City of Seattle closing loophole on tax break for micro housing developers

by: David Ham Updated:

SEATTLE - Starting Friday Seattle's Office of Housing will require developers of micro housing projects like aPodments, to go through a design review process if they want to apply for a multifamily tax exemption.

"I would have issued a rule to take effect immediately," said Seattle City Council member Tim Burgess.

He alerted the office of housing in September about the loophole, which allowed micro housing micro-housing developers to avoid going through a design review process because the buildings have less than eight kitchens. Meanwhile, the developments could have 56 living units.

At the same time, developers could still apply for the tax exemption that would allow them to be exempt from property taxes on the buildings for 12 years because the units fit within the affordable housing requirements. Developers would still have to pay property taxes on the land.

"These are goldmines for the developers yet the city gives them another incentive by allowing them to not have to pay property tax," said Carl  Winter, who lives in Capitol Hill and is against the micro-housing developments.

Dennis Saxman is also a neighborhood activist and says an example, the developer of a 56-unit aPodment building on 13th and John in Capitol Hill would save over $330,000 on property taxes under the exemption.

Garett Randall is a property manager at a micro housing development called Emerald  10.

He doesn't think developers were trying to skirt the rules.

"I don't think we're skirting by any rules. I think we do only have less than eight kitchens. We have five kitchens," said Randall.

Randall also doesn't think closing the loophole will slow down the micro-housing boom.

"Obviously we're going to play within the rules we're not going to deceive or trick anybody into building these things. We build them to code," he said.

Micro-housing developers who have already received the multifamily tax exemption will continue to be exempt. The Office of Housing's rule will apply to developments moving forward.

City leaders are still debating putting a moratorium on micro housing developments.

A meeting for developers and residents on the issue will be held May 6 at Seattle First Baptist Church at 6:00 p.m.

Community representatives will describe the impacts of micro-housing to neighborhoods and hear suggestions from the public on how they should be regulated.