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Real Briefings

Bellingham City Council

BEL-CON-2025-05-19 May 19, 2025 City Council Regular Meeting City of Bellingham 52 min
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The Bellingham City Council took major action on housing policy Monday night, unanimously approving sweeping changes to the Multi-Family Tax Exemption (MFTE) program that will expand tax incentives to spur housing construction across much more of the city. The amendments to BMC 17.82 represent one of the most significant housing policy moves in years, extending the 8-year market-rate tax exemption to the Fairhaven, Barkley, and Waterfront urban villages while dramatically expanding the 12-year affordable housing exemption to all areas where middle housing is allowed. The changes also introduce new housing types and incentive structures. For the first time, co-living housing projects — where individual bedrooms are rented separately with shared common areas — will be eligible for tax exemptions. A new 20-year tax exemption was created for permanently affordable homeownership projects, and existing properties approaching the end of their exemption periods can now extend their benefits by committing to affordable units. Council's action came after extensive public testimony supporting the expansion, with developers, the Port of Bellingham, and housing advocates all endorsing the changes. The amendments respond to a market feasibility study showing that multi-family construction in Bellingham is currently "infeasible" under existing conditions, but that modest market improvements combined with adjusted tax incentives could restart development. Beyond the housing tax exemption, the evening included routine infrastructure approvals — two major contracts totaling over $7 million for water main replacement and fish passage improvements — and committee reports covering the city's challenging 2026 budget outlook and substantial utility rate increases ahead. Council also approved final passage of middle housing regulations with reduced floor area ratios and heard updates on rental fee ordinances that will be discussed further at a June 2nd special meeting. The meeting conc

**Multi-Family Tax Exemption Program Expansion (AB 24540)** — PASSED 7-0 - Approved first and second reading of comprehensive MFTE amendments - Expands 8-year market-rate exemption to Fairhaven, Barkley, and Waterfront urban villages - Extends 12-year affordable housing exemption to all areas allowing middle housing (outside Lake Whatcom watershed) - Creates new 20-year exemption for permanently affordable homeownership - Allows co-living housing projects with 10+ bedroom units - Increases AMI thresholds from 60% to 80% for rental units - Establishes extension option for existing properties at 70% AMI - Staff recommendation: Approve — Council aligned with staff **Russell-Irving Water Main Replacement Contract (AB 24557)** — PASSED 7-0 - Awarded $2,688,577 contract to Colacurcio Brothers, Inc. - Replaces water mains dating to 1918-1927 across 8 blocks - Includes 58 ADA-compliant ramp upgrades - Engineer's estimate was $3,558,180; came in well under budget - Staff recommendation…

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**Multi-Family Tax Exemption Program Transformation** The MFTE amendments represent a fundamental shift in Bellingham's approach to housing incentives, moving from highly targeted geographic areas to broad citywide application. Chris Behee, Long Range Division Manager, explained the dual purpose: the 8-year program focuses on production in areas with significant infrastructure investments, while the 12-year and new 20-year programs target mixed-income development. The expansion was driven by a market feasibility study concluding that multi-family construction is currently "infeasible" in Bellingham, but that with modestly improved market conditions and adjusted incentives, both programs could succeed. The key finding was that the previous 60% AMI threshold for 12-year program rental units was "set too low to be feasible in the housing market." Council Member Anderson expressed initial concern about expanding the 8-year market-rate program to desirable areas like Barkley and the Waterfront, historically preferring to push for more affordable housing requirements. However, she ultimately supported the changes, recognizing that current economic uncertainty and construction costs create a "really hard to look at do I want to build an eight story building of 120 houses right now" environment for developers. Council Member Lilliquist emphasized the program's shift toward mixed-income housing, particularly in middle housing contexts. "Mixed income is a community value," he said. "That's why I like this program and I'd like extending to middle housing in particular because those are modest scale, naturally affordable and made more affordable with a tax break." The co-living housing inclusion reflects new state requirements. These projects typically feature individual bedrooms with attached bathrooms and shared kitchens, commonly serving students but not restricted to that population. The 10-bedroom minimum for co-living projects aims to maintain equivalency with 5-unit traditional projects. **Displacement Protection and Extension Provisions** Staff addressed Council's concerns about tenant displacement by removing vacancy requirements and establishing new protections. Properties undergoing rehabil…
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**Public Testimony — All Supportive** Adam Belinger supported the concept but raised concerns about full-cycle costs, noting the substantial tax revenue foregone for 8-20 year periods. He warned about potential gaming of the system, citing Seattle examples where developers scraped affordable housing to build higher-rent efficiency units under MFTE programs. Brian Gower, Port of Bellingham Environmental and Planning Director, strongly supported extending MFTE to the Waterfront District, emphasizing the need for a "level playing field" across urban villages and the challenging development conditions downtown including geotechnical and environmental considerations. Ben Bessley, representing Barkley Village with Talbot Group, enthusiastically backed the ordinance, confirming active work on a qualifying multi-family project. He emphasized that the incentive would accelerate housing production while preserving density and land for future growth. Dan Blumker, a Birchwood resident living in single-room occupancy housing at $670/month, supported adding co-living to the program as "some of the most affordable housing that can be provided." Alexandra Spalding, Whatcom Community Foundation, supported the expansion on behalf of the Mill Works project, noting the difficulty of expanding tax exemption programs during budg…
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**Chris Behee, on the market feasibility study:** "The market report that was done to examine the MFTE projects to date and the current market conditions really concluded that multi-family construction of any type within the city and the way the market is right now is infeasible." **Council Member Anderson, on supporting expansion despite preferences:** "I feel that if we're on that upside down kind of bell curve and we have four years of this, how long is it going to take to come out the othe…
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**June 2, 2025 at 10:00 AM** — Special Council meeting in Mayor's Boardroom to discuss two proposed rental fee ordinances with opportunity for in-depth discussion and further amendments. **June 4, 2025 at 2:00 PM** — Special joint meeting with County Council and Lake Whatcom Water and Sewer District Board at Pacific Street Operations Center, following up on April's annual Lake Whatcom joint meeting. **June 9, 2025** — Next regular Council meeting where Council Member Stone expects to present draft resolution and ordinance regarding LGBTQI+ community protections and city values reaffirmation. **July 1, 2025** — Target date for implementing National Safe…

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**Housing Policy** - MFTE 8-year market-rate exemption now available in three additional urban villages (Fairhaven, Barkley, Waterfront) - MFTE 12-year affordable housing exemption expanded citywide to all middle housing areas (except Lake Whatcom watershed) - Co-living housing projects now eligible for all MFTE programs with 10+ bedroom minimum - New 20-year MFTE program created for permanently affordable homeownership (99-year deed restrictions) - AMI thresholds increased from 60% to 80% for rental units in 12-year program - Extension option created for existing MFTE properties at 70% AMI requirement - Minimum project size increased from 4 to 5 units (10 for co-living) - Vacancy requirements removed, replaced with displacement protection standards - Quality and distribution requirements added for affordable units within projects **Middle H…
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# An Evening of Housing Policy and Community Values — Bellingham City Council Meeting of May 19, 2025 On a busy Monday evening at City Hall, the Bellingham City Council convened for what would prove to be a significant meeting for the city's housing future. All seven council members were present as they tackled a packed agenda that would stretch nearly five hours, from committee meetings in the afternoon through public comment that didn't conclude until nearly midnight. The evening's central drama revolved around housing policy, but it was bookended by the mayor's announcement of new safety protections for the LGBTQ+ community and extensive public testimony that underscored the urgent civic conversations happening in Bellingham about identity, safety, and belonging. ## The Multifamily Tax Exemption Expansion The meeting's marquee item was a public hearing on expanding the city's Multifamily Tax Exemption (MFTE) program — a tool that has generated over 1,400 housing units in Bellingham by offering property tax breaks in exchange for housing production and, in some cases, affordable units. Chris Behee, the city's long-range division manager, along with planner Chris Koch, presented the proposed changes to a room of developers, housing advocates, and interested residents. The amendments would extend the program to three additional urban villages — Fairhaven, Barkley, and the Waterfront District — while creating new pathways for affordable housing throughout the city. "The market report that was done to examine the MFTE projects to date and the current market conditions really concluded that multi-family construction of any type within the city and the way the market is right now is infeasible," Behee explained to the council. The economic reality facing developers is stark: most projects currently under construction secured their financing and land under better market conditions than exist today. The proposed changes respond to this challenge by expanding where the eight-year market-rate program can be used while strengthening the affordable housing components. Under the new rules, the twelve-year affordable housing program would require 20% of units to be affordable at 80% of area median income, up from the…
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### Meeting Overview The Bellingham City Council met on May 19, 2025, for their regular meeting, which lasted 4 hours and 52 minutes (7:00 PM to 11:52 PM). The primary focus was expanding the Multi-Family Tax Exemption (MFTE) program to stimulate housing production and affordability across more areas of the city. ### Key Terms and Concepts **Multi-Family Tax Exemption (MFTE):** A state-authorized program that provides property tax exemptions to developers in exchange for building multi-family housing. The program has different tracks: 8-year for market-rate housing production, 12-year for mixed-income projects, and a new 20-year option for permanently affordable homeownership. **Urban Villages:** Designated areas comprising less than 4% of Bellingham's land but expected to accommodate about 30% of new housing. These areas have concentrated infrastructure investments and are prioritized for higher-density development. **Area Median Income (AMI):** The middle household income for a geographic area, used to determine affordability thresholds. The proposed ordinance adjusts income requirements from 60% AMI to 80% AMI for rental units. **Co-living Housing:** Multi-bedroom units where individual rooms are leased separately, typically with shared kitchen facilities. Each bedroom may have its own bathroom and locking door. The proposal requires minimum project sizes of 10 sleeping units. **Floor Area Ratio (FAR):** A measure of building mass relative to lot size. The council amended the interim middle housing ordinance to reduce maximum FAR from 0.6 to 0.4 for single dwelling unit lots. **Middle Housing:** Housing types between single-family homes and large apartment buildings, including duplexes, triplexes, townhomes, and small apartment buildings designed to fit into residential neighborhoods. **Lake Whatcom Watershed:** A protected area where development is restricted to preserve water quality. The expanded MFTE program excludes this area from eligibility. ### Key People at This Meeting | Name | Role / Affiliation | |---|---| | Hollie Huthman | Council President (Second Ward) | | Hannah Stone | Council Member (First Ward) | | Daniel Hammill | Council Member (Third Ward) | | Edwin H. "Skip" Williams | Council Member (Fourth Ward) | | Lisa Anderson | Council Member (Fifth Ward) | | Michael Lilliquist | Council Member (Sixth Ward) | | Jace Cotton | Council Member (At-Large) | | Kim Lund | Mayor | | Chris Behee | Long Range Division Manager | | Chris Koch | Planner II | | Blake Lyon | Planning & Community Development Director | ### Background Context Bellingham faces a housin…
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Housing Budget & Finance Transportation & Infrastructure Government Operations AB 24478 AB 24540 AB 24546 AB 24547 AB 24550 AB 24557 Barkley Village Colacurcio Brothers Faber Construction Mill Works Port Of Bellingham Talbot Group Whatcom Community Foundation Adam Belinger Alexandra Spalding Ben Bessley Blake Lyon Brian Gower Chris Behee Dan Blumker Daniel Hammill Edwin Skip Williams Hannah Stone Hannah Stone Hollie Huthman Jace Cotton Kimberley Lund Lisa Anderson Michael Lilliquist Sean Hextead Affordable Housing Budget 2026 Budget Finance Canadian Relations Co Living Co Living Housing Displacement Protection Fish Passage Housing Policy Infrastructure Investment Lake Whatcom Watershed Lgbtqi Protections Mfte Program Middle Housing Multifamily Tax Exemption Urban Villages Utility Rates Water Sewer Capacity