City Council Passes New Affordable Housing Tax Abatement measure

Frustrated by a lack of below market-rate housing in the Town Center area, passed new incentives March 21 to hand developers tax abatements to build affordable housing.

The new incentive is an ordinance allowing developers to forego paying property tax for up to 12 years on new multi-family residential buildings, so long as they include a certain percentage of affordable housing. After a surge of residential development transformed the Town Center area with out any new affordable housing, City Hall took another look at the incentives and decided to the proposal earlier this month. 

Despite a series of amendments offered by Councilman Dan Grausz— who ultimately opposed the measure —  the ordinance passed 4-2. Councilmembers Mike Cero was also opposed and Jane Meyer Brahm was absent.

Grausz sought to increase penalties and enforcement in the new incentive to ensure the developers followed through on promises to offer below market-rate homes, but Development Services Group Director Tim Stewart said any additional regulation might scare off potential investors interested in the new abatement scheme.

"The enforceability, it's a call on your part, but it's a disincentive," he said. "Will it be so onerous as to scare them off? I don't know"

Councilman El Jahncke, a long-term proponent of the proposal, grew frustrated by the number of amendments, accusing Grausz of attempting to scuttle the effort by offering amendments he called "poison pills".

"It seems to me that your goal is to make the ordinance so onerous," he said. "This has got to be a balance."

City Hall and regional partners A Regional Coalition for Housing (ARCH) have tried for years to incentivize the construction of new affordable housing units on Mercer Island, including offers of additional building heights and waiving development fees. The city set planning targets under the Growth Management Act (GMA) several years ago to ensure a certain percentage of new housing would be affordable to low and moderate income families. 

The GMA is intended to prevent urban sprawl and coordinate growth to protect the natural environment in the Puget Sound.

Councilmembers also agreed to move the next council meeting from April 4 to April 11, due to a scheduling conflict with local schools for Spring Break. A number of councilmembers have children in local schools and cited previous family plans as the reason to move the date.