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Council studies changes to Bothell’s multifamily tax‑exemption program to boost housing production
Summary
Staff proposed updating the multifamily tax-exemption (MFTE) program — standardizing a 20% set‑aside, reducing parking requirements, proposing a 20‑year exemption with a 12‑year renewable option, and debating whether to target 70% or 80% AMI. Council asked staff for option packages, data, and annual reporting.
City planners presented conceptual changes on July 21 to the city’s multifamily tax-exemption (MFTE) program designed to spur multifamily development and produce affordable units. Ray Sosa, senior planner, said the existing MFTE tool adopted in 2021 has seen no take-up and staff want to make the program more feasible for developers while meeting state TOD obligations.
Sosa outlined core proposals: standardize set-aside levels to 20% citywide, streamline AMI tiers and consider a 70% AMI target (staff presented 70% as a primary option), remove parking requirements for MFTE units to align with downtown minimum changes, and implement a 20‑year tax-exemption period consistent with recent state guidance with options to renew a 12‑year exemption to match a 20‑year window. “We’re proposing to standardize that across the city so it'd be 20% for any part of the city. Same with the AMI…we'd like to streamline that so there's only 1 option. So that's at 70%,” Sosa said.
Councilmembers expressed mixed views: some supported a deeper affordability target (lower AMI) but recognized that deeper discounts can make projects infeasible; others argued 80% AMI in other jurisdictions has sometimes resulted in units that are effectively near market rate and have low occupancy. Several members asked staff to return with concrete options (e.g., A/B/C packages), cost estimates, and comparative data from neighboring cities; staff agreed to provide multiple concrete proposals and to track MFTE utilization via annual reporting.
Next steps: staff will prepare option packages with fiscal implications, seek additional data from peer cities, and return to council with code text for adoption later in 2026.
