Chapter 3.45
MULTIFAMILY HOUSING TAX EXEMPTION
Sections:
3.45.030 Residential targeted area.
3.45.060 Application procedure.
3.45.090 Annual certification.
3.45.010 Purpose.
Limited exemptions from ad valorem property taxation for multifamily housing in urban centers are intended to:
A. Provide economic incentives enabling increased residential housing choices and opportunities, including affordable housing opportunities, within urban centers designated by the council as targeted residential areas;
B. Stimulate new construction or rehabilitation of existing vacant and underutilized buildings for multifamily housing in targeted residential areas to increase and improve housing opportunities, including affordable housing;
C. Assist in directing future population growth to designated urban centers with existing available infrastructure thereby reducing development pressure on neighborhoods lacking infrastructure capacities;
D. Increase the supply of mixed-income multifamily housing opportunities within the city;
E. Achieve development densities which are more conducive to transit use in designated urban centers; and
F. Accomplish the planning goals required under the Growth Management Act, Chapter 36.70A RCW, as implemented from time to time by the city’s current and future comprehensive plans.
It is intended that this chapter meet all required provisions and procedures set forth in Chapter 84.14 RCW to comport with state law. (Ord. 23-03 § 1, 2023)
3.45.020 Definitions.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
“Affordable housing unit” means residential housing that is rented by a person or household whose monthly housing costs, including utilities, do not exceed thirty percent of the household’s monthly income at the eighty percent adjusted median income (AMI) level as determined annually by HUD for the Clark County, Washington area.
“Annual income” means gross annual income adjusted for household size and calculated based on verifiable income documentation provided by the housing applicant/tenant.
“Building code” shall mean the building code of the city as set forth in Chapter 15.104 BGMC.
“City” means the city of Battle Ground.
“City council” means the city of Battle Ground city council.
“Contract” means the standard form agreement between the owner or, for permanently affordable homeownership, a qualified nonprofit organization and the city that contains the terms and conditions, including for each MFTE unit as designated according to the final certificate, for the duration of the compliance period as a condition of eligibility of the property tax exemption according to this chapter.
“Director” means the city’s community development department director or authorized designee.
“Eligible household” means a household that certifies that their household income does not exceed the applicable percentage of the adjusted median income, adjusted for household size, and who certify that they meet all qualifications for eligibility including, if applicable, any requirements for recertification on income eligibility.
“Household” means a single person, family, or unrelated persons living together.
“Low-income household” means a household whose adjusted income is at or below eighty percent of the median family income adjusted for family size, as determined annually by HUD for the Clark County, Washington area.
“Market-rate exemption option” means an eight-year property tax exemption with no income or rent requirements, subject to the public benefit requirements as outlined in BGMC 3.45.040.
“MFTE” means multifamily housing property tax exemption.
“Multifamily housing” means a building or group of buildings having four or more dwelling units designed or used for permanent residential occupancy resulting from new construction or rehabilitation or conversion of vacant, underutilized, or substandard buildings. The term “multifamily housing” does not include dwelling units designed or used as transient accommodations, not does it include hotels and/or motels.
“Owner” means the property owner of record as filed with the Clark County assessor’s office.
“Permanent residential occupancy” means multifamily housing that provides either rental or owner occupancy for a period of at least one month. This excludes hotels and motels that offer rental accommodation on a daily or weekly basis.
“Project” means the multifamily housing or portion of the multifamily housing that is to receive the tax exemption.
“Qualified nonprofit organization” means a nonprofit organization or any subsidiary or affiliate of such organization.
“Rehabilitation improvements” means modifications to existing structures, that are vacant for twelve months or longer, that are made to achieve a condition of substantial compliance with existing building codes or modifications to existing occupied structures which increase the number of multifamily housing units.
“Residential targeted area” means an area designated by the council as a residential targeted area in accordance with, and within the meaning of, Chapter 84.14 RCW.
“Substantial compliance” means compliance with the applicable building and construction codes and all applicable uniform codes that are typically required for rehabilitation as opposed to new construction.
“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. (Ord. 23-03 § 1, 2023)
3.45.030 Residential targeted area.
A. Following notice and public hearing as prescribed in RCW 84.14.040, the city council may designate one or more residential targeted areas upon a finding by the city council that the residential targeted area meets the following criteria:
1. The residential targeted area is within an urban center as defined by Chapter 84.14 RCW;
2. The residential targeted area lacks sufficient available, desirable, and convenient residential housing to meet the needs of the public who would be likely to live in the urban center if affordable, desirable, attractive, and livable residences were available; and
3. Providing additional housing opportunity in the residential targeted area will assist in achieving one or more of the following purposes:
a. Encourage increased residential opportunities within the city; or
b. Stimulate the construction of new multifamily housing; or
c. Encourage the rehabilitation of existing vacant and underutilized buildings for multifamily housing.
4. In designating a residential targeted area, the city council may also consider other factors, including:
a. Whether additional housing in the residential targeted area will attract and maintain an increase in the number of permanent residents;
b. Whether providing additional housing opportunities for low- and moderate-income households would meet the needs of citizens likely to live in the area if affordable housing were available;
c. Whether an increased permanent residential population in the residential targeted area will help to achieve the planning goals mandated by the Growth Management Act under Chapter 36.70A RCW, as implemented through the city’s comprehensive plan; or
d. Whether encouraging additional housing in the residential targeted area supports significant public investment in public transit or a better jobs and housing balance.
B. The following are the “residential targeted areas” as designated by the city council:
1. Three parcels within the area known as Central Main, to the south of SR 502 (Main St) consisting of approximately 9.77 acres depicted in Map 1, and designated as parcels 091055051, 091109092, and 091055157.
C. At any time the council may, by ordinance, amend or rescind the designation of a residential targeted area pursuant to the same procedural requirements as set forth in this chapter for original designation. (Ord. 23-03 § 1, 2023)
3.45.040 Tax exemption.
The value of new housing construction, conversion, and rehabilitation improvements qualifying under this section is exempt from ad valorem property taxation, as follows:
A. For eight successive years beginning January 1st of the year immediately following the calendar year of issuance of the final certificate if the property otherwise qualifies for the exemption and meets the conditions in this subsection. For the property to qualify for the eight-year exemption under this subsection, the applicant must commit to renting or selling at least ten percent of the multifamily housing units as affordable housing units to eligible households whose monthly housing costs, including utilities, do not exceed thirty percent of the household’s monthly income at the eighty percent adjusted median income (AMI) level as determined annually by HUD for the Clark County, Washington area, and the property must satisfy that commitment. In the case of projects intended exclusively for owner occupancy, the minimum requirement of this subsection may be satisfied solely through housing affordable to households whose adjusted income is equal to or less than one hundred percent of the area median income. (Ord. 23-03 § 1, 2023)
3.45.050 Project eligibility.
A proposed project must meet the following requirements for consideration for a property tax exemption under this chapter:
A. The new or rehabilitated multiple-unit housing must be located in a designated residential targeted area.
B. The project must be multifamily housing consisting of at least four dwelling units within a residential structure or as part of a mixed-use development, in which at least fifty percent of the space within such residential structure or mixed-use development is intended for permanent residential occupancy.
C. For new construction, a minimum of four new dwelling units must be created; for rehabilitation or conversion of existing occupied structures, a minimum of four additional dwelling unites must be added.
D. Property proposed to be rehabilitated must fail to comply with one or more standards of the city’s building or housing codes.
E. Property proposed to be rehabilitated with existing multifamily housing that has been vacant for twelve months or more does not have to provide additional multifamily units, so long as the project provides at least four units of new, converted, or rehabilitated multifamily housing.
F. If the property proposed to be rehabilitated is not vacant, an applicant must provide each existing tenant housing of comparable size, quality, and price and a reasonable opportunity to relocate.
G. The project must be designed to comply with the city’s comprehensive plan, building, housing, and zoning codes, and any other applicable regulations in effect at the time the application is approved. Rehabilitation and conversion improvements must comply with all applicable housing codes. New construction must comply with the building code. The project must also comply with any other standards and guidelines adopted by the city council for the residential target area in which the project will be developed.
H. The project must not displace existing residential units, unless the units are certified not to meet current building and housing codes. The units can then be rehabilitated or replaced and included in the qualified portion of the project to receive the property tax abatement. If the units slated for replacement or demolition do meet current code, then the size of the project needs to be increased by the number of units that are being replaced or demolished and these replacement units would not qualify for the property tax abatement. Property proposed to be rehabilitated or developed must be vacant at least twelve months before submitting an application.
I. As per RCW 84.14.030(6), the applicant must enter into a contract approved by the council, under which the applicant has agreed to the implementation of the development on terms and conditions satisfactory to the council.
J. The project shall be completed within three years from the date of approval of the contract by the city council or by any extended deadline granted by the director. (Ord. 23-03 § 1, 2023)
3.45.060 Application procedure.
A property owner who wishes to propose a project for a tax exemption shall comply with the following procedures as per RCW 84.14.050:
A. Prior to the application for any building permit therefore, the applicant shall submit an application to the director on a form established by the director along with the required fees (see city’s fee schedule for associated fees).
B. A complete application shall include:
1. A written description of the project and preliminary schematic site and floor plans of the multifamily units and the structures in which they are proposed to be located setting forth the grounds for the exemption;
2. A completed city of Battle Ground multifamily limited tax application form setting forth the grounds for qualification for exemption, and identifying the income-restricted units in the proposed project, if applicable;
3. A statement from the owner acknowledging the potential tax liability when the project ceases to be eligible under this chapter;
4. Verification by oath or affirmation of the information submitted.
C. For rehabilitation projects, the applicant shall secure verification of property noncompliance with the building or housing ordinances, and shall also submit an affidavit that existing dwelling units have been unoccupied for a period of twelve months prior to filing the application, or that relocation support has been provided to tenants under BGMC 3.45.050(F). (Ord. 23-03 § 1, 2023)
3.45.070 Application review.
A. The director may certify as eligible an application which is determined to comply with the requirements of this chapter.
B. A decision to approve or deny an application shall be made within ninety days of receipt of a complete application.
C. If an application is approved by the director, the approval, together with a contract and covenant between the applicant and the city regarding the terms and conditions under this chapter, signed by the applicant, shall be presented to the city council for action.
D. The director is authorized to cause the contract to be recorded, or require the owner to record the contract, in the real property records of the Clark County recorder’s office.
E. Once the contract is approved by the council and fully executed, the director shall issue a conditional certificate of acceptance of tax exemption.
F. The conditional certificate expires three years from the date of approval unless an extension is granted as provided in this chapter.
G. The conditional certificate may be extended by the director for a period not to exceed twenty-four consecutive months. The applicant must submit a written request stating the grounds for the extension, accompanied by any applicable processing fee. An extension may be granted if the director determines that:
1. The anticipated failure to complete construction or rehabilitation within the required period is due to circumstances beyond the control of the owner;
2. The owner has been acting and could reasonably be expected to continue to act in good faith and with due diligence; and
3. All the conditions of the original contract between the applicant and the city will be satisfied upon completion of the project.
H. If the application is denied, the director shall state in writing the reasons for denial and shall send notice to the applicant at the applicant’s last known address within ten days of the denial.
I. An applicant may appeal a denial to the city council by filing a written appeal with the city clerk within thirty days of notification that the application has been denied. The appeal will be based upon the record made before the director with the burden of proof on the applicant to show that there is no substantial evidence on the record to support the director’s decision. The decision of the city council in denying or approving the application is final. All other appeals of the director’s decisions shall be made to the hearing examiner.
J. An owner may request amendments to the contract by submitting a request in writing to the director, along with the fees established by the city council, at any time within three years of the date of the approval of the contract as provided for in subsection C of this section. The director may approve amendments to the MFTE contract between the owner and the city that are reasonably within the scope and intent of the MFTE contract. The date for expiration of the conditional certificate shall not be extended by contract amendment unless all the conditions for extension set forth in subsection G of this section are met. (Ord. 23-03 § 1, 2023)
3.45.080 Final certificate.
A. Upon completion of the improvements provided in the contract and issuance of a temporary or permanent certificate of occupancy, the applicant may request a final certificate of tax exemption. The applicant must file with the director such information as necessary or useful to evaluate eligibility for the final certificate and shall include:
1. A statement of the amount of rehabilitation or construction expenditures made with respect to each housing unit and the total expenditures made in the rehabilitation or construction of the entire property;
2. A description of the work that has been completed and a statement that the rehabilitation improvements or new construction on the owner’s property qualify the property for limited exemption under this chapter;
3. If applicable, a statement that the project meets the affordable housing requirements as described in RCW 84.14.020 and BGMC 3.45.040; and
4. A statement that the work was completed within the required three-year period or any authorized extension.
B. Within thirty days of receipt of all materials required for a final certificate, the director shall determine whether the work completed and the affordability of the units, if applicable, satisfy the requirements of the application and the conditional contract approved by the city and is qualified for a limited tax exemption under Chapter 84.14 RCW. The city shall also determine which specific improvements completed meet the intent of this chapter and the required findings of RCW 84.14.060.
C. If the director determines that the project has been completed in accordance with this chapter and the contract between the applicant and the city and has been completed within the authorized period the city shall, within ten calendar days of the expiration of the thirty-day review period above, file a final certificate of tax exemption with the Clark County assessor.
D. The director shall notify the applicant in writing that a final certificate will not be filed if the director determines that:
1. The improvements were not completed within the authorized period;
2. The improvements were not completed in accordance with the contract between the applicant and the city;
3. The owner’s property is otherwise not qualified under this chapter; or
4. The owner and the director cannot come to an agreement on the allocation of the value of the improvements allocated to the exempt portion of rehabilitation improvements, new construction, and multi-use new construction.
E. Within thirty days of notification by the city to the owner of the director’s denial of a final certificate of tax exemption, the applicant may file a written appeal with the city clerk specifying the factual and legal basis for the appeal. The appeal shall be heard by the hearing examiner. (Ord. 23-03 § 1, 2023)
3.45.090 Annual certification.
A. Within thirty days after the first anniversary of the date of filing the final certificate of tax exemption and each year thereafter, for the applicable tax exemption period, the property owner shall file a notarized declaration with the director indicating the following:
1. A statement of occupancy and vacancy of the rehabilitated or newly constructed property during the twelve months ending with the anniversary date;
2. A certification by the owner that the property has not changed use and, if applicable, that the property has been in compliance with the contract with the city;
3. A description of changes or improvements constructed after issuance of the certificate of tax exemption;
4. The total monthly rent of each unit;
5. Information demonstrating compliance with the affordability requirements of BGMC 3.45.040 and other applicable requirements under BGMC 3.45.050;
6. For the affordable units, the income of each household at the time of initial occupancy and their current income; and
7. Any additional information requested regarding the units receiving a tax exemption and meeting any reporting requirements under Chapter 84.14 RCW.
B. Annual Report. By December 31st of each year the city has any outstanding limited multifamily tax exemptions the city shall submit a report to the state providing the information required by Chapter 84.14 RCW.
C. Annual Monitoring. A review of the rent rolls is required annually including unit number, unit size (bedrooms/bathrooms), household size, rent, and utilities. City staff will conduct on-site reviews of tenant files randomly. There is an annual monitoring fee (see Battle Ground fee schedule). (Ord. 23-03 § 1, 2023)
3.45.100 Cancellation.
A. The director may cancel the tax exemption if the property owner breaches any term of the MFTE contract, covenant, or any part of this chapter. Reasons for cancellation include but are not limited to the following:
1. The property no longer complies with the terms of the contract or with the requirements of this chapter, including the provision of affordable units;
2. The use of the property is changed or will be changed to a use that is other than residential;
3. The project violates applicable zoning requirements, land use regulations or building code requirements; or
4. The property for any other reason no longer qualifies for the tax exemption.
B. Upon determining that a tax exemption shall be canceled, the director shall notify the property owner or qualified nonprofit organization, if applicable, by certified mail with a return receipt requested.
C. The property owner or qualified nonprofit organization, if applicable, may appeal the determination within thirty days by filing a notice of appeal with the city clerk, specifying the factual and legal basis on which the determination of cancellation is alleged to be erroneous. The city council may hear the appeal pursuant to city’s policy.
D. The director shall notify the Clark County assessor of the cancellation of the tax exemption thirty days after the notification of the property owner or qualified nonprofit organization, or upon an unsuccessful appeal under subsection C of this section.
E. If the owner intends to convert multifamily housing receiving a tax exemption under this chapter to another use, the owner must notify the director and the county assessor within sixty days of the change in use. Upon such change in use, the tax exemption shall be canceled. (Ord. 23-03 § 1, 2023)