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Tax Incentives

MultiFamily Property Tax Exemption (MFTE) Program

Multifamily Property Tax Exemption Program is one way to encourage the development of multifamily units located in designated Residential Target Areas in Tacoma. The incentive exempts qualifying projects from property taxes on the assessed improvement value for 8, 12, or 20 years based on the level of affordability provided. 

 

Project Eligibility:

For a project to be eligible for the tax incentive, it must:

  • Include a minimum of four new multifamily units
  • Be located in one of Tacoma’s Residential Target Areas which include:
    • 17 designated mixed-use centers
    • Areas zoned Mid-scale Residential along key corridors
  • For a 12 year exemption, 20% of the units must be affordable at 70% Pierce County Area Median Income (AMI) for 12 years
  • For a 20 year exemption, 25% of the units must be permanently affordable

On this map under layers button on the top right, check the box marked “Multifamily Property Tax Exemption Eligibility Areas”.

 

Public DART Map (cityoftacoma.org)


Application Process:

We accept applications year-round. Applications are submitted through the permitting portal Accela.

  • There is an application fee ranging from $1,000 to $5,000 depending on project size/number of units. $1000 for the first four units and then $100 per additional unit to a maximum of $5000.
  • Applications must be submitted and approved before building permits are issued.
  • An applicant must be the owner of a qualifying property

Once the application process is complete, staff reviews the application and provides a recommendation to the Tacoma City Council to approve or reject the project based on eligibility. Upon City Council approval, the owner enters into a contract with the City of Tacoma, establishing specific guidelines for completion and acceptance of the project. If the owner sells the property after the tax exemption has been granted, the exemption stays with the property and is transferred to the new owner.

 

If approved, the applicant has three years to complete the new housing with the tax exemption starting the calendar year following  issuance of temporary or permanent Certificate of Occupancy.

 

As part of our Affordable Housing Action Strategy, we have updated our program. Effective March 14, 2022, we expanded eligible areas the 12-year exemption is allowed to be used, lowered the household income level to 70% of Pierce County AMI as published by HUD each year, added a 20-year option for projects that provide permanently affordability, and adopted the option for extending an exemption for an additional 12 years if affordability is added.

  

Resources

Tip Sheet

TMC CHAPTER 6A.110 PROPERTY TAXEXEMPTIONS FOR MULTI-FAMILY HOUSING

RCW Chapter 84.14

Rent and Income Limits - May 1, 2024

 

 

 

Frequently Asked Questions:

Is there an affordability requirement for the 8-year MFTE?

No. However, some areas of the City do not allow the 8-year MFTE option.  Learn more using the interactive map linked to the tip sheet on this page.

 

What are the affordability requirements for the 12-year MFTE option?

The affordability requirement for the 12-year MFTE option is 20 percent of the units (spread across unit type) must be affordable. The units must be rented to households making 70 percent or less of the Pierce County AMI.

What is AMI?

AMI stands for Annual Median Income. The U.S. Department of Housing and Urban Development (HUD) releases the AMI data by county each year.

What are the current rental and income limits?

The current limits from the U.S. Department of Housing and Urban Development (HUD) for rental and income limits are linked on this page.

 

How are affordable rents defined?

The Department of Housing and Urban Development (HUD) annually releases the median income data for each county.  The City of Tacoma requires that MFTE affordable units be rented to household making 70% or less of the Pierce County AMI. The income level is determined by household size. Rental rates are determined per number of bedrooms.

 

What are the reporting requirements for the affordable units?

The City of Tacoma requires the owner of the property to submit an annual report due to each February consisting of filling in documents, which include:

  • An affidavit signed by the owner or representative that the property remains in compliance with the terms of the MFTE agreement, notes any changes to the property and states the current occupancy rate. 
  • An affidavit signed by a representative of each unit that is an affordable unit.  This affidavit includes: annual income of the household, number of people in the household and the rent being charged to the household. 

 

What happens if a household occupying an affordable unit no longer qualifies?

In this case, the next available unit in the project must become an affordable unit to replace the one that is no longer in compliance. Displacement is highly discouraged, and at all times, the rental housing code must be followed.  


Rental Housing Code



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