Chapter 3.94
MULTIFAMILY PROPERTY TAX EXEMPTION
Sections:
3.94.010 Findings of fact.
3.94.020 Purpose.
3.94.030 Definitions.
3.94.040 Tax exemption – Duration – Valuation – Exceptions.
3.94.050 Project eligibility.
3.94.060 Application procedure.
3.94.070 Application review – Approval – Required findings – Issuance of conditional certificate – Denial – Appeal.
3.94.080 Amendment of contract.
3.94.090 Extension of conditional certificate – Required findings – Denial – Appeal.
3.94.100 Final certificate – Application – Issuance – Denial – Appeal.
3.94.110 Annual certification.
3.94.120 Cancellation of tax exemption – Appeal.
3.94.130 Review of program.
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, its 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. (Ord. 5779 § 1, 2003.)
3.94.020 Purpose.
As provided for in Chapter 84.14 RCW, the purpose of this chapter is to provide limited, eight-year exemptions from ad valorem property taxation for qualified new multifamily and rehabilitated multi-family housing constructed in the downtown core and 12-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, Chapter 36.70A RCW and the city of Auburn comprehensive and downtown plans;
B. Encourage residential opportunities, including affordable housing opportunities, within the downtown core;
C. Stimulate new construction of multifamily housing in the downtown core to increase housing opportunities;
D. Assist in directing future population growth into the city’s downtown core thereby encouraging the most efficient use of the city’s infrastructure;
E. Achieving development densities that enhance the use of the community’s mass transit opportunities and the public investment in such opportunities; and
F. Promote community development and downtown core revitalization in fulfillment of the city’s downtown plan. (Ord. 6257 § 1, 2009; Ord. 5779 § 1, 2003.)
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 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.
C. “Director” means the director of the city of Auburn planning and development 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 130 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 80 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 100 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 80 percent but is at or below 115 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 100 percent, but at or below 150 percent, of the median family income, adjusted for family size, for the county where the project is located.
G. “Multifamily housing” means a building having four or more dwelling units designed for permanent residential occupancy.
H. “Owner” means the property owner of record.
I. “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.
J. “Rehabilitation improvements” means modifications to existing structures that are vacant for 12 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.
K. “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 to the ordinance codified in this chapter,1 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.
L. “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, and 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. 6287 § 2, 2010; Ord. 6257 § 1, 2009; Ord. 5779 § 1, 2003.)
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 eight successive years beginning January 1st of the year immediately following the calendar year of issuance of the final certificate of tax exemption and 12 successive years beginning January 1st 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 nonhousing improvements, nor does the exemption apply to increases in assessed valuation of land and nonqualifying improvements. This chapter also does not apply to increases in assessed valuation made by the assessor on nonqualifying 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 to achieve the uniformity of assessment or appraisal required by law. In the case of rehabilitation of existing buildings, the exemption does not include the value of improvements constructed prior to the submission of the application required under Chapter 84.14 RCW.
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 the ordinance codified in this section (August 17, 2009) 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 the ordinance codified in this section (August 17, 2009) and 20 percent or more of the units priced as affordable units shall qualify for the exemption. (Ord. 6257 § 1, 2009; Ord. 6020 § 1, 2006; Ord. 5779 § 1, 2003.)
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 four dwelling units of multifamily housing, located within a residential structure or a mixed-use development, in which at least 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 overall 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 years from the date of approval of the application or by any extended deadline granted by the director pursuant to ACC 3.94.070(C).
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 agreed to the implementation of the development on terms and conditions satisfactory to the city. (Ord. 6257 § 1, 2009; Ord. 5779 § 1, 2003.)
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 $1,000, plus an amount necessary to cover recording fees under ACC 3.94.100;
F. Except as otherwise provided in ACC 3.94.070, 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 the ordinance codified in this chapter, the owner has applied for a permit identified in subsection (F)(2) of this section, then application for exemption under this section may be submitted any time prior to issuance of a building permit. (Ord. 6257 § 1, 2009; Ord. 5779 § 1, 2003.)
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 four new multifamily units are being constructed; or an existing structure vacant for 12 months or more has a minimum of four 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 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 ACC 3.94.050, and application requirements contained in ACC 3.94.060; 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 and the director shall issue a conditional certificate of acceptance of tax exemption. The conditional certificate shall expire three years from the date of approval unless an extension is granted as provided in ACC 3.94.090.
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 years from the date of approval unless an extension is granted as provided in ACC 3.94.090.
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 10 working days of the denial.
F. An owner may appeal a denial of a tax exemption application to the hearing examiner by filing a notice of appeal with the city clerk within 30 calendar days of receipt of notice of the denial. The appeal before the hearing 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. (Ord. 6257 § 1, 2009; Ord. 5779 § 1, 2003.)
3.94.080 Amendment of contract.
A. Any owner seeking amendment(s) to the contract approved by the director may do so by submitting a request in writing to the director at any time within three years of the date of the director’s approval of the contract.
B. Any owner seeking amendments to the approved form of contract shall pay to the city an amendment application fee of $500.00 for administrative costs, plus any amount necessary to cover recording fees.
C. The date for expiration of the conditional certificate shall not be extended by contract
amendment unless all conditions for extension set forth in ACC 3.94.090 are met. (Ord. 5779 § 1, 2003.)
3.94.090 Extension of conditional certificate – Required findings – Denial – Appeal.
A. The conditional certificate may be extended by the director for a period not to exceed 24 consecutive months. The owner shall submit a written request stating the grounds for the extension together with a fee of $500.00 for the city’s administrative cost to process the request. The director may grant an extension if the director finds that:
1. The anticipated failure to complete construction within the required time period is due to circumstances beyond the control of the owner; and
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 owner and the city will be satisfied upon completion of the project.
B. If an extension is denied, the director shall state in writing the reason for denial and shall send notice to the owner’s last known address within 10 working days of the denial. An owner may appeal the denial of an extension to the hearing examiner by filing a notice of appeal with the city clerk within 14 calendar days after issuance of the notice of the denial. The appeal before the hearing examiner shall follow the provisions of Chapter 18.66 ACC. The hearing examiner’s decision shall be the final decision of the city and is not subject to further appeal. (Ord. 5779 § 1, 2003.)
3.94.100 Final certificate – Application – Issuance – Denial – Appeal.
A. Upon completion of the construction as provided in the contract between the owner and the city, and upon issuance of a temporary certificate of occupancy, or a permanent certificate of occupancy if no temporary certificate is issued, the owner may request a final certificate of tax exemption. The owner shall file with the director such information as the director may deem necessary or useful to evaluate eligibility for the final certificate, which shall at a minimum include:
1. An audited statement of expenditures made with respect to each multifamily housing unit and the total expenditures made with respect to the entire property, including total project costs, which statement shall be approved by the city of Auburn finance director.
2. A description of the completed work and a statement of qualification for the exemption.
3. A statement that the work was completed within the required three-year period or any approved extension; and
B. At the time of application for final certificate under this section the owner shall pay to the city a fee of $50.00 to cover the city’s administrative costs.
C. Within 30 calendar days of receipt of all materials required for a final certificate, the director shall determine whether the completed work is consistent with the contract between the city and owner, whether all or a portion of the completed work is qualified for exemption under this chapter and, if so, which specific improvements satisfy the requirements of this chapter.
D. If the director determines that the project has been completed in accordance with the contract between the owner and the city and the requirements of this chapter, the city shall file a final certificate of tax exemption with the assessor within 10 calendar days of the expiration of the 30-calendar-day period provided under subsection C of this section.
E. The director is authorized to cause to be recorded or to require the owner or owners to record in the real property records of the appropriate office of the county in which the property is located, the contract with the city required under ACC 3.94.050, or such other document(s) as will identify such terms and conditions of eligibility for exemption under this chapter as the director deems appropriate for recording.
F. The director shall notify the owner in writing that the city will not file a final certificate if the director determines that the project was not completed within the required three-year period or any approved extension, or was not completed in accordance with the contract between the owner and the city and the requirements of this chapter, or the owner’s property is otherwise not qualified for the limited exemption under this chapter.
G. The owner may appeal the director’s decision to the hearing examiner by filing a notice of appeal with the city clerk within 14 calendar days after the issuance of the notice of the denial. The appeal before the hearing examiner shall follow the provisions for appeal contained in Chapter 18.66 ACC. The owner may appeal the hearing examiner’s decision to the King County superior court according to the procedures contained in RCW 34.05.510 through 34.05.598, as provided in RCW 84.14.090(6), within 30 days of notification by the city to the owner of the decision. (Ord. 5779 § 1, 2003.)
3.94.110 Annual certification.
A. Within 30 days after the first anniversary of the date the city filed the final certificate of tax exemption and each year thereafter, for a period of 10 years, the property owner shall file a certification with the director, verified upon signed affirmation under penalty of perjury under the laws of the state of Washington. The certification shall contain such information as the director may deem necessary or useful, and shall at a minimum include the following information:
1. A statement of occupancy and vacancy of the multifamily units during the previous year;
2. A certification that the property has not changed use since the date of filing of the final certificate of tax exemption, and continues to be in compliance with the contract with the city and the requirements of this chapter;
3. A description of any improvements or changes to the property made after the filing of the final certificate or most recent certification, as applicable.
B. Failure to submit the annual certification may result in cancellation of the tax exemption. (Ord. 5779 § 1, 2003.)
3.94.120 Cancellation of tax exemption – Appeal.
A. If at any time the director determines that the property no longer complies with the terms of the contract or with the requirements of this chapter, or the use of the property for any reason no longer qualifies for the tax exemption, the tax exemption shall be cancelled and additional taxes, interest and penalties imposed pursuant to state law.
B. If the owner intends to convert the multifamily housing to another use the owner must notify the director and the King County assessor within 60 days of the change in use. Upon such change in use, the tax exemption shall be cancelled and additional taxes, interest and penalties imposed pursuant to state law.
C. Upon determining that a tax exemption shall be cancelled, the director shall notify the property owner by certified mail, return receipt requested. The property owner may appeal the determination by filing a notice of appeal with the city clerk within 30 calendar days after issuance of the decision by the director, specifying the factual and legal basis for the appeal. The appeal before the hearing examiner shall follow the procedures set forth in ACC 18.66.110 through 18.66.160. At the appeal hearing, all affected parties may be heard and all competent evidence received. The hearing examiner shall affirm, modify, or repeal the decision to cancel the exemption based on the evidence received. The hearing examiner shall give substantial weight to the director’s decision to cancel the exemption, and the burden of proof and the burden of overcoming the weight accorded to the director’s decision shall be upon the appellant. An aggrieved party may appeal the hearing examiner’s decision to the King County superior court in accordance with the procedures in RCW 34.05.510 through 34.05.598, as provided in RCW 84.14.110(2), within 30 days after issuance of the decision of the hearing examiner. (Ord. 5779 § 1, 2003.)
3.94.130 Review of program.
A. The provisions of this chapter shall be reviewed five years after the effective date of the ordinance codified herein. Such review may include, but not be limited to, the number of dwelling units granted property tax exemption under this program, consideration of the multifamily development trends in the city and region, review of administrative processes and procedures, as well as public comment. If the program is terminated, no further applications for a conditional certificate of tax exemption shall be accepted. Incomplete applications shall be returned to the owner.
B. Notwithstanding subsection A of this section, pending complete applications for a conditional certificate, extension of conditional certificate or final certificate shall be processed as provided under ACC 3.94.060 through 3.94.100. The city’s authority to enforce the provisions of this chapter shall survive any and all timetables provided for herein, and shall apply to all properties that have been issued a final certificate of tax exemption under this chapter until expiration, termination or cancellation of the certificate. (Ord. 5779 § 1, 2003.)
Exhibit A of Ord. 5779 is on file in the office of the city clerk for public review and inspection.