Industry News

Bellevue’s MFTE credited with spurring builders to include affordable units

Published on:

Like many cities in the Puget Sound region, Bellevue’s high-priced housing is too expensive for many who work in the city. These workers include first responders, teachers, and health care providers.

In an effort to support the development of more affordable housing projects, Bellevue created or modified various initiatives including a Multifamily Tax Exemption (MFTE). In mid-2021 the program, first approved in 2017, was amended to remove provisions that limited it to certain parts of the city, expanding it to anywhere that is zoned for multifamily use.

The city – one of the fastest growing in the state – has a housing growth target of a minimum of 35,000 new housing units through 2044.

The city’s Housing Needs Assessment, released in December 2022, revealed declining affordability and a lack of choice for housing types within its housing stock.

About 27% of Bellevue’s households are cost burdened (spending more than 30% of their income for housing expenses). Additionally, there’s a deficit in the number of units affordable to households in the 30-50% AMI and <30% AMI (Area Median Income).

In addition to the MFTE program, the city listed other incentives to encourage the construction of affordable housing. The Assessment report noted:

  • Development incentives for homeowners who decide to build smaller units on their property (e.g., an accessory dwelling unit, or ADU).
  • Location-specific density bonuses in the Downtown and BelRed corridors plus the Eastgate Transit Oriented Development District and Mixed Use Districts.
  • Density bonus of up to 15% above existing density limits with the inclusion of affordable units.
  • C-1 Affordable Housing Density Bonus. It establishes up to 50% density bonus for permanent affordable housing on certain land owned by religious organizations, nonprofit organizations, or public entities.
  • Housing Stability Program, enacted by resolution to collect one-tenth of a percent sales tax to support affordable housing and related services. In 2021, the first year it was in place, it generated $9.7 million.

Bellevue’s MFTE has drawn praise from leaders at Wallace Properties, a prominent commercial brokerage, developer, and property management firm. Company president Kevin Wallace said the program enables not only the development of affordable housing, but also additional workforce and market-rate apartment units.

The city’s MFTE policy allows for a 12-year tax exemption for multifamily projects where 20% of the units are affordable to moderate- and low-income residents. The voluntary program is credited with prompting the development of associated market-rate units.

As of the end of July, the Puget Sound Business Journal reported there were 659 MFTE-related affordable units completed or in Bellevue’s construction pipeline, and another 3,295 units of market-rate housing either completed or in the pipeline. Bellevue Senior Planner James Chow, the city’s MFTE lead, told the reporter, “Most, if not all, of those developing multifamily projects in Bellevue are interested in this program.”

Wallace said the MFTE is the only reason his company can provide affordable housing in a 466-unit high-rise mixed-use complex in downtown Bellevue.

Linda Abe, Bellevue’s affordable housing manager, said other measures the city has taken are also contributing to affordable housing development. Among these, she cited reducing permit fees, easing parking requirements, and eliminating barriers to build micro-units, detached and attached dwelling units. Also, the city is partnering with Amazon, Microsoft, Sound Transit and other large employers to help develop and retain “naturally affordable housing,” like transit-oriented workforce housing.

Back to top