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Oak Harbor’s Multi-Family Tax Exemption Program Faces Logistical Challenges in Affordable Housing Initiative

Oak Harbor's Multi-Family Tax Exemption Program. (HUD USERS)

The potential implementation of a Multi-Family Tax Exemption program aimed at encouraging the creation of affordable multi-family housing units in Oak Harbor may confront logistical obstacles, pending approval by city council members.

Oak Harbor’s Multi-Family Tax Exemption Program. (City of Spokane)

 Multi-Family Tax Exemption for Affordable Housing Faces Logistical Difficulties

Whidbey News Times stated that the proposed Multi-Family Tax Exemption program, designed to encourage the construction of affordable multi-family housing units in Oak Harbor, has encountered resistance from city council members. Although the program is part of Washington state’s Multi-Family Tax Exemption initiative, council members expressed doubts about its practicality, including the need for revisions to the city’s building code to accommodate longer Multi-Family Tax Exemption programs.

There were concerns that incentivizing market-rate housing without an affordable Multi-Family Tax Exemption housing component could place an additional financial burden on taxpayers. Additionally, the willingness of private developers to participate in the Multi-Family Tax Exemption program and create below-market-rate housing units remained uncertain.

While the discussion prompted questions about the Multi-Family Tax Exemption program’s suitability for Oak Harbor, further evaluation is needed. The city council did not take immediate action on this Multi-Family Tax Exemption proposal during the September 5 meeting.

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What is Multi-Family Tax Exemption?

According to Washington Joint Legislative Audit and Review Committee, the Multi-Family Tax Exemption (MFTE) is a property tax exemption initiative that permits eligible cities to designate specific regions for the promotion of multifamily housing development. A city can decide to establish such program and have the option to introduce supplementary criteria or limitations.

Under Multi-Family Tax Exemption program, property owners have the opportunity to request an 8-year or 12-year property tax exemption when constructing or renovating multifamily housing. To qualify for the 12-year exemption, property owners are obliged to allocate a minimum of 20% of their units for affordable housing, as defined by statutory regulations. Municipalities possess the authority to assess and approve individual development projects based on these provisions.

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