thank you and welcome to the committee table, Director Maiko Winkler-Chen and Kelly Larson from the Office of Housing, and once again to our central staffers, Tracy and Jen.

So to restate for the committee, the Office of Housing is eager to move this legislation forward.

Ideally, legislation is heard twice in a committee and then voted on, but I understand that committee members Hopefully, the committee members will be feeling comfortable so far with the legislation being able to vote today.

Anyway, as the presentation is made, I'm sure my colleagues will ask the questions that they need to have answered, and then we will discuss whether or not everyone's comfortable moving forward with the vote.

So with that said, I will turn it over to our presenters.

Thank you very much.

And we're starting the presentation now.

Kelly's got the slide deck up for all of us to see.

And my eyes are having to roll up because it's kind of high up there.

Good morning, council members.

We're here today to talk about the 12-year extension of the property tax exemptions that are expiring in 2024. And as I just said, it's an overview of the MFTE program, just kind of piggybacking on the fine work that our colleague here did, and just talking about the proposed MFTE extension legislation and timeline and other program considerations in future legislation.

So those are the three topics.

So here is kind of a visual representation of how we see the multifamily property tax exemption program life cycle.

So first in the blue over towards the left is that the property owner applies to the MFTE program and if eligible, executes the MFT agreement.

Then the yellow period, the yellow circle is the first 12 year period where the property owner provides affordable homes and receives a tax exemption.

And after the 12 years, a property tax exemption expires, which is the period that we're in now, this gray circle.

And then the orange circle is what we're discussing here today, which is the option to extend the exemption for 12 more years with deeper affordability requirements.

So as we've all discussed here today, there's two upcoming MFT legislations.

The first is extension on the left-hand side, which we are discussing here today.

It's an extension of the MFTE units.

You don't get to opt in now, but you can, if you're currently in the program, get to extend if your property expiring this year.

We've transmitted the legislation on April 3rd.

Today, here we are at committee, and this, as Tracy and Jen mentioned, affects 15 MFTE properties with property tax exemptions expiring this year.

Later on during the summer into early fall, we will be discussing the reauthorization.

We're anticipating transmittal of that language in quarter three, and it will affect complete MFTE applications submitted after the legislation is in effect.

My staff, our staff here at the Office of Housing are listening in right now, and they're taking down the questions and all that that came up in your robust conversation earlier with Tracy and Jen.

Thank you.

So just going into a little bit more detail about the extension legislation here today.

First, just to reply to a couple of comments that were made during the earlier presentation.

Council Member Nelson referenced the challenging cost environment that we're in right now.

And I think that is part of why we are bringing this legislation forward, specifically related to interest rates and operating costs.

We are hearing more and more that, especially in this time, MFTE is much more important for these projects to maintain financial stability and continue providing affordable homes.

Again, Council Member Moore referenced, we are isolating this to 2024, but we are relying on analysis that has been completed in order to support prior extensions legislation, as well as all of the analysis that went into program six.

And we are looking forward to reauthorization later this year and additional robust analysis.

So back to today, this legislation impacts MFTE properties with exemptions expiring in 2024. There are 15 properties with 342 income restricted homes.

The income limits depend on the program that they entered under.

So for program three properties, their income limits range from 80 to 90% of area median income.

For program four properties, their income limits range from 65 to 85% of area median income.

If a property owner chooses to pursue an extension, they must provide homes affordable to households at lower income levels.

If the property owner chooses not to pursue the extension, the tax exemption and affordability requirements will end.

Previously, this council authorized a 12-year extension option for owners of MFT properties, which had expiration dates in 2021, 2022, and 2023. As of today, eight out of 14 property owners have requested and received their extended tax exemptions for 12 additional years.

Over the next five years, exemptions for projects are set to expire in approximately 130 market rate rental properties, totaling nearly 2,600 MFTE affordable units.

This graphic represents the slide that I just spoke to, so you can see somewhat lower impact in these earlier years, but going forward, starting next year, there are many more MFTE units set to expire, which we will address through Program 7 reauthorization.

The blue and red bar represents the expirations occurring this year in 2024. The blue is the number of MFTE units that are authorized under Program 3. The red is the number of MFTE units authorized under Program 4. This chart details the income limit impacts for all these different program reauthorizations and extensions.

So you can see the unit type is in the far left column.

Compact units are less than 400 square feet.

So for the top row, for compact units that are some portion of a building, these are the income limits that are set for Program 3, Program 4, Program 6, which is the current MFTE program.

And the orange column at the very end demonstrates the rent limits for 12-year extensions of this tax exemption.

The reason the top row is dark gray is because for 2024 expirations, there are no projects that meet this criteria, so this will not apply.

However, all the four rows remaining have units that will apply for these 2024 expiring projects.

So you can see row two, projects that have compact units, which again are less than 400 square feet, where those units are 100% of the building.

So it's the whole building contains units that are smaller than 400 square feet.

These are the income limits that are in place.

So for Program 3, that is at 80% of AMI.

For Program 4, that is 65% of AMI.

Currently, for Program 6, new projects coming in, that standard is set at 50% of AMI.

And for these extensions, there are two standards that will apply.

The majority of units likely will be under the lower standard at 40% of AMI.

But there is an option for 65% of AMI for existing MFTE tenants whose income has increased.

And if their incomes are above 1.5 times that lower rent threshold, they are eligible to remain in their homes at this higher standard of 65% of area median income, as long as their income does not exceed 1.5 times that limit.

And you can see the rent limits that apply for the other unit designations.

Zero bedroom is studio, and then one bedrooms and two bedrooms all have different standards.

So, next steps here.

If council approves the extension I just wanted to make sure I got the right word, the extension legislation.

Owners of eligible properties must submit MFTE extension applications by July 31st, 2024, and OH will execute new MFTE agreements by December 31st, 2024, so their tax exemption can continue for the next 12 years.

Now, looking ahead to Program 7 reauthorization, Since the first adoption of MFTE in 1998, as Tracy mentioned, program has been reauthorized five times.

And to inform our reauthorization, we're working with a research team out of the University of Washington, I think it's Dr. Greg Colburn and his team, to evaluate the program and engage with constituents.

The topics of discussion will include revenue impact and shifted tax burden, the MFTE affordable housing outcomes and potential MFTE administrative improvements to how the programs operated, some of the details around such things as paperwork, income certifications, that sort of thing, as well as other tweaks that you all have mentioned as ideas for us to explore.

We've been engaged in a number of discussions with various constituents on these various topics already.

So we have quite a bit of feedback that we're incorporating and considering for changes that will be presented for program seven.

We are planning to hold public meetings in May and August of this year that will offer an open call for folks to come forward and offer their comments on all areas of the program.

So we look forward to engaging with community further But this is, again, just focused today on these extensions and then we will next step start, we're currently already working on reauthorization and we look forward to engaging with you further.

Okay, Council Member Morales.

Oh, thank you.

Could we go back to slide eight?

which has a dizzying amount of information on it.

I just wanna make sure that I understand the orange column.

So for example, if a project was in P3, then the units have to be at 80%.

If it was in P4, they have to be at 65%.

But if they get the extension, those affordability limits shift.

and apply to units for new tenants, not for existing tenants?

Both.

Okay, so if I'm living there and I'm at 80% or 75%, I can stay, can I stay?

Yes.

Okay.

Oh, if you are...

No.

If your income exceeds 1.5 times either the lower or the higher threshold, you will need to either be moved or your unit will be reassigned, so you will not be in an MFTE unit any longer in that building.

There are many other units possible.

Or you may need to look for other housing if your income exceeds that income limit.

So...

So I appreciate the change in affordability, but if I make 75% of AMI and my building changes, is there an obligation then to help me move somewhere else if I'm not allowed to stay in the building anymore?

So these, all properties are being informed of the tenant relocation assistance that is possible for everybody and the obligations, rights and responsibilities for tenants that will be communicated to all these property owners.

Okay, so they will have some amount of time to hopefully find new housing.

Is there any option for moving them into a different MFTE building with a different affordability level that has a vacancy, if such a thing exists in the city?

That would definitely be possible.

Okay.

Okay, thank you.

I see where you're going with that.

I'm sorry if I could follow up.

I hadn't included, I mean, I hadn't zeroed in on this issue.

So is it required that the people, the existing tenants must adhere to the lower rate?

Can you just explain the policy rationale or is that set by state law?

That is the policy that the city has set based on the analysis and you heard our council colleagues reference earlier.

You have program six requirements here range from 40% AMI to 85% AMI and these are for brand new buildings.

The buildings that are being extended at this point are 12 years old.

So in order for the policy to make sense, the affordability limits need to be lower for a 12-year-old product than for the new products in the program.

We did look at existing rents in this program, and as an example for the second row here, for compact units that are 100% of the building, on average, you will not see an impact in the rent differential for any existing tenants.

They are already currently at the limit of 40%.

All of those rents on average are sitting at that level.

So typically, you will see rents drop as perhaps in certain neighborhoods as units grow in age.

But it varies according to unit type, MFTE program that these units are in, and what actually happens with current rents based on neighborhood and other factors.

So I think just to clarify, I think you also said that's true for the one and two bedroom units as well, that most people will be, they will remain within the qualifying new range.

Most current tenants.

The rents on average will drop for one bedrooms and two bedrooms, but it is a lower impact in terms of the dollar change on the rents, given where those rents are on average right now.

It varies between about $100 per month to about $200 per month change for the one bedrooms and two bedrooms.

remembering that that rent level applies only to the 20% or 25% of the MFTE unit.

So again, it's this calculation of, okay, so maybe on the one bedrooms and the two bedrooms, I'm going to have to take a hit per month of $100 per unit.

But on the zero bedrooms, if I don't have, if I have much of those, maybe I'm not going to feel any impact there.

And then what do I get in terms of the value of that tax exemption?

So this is, and this is an individual project by project decision that gets made by the developers to look at.

what are the implications of these lower rent limits and what I can charge versus what I'm going to get in terms of the tax exemption.

I think if I may just restate State Council Member Morales' concern is that we don't want to, by approving this extension, wind up kicking a lot of people out of units that they're currently living in.

And so we want to make sure that either they can stay and pay market rate, or if they can't stay, that they are given relocation assistance to a place that they choose.

Can we confirm that that's the case?

Right.

We've looked at the current data that we have.

There would not be significant displacement concerns given where the current rent limits are set and the existing tenant incomes.

How many people?

I'll have to get back to you on that.

I think we do know, Kelly, don't we, from the last two times that we've done explorations, the data that I've seen in the 21 and 2022 reports, it looks like the majority of the tenants that are residing in the projects where they decide to extend meet the lower income levels.

They're like at 54% of AMI or 45% of AMI.

And it's like the majority of the people, like almost 80 or 90% right of the tenants, I think, with very few that were actually over income that wouldn't qualify and have to be charged market rent.

and those who might get that second lower rent, that 65% or 75% or 85%.

But the vast majority of those folks were eligible for that lower rent tier.

And we've heard something about that anecdotally over the years that, you know, you might say, well, 65% of AMI or 80% of AMI, that still could be a high rent.

But compared to what the market is, some folks who are lower incomes are choosing this option because it's a lower rent that they would pay than trying to find a market rate unit.

So it tracks this data, though it's preliminary, does track with what we've heard anecdotally, which it is providing a more affordable product than what they might face in the open market.

Well, it sounds like we're making a policy decision that could potentially impact residents.

And so I hope that this question is considered during the reauthorization because, you know, we're creating a policy.

Based on our policy, we're creating a problem that we then have to solve through our rental assistance program.

And where could those resources go?

And so, anyway, thank you for paying attention to that going forward.

Council Member Reynolds?

Yeah, I think, so it raises two questions for me.

To the question that Chair Moore asked about the market rate units in some of these buildings sitting vacant.

maybe this is something for the next program, but if that exists and people are getting moved out because of this policy decision, there's some way then to connect them to an empty unit someplace else.

I don't know what that would take, but I think the, This issue is part of the reason why I am so interested in talking about social housing and how we might be able to move in that direction as a city, as creating one other tool for us.

Because in social housing, if you live in a building or in a unit that has some sort of subsidy, if your rent goes up, you don't get kicked out.

Your rent level just changes in that unit.

You know, I know that the way we do affordable housing in this country is Byzantine because of how hard it is to finance these projects.

And that is one of the things, candidly, that is very appealing to me about social housing is that because the financing works differently, you don't have to abide by these really tight income restrictions and move people out if their income increases.

You allow them to stay, you just increase their rent a little bit.

Just wanted to explain one of the reasons I'm going to Vienna in two weeks.

Thank you.

Are there any other questions?

I actually have a comment.

We're taking a vote today.

I want to be completely transparent.

The Louisa Hotel Apartments does participate in MFTE program, chatting with our lawyer, the legislative lawyer, and asking if I'm able to vote or I need to recuse myself today.

And she says I can vote because this program does not directly affect me. my building, but in the future, I might have to when we, any MFTE projects that come up for vote.

Thank you.

Okay, thank you.

All right, there, I see no other comments or questions.

So I guess that would call the question, is the committee comfortable voting on this today?

Okay, I'm seeing consent.

So I will now move that the committee recommend passage of Council Bill 120772. Is there a second?

Second.

Thank you.

It's been moved and seconded to recommend passage of the bill.

Any final comments?

Not seeing any.

Will the clerk please call the roll on the committee recommendation to pass the bill?

Council President Nelson?

Aye.

Council Member Saka?

Aye.

Council Member Wu?

Yes.

Vice Chair Morales?

Yes.

Chair Moore?

Aye.

Five in favor, none opposed.

Great, it passes unanimously.

The committee recommends...

The motion carries, and the committee recommendation to pass the council bill will be sent to the April 30th City Council meeting.

Again, thank you very much to the presenters.

I know it was somewhat complicated information to present, so I appreciate the effort to do so.

All right.

If there is nothing further, this concludes the April 24th meeting of the Housing and Human Services Committee.

Next meeting is scheduled for May 8th.

The time is 1056, and we are adjourned.

Thank you, everyone.

Thank you.