• Updates to the Multifamily Tax Exemption Program resulted in policies that require market rate developers to provide a public benefit in the form of payment to a new Affordable Housing Fee-In-Lieu (FIL) Fund.
• The amount of FIL varies based on target area and project densities. The developer will pay the FIL at project completion.
• FIL Fund will only be used to support rental units for households earning 60% AMI or less, and ownership units for households earning up to 80% AMI.
• FIL funding will provide more flexibility in its use and timing than current housing resources allow.

Housing and Human Needs – meeting basic needs and partnering with organizations to support the community.

HH.PM.5: Number of new housing units constructed (overall and affordable). Goal: To meet new demand and close the deficit within 10 years, Vancouver must increase annual housing production to at least 2,500 new housing units, including 750 new housing units per year that are affordable to households earning 80% or less of the area median income.

In July 2023, the City Council approved changes to the Multifamily Tax Exemption Program, which expanded target areas across the City and simplified the public benefit negotiation for applicants proposing market rate projects.

To be eligible for the City’s updated Multifamily Tax Exemption (MFTE) program, new developments are required to provide an affordable housing or ownership benefit. A developer may propose one of the following:

• New units that include a minimum of 20% of units affordable to households earning up to 80% AMI; or
• New ownership units with a minimum number of new units required and a maximum eligible sales price; or
• New market rate units with no rent restrictions in exchange for paying a fee-in-lieu of providing affordability.
  
  

The FIL paid for the tax exemption benefit will vary based on Target Area and project density. The amount of fee-in-lieu is calculated using the projected tax liability to the project and the value of the benefit of the MFTE. The fee is 25 or 50% of the net present value of the exemption over eight years (life of the exemption) based on Target Area requirements.

The Affordable Housing Fee-in-Lieu (FIL) Fund is a flexible tool for making strategic investments in affordable housing projects in close proximity to the MFTE projects that provide FIL funding. Revenues collected will be tracked by Target Area with a goal of reinvesting these funds in or near the same Target Area, particularly in areas with limited affordability.

Rather than make funds available through periodic Requests for Proposals (RFPs), the FIL Fund will be used on an as-needed basis to address needs not targeted by other funding sources or proposed projects. The funding will be able to be used for a variety of affordable housing support but will require affordability for households at 60% AMI for rental units and 80% of AMI for ownership unit development.

City staff will monitor and report on FIL Fund collection, investments, and outcomes.

Provide a new flexible local resource that will help create additional affordable housing within the City of Vancouver.