Smaller multifamily projects rise as Tacoma makes middle housing push
AI-generated summary reviewed by our newsroom.
- Tacoma council approved a fourth small MFTE project, favoring 12-year deals.
- 12-year MFTEs require 20% of units at 70% Pierce County AMI.
- Developers turn to smaller projects for cost, flexibility after zoning changes.
Developers seeking tax breaks for building multifamily residences in Tacoma so far this year are submitting smaller projects.
Tacoma City Council on March 24 approved the fourth multifamily property tax exemption project so far this year, with two more proposals waiting in the wings.
The bulk of them are taking the 12-year MFTE option, where 20% of the units must be affordable at 70% Pierce County Area Median Income ($84,560 for a family of four as of last year’s limits) for 12 years.
Only one project so far has taken the eight-year MFTE option, which allows for all market-rate units.
MFTEs offer multiyear tax breaks to developers as an incentive to create multifamily housing. The tax breaks offer exemptions on assessed improvements (not land) in 8-, 12- or 20-year versions.
Tacoma, through its Home in Tacoma program, has pushed for more “missing middle” housing developments, sites that fall between larger apartment sites and single-family homes.
Smaller projects have become a popular option among developers in recent years for cost and flexibility resulting from changes in zoning and other regulations allowing for more types of housing.
The most recent approval was for a Hilltop-area project at 1701 S. L St., near People’s Community Center and about a block from St. Joseph Medical Center. It gained a 12-year MFTE for seven, two-bedroom townhomes.
According to the city’s agenda material, five of the 990-square-foot units are planned at market rate (expected rent $2,300) and two rent-restricted ($1,825).
The site is a combined parcel that has three residential structures dating back to 1895, according to county records, and submitted proposals have shown those buildings remaining on site.
The property is owned by a Redmond LLC affiliated with a group of private investors. A contact listed in records for the LLC did not respond to request for comment from The News Tribune.
Redevelopment at the site has been in the works for several years, according to a review of filings on the city’s online permit portal, with the MFTE action being the latest action.
Other MFTEs approved by council so far this year and their municipal development zones:
- 8-year MFTE for development of 12 market-rate rental housing units at 634 S. Steele St. (Sixth Avenue Mixed Use Center).
- 12-year MFTE for development of six market-rate, two rent-restricted units at 4508 S. Warner St., (Tacoma Mall Regional Growth Center).
- 12-year MFTE for development of three market-rate, one rent-restricted unit at 312 S. 28th St. (Downtown Regional Growth Center).
Two more are listed as “agenda ready” on the council’s legislation portal:
- 12-year MFTE for development of four market-rate and two rent-restricted units at 3010 S. Puget Sound Ave. in South Tacoma.
- 12-year MFTE for development of three market-rate and one rent-restricted unit at 5440 S. K St., in the South End.
In 2025, 13 MFTEs were approved, also mostly for 20 or smaller units. The exception was Koz at Aviva Crossing, approved for a 12-year MFTE for 226 units at 1602 S. Mildred St. next to the James Center.
2022 remains the peak year for MFTEs in the city, with more than 30 approved by council at that time.
