Bellingham City Council

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 concluded with Council Member Stone providing an update on her work to draft both a resolution reaffirming city values around inclusion and an ordinance establishing concrete policies to protect LGBTQI+ community members, particularly transgender residents. Mayor Lund announced the city will implement the National Safe Place Program by July 1st to support hate crime victims.