Multi-Family Tax Exemption (MFTE) Program

The City of Bellingham provides a property tax exemption for multi-family housing in targeted residential area​s, as described in both Washington State Law (RCW 84.14) and the Bellingham Municipal Code (BMC 17.8​2) to encourage construction of residential units, including affordable housing, within urban villages.

History of the MFTE

After Bellis Fair Mall opened in 1989, the City initiated a number of programs to retain and attract investment and activity in the downtown. However, virtually no purpose-built market rate housing was built for decades. In 1999, the MFTE Program was adopted to create a financial incentive for residential uses in the downtown and support the creation of an active neighborhood district. Many developers have reported that the MFTE allowed banks to lend in an unproven or risky market for new residential development at that time.

Since 2010, the MFTE Program has expanded to four additional urban villages: Samish Way, Fountain District, Fairhaven and Barkley Village.

Results of the MFTE 

  • As of September 2019, twenty-nine market rate residential projects have been approved with 1,182 residential units
  • Over 1,000 of these units are located downtown
  • 860 of the units approved to date have been constructed, with another 322 underway.
  • Project sizes range from 4 to 164 units (average 41 units)
  • Eleven projects (329 units) have run the duration of their tax exemptions and returned to the property tax rolls.

How does the program work? 

Bellingham's MFTE Program provides a tax incentive to encourage development of a minimum of 4 new multifamily units to be located within one of 5 designated mixed-use urban villages. The incentive provides either an 8-year or 12-year property tax exemption on the assessed improvements that create 4 or more additional housing units.

The 8-year option allows for all market rate housing. The 12-year option is offered for projects that designate at least 20% of the units as affordable; see BMC 17.82.030(B)(2) for affordability criteria. Both options allow the units to be rented as apartments or owned as condos. Only the 12-year option is currently offered in the Fairhaven and Barkley urban villages.

The Multi-Family Tax Exemption application (PDF) must be submitted prior to applying for a building permit.

Staff Contact: Chris Koch at 360-778-8349 or ckoch@cob.org for more information about the program.

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