Multifamily Tax Exemption

The MFTE Program is a voluntary affordable housing incentive for new multifamily rental development. The MFTE provides a 12-year exemption from property taxes paid on the housing portion of qualifying projects in exchange for setting aside 20 percent of the units for income-eligible households.

The tax exemption is available in any area of the city where the Land Use Code permits multifamily uses. It requires a baseline affordability level of 80% AMI for 20 percent of the project’s units. This affordability level may be lowered for some or all of the affordable units according to the following conditions:

  • If fewer than 15% of the units have two or more bedrooms, the owner may pick either of the following:
    • 20 percent of units offered at 70% AMI (studios and one-bedrooms) and 80% AMI (two-bedrooms and larger) OR
    • 25 percent of units offered at 80% AMI
  • Any unit under 300SF in size must be offered at 45% AMI
  • A project may overlap land use incentive affordability with that required under MFTE. In these instances, the double-counted units must be 15% AMI deeper affordability than they otherwise would be required to be. This does not apply to units under 300SF in size.

In addition, the affordable rents are capped at a 3% annual increase for any returning MFTE tenants. Outside of Downtown, MFTE tenants must also be offered a 30% discount on market-rate pricing for a monthly parking space rental.

The MFTE information sheet provides program overview, tables and administrative information.

In June 2015, the City Council adopted the multifamily housing property tax exemption (City Code 4.52) through Ordinance 6231. In February 2018, the City Council amended the program through Ordinance 6400. In June 2021, the City Council amended the program through Ordinance 6582RCW 84.14 addresses such tax exemptions in state law. 

Is my apartment project eligible for an MFTE property tax exemption?

Projects must meet the following eligibility requirements:

  • The project is new construction, multifamily rental housing located in a targeted residential area.
  • The project can be all residential or mixed-use residential of at least four dwelling units. At least 50 percent of the project is residential use.
  • The unit mix, configuration and size of affordable units at each affordability level must be substantially proportional to the mix and configuration of all housing units in the project.
  • The affordable units are constructed of similar quality and finishes as the other units of the project.
  • In projects containing more than one building, the affordable units are distributed amongst all the buildings.
  • The development does not result in the net loss of existing, federally subsidized affordable housing.
  • Construction is completed within three years from application approval or within an extension period approved by the director.
  • The project complies with all other applicable provisions of the Bellevue City Code.

Are there other rules associated with the MFTE?

The tax exemption...

  • is available for the entire residential component of the project – both affordable and market-rate dwelling units.
  • is not available for the land or for any non-residential component of the project (retail, commercial, office space, etc.). These will be taxed at the full assessed value.
  • takes effect the January 1 following the city’s approval of a final certificate of tax exemption.
  • will remain in place for a maximum of 12 years, provided the project remains in compliance with program requirements.
  • is transferable to a new property owner as long as the new owner maintains compliance with program requirements.

Are there any reporting requirements associated with the MFTE?

Tenants of the affordable units must be able to certify their income eligibility at time of initial occupancy and annually thereafter. To verify continued compliance with the program, by March 1 of each year after obtaining the final certificate the owner will submit to ARCH an annual report for all tenants of the affordable units.
 

2021 Annual Monthly Rental Costs*

Bedrooms Household Size Rent Utility Allowance**
45% AMI 55% AMI 65% AMI 70% AMI 80% AMI
  Studio   1 persons $911 $1,114 $1,316 $1,417 $1,620 $142
  One   1.5 persons $976 $1,193 $1,410 $1,519 $1,736 $169
  Two   3 persons $1,171 $1,432 $1,692 $1,822 $2,083 $207
  Three   4.5 persons $1,354 $1,655 $1,955 $2,106 $2,407 $254

 

* Based on the King County/Seattle-Bellevue Metro Median Income (4 persons): $108,600

** Monthly rental cost includes rent, utilities, and other required expenses; Utility allowance (right) includes Electricity & Gas, Water-Sewer-Garbage, and Renter's Insurance. A separate chart breaking this down further can be provided to calculate cases where any of these utilities are not charged directly to tenants.

Applications must be submitted to the Community Development Department prior to 60 days after the issuance of a project's first building permit (amended on June 28 2021, effective shortly).

If the application is approved per City Code Section 4.52, the city will issue a conditional certificate of acceptance for tax exemption. The city will then assign A Regional Coalition for Housing (ARCH) to develop a tax exemption contract and a regulatory agreement for execution by the project owner and the city manager. The regulatory agreement will be recorded as a covenant running with the land.

When the housing units are ready for occupancy, the applicant will submit to the Community Development Department (CD) an application for a final certificate of tax exemption, demonstrating that the project complies with all of the requirements of the program. If the Community Development Director approves the application, the city will issue a final certificate to the King County assessor, who will exempt the residential improvements from the taxable value of the property.

Application Documents

Sample Contract and Covenant

2021 Annual Income Qualification

Household Size 45% AMI 55% AMI 65% AMI 70% AMI 80% AMI
1 person  $  36,446  $     44,545  $  52,644  $  56,693  $  64,792
2 persons  $  41,652  $     50,908  $  60,164  $  64,792  $  74,048
3 persons  $  46,859  $     57,272  $  67,685  $  72,891  $  83,304
4 persons  $  52,065  $     63,635  $  75,205  $  80,990  $  92,560
5 persons  $  56,230  $     68,726  $  81,221  $  87,469  $  99,965


Bellevue has two downtown apartment buildings currently open and participating in the MFTE program, adding over 60 moderately priced apartments in a range of sizes. If you are looking for an affordable apartment in Bellevue, other resources include: