---
title: Why Bellingham Is REALLY Pushing Density
description: Explore Bellingham's density push, revealing how it's a revenue strategy rather than an affordability solution, leading to high costs for residents.
---

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# [Why Bellingham Is REALLY Pushing Density](https://www.realissuespodcast.org/the-real-blog/why-bellingham-is-really-pushing-density)

 Written by [Brian Gass](https://www.realissuespodcast.org/the-real-blog/author/brian-gass) | Apr 22, 2026 3:14:13 AM

*A Real Issues Analysis*

## **Introduction: The Story You’ve Been Told vs. The Truth You Haven’t**

For years, Bellingham officials and outside advocacy groups like the Sightline Institute have pushed one message:

> “Density equals affordability.”

It’s repeated so often that many people assume it must be true. But when you look at the data, follow the money, and compare Bellingham’s actions to its own past promises, a very different story emerges.

This is not a housing strategy. It’s a revenue strategy. And residents deserve to see how we got here.

## The 2005 Growth Plan: A Promise Bellingham Never Kept

In 2005, Bellingham adopted a bold, long-term Comprehensive Plan. It identified **15 Urban Growth Areas (UGAs)** the city promised to annex by 2025. The logic was simple:

- Bellingham would grow.
- The population would increase.
- The city needed more land to support homes, parks, roads, and utilities.

But from 2005–2025, something remarkable happened.

**Annexations completed: 0 of 15**

Not a single annex area annexed in 20 years!

**Not one.** Despite repeated commitments, no meaningful expansion occurred.[ At](http://occurred.At) the same time:

- Population grew **over 30%**
- Housing demand surged
- Land supply remained frozen
- Prices skyrocketed

This wasn’t an accident — it was a policy choice. You can’t grow people and freeze land without driving costs through the roof. And that’s exactly what happened.

Today, Bellingham is one of the [**most expensive cities in the United States for its size**](https://constructioncoverage.com/research/cities-with-highest-home-price-to-income-ratios).

## “Growth Pays for Growth” — But the Money Never Built Growth

Over $1 MILLION in fees! 116 unit complex!

Here’s where the real story begins. Washington requires that new development pay *impact fees* and *connection fees* so existing residents aren’t subsidizing growth. These fees are **legally restricted** for:

- **New sewer and water capacity**
- **New transportation infrastructure**
- **Park expansion**
- **School impacts**
- **Stormwater capacity**

In other words:

### **These revenues must fund EXPANSION — not payroll, not administration, not internal projects.**

But in Bellingham, those funds disappeared into the City Hall budget with no equivalent expansion of city infrastructure.

## Developers Build the Infrastructure — Not the City

Here’s the part most people don’t know:

When a new subdivision or apartment complex is built, the **developer** pays to install:

- Roads
- Sidewalks
- Gutters
- Streetlights
- Fire hydrants
- Water lines
- Sewer lines
- Stormwater systems
- Meters
- Engineering
- Inspections
- On-site utilities

And when the project is complete?

### **The developer donates the entire utility system to the City.**

That’s right — the City receives a fully built, fully functioning system **for free**.

And then still charges:

- **Full water/sewer connection fees**
- **Full impact fees**
- **Full frontage fees**
- **Full utility hook-up fees**

This is a revenue engine — not an affordability tool.

## Don't forget about the REET!

Washington State imposes a Real Estate Excise Tax (REET) on most real estate transactions. The amount charged is a progressive percentage, starting at under $500,000 and increasing.

**Cities and counties may impose their own local REET taxes in addition to the state REET, each with a maximum rate of 0.25%**, with differences primarily in which municipalities can levy them and how the funds can be used. 

**Key Distinctions between REET 1 and REET 2**

**Feature**

**REET 1 (First Quarter Percent)**

**REET 2 (Second Quarter Percent)**

**Rate**

A 0.25% tax.

An additional 0.25% tax (total local REET can be 0.5%).

**Eligible Municipalities**

Any city, town, or county can impose it.

Only cities and counties that are fully planning under the **Growth Management Act (GMA)** can impose it.

**Use of Funds**

Primarily for capital projects and limited maintenance, with a broader definition of "capital projects".

Primarily for capital projects and limited maintenance, but with a more restrictive definition of "capital projects".

**Specific Allowable Uses**

Eligible uses include public facilities like law enforcement, fire protection, libraries, administration, courts, and park land acquisition.

Funds are more specifically directed to infrastructure and parks capital projects, but historically **did not allow** for the acquisition of park land, nor public facilities like law enforcement or libraries.

**Recent Legislation (Effective July 27, 2025)**

Recent legislation (HB 1791) has significantly reduced the differences between the two, providing greater flexibility. Key changes include: 

- Allowing REET 1 revenues to be used for REET 2 purposes and vice versa, essentially harmonizing their authorized uses.
- Removing distinctions between GMA and non-GMA jurisdictions for the use of REET 1 funds.
- Making permanent the authority to use a portion of REET funds (up to 35% or $100,000, whichever is greater) for operation and maintenance of existing capital projects. 

In short, while they were historically distinct in their use limitations and the local governments that could levy them, new laws are making the two local taxes nearly interchangeable in how the revenues can be applied to capital and maintenance projects.

Bellingham collected an estimated **$20 million in just five years**.

## Where Did the Growth Money Go?

It went into the City budget. The payroll exploded from ~800 employees to ~1,100. The city budget grew from ~$56 million to **over $140 million**. Internal departments grew at record pace, yet:

- No new UGAs were annexed
- No major capacity expansions occurred
- No new growth infrastructure was built
- No meaningful land supply was added

Growth fees didn’t pay for growth — they paid for Bellingham’s internal operating costs.

## Bellingham: The Least Efficient City in Western Washington

Here’s the most telling statistic:

Everett has its own public transit and still is a better deal than Bellingham for it's residents!

### **Employees per 1,000 residents**

- Vancouver: ~6
- Bellevue: 6–7
- Redmond: ~7
- Kirkland: ~7
- Everett (runs its own transit system): ~8
- **Bellingham: 11.5–12**

Bellingham is **the least efficient city** relative to its population size and geographic footprint.

A bloated city government requires a massive revenue stream. And where does that come from?

### **Dense, fee-heavy development.**

Not single-family homes. Not ownership housing. Not moderate growth. Not boundary expansion. **Apartments = more units = more money.**

## The Final Myth: Density = Affordability

But every major academic study shows the opposite — including **three of the strongest peer-reviewed analyses available today**.

**Study [#1](https://www.realissuespodcast.org/the-real-blog/hashtags/1) (Ahlfeldt & Pietrostefani, 2019)** – [*Full breakdown here*](https://www.realissuespodcast.org/general-8)

**Study [#2](https://www.realissuespodcast.org/the-real-blog/hashtags/2) (Stacy, Davis & Larson, 2023)** – [*Full breakdown here*](https://www.realissuespodcast.org/copy-of-gentrification-density-low)

**Study [#3](https://www.realissuespodcast.org/the-real-blog/hashtags/3) (NIH Gentrification Study, 2021)** – [*Full breakdown here*](https://www.realissuespodcast.org/copy-of-the-economic-effects-of-density)

### What All Three Studies Agree On

Across the Harvard, NIST, and NIH research:

#### ❌ Density does not reduce rents

#### ❌ Density does not create affordable units

#### ❌ Density does not help low-income renters

#### ❌ Density does not lower construction costs

Instead:

#### ✔ Density raises land values

#### ✔ Density raises construction costs

#### ✔ Density raises municipal overhead

#### ✔ Density accelerates gentrification pressures

#### ✔ Density produces high-rent units first

#### ✔ Density benefits city budgets — not residents

And in a city like Bellingham, where land supply has been **intentionally frozen for 20 years**, density compounds scarcity rather than relieving it.

# **The Real Reason Bellingham Pushes Density**

Because dense development:

- Generates **the highest fee revenue**
- Produces **the highest REET intake**
- Raises **assessment values**
- Maximizes **utility and connection fees**
- Expands the City budget without expanding the city boundaries
- Funds payroll growth instead of infrastructure expansion

Meanwhile, renters pay:

- The **highest cost per square foot**
- The highest transportation burden
- The highest instability
- The highest share of city revenue per resident

**Density is not affordability. Density is a revenue strategy for an inefficient city government.**

And the research proves it.

> **The densest cities are the least affordable cities.**

Density increases land values. Density increases development costs. Density increases municipal overhead. Density increases pressure on infrastructure. In Bellingham, density isn’t even replacing scarcity — it’s being built on top of it.

That’s why renters pay the **highest cost per square foot** in the city — and why the City has every incentive to keep the system going.

## Conclusion: Follow the Money

When you step back and connect the dots:

- The City ignored its own expansion plan
- Froze land supply
- Collected growth-related revenue
- Didn’t expand anything
- Redirected funds internally
- Became the least efficient city of its kind
- Now sells “density = affordability” as a solution

This isn’t a housing strategy. This isn’t an affordability strategy. This is a **financial survival strategy for an inefficient City Hall**.

And Bellingham residents — renters, buyers, families — are the ones paying the price.

[View full post](https://www.realissuespodcast.org/the-real-blog/why-bellingham-is-really-pushing-density)

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