Chapter 3.25
MULTIFAMILY DWELLING
TAX EXEMPTIONS
Sections:
3.25.010 Purpose.
3.25.020 Definitions.
3.25.030 Terms of the tax exemptions for multifamily housing in residential target areas.
3.25.040 Project eligibility.
3.25.050 Application procedure.
3.25.060 Application review and issuance of conditional certificate.
3.25.070 Extension of conditional certificate.
3.25.080 Application for final certificate.
3.25.090 Issuance of final certificate.
3.25.100 Annual certification and report.
3.25.110 Cancellation of tax exemption.
3.25.120 Sunset of exemption for applications for conditional certificates.
3.25.010 Purpose.
As provided for in Chapter 84.14 RCW, the purpose of this chapter is to provide limited eight (8) year exemptions from ad valorem property taxation for multifamily housing in designated urban centers to:
1. Encourage increased residential opportunities within urban centers designated by the city council as residential targeted areas; and
2. Stimulate new construction on vacant and underutilized sites for multifamily housing in residential targeted areas to increase and improve housing opportunities; and
3. Assist in directing future population growth in designated urban centers, thereby reducing development pressure on single-family residential neighborhoods; and
4. Achieve development densities which are more conducive to transit use in designated urban centers.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.020 Definitions.
When used in this chapter, the following terms shall have the following meanings, unless the context indicates otherwise:
1. Administrator means the Kent economic development director or his/her designee.
2. Mixed use means a multi-story multifamily housing residential project with at least one (1) nonresidential use in one (1) or more multi-story multifamily housing buildings in the project, such as retail, office, entertainment, schools, conference centers or a use approved in writing by the administrator.
3. Multifamily housing means one (1) or more new multi-story buildings designed for permanent residential occupancy, each with four (4) or more dwelling units.
4. Owner means the property owner of record.
5. Permanent residential occupancy means multifamily housing that provides either rental or owner occupancy on a nontransient basis. This includes owner-occupied or rental accommodation that is leased for a period of at least one (1) month. This excludes hotels and motels that predominately offer rental accommodation on a daily or weekly basis.
6. Residential targeted area means the geographic area of downtown Kent bordered by Titus Street, State Route 167, Willis Street, and Cloudy Street, and only including zones that permit multifamily housing. See Appendix 1* for map.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
*Code reviser’s note: Appendix 1, attached to the ordinance codified in this chapter, is on file in the office of the city clerk.
3.25.030 Terms of the tax exemptions for multifamily housing in residential target areas.
A. Duration of exemption. The value of improvements qualifying under this chapter is exempt from ad valorem property taxation for eight (8) successive years beginning January 1 of the year immediately following the calendar year after issuance of the final certificate of tax exemption.
B. Limits on exemption. The exemption does not apply to the value of land or to the value of improvements not qualifying under this chapter, nor does the exemption apply to increases in assessed valuation of land and nonqualifying improvements. This chapter 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. At the conclusion of the exemption period, the new housing cost shall be considered as new construction for the purposes of Chapter 84.55 RCW.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.040 Project eligibility.
A proposed project must meet the following requirements for consideration for a property tax exemption:
A. Location. The project must be located within the designated residential targeted area as defined in KCC 3.25.020, Definitions, Residential targeted area. 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.
B. Tenant displacement. Prior to approval of an application under KCC 3.25.060, the applicant shall provide the administrator with documentation satisfactory to the administrator of the following:
1. All tenants of residential rental structures on the project site have been notified per state statute of the termination of their tenancy;
2. The applicant’s efforts to refer tenants to similar, alternative housing resources; and
3. Any other actions the applicant has taken to minimize the hardship on tenants whose tenancies will be terminated.
C. Size. The project must include at least thirty (30) units of new multifamily housing within a multi-story development. At least fifty (50) percent of the space within the project shall be intended for permanent residential occupancy.
D. Proposed completion date. New construction of multifamily housing must be completed within three (3) years from the date of approval of the application.
E. Compliance with guidelines and standards. The project must be designed to comply with the city’s comprehensive plan, building, fire, housing, and zoning codes, downtown design review guidelines, multifamily design review, mixed use design review if applicable, and any other applicable regulations. The project must be LEED® certifiable as confirmed by a LEED® certified independent third party reviewer or must be Built Greentm certified, and must also comply with any other standards and guidelines adopted by the city council for the residential targeted area.
F. Parking. All required residential parking shall be located in structured parking garages, under buildings, or underground.
G. Class A pedestrian street. For buildings adjacent to a class A pedestrian street, the first floor of the building facing the street shall consist of residential units, commercial uses, and/or residential amenity uses.
H. Mixed use development. The project shall be a mixed use project, unless the mixed use component is waived by the administrator.
1. The purpose of the mixed use requirement is to implement the intent of the land use district, maximize the efficient use of land, support transit use, and encourage the development of well-balanced, attractive, convenient, and vibrant urban residential neighborhoods. The additional use excludes any accessory functions related to the residential use. Unless otherwise modified or waived in writing by the administrator, the nonresidential mixed use shall occupy at a minimum the ground floor along the street frontage with a depth of at least thirty (30) feet for any building in the project. The administrator may not modify or waive the mixed use requirement, as provided in subsection (H)(2) of this section, in the DC zoning district, which is governed by KCC 15.04.030(4) and (5).
2. The administrator may waive the mixed use requirement for the purposes of this chapter, if the applicant can demonstrate that mixed use development is impractical or infeasible due to the following factors:
a. Size or other physical characteristic of the project’s lot(s);
b. Project site is not conducive to commercial use;
c. Classification of street(s) abutting the project; or
d. Other similar type of circumstance that makes mixed use impractical for the project.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.050 Application procedure.
A property owner who wishes to propose a project for a tax exemption shall complete the following procedures:
A. The application provided by the city shall be filed with the administrator along with the required initial application fee of one thousand dollars ($1,000). The application shall be filed prior to the issuance of the building permit for the project.
B. A complete application shall include:
1. A completed city of Kent application form setting forth the grounds for the exemption.
2. A brief written description of the project, and floor and site plans of the proposed project, which may be revised by the owner provided such revisions are made and presented to the administrator prior to the city’s final action on the exemption application.
3. A statement from the owner acknowledging the potential tax liability when the project ceases to be eligible for exemption under this chapter.
4. An affidavit signed by the owner stating the occupancy record of the property for a period of twelve (12) months prior to filing the application.
5. Verification of the correctness of the information submitted by the owner’s signature and affirmation made under penalty of perjury under the laws of the state of Washington.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.060 Application review and issuance of conditional certificate.
The administrator 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 ninety (90) calendar days of receipt of a complete application.
A. Approval. The administrator may approve the application if he/she finds that:
1. The proposed project is or will be, at the time of completion, in conformance with all applicable local plans, regulations, and design guidelines.
2. The owner has complied with all standards and guidelines adopted by the city under this chapter, including but not limited to the project eligibility and application requirements.
B. Contract required. If an application is approved, the applicant shall enter into a contract with the city, approved by the city council, regarding the terms and conditions of the project under this chapter.
C. Issuance of conditional certificate. Following approval of the contract, the administrator 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 this chapter.
D. Application denial. If an application is denied, the administrator shall state in writing the reasons for denial and shall send notice to the applicant at the applicant’s last known address within ten (10) calendar days of the denial. Per RCW 84.14.070, an applicant may appeal a denial to the city council within thirty (30) calendar days of receipt of the denial by filing a complete appeal application and council appeal fee with the city clerk. The appeal before the city council will be based on the record made before the administrator. The administrator’s decision will be upheld unless the applicant can show that there is no substantial evidence on the record to support the administrator’s decision. The city council’s decision on appeal will be final.
E. Amendment of contract. An owner may request an amendment(s) to the contract by submitting a request in writing to the administrator, together with a fee of five hundred dollars ($500), at any time within three (3) years of the date of the approval of the 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 KCC 3.25.070 are met.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.070 Extension of conditional certificate.
A. The conditional certificate and time for completion of the project may be extended by the administrator for a period not to exceed a total of twenty-four (24) consecutive months. To obtain an extension, the applicant must submit a written request, along with a processing fee of fifty dollars ($50), stating the grounds for the extension. An extension may be granted if the administrator 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; and
3. All the conditions of the original contract between the applicant and the city will be satisfied upon completion of the project.
B. If an extension is denied, the administrator shall state in writing the reason for denial and shall send notice to the applicant’s last known address within ten (10) calendar days of the denial. An applicant may appeal the denial of an extension to the hearing examiner within fourteen (14) calendar days of receipt of the denial by filing a complete appeal application and appeal of administrative decision fee with the administrator. The appeal before the hearing examiner shall be as provided in Ch. 12.01 KCC for a Process I action. No appeal to the city council is provided from the hearing examiner’s decision.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.080 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 by filing with the administrator the following, along with a one thousand dollar ($1,000) fee:
A. A statement of expenditures made with respect to each multifamily housing unit and the total expenditures made with respect to the entire property;
B. A description of the completed work and a statement of qualification for the exemption;
C. The total monthly rent or total sale amount of each multifamily housing unit rented or sold to date;
D. Any additional information requested by the city pursuant to meeting any reporting requirements under Chapter 84.14 RCW; and
E. A statement that the work was completed within the required three (3) year period or any authorized extension.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.090 Issuance of final certificate.
Within thirty (30) calendar days of receipt of all materials required for a final certificate, the administrator shall determine whether the specific improvements satisfy the requirements of the contract, application, and this chapter.
A. Granting of final certificate. If the administrator 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 time period, the city shall, within ten (10) calendar days of the expiration of the thirty (30) day review period above, file a final certificate of tax exemption with the King County assessor.
B. Recording. The administrator is authorized to cause to be recorded, at the owner’s expense, in the real property records of the King County department of records and elections, the contract with the city, as amended if applicable, and such other document(s) as will identify such terms and conditions of eligibility for exemption under this chapter as the administrator deems appropriate for recording.
C. Denial and appeal. The administrator shall notify the applicant in writing that a final certificate will not be filed if the administrator determines that:
1. The improvements were not completed within the authorized time period;
2. The improvements were not completed in accordance with the contract between the applicant and the city; or
3. The owner’s property is otherwise not qualified under this chapter.
An applicant may appeal a denial to the hearing examiner within fourteen (14) calendar days of issuance of the denial of a final certificate by filing a complete appeal application and appeal of administrative decision fee with the administrator. The appeal before the hearing examiner shall be as provided in Ch. 12.01 KCC for a Process I action. No appeal to the city council is provided from the hearing examiner’s decision. The applicant may appeal the hearing examiner’s decision to the King County superior court, under RCW 34.05.510 through 34.05.598, if the appeal is filed within thirty (30) calendar days of receiving notice of that decision.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.100 Annual certification and report.
Within thirty (30) calendar days after the first anniversary of the date the city issued the final certificate of tax exemption and each year thereafter for the duration of the tax exemption period, the property owner shall file a notarized declaration and annual report with the administrator indicating the following:
A. A statement of occupancy and vacancy of the multifamily units during the previous twelve (12) months;
B. A certification that the property has not changed use and continues to be in compliance with the contract with the city and this chapter;
C. A description of any subsequent improvements or changes to the property made after the city issued the final certificate of tax exemption.
D. The total monthly rent of each multifamily housing unit rented or the total sale amount of each multifamily housing unit sold to an initial purchaser during the twelve (12) months ending with the anniversary date;
E. A breakdown of the number, type, and specific multifamily housing units rented or sold during the twelve (12) months ending with the anniversary date; and
F. Any additional information requested by the city pursuant to meeting any reporting requirements under Chapter 84.14 RCW.
City staff may also conduct onsite verification of the declaration and reporting. Failure to submit the annual declaration and report shall result in a review of the exemption per RCW 84.14.110.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.110 Cancellation of tax exemption.
A. If the administrator determines (1) the owner is not complying with the terms of the contract or this chapter; (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, building or fire code requirements; or (4) the property for any reason no longer qualifies for the tax exemption, the tax exemption shall be canceled and additional taxes, interest and penalties imposed pursuant to state law. 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 shall notify the administrator and the King County assessor in writing within sixty (60) calendar days of the change in use. Upon such change in use, the tax exemption shall be canceled and additional taxes, interest, and penalties imposed pursuant to state law.
B. Notice and appeal. Upon determining that a tax exemption is to be canceled, the administrator shall notify the owner by mail, return receipt requested. The property owner may appeal the determination by filing a notice of appeal and appeal of administrative decision fee with the city clerk within thirty (30) calendar days, specifying the factual and legal basis for the appeal. The hearing examiner will conduct a hearing under Ch. 12.01 KCC for a Process I action. An aggrieved party may appeal the hearing examiner’s decision to the King County superior court under RCW 34.05.510 through 34.05.598.
(Ord. No. 3560, § 1, 6-5-01; Ord. No. 3922, § 1, 6-16-09)
3.25.120 Sunset of exemption for applications for conditional certificates.
The city shall not accept new applications for conditional certificates as provided in this chapter after June 30, 2014, unless extended by city council action. Incomplete applications for conditional certificates as of June 30, 2014, shall be returned to owners. Notwithstanding the above, the city shall process (A) pending complete applications for a conditional certificate and (B) applications for extension of the conditional certificate or final certificate received after June 30, 2014, as provided in this chapter. This chapter shall continue to apply to all properties that have been or are issued a final certificate of tax exemption under this chapter until expiration, termination, or cancellation of the tax exemption.
(Ord. No. 3922, § 1, 6-16-09)