Constructing Affordable Housing

Bonus Density Summary

This incentive is found in the Land Use Code at BCC 20.25A.070.C.
Residential developments in Downtown Bellevue are eligible to receive a bonus 1.0 floor area ratio (FAR) by providing housing units that are affordable to households earning up to 80% of the area median income (AMI).

The bonus FAR must have a ratio of at least 1 sq. ft. of affordable housing space for every 2.5 sq. ft. of market-rate housing. In other words, 1 in 3.5 sq. ft. (28.6%) of the additional FAR must be made up of affordable housing.

Additional Details

• For projects that utilize at least 0.5 FAR of this bonus, additional flexibility for lot coverage and setback standards may be provided.
• Required parking for affordable studio and 1-bedroom units may be provided at a reduced minimum ratio of 0.5 spaces per unit.
• Affordable units provided as part of this incentive must remain affordable for the life of the project. A covenant must be recorded on the title of the property indicating this requirement.
• There is no option for paying a fee in lieu of providing affordable housing on site.

Bonus Density Summary

This incentive is found in the Land Use Code at BCC 20.25D.090.C.

The City offers several different incentives for development of affordable housing and other amenities in the BelRed neighborhood. The degree of these incentives is based on the land use district in which the property is located; namely, those districts located near light rail stations are subject to higher levels of incentives.

For projects located within transit nodes (MO-1, OR-1, OR-2, RC-1, RC-2, and RC-3 land use districts), a bonus of up to 1.25 FAR may be granted for affordable housing. For projects outside those nodes (CR and R land use districts), the bonus is reduced to 0.5 FAR.

Bonus Requirements

For units intended to be rentals, the bonus FAR must be made up of at least 1 sq. ft. of affordable housing space for every 4.5 sq. ft. of market-rate housing. For units intended to be sold, the ratio is 1 sq. ft. of affordable housing for every 7.2 sq. ft. of market-rate housing. Rental units must be affordable to households earning up to 80% of the Area Median Income (AMI). Sale units must be affordable to households earning up to 100% AMI.

Payment of a fee in lieu of providing affordable housing is an option in BelRed. The current rate for the fee-in-lieu is $18 per sq. ft. of affordable housing required as part of this bonus.

Additional Details:

• Studio and 1-bedroom units that are affordable to households earning up to 60% AMI are given a reduced minimum parking ratio of 0.25 spaces per unit.
• Affordable units provided as part of these incentives must remain affordable for the life of the project. A covenant must be recorded on the title of the property indicating this requirement.

Bonus Tiers

Other incentives are available in BelRed, but affordable housing incentives must be achieved first before unlocking the additional bonuses. The graph above illustrates the different FAR incentives available in BelRed.

Bonus Density

This incentive is found in the Land Use Code at BCC 20.25P.060.B.2.a for Eastgate and at BCC 20.20.010 (note 49) for the Neighborhood Mixed Use land use district.

A floor area ratio (FAR) bonus is available to projects in these areas (EG-TOD and NMU land use districts) that provide affordable housing units. These units must be affordable to households earning up to 80% of the area median income (AMI). The additional FAR must be made up of at least 1 affordable unit for every 2.5 market rate units. Affordable units provided as part of these incentives must remain affordable for the life of the project. A covenant must be recorded on the title of the property indicating this requirement.

Affordable studio and 1-bedroom units are also given a reduced parking ratio of 0.25 spaces per unit.

Density Bonus

A density bonus is available for multifamily development projects outside of Downtown, BelRed, Eastgate, and the NMU land use district. This incentive is found in the Land Use Code at BCC 20.20.128 For each affordable unit proposed, one additional market-rate unit is allowed, up to a maximum bonus of 15% over the existing density limits. Affordable units provided as part of this incentive must remain affordable for the life of the project. A covenant must be recorded on the title of the property indicating this requirement.

In order for projects to more easily take advantage of this bonus, flexibility on other regulations is also offered, including:

• An allowance for more compact parking spaces (up to 75% of the total parking spaces)
• Increased height limits (between 6 and 20 feet depending on the land use district)
• Increased lot coverage limits (up to 5% increase)
• Reduced open and recreational space requirements

Minimum Parking Reductions

Reduced minimum parking reductions are also available for projects located within a certain distance of frequent transit stops.

• Affordable housing units within 1/4 mile of transit stops with service at least 2 times per hour have a minimum parking ratio of 0.75 spaces per unit.
• Affordable housing units within 1/4 mile of transit stops with service at least 4 times per hour have a minimum parking ratio of 0.5 spaces per unit.

This incentive is found in the Land Use Code at BCC 20.20.590.L.

MFTE Information

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. A common change to the affordability level required occurs when owners choose to overlap or double-count units for both the MFTE program and a density incentive available under the Land Use Code that also requires affordability at 80% AMI. The MFTE information sheet outlines this and other conditions that may impact the affordability level. It also outlines other requirements regarding rent stabilization, parking discounts applying outside the Downtown area, and other 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 6582. RCW 84.14 addresses such tax exemptions in state law. 

MFTE Application Process for Developers

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

• MFTE Conditional Certificate Application
• MFTE Final Certificate Application
• MFTE Annual Income Eligibility Certification

Sample Contract and Covenant

• Boilerplate MFTE Contract
• Boilerplate MFTE Covenant