Redmond: Ordinance 3218 and Affordable Housing

Exciting changes are underway in the City of Redmond as Ordinance No. 3218, a crucial piece of legislation aimed at boosting affordable housing, officially went into effect this week.  At its heart, Ordinance No. 3218 refines and strengthens Chapter 3.38 of the Redmond Municipal Code, which governs our successful Multifamily Housing Property Tax Exemption (MFTE) program. For years, the MFTE program has proven to be an effective tool in fostering the creation of affordable housing units. Now, with these new updates, Redmond is doubling down on its commitment to ensuring a diverse and accessible housing market for all residents.

This latest ordinance isn't just a standalone measure; it's an integral part of the broader vision outlined in Redmond 2050, which the City Council proudly adopted last November. That comprehensive plan included a vital update to our Housing Element, acknowledging the critical need for more varied and affordable housing options across our community. In tandem with this ordinance, the City is also rolling out new zoning and development regulations (under Ordinance No. 3220) to fully realize the future envisioned by Redmond 2050 – a future that embraces vibrant urban centers and thriving neighborhoods, moving from a suburban to a more dynamic, urban character. The updated MFTE provisions are specifically crafted to work seamlessly with these new regulations, actively incentivizing and facilitating the construction of much-needed affordable housing.

A key element of Ordinance No. 3218 is the formal designation of Residential Targeted Areas (RTAs). These are specific urban centers that the City Council has identified as having a pressing need for more available, desirable, and, crucially, affordable residential housing. Get ready to see focused development in areas like: Downtown, Overlake Village, Marymoor Village, Neighborhood, Faith-Based Institutions, and Mixed-Use

The decision to designate these areas wasn't arbitrary. The City Council carefully considered factors such as the potential for new housing to create more residential opportunities, stimulate affordable multifamily rental housing, attract and retain permanent residents, and support public investments in transit, all while working towards a healthier jobs-to-housing balance. A clear provision in the ordinance also states that if any part of a legal lot falls within an RTA, the entire lot will be considered part of that RTA for the purposes of the exemption.

For developers looking to contribute to Redmond's affordable housing goals, the ordinance lays out clear guidelines for exemption duration and affordability requirements. New housing construction that qualifies can now receive a property tax exemption for either eight or twelve consecutive years, kicking off on January 1st of the year following the certificate's issuance. The length of the exemption is directly tied to the level of affordability provided within the project.

Each RTA has tailored requirements for the minimum percentage of units that must be designated as affordable, along with the corresponding affordability levels, typically expressed as a percentage of the Area Median Income (AMI) – for example, 50% AMI, 60% AMI, or 80% AMI. The ordinance ensures that affordable units must maintain affordable rents, that their mix and configuration generally align with the overall project, and that they are integrated seamlessly throughout the development. Importantly, the exemption applies only to the value of new housing construction improvements, not to the land or non-qualifying improvements.