Office to Residential Conversion Program

What and Why

Downtown Seattle, like many city centers, continues to face challenges from the lasting effects of COVID-19. Remote work, declining transit use, shifting retail trends, and affordability concerns have reshaped the urban core.

At the same time, Seattle faces a critical shortage of affordable housing in well-connected neighborhoods like Downtown. To address both vacant office spaces and the growing demand for housing, we launched the Office-to-Residential Conversion Program as part of the Downtown Activation Plan.

This program transforms underused office buildings into homes, revitalizing Downtown and creating much-needed housing for Seattleites.

Sales and Use Tax Deferral Program for Housing Conversions

We introduced a Sales and Use Tax Deferral Program to encourage the conversion of underutilized commercial properties into housing, including below-market-rate rental or ownership opportunities. This initiative supports economic development, downtown activation, and the creation of more residential options in key areas.

This program is authorized by the State of Washington under RCW 82.59 and WAC 458-20-305 and is codified in Chapter 5.75 of the Seattle Municipal Code.

Click to Apply

Who Can Apply?

Owners of underutilized commercial properties in Seattle who plan to convert their buildings into multifamily residential housing are eligible to apply.

Under RCW 82.59, "underutilized commercial property" refers to an entire property or a portion of it currently used—or intended to be used—for retail, office, or administrative activities. See RCW 82.59.010(13) for details. 

To qualify, projects must:

• Be located in Seattle
• Be primarily multifamily housing, with at least 10% of units designated as affordable
• Be completed within three years of conditional approval
• Align with Seattle’s zoning and land use regulations

Program Benefits

• Financial Feasibility: Defers sales and use tax payments during construction, reducing upfront costs and improving project viability.
• Downtown Revitalization: Advances the Downtown Activation Plan by increasing foot traffic and economic activity.
• Mixed-Use Development: Encourages projects that include ground-floor commercial spaces alongside housing.
• Increased Housing Supply: Expected to create 1,000–2,000 new housing units over seven years, including 100–200 affordable units. When combined with the Multifamily Tax Exemption (MFTE) program, this could increase to 3,000–6,000 units, with 300–600 designated as affordable.

Application & Approval Process

1. Complete and Notarize Application: Complete this application and have the final page notarized.
2. Submit Application:
   
   Email your form and supporting documents to our Downtown Activation Coordinator: tiernan.martin@seattle.gov.
   
   Mail or deliver your notarized copy of the application to:
   Office of Planning and Community Development
   c/o Tiernan Martin
   P.O. Box 94788
   Seattle WA 98124-7088
   
   In-Person Delivery Address:
   600 4th Avenue, Floor 5
   Seattle WA 98104
   
   
3. City Review & Conditional Approval: We will review applications within 90 days. Approved projects receive a Conditional Certificate. Denied applications can be appealed.
4. Apply to WA Dept. of Revenue: Submit approval certificate to the Washington State Department of Revenue (DOR) for tax deferral certification.
   
   DOR application: Form 81-1041
   Contact DOR at DORDeferrals@dor.wa.gov or call (360) 534-1443
   
   
5. Complete Construction: Secure permits, finish the project, and obtain a Certificate of Occupancy within three years (or five with an extension).
6. Final Approval: Submit final documentation to us within 30 days of occupancy. If all conditions are met, we will grant final approval for the tax deferral.
7. Annual Reporting: For 10 years, property owners must submit compliance reports to us and their Annual Tax Performance Report to the WA Dept. of Revenue.
8. Appeals: Denied applications can be appealed within 30 days. Non-compliance may result in tax repayment.
   
   

Combining with Other Incentives

This program can be combined with Seattle’s Multifamily Housing Property Tax Exemption (MFTE), allowing property owners to maximize benefits while increasing affordable housing availability.

For More Information

Email Tiernan Martin, Downtown Activation Coordinator, at tiernan.martin@seattle.gov.