Chapter 3.70
PROPERTY TAX INCENTIVES IN RESIDENTIAL TARGETED AREAS

Sections:

3.70.010    Purpose.

3.70.020    Findings.

3.70.030    Definitions.

3.70.040    Residential targeted area designation criteria.

3.70.050    Residential targeted area designated.

3.70.060    Residential targeted area standards and guidelines.

3.70.070    Tax exemption for multifamily housing in residential targeted areas.

3.70.080    Application procedures.

3.70.090    Application review and issuance of conditional certificate.

3.70.100    Application for final certificate.

3.70.110    Issuance of final certificate.

3.70.120    Annual compliance review.

3.70.130    Cancellation of tax exemption.

3.70.140    Appeals to hearing examiner.

3.70.010 Purpose.

As provided in RCW 84.14.007, it is the purpose of this chapter to encourage increased residential housing opportunities, including affordable housing opportunities, within urban centers within the city of Puyallup where there are insufficient housing opportunities. It is further the purpose of this chapter to stimulate the construction of new multifamily housing and the rehabilitation of existing vacant and underutilized buildings for multifamily housing in urban centers having insufficient housing opportunities that will increase and improve residential opportunities within such urban centers. To achieve these purposes, this chapter provides for special valuations for eligible improvements associated with multiunit housing, including affordable housing, in residentially deficient urban centers located within the city of Puyallup. (Ord. 2897 § 1, 2008; Ord. 2753 § 1, 2003).

3.70.020 Findings.

The city council has determined that the residential targeted area(s) designated in this chapter are located within an urban center; that they lack sufficient available, desirable, and convenient residential housing to meet the needs of the public who would be likely to live in the urban center, if the desirable, convenient, attractive, affordable, and livable places to live were available; and that providing additional housing opportunities in designated areas will assist in achieving one or more of the stated purposes of this chapter. The city council further finds that development of a variety of additional housing units in the city’s urban center will attract and maintain residents, thus making the area more vibrant, through better business, entertainment and cultural activities. Development of additional housing within the urban center of the city of Puyallup will help to achieve the planning goals mandated by the Growth Management Act under RCW 36.70A.020. The tax incentives provided in this chapter will stimulate the creation of new and enhanced residential structures, opportunities, and uses within the city’s urban center, benefiting and promoting the public health, safety and welfare in the city’s urban center. (Ord. 2897 § 2, 2008; Ord. 2753 § 1, 2003).

3.70.030 Definitions.

“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 as defined by Chapter 84.14 RCW.

“City” means the city of Puyallup.

“Director” means the city manager or other city staff as may be designated in writing by the city manager.

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

“Multifamily housing” means building(s) having four or more dwelling units designed for permanent residential occupancy resulting from new construction, rehabilitation or conversion of a vacant, underutilized or substandard building.

“Owner” means the property owner of record.

“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 predominantly offer rental accommodations on a daily or weekly basis.

“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.

“Residential targeted area” means the area within or coterminous with the city’s urban center that has been designated by the city council as the residential targeted area in accordance with this chapter and Chapter 84.14 RCW as found by the city council to be lacking sufficient available, convenient, attractive, livable, and desirable residential housing to meet the needs of the public.

“Urban center” means a compact identifiable district where urban residents may obtain a variety of products and services. (Ord. 2897 § 3, 2008; Ord. 2753 § 1, 2003).

3.70.040 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 an urban center as determined by the city council;

(2) The targeted area lacks sufficient available, 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 Puyallup; 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. The city council may, by ordinance, amend or rescind the designation of a residential target area at any time pursuant to the same procedure as set forth in this chapter for original designation.

(5) The notice for the hearing has met the requirements of RCW 84.14.040. (Ord. 2753 § 1, 2003).

3.70.050 Residential targeted area designated.

(1) Residential Targeted Area Designated. The area hereby declared to be the residential targeted area of the city of Puyallup includes all properties within the central business district (CBD) zone district as denoted on the official city zoning map. In addition, the residential targeted area shall also consist of all properties directly south of the existing central business district zone southern perimeter within the area bound by 3rd Street SW, 7th Avenue and 2nd Street SE.

(2)  If a part of any legal lot is within the residential targeted area, then the entire lot shall be deemed to lie within such area. (Ord. 2753 § 1, 2003).

3.70.060 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.

(3) A proposed project must meet the standards and guidelines listed in PMC 3.70.070(4)(a) through (f). (Ord. 2753 § 1, 2003).

3.70.070 Tax exemption for multifamily housing in residential targeted areas.

(1) Intent. Limited multi-year exemptions, as authorized by Chapter 84.14 RCW, from ad valorem property taxation for multifamily housing in the residential targeted area are intended to:

(a) Encourage increased residential 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; and

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

(2) Duration of Exemption.

(a) For properties for which applications for certificates of tax exemption eligibility were submitted before July 22, 2007, the value of new construction, conversion, and rehabilitation improvements qualifying under this chapter is exempt from ad valorem property taxation for 10 successive years beginning January 1st of the year immediately following the calendar year of issuance of the final certificate of tax exemption.

(b) For properties for which applications for certificates of tax exemption eligibility are submitted after July 22, 2007, the value is exempt:

(i) For eight successive years beginning January 1st of the year immediately following the calendar year of issuance of the certification; or

(ii) For 12 successive years beginning January 1st of the year immediately following the calendar year of issuance of the certification if the property otherwise qualifies for the exemption under this chapter and meets the conditions of RCW 84.14.020(1)(a)(ii)(B).

(c) If improvements have been exempted under this chapter, the improvements shall continue to be exempted for the duration of the period applicable under this subsection, so long as they are not converted to another use and so long as they continue to satisfy all applicable conditions of the contract provided for by PMC 3.70.090. If the owner intends to convert the multifamily development to another use, or if applicable, if the owner intends to discontinue compliance with the affordable housing requirements as described in this section, or any other condition to exemption, the owner shall notify the assessor within 60 days, and shall, in all respects, be subject to the requirements of RCW 84.14.110.

(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. Nonresidential portions of multiple-use projects with qualifying residential components shall not qualify for this exemption. 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 PMC 3.70.050.

(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 applicable building or housing codes. 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 four units of multifamily housing within a residential structure. 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.

(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 PMC 3.70.030, and only that portion of the space designated for multifamily housing shall be eligible for applicable exemption provided for by this chapter.

(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 PMC 3.70.090(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 and standards in effect for the subject property at the time the applicant submits a fully completed application to the director. 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) Low- and Moderate-Income Housing. 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 multifamily housing units as affordable housing units to low- and moderate-income households, as defined by RCW 84.14.020, and any additional affordability and income eligibility conditions as may be adopted by the city. (Ord. 2897 § 4, 2008; Ord. 2753 § 1, 2003).

3.70.080 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 therefor, the applicant shall submit an application to the director, on a form established by the director along with the required fees, as contained in the city’s fee schedule.

(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, and specifically identifying the low- or moderate-income elements of the proposed project;

(c) A statement from the owner 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 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 building or housing ordinances. (Ord. 2897 § 5, 2008; Ord. 2753 § 1, 2003).

3.70.090 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 for action. Once the contract is approved by the city council and 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 any applicable 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 that the application has been denied. The appeal will be based upon the record made before the director with the burden of proof on the applicant to show that there is no substantial evidence on the record to support the director’s decision. The decision of the city council in denying or approving the application is final. All other appeals of the director’s decisions shall be made to the hearing examiner. (Ord. 2753 § 1, 2003).

3.70.100 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; and

(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. (Ord. 2753 § 1, 2003).

3.70.110 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 PMC 3.70.100(3), file a final certificate of tax exemption with the Pierce 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.

(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 specifying the factual and legal basis for the appeal. Said appeal shall be heard by the city’s hearing examiner. (Ord. 2753 § 1, 2003).

3.70.120 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 the applicable tax exemption period, the property owner shall file a notarized declaration with the director indicating the following:

(1) A statement of occupancy and vacancy of the multifamily units during the previous year;

(2) A certification that the property continues to be in compliance with the contract with the city; and

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

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. 2897 § 6, 2008; Ord. 2753 § 1, 2003).

3.70.130 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 Pierce 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 Pierce 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 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 may affirm, modify, or repeal the decision to cancel the exemption based on the evidence received. (Ord. 2753 § 1, 2003).

3.70.140 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. 2753 § 1, 2003).