The Senate Housing and Local Government Committee has made significant and positive amendments to a bill proposing changes to the Multifamily Tax Exemption Program (MFTE) as they voted it out of committee.
SB 5287, as introduced, included several positive provisions for cities:
- New access to the program for small cities;
- Authority to offer extensions of the tax exemption to preserve or create new affordable units; and
- A new twenty-year option to promote permanently affordable home ownership units.
Unfortunately, those benefits had been overshadowed by problematic changes to the eight and twelve-year MFTE program. Consequently, cities were opposed to the original version of the bill.
AWC is pleased to see the committee has since removed the most problematic elements of the proposal and is moving forward with a narrower set of changes that are beneficial to cities.
In addition to accepting some of the more agreed-upon elements of the MFTE negotiations as bill amendments, there is agreement to propose a study about the program’s controversial elements to obtain better data with which to inform future discussions.
Provisions for the study will likely appear in the budget.
Highlights of the new approach include:
- Authorizes cities to offer a second twelve-year exemption to buildings included in the eight and twelve-year program, if affordability requirements are met.
- Creates a new twenty-year exemption program geared towards permanently affordable home ownership.
- Authorizes smaller cities to access the twelve-year exemption program and the new twenty-year program until December 31, 2024. The extended authority requires a city to have certain underlying densities in the areas where the exemption would be used.
AWC is in discussion with the sponsor about this point.
- Requires a city to comply with reporting requirements to offer the tax exemptions.
- No new tax exemptions may be offered after January 2032; no extensions may be offered after January 2046.
Please share your comments on this subject with Carl Schroeder.