Seattle City Councilman Tom Rasmussen has released a revised version of Mayor Greg Nickels plan to expand an existing program that gives developers a break on property taxes in exchange for providing some "affordable" housing.

Rasmussen's plan lowers the mayor's income level requirement for the multi-family tax exemption program, "Seattle Homes Within Reach."

Nickels' proposal would give developers a 12-year property tax break for new rental and condominium developments in which 20 percent to 25 percent of the units are set aside for individuals or families earning between 90 percent and 120 percent of median Seattle income ($49,000 to $75,000).

The median annual income in Seattle for an individual is a little more than $50,000.

Both versions would also make the program available to more neighborhoods, including Ballard and West Seattle.

Rasmussen's plan differentiates between low and high growth areas in Seattle.

In low growth areas, parts of the city that are below 35 percent of their target growth and or have a weak rental market, 20 percent of new rental units could be available for those earning between 70 percent and 80 percent of median income. Some of these areas would include parts of southwest and West Seattle, Greenwood and Lake City.

The program would be available in high growth areas, too, such as Ballard and Capitol Hill. Developers would get a tax credit when they build 20 percent of new units as affordable to household earning between 70 percent and 90 percent of median.

Another aspect of the council member's proposal includes an incentive for non-profit and for-profit developers who set aside 20 percent of units at 60 percent the median income. This would apply to high and low growth areas and be best for developers using other tax exemption programs and bond financing to build affordable housing, said Traci Ratzliff, a city council central staffer.

Developers who build condos can take advantage of the program if some homes are sold between 80 and 120 percent median income. The affordability requirement for home ownership is 120 percent of median, or about $75,000 a year, under the mayor's plan.

The current program, in place since 1998, is aimed at those making between 60 to 70 percent of median wages. But developers have said the rents or sale price would be too low to even get projects off the ground financially.

Just a little more than 900 "affordable" units of housing have been produced under the program in the past seven years and only 18 developers have signed on.

"The current program isn't really stimulating the development of any new options at these moderate-income levels," said Rasmussen, outgoing chair of the council's housing committee.

New housing coming online isn't affordable to people making below $58,000 a year, and the tax break should be enough to help spur more housing in the city for that income bracket, said Rasmussen.

"I agree with the community that the levels set by the mayor are too high," he said.

Rasmussen acknowledged the plan is a "shallow" subsidy when looking at Seattle's overall housing crisis, which includes people earning much less than the target incomes. This particular tool is meant to help a certain subset of workforce residents, mostly teachers, police officers and fire fighters who can no longer afford to live here, he said.

"My proposal is intended to encourage and stimulate the development of new housing that will be rented or sold at less than what the market is charging at this time," Rasmussen said.

Some older rentals are still affordable, but, typically, new construction is priced out of reach for a growing number of Seattleites due to rising land and construction costs. Developers say it's near impossible to build rentals that will go for less than 100 percent of median income.

Ratzcliff said the council should include measurable goals in the legislation to evaluate on a regular basis whether the program is actually producing affordable housing. At least, she said, the city should expect a better outcome than the current program.

At a housing committee meeting earlier this month, Kenny Stewart said he was speaking in support of the program on behalf of Seattle fire fighters. He said most fire fighters have been forced out of the city because of housing costs.

"There's an intrinsic value in living where you work," Stewart said. "This is a step in the right direction and hopefully the start of more programs to make Seattle more affordable."

Andrew Brand works with the Evergreen Housing Development Group, a for-profit housing company that focuses solely on developing affordable housing. The current program was instrumental in creating the Quintessa Apartments that opened recently in Pioneer Square; 132 units of rental housing mostly for those earning less than $32,000 annually.

"It's needed in that community for a number of reasons and it would not have happened without the tax exemption program," Brand said. "As a for profit...It's almost impossible to make projects work without some kind of tax relief..."

Hal Ferris, a partner with Lorig Associates, a real estate development company, said the median income in Seattle is expected to increase by about 2 percent a year, while rental rates are projected to go much higher than that.

"Each month that goes by we're losing more opportunity to include workforce housing in the new developments that are occurring," said Ferris, who is also board chair of Common Ground, a low-income non-profit housing developer.

John Fox, coordinator of the Seattle Displacement Coalition, has been a vocal critic of the mayor's plan and said Rasmussen's isn't much better. The rents on the set asides are still above what average tenant household in Seattle can afford, said Fox.

"It's still simply a giveaway to developers," he said. "It mystifies us why the council is giving this proposal any consideration at all."

The city cites a shortage of units available to those making about 80 percent area median income, but Fox said that's just "flat wrong." According to a 2006 county benchmarks report there's a surplus of rentals in that category here, and roughly 40 percent of condos are sold to this income group, he said.

"So why are we offering subsidies to developers serving this income level and higher?" Fox asked. "They have options. The people at the bottom do not."

The coalition plans to legally challenge the proposal.

Rasmusen said the amount of taxes that would be shifted to property owners should be examined further. Under the mayor's plan, that amounts to about $5 a year, according the City's Office of Housing.

Adrienne Quinn, director of the Office of Housing, said the program should be tied to Nickels' plan to use incentive zoning, which stipulates that whenever significant zoning changes are adopted, incentive zoning, or "land banking," should be used to create affordable housing.

Developers who use an increase in height and density limits would be required to either build affordable units, or pay into a fund for housing available to those earning 80 percent to 100 percent area median income or other neighborhood amenities, such as parks and open space.

The city council will review that proposal early next year.

Robin Amadon, a housing developer with the Low Income Housing Institute, said it's vital for the city to figure out how to tap into the private sector, which is "the engine of growth" in Seattle. She encouraged the council to act soon on the tax exemption proposal because there aren't enough non-profit developers to address the city's housing crisis.

"I would encourage you not to hold the good hostage to the perfect," said Amadon. "This won't be a perfect proposal."

Rebekah Schilperoort may be contacted at 783.1244 or rebekahs@robinsonnews.com