City staff presented recommended updates to Bellevue’s Multifamily Tax Exemption (MFTE) program at a study session, proposing several new options and a phased approach to a Wilburton “supercharger” that allows mandatory affordability requirements to stack with MFTE.

Robin Zhao, affordable housing development program manager, summarized the staff package: recommended additions include a 20‑year MFTE option aimed at permanently affordable homeownership for nonprofit developers; allowing MFTE for office‑to‑residential conversions citywide; and creating an optional 8‑year MFTE program in Wilburton that requires deeper permanent affordability at lower AMI levels. Zhao also recommended allowing a Wilburton‑only supercharger that would permit double counting of required affordable units (without deeper AMI) and conducting a look‑back within four years to evaluate its impacts.

Zhao explained the policy tradeoffs staff examined: MFTE reduces or shifts property tax revenue but lowers rents for households in MFTE units and can improve overall development feasibility. "Under the existing program, we do see a very strong benefit being provided for each dollar of tax exempted," Zhao said, summarizing technical modeling that showed renters in MFTE units saved roughly $9,500 per year on average compared with comparable market rents in the same buildings. Staff also modeled the supercharger and found that while it increases development feasibility it shifts a greater share of benefit to property owners (developers) than the existing program.

On that point, Zhao told council that in 2025 six MFTE properties accounted for approximately $3.5 million in exempted taxes citywide; roughly $2.6 million of that was shifted (paid by other taxpayers) and about $900,000 was foregone by taxing districts. Zhao said the city estimated MFTE renters received about $2.5 million in rent savings in that year — roughly $0.75 in renter benefit for every $1 of tax exemption.

To address concerns that the supercharger concentrates 80% AMI units rather than producing deeper affordability, staff proposed the 8‑year alternative in Wilburton that pairs permanent deeper set‑asides (examples tested were 8% at 50% AMI or 6.5% at 60% AMI) so that the long‑term public benefit can be preserved while still providing development incentives. Zhao said those 8‑year options were calibrated so they would be roughly competitive in feasibility with the supercharger for developers in Wilburton’s market context.

The staff recommendations are to: adopt the 20‑year homeownership MFTE option; allow MFTE for conversion projects citywide; add an 8‑year MFTE option in Wilburton (with permanent deeper affordability set‑asides tied to mandatory requirements); permit the Wilburton supercharger for up to four years with a look‑back to study renter benefit, tax shift and on‑site affordable unit outcomes; and defer adoption of a citywide 12‑year extension option pending more data from existing MFTE properties.

Public comment during oral communications included several speakers who praised the Wilburton supercharger and urged adding a 12‑year extension citywide. Jesse Clawson, a developer representative, said the Wilburton supercharger has produced substantial permit activity: "Right now we have 2,158 residential units either submitted for permit or very close to it in the Wilburton sub area," Clawson said, and urged consideration of a 12‑year extension to make units affordable longer.

Councilmembers asked technical and policy questions. Several councilmembers supported starting the supercharger in Wilburton only and then evaluating its results; others urged expanding it citywide. Councilmember Newenhouse asked staff to list the 25 organizations engaged during phase‑one outreach; staff committed to provide that list. Councilmember Bergada suggested pairing the supercharger/multiple MFTE options with other tools (for example local revenue or preservation funding) to push deeper affordability. Zhao and staff said the item will return to council on Dec. 2 with draft code language, and that staff plan a four‑year look‑back on the Wilburton supercharger if adopted.

No formal council action was taken at the study session; staff sought direction and will return with draft code amendments for council review.