On September 22, 2025, the Seattle City Council Housing and Human Services Committee advanced Council Bill 121055 to the full Council, which is expected to consider the ordinance on October 14, 2025. The ordinance renews and modifies the existing Multifamily Tax Exemption (“MFTE”) program, which sunset in mid-September 2025.
The MFTE program provides a 12-year property tax exemption on eligible multifamily housing in exchange for income- and rent-restricted units. The program has a periodic sunset date, requiring the Council to take action to reauthorize and continue the program.
The current program (“Program 6”) is being modified to include new income and rent limits for new projects and MFTE extensions, remove a Program 6 rent cap, allow conversions from Program 6 to Program 7, and establish a new definition and requirements for “alternate” bedrooms.
The ordinance advanced out of committee with several amendments.
Amendment 1, sponsored by Councilmember Solomon, increases income and rent limits for alternative one-bedroom units in new projects from 65% of Area Median Income (“AMI”) to 70% of AMI. This increases the maximum rent for alterative one-bedrooms from $1,915 to $2,062. Alternative one-bedrooms are defined as “an area with four walls and (a) each wall must be at least seven feet high, (b) at least two of the walls must be floor-to-ceiling, and (c) no more than one wall may be comprised partly or entirely of a sliding door.”
Amendment 3, sponsored by Council President Nelson, requires the Office of Housing to publish a Director’s Rule regarding the process for selecting MFTE units. The Office of Housing would be required to publish the Rule by March 31, 2026. The Amendment also requires the Office of Housing to allow a streamlined income verification approach, including a process for tenant self-certification.
Amendment 4, sponsored by Councilmember Solomon, eliminates a low-income housing replacement requirement. Under the current program, developers utilizing the MFTE program are required to replace low-income units in existence during the 18-months prior to application for the land use or building permits for the project by a one-to-one ratio. The replacement requirement is in addition to the required number of MFTE units. Amendment 4 eliminates such a replacement requirement.
Amendment 5, sponsored by Councilmember Solomon, allows projects that had applied under Program 6, and received a final certificate in 2025, to convert to Program 7.
Amendments 6 and 7 are technical corrections with no substantive effects.
Amendment 9, sponsored by Councilmember Solomon, increases income and rent limits for MFTE studio units in extending properties. The amendment regulates studios in extending properties at 60% AMI, instead of 55% AMI, so that studios in extending and newly constructed buildings are regulated at the same level and are in-line with market-rate rents.
Amendment 10, sponsored by Councilmember Solomon, allows owners of MFTE projects seeking a 12-year extension to elect to retain the existing MFTE designated units and classifications. Program 7 creates a new definition for alternative bedrooms, with different rental rates than the existing studio and one-bedroom classifications. Per the amendment, units with alternative bedrooms in extending projects could elect to continue to be regulated under their original designation as either studios or one-bedrooms. In addition, the amendment does not require owners who selected units in prior MFTE programs to select a new mix of MFTE units to meet new comparability and distribution standards.
Amendment 11, sponsored by Councilmember Solomon, (1) extends the 12-year extension application deadline for projects expiring in 2025 from May 1, 2025 to November 1, 2025; (2) allows all projects expiring in 2025 to apply for an extension under Program 7 terms, even if they already submitted an application under Program 6; and (3) allows extending projects until June 30, 2027 to become compliant with Program 7.
Amendment 12, sponsored by Councilmember Saka, adds additional requirements to annual MFTE reports to include further information to inform the City’s understanding of tenant demographics and the public benefits of the program.
Amendment 13, sponsored by Councilmember Saka, establishes an MFTE program sunset date of September 1, 2029. The original proposal for Program 7 did not include a sunset date.
Amendment 15, sponsored by Councilmember Rinck, revises the incentives for two or more-bedroom units. Under the current program, projects where eight or more percent of MFTE units are two or more-bedrooms are subject to a 20% MFTE set-aside, as compared to projects that do not meet that threshold, which are subject to a 25% MFTE set aside of units. The amendment increases the required percentage from eight to twelve percent to qualify for the 20% set-aside. In addition, the amendment offers an option to qualify for the lower set-aside by designating three percent of MFTE units as three or more-bedrooms.
Amendments 2 and 8, sponsored by Councilmembers Rinck and Solomon, respectively, were not passed by Committee. The Committee did not consider an Amendment 14.
For more information about the MFTE program, please contact Holly Golden or Layla Khademi.