Chapter 3.103
MULTIFAMILY HOUSING PROPERTY TAX EXEMPTION

Sections:

3.103.010    Findings.

3.103.020    Purpose.

3.103.030    Definitions.

3.103.040    Residential targeted area designation criteria.

3.103.050    Amendment or rescission of designation of residential targeted area.

3.103.060    Residential targeted area standards and guidelines.

3.103.070    Tax exemption for multifamily housing in residential targeted areas.

3.103.080    Application procedures.

3.103.090    Application review and issuance of conditional certificate.

3.103.100    Application for final certificate.

3.103.110    Issuance of final certificate.

3.103.120    Annual compliance review.

3.103.130    Cancellation of tax exemption.

3.103.140    Appeals to hearing examiner.

3.103.150    Urban center and residential targeted area designated.

3.103.010 Findings.

(1) The urban center of the city of Marysville lacks sufficient available, desirable and convenient residential housing units, including affordable housing units, to meet the needs of the public, and more current and future residents of Marysville would be likely to live in the city’s urban center if additional desirable, convenient, attractive, affordable and livable places to live were available.

(2) The development of such housing units, including affordable housing units, in the urban center of the city will attract and maintain a significant increase in the number of residents, thus making the area more vibrant, and will help to stimulate business, entertainment and cultural activities. Accordingly, development of additional housing within the urban center of the city of Marysville will help to achieve the planning goals mandated by the Growth Management Act under RCW 36.70A.020.

(3) The tax incentive provided by Chapter 84.14 RCW will stimulate the creation of new and enhanced residential structures within the city’s urban center, benefiting and promoting the public health, safety and welfare by encouraging residential redevelopment, including affordable housing opportunities.

(4) This housing tax-incentive program also would promote further economic development and enhanced public safety in the city’s urban center by creating an influx of new residents, of mixed income, who will utilize urban services, stimulate downtown Marysville development and encourage increased residential opportunities.

(5) The providing of additional housing opportunity in the residential targeted area described in MMC 3.103.150 meets the requirements of Chapter 84.14 RCW.

(6) The notice of hearing given for the designation of the residential targeted area and the adoption of this chapter meets the requirements of RCW 84.14.040. (Ord. 2801 § 1, 2009).

3.103.020 Purpose.

It is the purpose of this chapter to encourage increased residential housing, including affordable housing opportunities, in keeping with the goals and mandates of the Growth Management Act (Chapter 36.70A RCW) so as to stimulate the construction of new multifamily housing and the rehabilitation of existing vacant and underutilized buildings for multifamily housing in the city’s urban center having insufficient housing opportunities. (Ord. 2801 § 1, 2009).

3.103.030 Definitions.

(1) “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 levels.

(2) “City” means the city of Marysville, a municipal corporation and political subdivision.

(3) “Director” means the city of Marysville’s director of community development or authorized designee.

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

(5) “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 Snohomish County as reported by the United States Department of Housing and Urban Development. At such times as the city is a high-cost area, “low-income household” means a household that has an income at or below 100 percent of the median family income adjusted for family size in Snohomish County.

(6) “Moderate-income household” means a single person, family, or unrelated persons living together whose adjusted income is more than 80 percent but is below 115 percent of the median family income adjusted for family size for Snohomish County as reported by the United States Department of Housing and Urban Development. At such times as the city is a high-cost area, “moderate-income household” means a household that has an income at or above 100 percent of the median family income, adjusted for family size, but is below 115 percent of the median family income, adjusted for family size, for Snohomish County.

(7) “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.

(8) “Owner” means the property owner of record.

(9) “Multifamily housing” and “multiple-unit housing” are used synonymously in this chapter and mean a building having 20 or more dwelling units not designed or used as transient accommodations, not including hotels and motels and designed for permanent residential occupancy resulting from new construction, rehabilitation or conversion of a vacant, underutilized or substandard building to multifamily housing.

(10) “Permanent residential occupancy” means multifamily housing that provides either owner-occupant housing or rental accommodations that are leased for a period of at least one month on a nontransient basis. This excludes accommodations that offer occupancy on a transient basis such as hotels and motels that predominately offer rental accommodations on a daily or weekly basis.

(11) “Rehabilitation improvements” means modifications to existing structures that are vacant for 12 months or longer, 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.

(12) “Residential targeted area” means the area within or coterminous with the city’s urban center and downtown study area, generally described as follows:

The downtown study area for the master plan is located within the larger Downtown Neighborhood, Planning Area 1 of the City’s neighborhood planning areas, as defined in the City of Marysville Comprehensive Plan. The study area is bounded by 8th Street to the north, Ebey Slough to the south, Alder Avenue to the east, and I-5 to the west. The Downtown Study Area is approximately 182 acres in size.

The downtown study area is part of the urban center of the city and has been designated by the city council as the residential targeted area in accordance with this chapter and Chapter 84.14 RCW. It has been found by the city council to be lacking sufficient available, convenient, attractive, livable, and desirable residential housing to meet the needs of the public.

(13) “Urban center” means the downtown study area described in MMC 3.103.150, where urban residents may obtain a variety of products and services including, but not limited to, shops, offices, banks, restaurants, governmental agencies and a mixture of uses and activities that may include housing, recreation, and cultural activities in association with either commercial or office, or both uses. (Ord. 2801 § 1, 2009).

3.103.040 Residential targeted area designation criteria.

Following notice and public hearing, or a continuance thereof, as prescribed in RCW 84.14.040, the city council may, in its sole discretion, designate all of or a portion of the residential targeted area described in the notice of hearing as the residential targeted area. The designated targeted area must meet the following criteria, as found by city council in its sole discretion:

(1) The targeted area is located within the urban center as determined by the city council;

(2) The targeted area lacks sufficient available, affordable, attractive, convenient, desirable, and livable residential housing to meet the needs of the public who would be likely to live in the urban center, if such places to live were available; and

(3) The providing of additional housing opportunity in the targeted area will assist in achieving the stated purposes of RCW 84.14.007, namely:

(a) Encourage increased residential opportunities within the targeted area of the city of Marysville; or

(b) Stimulate the construction of new multifamily housing and the rehabilitation of existing vacant and underutilized buildings for multifamily housing that will increase and improve residential opportunities within the city’s urban centers;

(4) In designating the residential targeted area, the city council may also consider other factors, including, but not limited to, which additional housing in the targeted area will attract and maintain a significant increase in the number of permanent residents, whether additional housing in the targeted area will help revitalize the city’s urban center, whether an increased residential population will help improve the targeted area and whether an increased residential population in the targeted area will help to achieve the planning goals mandated by the Growth Management Act under RCW 36.70A.020;

(5) The notice for the hearing has met the requirements of RCW 84.14.040.

The urban center and residential targeted area defined in MMC 3.103.030 were designated following notice and a public hearing and findings as required by this section. (Ord. 2801 § 1, 2009).

3.103.050 Amendment or rescission of designation of residential targeted area.

The city council may, by ordinance, amend or rescind the designation of the residential targeted area at any time pursuant to the same procedure as set forth in this chapter for original designation. (Ord. 2801 § 1, 2009).

3.103.060 Residential targeted area standards and guidelines.

For the designation of residential targeted area, the city council shall adopt basic requirements for both new construction and rehabilitation, including the application process and procedures. The city council may also adopt guidelines and requirements including the following:

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

(2) Building requirements that may include elements addressing parking, height, density, environmental impact, public benefit features, compatibility with surrounding property, and such other amenities as will attract and keep permanent residents and will properly enhance the livability of the residential targeted area. The required amenities should be relative to the size of the proposed project and tax benefit to be obtained.

(3) A proposed project must meet the standards and guidelines listed in MMC 3.103.070(4)(a) through (f), including parking requirements existing for the applicable zone in effect at the time the applicant submits a fully completed application to the director; provided, all parking shall be provided on site for the project subject to the application. (Ord. 2801 § 1, 2009).

3.103.070 Tax exemption for multifamily housing in residential targeted areas.

(1) Intent. Exemptions from ad valorem property taxation for multifamily housing in urban centers are intended to:

(a) Encourage increased residential opportunities, including affordable housing opportunities, within the urban center designated by the city council as a residential targeted area;

(b) Stimulate new construction or rehabilitation of existing vacant and underutilized buildings for multifamily housing in the residential targeted area to increase and improve housing opportunities;

(c) Assist in directing future population growth in the designated urban center, thereby reducing development pressure on single-family residential neighborhoods; and

(d) Achieve development densities which are more conducive to transit use in the designated urban center.

(2) Duration of Exemption. The value of new construction, conversion, and rehabilitation improvements qualifying under this chapter is exempt from ad valorem property taxation as follows:

(a) Eight successive years beginning January 1st of the year immediately following the calendar year of issuance of the certificate of exemption; or

(b) Twelve successive years beginning January 1st of the year immediately following the calendar year of issuance of the final certificate of exemption, and the property otherwise qualifies for the exemption under Chapter 84.14 RCW and meets the following conditions:

(i) The applicant must commit to renting or selling at least 20 percent of the multifamily housing units as affordable housing units to low- and moderate-income households, and the property must satisfy that commitment. In the cases of projects intended exclusively for owner occupancy, the minimum requirement of this subsection may be satisfied solely through housing affordable to moderate-income households.

(ii) The exemptions provided herein do not include the value of land or non-housing-related improvements.

(3) Limits on Exemption. The exemption does not apply to the value of the land or to the value of improvements not qualifying under this chapter, nor does the exemption apply to increases in assessed valuation of land or 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.

(4) 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 residential targeted area as designated pursuant to MMC 3.103.150 and defined in MMC 3.103.030.

(b) 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 fail to comply with one or more requirements of the building code of the city as set forth in MMC Title 16. 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.

(c) Size. The project must include at least 20 units of multifamily housing within a residential structure. A minimum of 20 new units must be constructed or at least 20 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 20 units of new, converted or rehabilitated multifamily housing.

(d) Permanent Residential Housing. At least 50 percent of the space designated for multifamily housing must be provided for permanent residential occupancy, as defined in MMC 3.103.030(10) and only that portion of the space designated for multifamily housing shall be eligible for the exemption provided for herein.

(e) Proposed Completion Date. New construction multifamily housing and rehabilitation improvements must be completed within three years from the date of approval of the application, plus any extension of time granted under MMC 3.103.090(2).

(f) Compliance with Guidelines and Standards. 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 applicant submits a fully completed application to the director. New construction must comply with the building code of the city and all other applicable regulations. Rehabilitation and conversion improvements must comply with the building code of the city set forth in MMC Title 16 and all other applicable regulations. 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 and housing ordinance requirements for which a notice of violation has been issued and is not resolved by compliance, withdrawal or other final resolution. The project must also comply with any other standards and guidelines adopted by the city for the residential targeted area in which the project will be developed.

(g) Parking. The project must provide all required parking spaces on site. The parking requirements for multiple-family dwellings of the Marysville zoning code are applicable to multifamily residences provided for in this chapter; provided, however, to qualify for the exemption hereunder, the project shall provide not less than one parking space per new or rehabilitated residential unit in the project. The term “parking spaces on site” means that all the parking required under applicable city codes and requirements shall be off-street parking and provided on the property subject to the application for tax exemption hereunder or on any contiguous parcel owned by the applicant and not separated by a street, alley, other public right-of-way, or property not owned by the applicant. The director may authorize the parking area for a multifamily residence which is subject to the application for tax exemption hereunder to be located on a contiguous parcel which is separated from the multifamily residence site by an alley, if topographic, environmental or space constraints prevent vehicle parking and maneuvering from being placed on the location otherwise required by this chapter. In approving the on-site parking on any parcel contiguous to the multifamily residence site, including any approved parcel separated by an alley, the director shall require the owner to execute and record a covenant running with the land, acceptable to the city attorney, dedicating such parking area to parking use, to terminate only in the event that the owner’s use which created the need for the parking on the owner’s property is abandoned, discontinued or otherwise terminated, or the owner provides parking in a contiguous alternate location which is acceptable to and approved by the city. (Ord. 2801 § 1, 2009).

3.103.080 Application procedures.

A property owner who wishes to propose a project for a tax exemption shall comply with the following procedures:

(1) Prior to the application for any building permit for a project, the applicant shall submit an application to the director, on a form established by the director, along with the required fees. The initial application fees to the city shall consist of a base fee of $500.00, plus $25.00 per multifamily unit. An additional $150.00 fee to cover the Snohomish County assessor’s administrative costs shall also be paid to the city. If the application is approved, the city shall pay the application fee to the county assessor for deposit in the county current expense fund, after first deducting that portion of the fee attributable to its own administrative costs in processing the application. If the application shall result in a denial by the city, the city shall retain that portion of the fee attributable to its own administrative costs and refund the balance to the applicant.

(2) A complete application shall contain such information as the director may deem necessary or useful, and shall include:

(a) A brief written description of the project and preliminary schematic site and floor plans of the multifamily units and the structure(s) in which they are proposed to be located, setting forth the grounds for the exemption;

(b) A brief statement setting forth the grounds for qualification for exemption;

(c) A statement from the owner acknowledging the potential tax liability when the project ceases to be eligible under this chapter;

(d) If applicable, a statement that the project meets the affordable housing requirements; and

(e) Verification by oath or affirmation of the information submitted.

For rehabilitation projects, the applicant shall also submit an 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 housing ordinance. (Ord. 2801 § 1, 2009).

3.103.090 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 or concurrently with the issuance of the final SEPA determination for the proposed project, whichever is later. An application may be approved subject to such terms and conditions as deemed appropriate by the director to ensure the project meets the land use regulations of the city.

(1) Approval. If an application is approved by the director, the approval, together with a contract between the applicant and the city regarding the terms and conditions of the project, signed by the applicant, shall be presented to the city council with a recommendation that the council authorize the mayor to sign the contract. Once the contract is fully executed, 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) 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 a $150.00 processing fee. An extension may be granted if the director determines that:

(a) The anticipated failure to complete construction or rehabilitation within the required time period is due to circumstances beyond the control of the owner;

(b) The owner has been acting and could reasonably be expected to continue to act in good faith and with due diligence; and

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

(3) Denial of Application. 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 10 days of the denial. An applicant may appeal a denial to the city council by filing a written appeal with the city clerk within 30 days of notification by the city to the applicant that the application is 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. (Ord. 2801 § 1, 2009).

3.103.100 Application for final certificate.

Upon completion of the improvements provided 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 director such information as the director may deem necessary or useful to evaluate eligibility for the final certificate and shall include:

(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 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. Within 30 days of receipt of all materials required for a final certificate, the director shall determine whether the improvements satisfy the requirements of this chapter; and

(4) If applicable, a statement that the project meets the affordable housing requirements. (Ord. 2801 § 1, 2009).

3.103.110 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 following the expiration of the 30-day period specified in MMC 3.103.100(3), file a final certificate of tax exemption with the Snohomish 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) The owner’s property is otherwise not qualified under this chapter; or

(d) 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; or

(e) If applicable, that the affordable housing requirements for the project have not been met.

(2) Within 30 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. Said appeal shall be heard by the city’s hearing examiner. (Ord. 2801 § 1, 2009).

3.103.120 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 a period of 10 years, 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;

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

(4) If applicable, a certification that the property has not changed use and the property has been in compliance with affordable housing requirements.

City staff shall also conduct on-site verification of the declaration. Failure to submit the annual declaration may result in the tax exemption being canceled. (Ord. 2801 § 1, 2009).

3.103.130 Cancellation of tax exemption.

If at any time the director determines the owner has not complied with the terms of the contract or with the requirements of this chapter, or that the property no longer complies with the terms of the contract or with the requirements of this chapter, or 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 must notify the director and the Snohomish County assessor within 60 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.

(1) Effect of Cancellation. If a tax exemption is canceled due to a change in use or other noncompliance, the Snohomish County assessor shall comply with applicable state law to impose additional taxes, interest and penalties on the property, and a priority lien may be placed on the land, pursuant to state law.

(2) Notice and Appeal. Upon determining that a tax exemption is to be canceled, 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 days, specifying the factual and legal basis for the appeal. The hearing examiner will conduct a hearing at which the applicant and the city will be heard and all competent evidence received. The hearing examiner will affirm, modify, or repeal the decision to cancel the exemption based on the evidence received. (Ord. 2801 § 1, 2009).

3.103.140 Appeals to hearing examiner.

(1) The city’s land use hearing examiner is hereby provided jurisdiction to hear appeals of the decisions of the director under this chapter. Said appeals shall be as follows:

(a) Appeal of a decision of the director that the owner is not entitled to a final certificate of tax exemption, filed with the city clerk within 30 days of notification by the city to the owner of denial of a final certificate of tax exemption.

(b) Appeal of a cancellation of tax exemption, filed with the city clerk within 30 days of the notification by the city to the owner of cancellation.

(2) The hearing examiner’s procedures shall apply to hearings under this chapter to the extent they are consistent with the requirements of this chapter and Chapter 84.14 RCW. The hearing examiner shall give substantial weight to the director’s decision and the burden of overcoming the weight shall be on the appellant. The decision of the examiner constitutes the final decision of the city. An aggrieved party may appeal the decision to superior court under RCW 34.05.510 through 34.05.598 if the appeal is properly filed within 30 days of notification by the city to the appellant of that decision. (Ord. 2801 § 1, 2009).

3.103.150 Urban center and residential targeted area designated.

(1) Urban Center Designation. The area declared to be the urban center of the city of Marysville is:

Planning Area 1 of the City’s neighborhood planning areas, as defined in the City of Marysville Comprehensive Plan. The urban center is bounded by 8th Street to the north, Ebey Slough to the south, Alder Avenue to the east, and I-5 to the west. The urban center is approximately 182 acres in size.

(2) Residential Targeted Area Designated. The area hereby declared to be the residential targeted area of the city of Marysville is the urban center of the city as defined in subsection (1) of this section.

(3) If a part of any legal lot is within the urban center or is within the residential targeted area, then the entire lot shall be deemed to lie within such area. (Ord. 2801 § 1, 2009).