Across the Puget Sound region, as real estate values and rents rise, cities large and small are struggling to preserve existing lower-cost, market-rate housing. A bipartisan plan to enact a local-option property tax exemption for existing rental homes aims to preserve lower rents and prevent the displacement of long-time tenants, even as landlords seek to make building improvements.
The Preservation Tax Exemption proposal sponsored by Sen. Joe Fain (R–Auburn) and Sen. David Frockt (D–Seattle) was introduced in Olympia on Jan. 11.
“Housing costs for working families have skyrocketed in our region,” said Sen. Fain, who serves as majority floor leader in the Washington state senate. “Sometimes, the tools policymakers use to maintain affordable housing can reduce supply over time, leading to shortages and higher prices. Giving cities the discretion to create incentives for landlords to upgrade and maintain their properties at prices families can afford is one tool for addressing this growing problem.”
Under the bill, owners of rental properties could apply for a 15-year exemption to local property taxes, and in exchange, reserve 25 percent of the building’s apartments for low-income families earning less than 50 to 60 percent of the Area Median Income (AMI).
In King County, 50 percent of AMI is $36,000 for two-person households and 60 percent of AMI is $43,000.
Affordable rent for a one-bedroom apartment in King County at 50 percent AMI is $840 and at 60 percent AMI is $1,008. The average market rate for a one-bedroom in new buildings in Ballard is $1,656, while a one-bedroom in Renton averages $1,275.
The City of Seattle estimates that it could preserve 3,000 affordable apartments over 10 years at the cost of $12 a year to the average property taxpayer.
“We will never solve the housing affordability crisis if we only focus on construction of new apartments,” said Seattle Mayor Ed Murray. “We must work to preserve existing affordable homes, including affordable market-rate homes. This is a cost-effective solution to prevent the displacement of thousands of families in our city.” (end)