Chapter 17.82
MULTIFAMILY HOUSING

Sections:

17.82.010    Definitions.

17.82.020    Targeted residential area designation and standards.

17.82.030    Tax exemptions for multifamily housing in targeted residential areas.

17.82.010 Definitions.

“Affordable housing,” for purposes of this chapter, means residential housing that is rented by a person or household whose monthly housing costs, including utilities other than telephone, do not exceed 30 percent of the household’s monthly income. For the purposes of housing intended for owner occupancy, “affordable housing” means residential housing that is within the means of low or moderate-income households.

“Director” means the director of the city’s planning and community development department or authorized designee.

“Household” means a single person, family, or unrelated persons living together.

“Local housing standards” means the International Property Maintenance Code as adopted by the city of Bellingham.

“Low-income household,” for purposes of this chapter, means a single person, family, or unrelated persons living together whose adjusted income is at or below 80 percent of the median family income adjusted for family size, for Whatcom County, as reported by the United States Department of Housing and Urban Development.

“Moderate-income household,” for purposes of this chapter, means a single person, family, or unrelated persons living together whose adjusted income is more than 80 percent but is at or below 115 percent of the median family income adjusted for family size, for Whatcom County, as reported by the United States Department of Housing and Urban Development. See BMC 17.82.030(D)(9) for limitations regarding affordable housing requirements for rental projects.

“Multifamily housing” means buildings having four or more dwelling units designated for permanent residential occupancy resulting from new construction or rehabilitation or conversion of vacant, underutilized or substandard buildings.

“Owner” means the property owner of record as filed with the Whatcom 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 predominately offer rental accommodation on a daily or weekly basis.

“Rehabilitation improvements” means modifications to existing structures which are and have been vacant for 12 months or longer, or modification to existing occupied structures which convert nonresidential space to residential space and/or increase the number of multifamily housing units.

“Targeted residential area” means an area in an urban center that has been designated by the city council as lacking sufficient, available, desirable, affordable, and convenient residential housing to meet the needs of the public.

“Urban center” means a center designated as such in the land use element of the city’s comprehensive plan. An urban center is an identifiable district containing business establishments, adequate public facilities, and a mixture of uses and activities, where residents may obtain a variety of products and services. Urban centers include core, district, neighborhood, and pocket urban centers as identified in the Bellingham comprehensive plan. [Ord. 2010-12-078; Ord. 1999-09-054].

17.82.020 Targeted residential area designation and standards.

A. Criteria. Following a public hearing, the city council may, in its sole discretion, designate one or more targeted residential areas. Each designated area must meet the following criteria, as determined by the city council:

1. The targeted area is located in any urban center found to be in conformity with RCW 84.14.040 and so designated by city council;

2. The targeted area lacks sufficient available, desirable and convenient residential housing, including affordable housing, to meet the needs of the public who would likely live in the urban center if affordable, desirable, attractive, and livable homes/situations were available; and

3. Provision of additional housing incentives in the targeted area will assist in achieving the following purposes:

a. Encourage increased residential opportunities within the targeted area; or

b. Stimulate the construction of new multifamily housing and the rehabilitation of existing vacant and under-utilized buildings for multifamily housing.

In designating a targeted residential area, the city council may also consider other factors including, but not limited to: whether additional housing in the targeted area will attract and retain a significant increase in the resident population; whether an increased residential population will alleviate detrimental conditions and social liability in the targeted area; and whether increasing the residential population in the targeted area will contribute to achieving the planning goals described in the city of Bellingham comprehensive plan or by the Growth Management Act under RCW 36.70A.020. The city council may, by ordinance, amend or rescind the designation of a targeted residential area at any time pursuant to the same procedure as set forth in this chapter for original designation.

B. Targeted Area Standards and Guidelines. For each designated area, the planning and development commission shall develop and the city council shall adopt and implement basic requirements for both new construction and rehabilitation, including the application process and procedures. The city council may also adopt guidelines including the following:

1. Requirements that address demolition of existing structures and site utilization;

2. Building requirements that may include elements addressing parking access to alternative transportation facilities, height, density, environmental impact, public benefit features, compatibility with surrounding property, or other features intended to enhance the livability of the area for permanent residency; and

3. More stringent income eligibility, rent, or sale price limits, including limits that apply to a higher percentage of units than the minimum conditions under BMC 17.82.030(B), either as conditions to eight-year exemptions or as conditions to an extended exemption period.

The required amenities shall be relative to the size of the proposed project and the tax benefit to be obtained.

C. Designated Targeted Areas. The boundaries of the “targeted residential areas” are located within the urban centers listed below, and as indicated on the maps in this section as follows:

TARGETED AREA 

MAP EXHIBIT

URBAN CENTER

DESIGNATION

Exhibit A

City Center Area

Area 1

Exhibit B

Samish Way Urban Village

Area 2

Exhibit C

Fountain District Urban Village

Area 3

Exhibit D

Fairhaven Urban Village

Area 4

Exhibit E

Barkley Village

Area 5

D. Designated Standards and Guidelines for Targeted Areas. Projects proposed for exemptions from ad valorem property taxes in targeted areas shall meet the eligibility requirements in BMC 17.82.030(D) and obtain design review approval consistent with the provisions of Chapter 20.25 BMC. Requests for consideration under this chapter for projects located in the targeted areas shall be processed under procedures and conditions established in BMC 17.82.030(E), including any modification in effect at the time of application.

BMC 17.82.020 – Exhibit A

BMC 17.82.020 – Exhibit B

BMC 17.82.020 – Exhibit C

BMC 17.82.020 – Exhibit D

BMC 17.82.020 – Exhibit E

[Ord. 2015-12-051 § 1 (Exhs. D, E); Ord. 2014-09-044 §§ 1, 2; Ord. 2010-12-078; Ord. 2006-06-060; Ord. 2005-07-062; Ord. 2003-03-011; Ord. 1999-09-054].

17.82.030 Tax exemptions for multifamily housing in targeted residential areas.

A. Intent. Limited exemptions from ad valorem property taxation for multifamily housing in urban centers are intended to:

1. Provide economic incentives enabling increased residential housing choices and opportunities, including affordable housing opportunities, within urban centers designated by the city council as targeted residential areas;

2. 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;

3. Assist in directing future population growth to designated urban centers with existing available infrastructure thereby reducing development pressure on neighborhoods lacking infrastructure capacities; and

4. Achieve development densities which are more conducive to transit use in designated urban centers.

B. Duration of Exemption. For properties for which applications for certificates of tax exemption eligibility are submitted under Chapter 84.14 RCW on or after July 22, 2007, the value of improvements qualifying under this chapter will be exempt from ad valorem property taxation as follows:

1. For eight successive years beginning January 1st of the year immediately following the calendar year of issuance of the certificate; or

2. For 12 successive years beginning January 1st of the year immediately following the calendar year of issuance of the certificate, if the property otherwise qualifies for the exemption under Chapter 84.14 RCW and meets the conditions in this subsection. For the property to qualify for the 12-year exemption under this subsection, the applicant must commit to renting or selling at least 20 percent of the multi-unit housing units as affordable housing units as set forth below:

a. Owner Occupancy. In the case of projects intended exclusively for owner occupancy, the minimum requirement of this subsection (B)(2) may be satisfied solely through housing affordable to moderate-income households during the authorized exemption period.

b. Rental Occupancy. In the case of projects intended for rental occupancy, the minimum requirement of this subsection (B)(2) must be satisfied based on affordability requirements outlined in subsection (D)(9) of this section.

C. Limits on Exemption. The exemption does not apply to the value of land or to the value of nonhousing related improvements not qualifying under this chapter, nor does the exemption apply to increases in assessed valuation of land and nonqualifying improvements. In the case of rehabilitation of existing buildings, the exemption does not include the value of improvements constructed prior to submission of the completed application required under this chapter. The incentive provided by this chapter is in addition to any other incentives, tax credits, grants, or other incentives provided by law.

D. Project Eligibility. A proposed project must meet the following requirements to be considered for a property tax exemption:

1. Location. The project must be located within a targeted residential area, as designated in BMC 17.82.020(C). If a part of any legal lot is within a designated residential targeted area then the entire lot shall be deemed to lie within such residential targeted area. Property located outside of, but adjacent to, the described areas is not designated as a residential targeted area.

2. Tenant Displacement Prohibited. The project must not displace existing residential tenants of structures that are proposed for redevelopment. Existing dwelling units proposed for rehabilitation must have been unoccupied for a minimum of 12 months prior to submission of an application and must have one or more violations of the city’s local housing standard. Applications for new construction cannot be submitted for vacant property upon which an occupied residential rental structure previously stood unless a minimum of 12 months has elapsed from the time of most recent occupancy.

3. Size. The project must include at least four units of multifamily housing within a residential structure or as part of a mixed-use development. A minimum of four new units must be constructed or at least four additional multifamily units must be added to existing occupied multifamily housing. Existing multifamily housing that has been vacant for 12 months or more does not have to provide additional units so long as the project provides at least four units of new, converted, or rehabilitated multifamily housing.

4. Permanent Residential Housing. At least 50 percent of the space designated for multifamily housing must be provided for permanent residential occupancy, as defined in BMC 17.82.010.

5. Affordable Housing. Projects located in Target Area 4 or Area 5 are required to meet the affordable housing requirements described in subsection (B)(2) of this section.

6. Proposed Completion Date. New construction multi-unit housing and rehabilitation improvements must be scheduled to be completed within three years from the date of approval of the application.

7. Compliance with Guidelines and Standards. The project shall 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 the city’s local housing standard. New construction must comply with the city’s local housing standard. New construction must comply with the current building code adopted by the city. The project must also comply with any other standards and guidelines adopted by the city council for the targeted residential area in which the project will be developed.

8. Historic Resource Protection.

a. Applications for new construction that require the demolition of structures listed in the local, state or national register, or identified as contributing to an historic district in the city’s historic resource inventory are not eligible for the multifamily tax exemption.

b. Applications for new construction on a vacant property upon which previously stood a structure that was listed in the local, state or national register, or was identified as contributing to an historic district in a city historic resource inventory are not eligible for the multifamily tax exemption unless a minimum of five years has lapsed between the date of demolition and application for the multifamily tax exemption.

c. The requirement of subsections (D)(8)(a) and (b) of this section may be waived if demolition is authorized by either the city’s historic preservation commission for structures on the local register or the director for structures identified as contributing to an historic district in the city’s historic resource inventory or on the state or national register. The demolition waiver determination shall be based on the criteria in BMC 17.90.060(D)(2) and (3).

9. Affordable Housing. Projects intended for rental occupancy seeking a 12-year tax exemption pursuant to subsection (B)(2) of this section shall provide 20 percent of the multi-unit housing as follows:

a. Affordable housing units shall be available to households whose adjusted income is at or below 60 percent of the median family income adjusted for family size for Whatcom County, except as otherwise allowed in subsection (B)(9)(b) of this section.

b. The affordable housing requirement can be met, either partially or fully, for any units with two or more bedrooms that are available to households whose adjusted income is at or below 80 percent of median family income adjusted for family size for Whatcom County.

E. Application Procedure. A property owner who wishes to propose a project for a tax exemption shall complete the following procedures:

1. File with the city’s planning and community development department the required application along with any required fees as determined by council resolution. An additional fee, as determined by council resolution, may be required to cover the Whatcom County assessor’s administrative costs. If the application shall result in a denial by the city, the city will retain that portion of the fee attributable to its own administrative costs and refund the balance to the applicant.

2. A complete application shall include:

a. A completed city of Bellingham application form setting forth the project’s eligibility for the exemption;

b. Preliminary floor and site plans and elevations of the proposed project and narrative or other description of the scope of work to be performed;

c. A statement acknowledging the potential tax liability when the project ceases to be eligible under this chapter; and

d. Verification by oath or affirmation of the information submitted.

For rehabilitation projects, the applicant shall also submit a sworn affidavit that existing dwelling units have been unoccupied for a period of 12 months prior to filing the application and shall secure from the city verification of property noncompliance with the city’s local housing standard.

F. Application Review and Issuance of Conditional Certificate. The director may certify as eligible an application which is determined to comply with the requirements of this chapter. A decision to approve or deny an application shall be made within 90 days of receipt of a complete application.

1. Approval. If an application is conditionally approved, the applicant shall enter into a contract with the city regarding the terms and conditions of the project. The director shall issue a conditional certificate of acceptance of tax exemption. The conditional certificate expires three years from the date of approval unless an extension is granted as provided in this chapter.

2. Denial. 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 10 days of the denial. An applicant may appeal a denial to the city council within 30 days of receipt of notice. On appeal, the director’s decision will be upheld unless the applicant can show that there is no substantial evidence on the record to support the director’s decision. The city council’s decision on appeal will be final.

G. Extension of Conditional Certificate. The conditional certificate may be extended by the director for a period not to exceed 24 consecutive months. The applicant must submit a written request stating the grounds for the extension, accompanied by any processing fee as determined by council resolution. No conditional certificate shall be eligible for more than one such extension. An extension may be granted if the director determines that:

1. The anticipated failure to complete construction or rehabilitation within the required time 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;

3. The project will comply with the city’s comprehensive plan, building, housing, and zoning codes, and any other applicable regulations in effect at the time the extension of the conditional certificate is granted; and

4. All the conditions of the original contract between the applicant and the city will be satisfied upon completion of the project.

H. Application for Final Certificate. Upon completion of the improvements agreed upon in the contract between the applicant and the city and upon 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 city’s planning and community development department the following:

1. A statement of expenditures made with respect to each multifamily housing unit and the total expenditures made with respect to the entire property;

2. A description of the completed work with evidence of final city inspection of all work completed and a statement of qualification for the exemption;

3. A statement that the work was completed within the required three-year period or any authorized extension; and

4. If applicable, a statement that the project meets the affordable housing requirements as described in BMC 17.82.030(B)(2).

Within 30 days of receipt of all materials required for a final certificate, the director shall determine which specific improvements, and the affordability of the units, satisfy the requirements of this chapter.

I. Issuance of Final Certificate. If the director determines that the project has been completed in accordance with the contract between the applicant and the city and has been completed within the authorized time period, the city shall, within 10 days, file a final certificate of tax exemption with the Whatcom County assessor.

1. Denial and Appeal. The director shall notify the applicant in writing that a final certificate will not be filed if the director determines that:

a. The improvements were not completed within the authorized time period;

b. The improvements were not completed in accordance with the contract between the applicant and the city;

c. If applicable, the affordable housing requirements as described in subsection (B)(2) of this section were not met; or

d. The owner’s property is otherwise not qualified under this chapter.

Within 14 days of receipt of the director’s denial of a final certificate, the applicant may file an appeal with the hearing examiner, as provided in BMC 2.56.050(B). The applicant may appeal the hearing examiner’s decision to Whatcom County superior court, if the appeal is filed within 30 days, or as otherwise required by law, of receiving notice of that decision.

J. Annual Compliance Review. Within 30 days after the first anniversary of the date of filing the final certificate of tax exemption and each year thereafter, for the 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 multifamily units during the previous year;

2. A certification that the property continues to be in compliance with the contract with the city, including any affordable housing requirements;

3. A description of any subsequent improvements or changes to the property; and

4. A report on affordable housing requirements, if applicable, including:

a. The total monthly rent or total sale amount of each unit produced;

b. The income of each renter household at the time of initial occupancy and the income of each initial purchaser of owner-occupied units at the time of purchase for each of the units receiving a tax exemption; and

c. Any additional information requested by the city in regards to the units receiving a tax exemption.

City staff shall have the right to conduct on-site verification of the declaration. Failure to submit the annual declaration may result in the tax exemption being canceled.

K. The city shall report annually by December 31st of each year to the Washington State Department of Commerce. The report must include the following information:

1. The number of tax exemption certificates granted;

2. The total number and type of units produced or to be produced;

3. The number and type of units produced or to be produced meeting affordable housing requirements;

4. The actual development cost of each unit produced;

5. The total monthly rent or total sale amount of each unit produced;

6. The income of each renter household at the time of initial occupancy and the income of each initial purchaser of owner-occupied units at the time of purchase for each of the units receiving a tax exemption and a summary of these figures for the city; and

7. The value of the tax exemption for each project receiving a tax exemption and the total value of tax exemptions granted.

L. Cancellation of Tax Exemption. If the director determines the owner is not complying with the terms of the contract, the tax exemption will be canceled. This cancellation may occur in conjunction with the annual review or at any other time when noncompliance has been determined. If the owner intends to convert the multifamily housing to another use, the owner must notify the director and the Whatcom County assessor within 60 days of the change in use.

1. Effect of Cancellation. If a tax exemption is canceled due to a change in use or other noncompliance, the Whatcom County assessor may impose an additional tax on the property, together with interest and penalty, and a priority lien may be placed on the land, pursuant to state legislative provisions.

2. Notice and Appeal. Upon determining that a tax exemption is to be canceled, the director shall notify the property owner by certified mail. The property owner may appeal the determination by filing a notice of appeal with the hearing examiner within 30 days, specifying the factual and legal basis for the appeal. An aggrieved party may appeal the hearing examiner’s decision to the Whatcom County superior court, if the appeal is filed within 30 days, or as otherwise required by law, of receiving notice of cancellation.

M. Conflict of Provisions. If any provision of this chapter is in legal conflict with the provisions of Chapter 84.14 RCW, the provisions of Chapter 84.14 RCW shall apply as if set forth in this chapter. [Ord. 2015-12-051 § 2; Ord. 2010-12-078; Ord. 2003-03-012; Ord. 2003-03-011; Ord. 1999-09-054].