Council Roundup: Considering code change to facilitate conversion of commercial buildings to multifamily housing

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Plus an update from Cascade Water Alliance

At Tuesday's meeting, the City Council directed staff to begin developing a land use code amendment that would provide more flexibility in converting commercial or mixed-use buildings to multifamily housing.

The proposed code change responds to House Bill 1042, a 2023 state law that requires cities in Washington to revise their codes to promote the redevelopment of existing buildings to residential uses. Intended to help address the state's housing shortage, the legislation also encourages interior redevelopment of commercial or mixed-use buildings into residential units and supports higher-density redevelopment of existing residential buildings.

To comply, the city must update its code by June 30, 2025. The code amendment will ensure that all commercial and mixed-use land use districts that permit multifamily housing can accommodate additional density and flexibility for redevelopment projects.
The council also directed staff to begin work on a second land use code amendment, intended to streamline design review and associated regulations for new development. This code change will address House Bill 1293, which mandates that cities apply only clear and objective design standards to the exteriors of new developments and additional requirements related to project review. Staff will confirm which standards to retain, which need to be clarified and which should be removed because they are unenforceable.

The drafting of these two amendments will include a public engagement phase and Planning Commission meetings. Additional information on both items is available in the agenda materials; the full discussion is available on video replay through Bellevue Television.

Cascade Water Alliance update

This week, the council also received an update from the Cascade Water Alliance on the proposed 2025-26 budget and rates, including proposed rate changes for Bellevue. All of Bellevue's drinking water is acquired through the Cascade Water Alliance, an association of water districts and cities, which serves as a regional water supply agency and wholesale water provider. Cascade purchases water under contract from Seattle Public Utilities (SPU), but is negotiating a new long-term contract with Tacoma Public Utilities (TPU).

Cascade is proposing a 3.5% rate increase per year in 2025 and 2026; however, due to reconciliation and changes to water demand shares, this does not apply equally for all Cascade member cities and districts. For Bellevue, this translates to a 0.58% cost decrease in 2025 and a 2.36% increase in 2026.

The 2024 typical Bellevue residential utility bill for water, sewer and stormwater services is $222.83 per month, with water service representing $82.87, or 37% of the total bill. The 2024 monthly amount dedicated to Cascade is approximately $25.01, which is about 30% of Bellevue's typical residential water bill. The impact of Cascade's proposed rate increase to a typical Bellevue residential customer would be a $0.17 decrease in 2025 and a $0.80 increase in 2026. This does not reflect other changes to the total utility bill for a typical residential customer.

The council recommended Cascade Water Alliance continue examining all options to address the affordability of utility rates through existing water infrastructure and contract negotiations with TPU and SPU. More information is available in the meeting materials.