For some time, Bellevue has been growing increasingly unaffordable for the people who live and work in the city. Median home prices in the city are some of the state’s most expensive, and apartment costs mimic this trend, with Bellevue’s median rental price landing at $3,400—adding up to a whopping $40,800 a year. Even with an Area Median Income (AMI) of $103,000 (nearly double the rest of the state), those who earn the AMI are likely housing burdened.
That’s why the city has decided to expand its Multifamily Tax Exemption (MFTE) program for developers. Through the program, MFTE properties are granted a 12-year tax exemption when 20% of the units are affordable to low- and moderate-income residents. In Bellevue, this includes anyone making under 80% of AMI, or less than $82,000.
The ultimate goal of the MFTE expansion is to make affordable developments more financially appealing to developers. Often, affordable projects have a lower profit margin, making developers less likely to build them.
By expanding the geographic area in which the MFTE can be used, developers are incentivized to use the program for their developments. As an added benefit, building affordable units this way also comes with more market-rate units, which can help to address the overall shortage of housing in the city. A typical MFTE project will produce 80% of its units as market-rate options, and 20% as affordable units.
So far under the MFTE, 84 affordable units have been built in Bellevue, 275 units have been approved for development, and developers have voiced interest in building at least 300 more. That means there are around 659 MFTE-related affordable units completed or in the construction pipeline. However, there are another 3,295 units of market-rate housing units either completed or in development to go along with those.
While this may sound good in theory, Bellevue is still a long way from meeting the long-term housing needs of its most vulnerable residents. According to the Puget Sound Business Journal, “…the city has too little housing for those making less than 50% of the AMI, but more than enough for those making 50% to 80%.”
Studies suggest that Bellevue is currently short about 4,000 housing units for those making between 0% – 30% of AMI. An additional 950 units are needed at the 31% – 51% bracket.
Although the city still has ground to make up in terms of affordable housing, it is supporting this effort in other ways as well. Bellevue has reduced permitting fees, eased parking requirements, and allowed for more micro-units, ADUS, and DADUs to be built. Over time, these changes could be the foundation for a more affordable city for its residents.
This article is based on this post from Puget Sound Business Journal.
