HomeMy WebLinkAboutITEM V-D
Memorandum
To:
Planning and Community Development Committee
From:
Elizabeth Chamberlain, AICP, Principal Planner
CC:
Cindy Baker, AICP, Director
Date:
August 5, 2009
Re:
Draft Ordinance – Revisions to Auburn City Code Chapter 3.94, Multi-Family
Property Tax Exemption
Background
The City originally adopted Ordinance No. 5779 creating Auburn City Code (ACC)
Chapter 3.94, Multi-Family Property Tax Exemption. This chapter allowed a property tax
exemption for ten years for projects that created 30 or more permanent occupancy units,
with an investment of at least $200,000.
In 2007, the State Legislature amended RCW Chapter 84.14, which permits cities to
enact this type of legislation, to incorporate affordable housing. If a project included a
certain percentage of affordable housing then the property tax exemption could be
realized for twelve years.With no affordable housing in the project then only eights
years of exemption can be obtained.
Discussion
Staff prepared a draft ordinance (attached) that amends various sections of ACC
Chapter 3.94 to address changes to RCW 84.14. As mentioned above, the significant
change is difference in how long the property exemption applies to a project; eight years
for no affordable housing and twelve years if affordable housing, for low or moderate
income households, is included in the project.
In looking at the definition for low and moderate income households, the City meets the
requirement as a high-cost area. What this means is that low-income household means
a household that has an income at or below one hundred percent of the median family
income for the County where the project is located. Moderate-income household means
a household that has an income that is more than one hundred percent, but at or below
one hundred fifty percent of the median family income for the County where the project is
Page 1 of 2
located. Median income in King County is approximately $63,500 and 150% of median
income is approximately $95,200.
To determine high cost area we take the third quarter median house price for the
previous year and if that price is equal to or greater than 130% of the statewide median
house price then the area is considered high cost.
In researching the “Washington center for real estate research at Washington State
University,” the information for third quarter 2007 (2008 not available yet) puts King
County as a high cost area.
Third Quarter Median
House Price 2007
King County
$472,000
Statewide
$314,000
Percentage difference
150%
Questions
At Monday’s Committee meeting, staff would like to discuss the following question:
1. Staff did not amend the minimum investment amount of $200,000 per unit.
Should this number be changed?
Page 2 of 2
ORDINANCE NO. X X X X
AN ORDINANCE OF THE CITY OF AUBURN,
WASHINGTON, CREATING A NEWAMENDING
CHAPTER 3.94 OF THE AUBURN CITY CODE
RELATING TO MULTI-FAMILY PROPERTY TAX
EXEMPTION
WHEREAS in 1995 the Washington State Legislature adopted Chapter
84.14 RCW, to encourage increased residential opportunities in cities required to
plan under the Growth Management Act, by providing for special property tax
valuation for eligible multi-family housing in targeted urban, residential areas; and
WHEREAS Chapter 84.14 further authorized cities with a population of at
least thirtyfifteen-thousand to adopt procedures to implement the special property
tax valuations; and
WHEREAS the City of Auburn adopted the Auburn Comprehensive Plan,
to implement the planning requirements of the Growth Management Act, RCW
36.70A; and
WHEREAS the Auburn Comprehensive Plan establishes a need for multi-
family housing and expressly designates the downtown as a location for
multifamily housing; and
WHEREAS the City of Auburn adopted the Auburn Downtown Plan as a
complement to the Auburn Comprehensive Plan; and
WHEREAS the Auburn Downtown Plan demonstrates a need for the
redevelopment of the downtown and establishes a plan for the redevelopment
that includes the new construction of multifamily housing; and
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Ordinance No. XXXX
August 4, 2009
Page 1
WHEREAS an assessment of available properties indicates a need for
new construction in the target area; and
WHEREAS in order to justify the tax abatement program, it is appropriate
that the residential development to which the tax abatement program would apply
establish a long term benefit to the City; and
WHEREAS the residential development to which the tax abatement
program would apply should also reflect a minimum investment; and
WHEREAS the advantages of new construction to the City therefore
outweigh disadvantages; and
WHEREAS as an Urban Center the City is obligated to increase densities
in its urban center; and
WHEREAS the Downtown Plan establishes certain development criteria
intended to promote development in the downtown area; and
WHEREAS, to further promote such development, the Auburn City
Council desires to adopt procedures for the application for and approval of
property tax incentives for qualifying multifamily housing within the downtown;
and
WHEREAS, the state legislature amended RCW 84.14 and the in order to
be eligible for a multi-family property tax exemption certain changes to Chapter
3.94 are warranted.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN
DO ORDAIN as follows:
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Ordinance No. XXXX
August 4, 2009
Page 2
Section 2.Amendment to City Code.
That Chapter 3.94, Multi-Family
Property Tax Exemption, of the Auburn City Code be and the same hereby is
amended to read as follows:
3.94.010 Findings of Fact.
A. The City Downtown Core is an urban center as defined in Section
84.14.010 of the Revised Code of Washington (RCW) because it is an
identifiable district where urban residents may obtain a variety of products and
services.
B. The Downtown Core currently lacks sufficient, available, desirable and
convenient residential housing to meet the needs of the public who would be
likely to live in the Downtown Core if desirable, attractive and livable places to
live were available.
C. The provision of special property tax valuations within the Downtown
Core will encourage construction of new multifamily housing, and that the
provision of such additional housing opportunities in the Downtown Core will
assist in achieving the goals of the City’s Comprehensive Plan, it’s Downtown
Plan, and the purposes set forth in RCW 84.14.007.
D. Encouraging the development of new residential units in the Downtown
Core will enhance the use and redevelopment of existing developed areas
reducing sprawl, maximizing the public investment in the infrastructure of the
community and ultimately increasing the valuation of property in the downtown.
3.94.020 Purpose.
As provided for in Chapter 84.14, RCW, the purpose of this Chapter is to
provide limited, eight (8) ten (10)year exemptions from ad valorem property
taxation for qualified new multifamily and rehabilitated multi-family housing
constructed in the Downtown Core and 12(twelve) year exemptions from ad
valorem property taxation for qualified new affordable multifamily and
rehabilitated multifamily housing constructed in the Downtown Core in order to:
A. Accomplish the planning goals of the Growth Management Act,
RCW 36.70A and the City of Auburn Comprehensive and Downtown Plans; and
B. Encourage residential opportunities, including affordable housing
opportunities, within the Downtown Ccore; and
C. Stimulate new construction of multifamily housing in the Downtown
Core to increase housing opportunities; and
D. Assist in directing future population growth into the City’s Downtown
Core thereby encouraging the most efficient use of the City’s infrastructure; and
E. Achieving development densities that enhance the use of the
community’s mass transit opportunities and the public investment in such
opportunities; and
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Ordinance No. XXXX
August 4, 2009
Page 3
F.Promote community development and Downtown Core
revitalization in fulfillment of the City’s Downtown Plan.
3.94.030 Definitions.
In construing the provisions of this Chapter, the following definitions shall
be applied:
A. Assessor means the King County Assessor.
B. Affordable Housing means residential housing that is rented by a
person or household whose monthly housing costs, including utilities other than
telephone, do not exceed thirty percent of the household’s monthly income. For
the purposed of housing intended for owner occupancy, “affordable housing”
means residential housing that is within the means of low or moderate-income
households.
CB. Director means the Director of the City of Auburn Department of
Planning and Community DevelopmentPlanning, Building, and Community
Department or any other City office, department or agency that shall succeed to
its functions with respect to this Chapter, or his/her authorized designee.
D. High cost area means a county where the third quarter median
house price for the previous year as reported by the Washington center for real
estate research at Washington State University is equal to or greater than one
hundred thirty percent of the statewide median house price published during the
same time period.
E. Low-income household means a single person, family, or unrelated
persons living together whose adjusted income is at or below eighty percent of
the median family income adjusted for family size, for the county where the
project is located, as reported by the United States department of housing and
urban development. For cities located in high-cost areas, "low-income
household" means a household that has an income at or below one hundred
percent of the median family income adjusted for family size, for the county
where the project is located.
F. Moderate-income household means a single person, family, or
unrelated persons living together whose adjusted income is more than eighty
percent but is at or below one hundred fifteen percent of the median family
income adjusted for family size, for the county where the project is located, as
reported by the United States department of housing and urban development.
For cities located in high-cost areas, "moderate-income household" means a
household that has an income that is more than one hundred percent, but at or
below one hundred fifty percent, of the median family income adjusted for family
size, for the county where the project is located.
GC. Multifamily housing means a building having thirty (30) four (4) or
more dwelling units designed for permanent residential occupancy.
HD. Owner means the property owner of record.
IE. Permanent residential occupancy means multifamily housing that
provides either rental or owner occupancy for a period of at least one (1) month.
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Ordinance No. XXXX
August 4, 2009
Page 4
This excludes hotels and motels that predominately offer rental accommodation
on a daily or weekly basis.
J. Rehabilitation improvements means modifications to existing
structures that are vacant for twelve months that are made to achieve a condition
of substantial compliance with existing building codes or modification to existing
occupied structures which increase the number of multifamily housing units.
KF. Residential targeted area means an area within an urban center
that has been designated by the City Council as a residential targeted area in
accordance with this Chapter.
1. Pursuant to this Section, the Auburn Downtown Core, as
designated by “Exhibit A” attached is designated the residential targeted
area.
2. If a part of any legal lot is within the residential targeted area,
then the entire lot shall be deemed to lie within the residential targeted
area.
LG. Urban center means a compact identifiable district where urban
residents may obtain a variety of products and services. An urban center must
contain:
1. Several existing or previous, or both, business
establishments that may include but are not limited to shops, offices,
banks, restaurants, governmental agencies;
2. Adequate public facilities including streets, sidewalks,
lighting, transit, domestic water, and sanitary sewer systems; and
3. A mixture of uses and activities that may include housing,
recreation, and cultural activities in association with either commercial or
office, or both, use.
3.94.040 Tax Exemption – Duration – Valuation – Exceptions.
A. Exemption, Duration of. The value of new housing construction,
conversion, and rehabilitation improvements for market rate property qualifying
under this Chapter, is exempt from ad valorem property taxation for ten eight
st
(108) successive years beginning January 1 of the year immediately following
the calendar year of issuance of the Final Certificate of Tax Exemption and
st
twelve (12) successive years beginning January 1 of the year immediately
following the calendar year of issuance of the Final Certificate of Tax Exemption
for affordable housing qualifying under this Chapter.
B. Limits on exemption. The exemption does not apply to the value of
land or to the value of non-housing improvements, nor does the exemption apply
to increases in assessed valuation of land and non-qualifying improvements.
This Chapter also does not apply to increases in assessed valuation made by the
assessor on non-qualifying portions of building and value of land, nor to
increases made by lawful order of a county board of equalization, the
Department of Revenue, or a county, to a class of property throughout the county
or specific area of the county achieve the uniformity of assessment or appraisal
required by law. In the case of rehabilitation of existing buildings, the exemption
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Ordinance No. XXXX
August 4, 2009
Page 5
does not include the value of improvements constructed prior to the submission
of the application required under RCW Chapter 84.14.
C. Only newly constructed or rehabilitated market rate units with a
minimum investment of $200,000 per unit annually adjusted for inflation by the
Consumer Price Index as of the passage date of this document or newly
constructed or rehabilitated market rate units with a minimum investment of
$200,000 per unit annually adjusted for inflation by the Consumer Price Index as
of the passage date of this document and 20% or more of the units priced as
affordable unitsshall qualify for the exemption.
3.94.050 Project eligibility.
To qualify for exemption from property taxation under this Chapter, the
property must satisfy all of the following requirements:
A. The property must be located in the designated residential targeted
area.
B. The project must consist of at least thirty (30) four (4)dwelling units
of multifamily housing, located within a residential structure or a mixed use
development, in which at least fifty (50) percent of the space within such
residential structure or mixed use development is intended for permanent
residential occupancy.
C. The property must be used and/or developed in a way that
increases or preserves property valuation, and the use or development of the
property must represent an increased investment in the property and property
maintenance that results in an increase in the over-all property values in the
target area.
D. The project must comply with all zoning requirements, land use
regulations, and building code requirements contained in the Auburn City Code
and applicable upon land use permit approval or submittal of a complete building
permit application, whichever occurs sooner.
E. For the duration of the exemption granted under this Chapter, the
property shall have no violations of applicable zoning requirements, land use
regulations, or building code requirements contained in the Auburn city Code for
which the City of Auburn and/or its departments or divisions have issued a “stop
work order” or notice of violation and order to correct that are not resolved by a
voluntary correction agreement, vacation by the hearing examiner, or action of
the property owner in compliance with the applicable code requirements as
determined by the Director, within the time period for compliance as provided in
such notice(s) and any extension of the time period for compliance granted by
the Director.
F. New construction of multifamily housing must be completed within
three (3) years from the date of approval of the application or by any extended
deadline granted by the Director pursuant to Section 3.94.070(C), ACC.
G. The owner must enter into a written agreement with the City,
approved by the Director, and signed by the Mayor, in which the owner has
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Ordinance No. XXXX
August 4, 2009
Page 6
agreed to the implementation of the development on terms and conditions
satisfactory to the City.
3.94.060 Application procedure.
The owner of property applying for exemption under this Chapter shall
submit an application to the director on a form established by the Director. The
owner shall verify the correctness of the information contained in the application
by his/her signature and affirmation made under penalty of perjury under the laws
of the State of Washington. The application shall contain such information as the
Director may deem necessary or useful, which at a minimum shall include:
A. A completed City of Auburn application form, including information
setting forth the grounds for tax exemption
B. A brief written description of the project, and schematic site and
floor plans of the multifamily units and the structure(s) in which they are proposed
to be located;
C. Floor and site plans of the proposed project, which plans may be
revised by the owner provided in the opinion of the Director, such revisions do
not materially alter the nature of the project or the rationale substantiating the
exemption application;
D. A statement from the owner acknowledging the potential tax liability
when the property ceases to be eligible for exemption under this Chapter
E. At the time of initial application under this section, the owner shall
pay to the City an initial application fee of one thousand dollars ($1,000), plus an
amount necessary to cover recording fees under Section 3.94.100 ACC.
F. Except as otherwise provided in Section 3.94.070, ACC, the
application shall be submitted any time before the earlier of (1) an application for
a land use approval process and (2) an application for a building or other
construction permit
G. If on the effective date of this Chapter, the owner has applied for a
permit identified in Subsection 6 of this section, then application for exemption
under this section may be submitted any time prior to issuance of a building
permit.
3.94.070 Application Review – Approval – Required findings – Issuance of
conditional certificate – Denial – Appeal.
A. The director may approve an application if he or she finds that:
1. When a new structure is being created, or an existing
structure is being rehabilitated a minimum of thirty (30) four (4)new
multi-family units are being constructed; or an existing structure
vacant for 12 months or more has a minimum of four(4) units being
rehabilitated;
2. The proposed project is or will be, at the time of completion,
in conformance with all approved plans, and all applicable
requirements of the Auburn City Code or other applicable
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Ordinance No. XXXX
August 4, 2009
Page 7
requirements or regulations in effect at the time the application is
approved;
3. The owner has complied with all of the requirements of this
Chapter, including but not limited to project eligibility requirements
contained in Section 3.94.050 ACC, and application requirements
contained in Section 3.94.060 ACC; and
4. The project site is located within a designated residential
targeted area.
B. The Director shall deny an application if the foregoing criteria are
not met.
C. If the application is approved, the owner shall enter into a contract,
the Director shall issue a conditional certificate of acceptance of tax exemption.
The conditional certificate shall expire three (3) years from the date of approval
unless an extension is granted as provided in Section 3.94.090, ACC.
D. Following his/her approval of the contract, the Director shall issue a
conditional certificate of acceptance of tax exemption. The conditional certificate
shall expire three (3) years from the date of approval unless an extension is
granted as provided in Section 3.94.090, ACC.
E. If the application is denied, the Director shall state in writing the
reasons for the denial and send notice of denial to the owner’s last known
address within ten (10) working days of the denial.
F. An owner may appeal a denial of a tax exemption application to the
Hearings Examiner by filing a notice of appeal with the City Clerk within thirty (30)
calendar days of receipt of notice of the denial. The appeal before the Hearings
Examiner shall be based upon the record before the Director, and the Director’s
decision will be upheld unless the owner can show that there is no substantial
evidence on the record to support the director’s decision.
Section 2.Severability.
That if any provision of this Ordinance or the
application thereof to any person or circumstance is held to be invalid, the
remainder of such code, ordinance or regulation or the application thereof to
other person or circumstances shall not be affected.
Section 3.Implementation.
The Mayor is hereby authorized to implement
such administrative procedures as may be necessary to carry out the directions
of this legislation.
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Ordinance No. XXXX
August 4, 2009
Page 8
Section 4.Effective Date.
This Ordinance shall be in full force and effect
five days from and after its passage and publication as provided by law..
INTRODUCED:
PASSED:
APPROVED:
________________________________
PETER B. LEWIS, MAYOR
ATTEST:
__________________________
Danielle E. Daskam, City Clerk
APPROVED AS TO FORM:
__________________________
Daniel B. Heid, City Attorney
PUBLISHED: ______________
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August 4, 2009
Page 9