Chapter 3.30
MULTIFAMILY HOUSING TAX EXEMPTIONS

Sections:

3.30.010    Intent.

3.30.015    Definitions.

3.30.020    Residential target area, hearing on resolution.

3.30.030    Residential target area designation and standards.

3.30.035    Residential target areas designated.

3.30.040    Tax exemptions for multifamily housing in residential target areas authorized.

3.30.050    Project eligibility.

3.30.060    Application procedure.

3.30.070    Application review and issuance of conditional certificate.

3.30.080    Extension of conditional certificate.

3.30.090    Application for final certificate.

3.30.100    Issuance of final certificate.

3.30.110    Annual compliance review.

3.30.120    Cancellation of tax exemption.

3.30.130    Application deadline and program expiration.

3.30.010 Intent.

It is the purpose of this chapter to encourage 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. The goal is to increase and improve residential opportunities, including affordable housing opportunities, within these urban centers. An additional purpose of this chapter is to promote dense, transit-oriented, walkable communities and to provide the residential density necessary for these mixed use urban centers to prosper and thrive. To achieve these purposes, this chapter provides for special valuations in residentially deficient urban centers for eligible improvements associated with multi-unit housing, which includes affordable housing.

(Ord. O2017-004, Added, 04/18/2017)

3.30.015 Definitions.

When used in this chapter, the following terms shall have the following meanings, as provided in RCW 84.14.010, unless the context indicates otherwise:

A.    “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 thirty 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.

B.    “Director” means the director of the city of Tumwater community development department or other city official designated by the city administrator or mayor to carry out this chapter.

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

D.    “Low-income household” means a single person, family, or unrelated persons living together whose adjusted income is at or below eighty 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.

E.    “Moderate-income household” means a single person, family, or unrelated persons living together whose adjusted income is more than eighty percent but is at or below one hundred fifteen 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 one hundred percent, but at or below one hundred fifty percent, of the median family income adjusted for family size, for the county where the project is located.

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

G.    “Owner” means the property owner of record.

H.    “Permanent residential occupancy” means multi-unit 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 month. This excludes hotels and motels that predominately offer rental accommodation on a daily or weekly basis.

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

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

K.    “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, 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, recreating, and cultural activities in association with either commercial or office, or both, use.

(Ord. O2017-004, Added, 04/18/2017)

3.30.020 Residential target area, hearing on resolution.

A.    For the purpose of designating a residential targeted area or areas, the city council may adopt a resolution of intention to designate an area described in the resolution. The resolution must state the time and place of a hearing to be held by the city council to consider the designation of the area and may include such other information pertaining to the designation of the area as the city council determines to be appropriate to apprise the public of the action intended.

B.    The city council shall give notice of a hearing by publication of the notice once each week for two consecutive weeks, not less than seven days, nor more than thirty days before the date of the hearing in a paper having a general circulation in the city. The notice must state the time, date, place, and purpose of the hearing and generally identify the area proposed to be designated as a residential targeted area.

(Ord. O2017-004, Added, 04/18/2017)

3.30.030 Residential target area designation and standards.

A.    Criteria. Following a public hearing, with notice given pursuant to TMC 3.30.020, the city council may, in its sole discretion, designate one or more residential target areas. Each designated target area must meet the following criteria, as determined by the city council:

1.    The target area is located within an urban center;

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

3.    The providing of additional housing opportunity, including affordable housing, in the target area will assist in achieving one or more of the following purposes:

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

b.    Stimulate the construction of new multifamily housing within the target area; or

c.    Stimulate the rehabilitation of existing vacant and under-utilized buildings for multifamily housing.

In designating a residential target area, the city council may also consider other factors including, but not limited to: whether additional housing in the target area will attract and maintain a significant increase in the number of permanent residents; whether an increased residential population will help alleviate detrimental conditions and social liability in the target area; and whether an increased residential population in the target area will help to achieve the planning goals mandated by the Growth Management Act under RCW 36.70A.020.

B.    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.

(Ord. O2017-004, Added, 04/18/2017)

3.30.035 Residential target areas designated.

The following areas are designated as residential target areas for the multifamily tax exemption program (see Figures 3.30.035A, 3.30.035B, 3.30.035C and 3.30.035D):

A.    Area 1 – Capitol Boulevard Corridor. All of that portion of the city of Tumwater, Washington, zoned as Capitol Boulevard Community.

B.    Area 2 – Brewery District. The subdistricts of the brewery district called the Triangle, Bates North, Bates South, Deschutes, and the Knoll; and the properties historically associated with the Old Brewhouse, which includes properties north of Custer Way, east of the Deschutes River, south of the extension of Carlyon Avenue, located within the historic commercial zone district.

C.    Area 3 – Tumwater Town Center. All of that portion of the city of Tumwater, Washington, zoned as Town Center.

D.    Area 4 – Littlerock Road Subarea. All of that portion of the city of Tumwater, Washington, covered by the Littlerock Road Subarea Plan.

Figure 3.30.035A – Area 1 – Capitol Boulevard Corridor

Figure 3.30.035B – Area 2 – Brewery District

Figure 3.30.035C – Area 3 – Tumwater Town Center

Figure 3.30.035D – Area 4 – Littlerock Road Subarea

(Ord. O2019-023, Amended, 01/21/2020; Ord. O2017-004, Added, 04/18/2017)

3.30.040 Tax exemptions for multifamily housing in residential target areas authorized.

A.    Duration of Exemption. The value of improvements qualifying under Chapter 84.14 RCW and this chapter will be exempt from ad valorem property taxation, as follows:

1.    For eight successive years beginning January 1 of the year immediately following the calendar year of issuance of the certificate. The eight-year duration of exemption applies only for projects in the Area 1 – Capitol Boulevard Corridor and Area 2 – Brewery District residential target areas; or

2.    For twelve successive years beginning January 1 of the year immediately following the calendar year of issuance of the certificate, if the property otherwise qualifies for the exemption under Chapter 84.14 RCW and meets the conditions in this subsection. For the property to qualify for the twelve-year exemption under this subsection, the applicant must commit to renting or selling at least twenty percent of the multifamily housing units as affordable housing units to low- and moderate-income households, and the property must satisfy that commitment and any additional affordability and income eligibility conditions adopted by the city. In the case of projects intended exclusively for owner occupancy, the minimum requirement of this subsection may be satisfied solely through housing affordable to moderate-income households.

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. 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. 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.

(Ord. O2019-023, Amended, 01/21/2020; Ord. O2017-004, Added, 04/18/2017)

3.30.050 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 a residential target area as designated in TMC 3.30.030.

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 twelve months prior to submission of an application and must have one or more violations of the International Property Maintenance Code of the city of Tumwater. Applications for new construction cannot be submitted for vacant property upon which an occupied residential rental structure previously stood, unless a minimum of twelve 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 or as part of an urban development. A minimum of four new units must be constructed or at least four additional multifamily units must be added to existing occupied multifamily housing. Existing multifamily housing that has been vacant for twelve 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.    Proposed Completion Date. New construction multifamily housing and rehabilitation improvements must be completed within three 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, housing, and zoning codes, and any other applicable regulations in effect at the time the application is approved. The project must also comply with any other standards and guidelines adopted by the city council for the residential target area in which the project will be developed.

F.    At least fifty percent of the space in a new, converted, or rehabilitated multiple unit must be for permanent residential housing. In the case of existing occupied multifamily development, the multifamily housing must also provide for a minimum of four additional multifamily units. Existing multifamily vacant housing that has been vacant for twelve months or more does not have to provide additional units.

G.    The applicant must enter into a contract with city approved by city council under which the applicant agrees to the implementation of the development on terms and conditions satisfactory to the city council.

(Ord. O2017-004, Added, 04/18/2017)

3.30.060 Application procedure.

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

A.    Prior to April 1 of any year, file with the director the required application along with the required fees as established by resolution of the city council.

B.    A complete application shall include:

1.    A completed city of Tumwater application form setting forth the grounds for the exemption;

2.    Preliminary floor and site plans of the proposed project;

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

4.    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 twelve months prior to filing the application and shall secure from the city verification of property noncompliance with the city’s applicable building or housing codes.

(Ord. O2017-004, Added, 04/18/2017)

3.30.070 Application review and issuance of conditional certificate.

A decision to approve or deny an application shall be made within ninety calendar days of receipt of a complete application.

A.    Approval. The director may approve the application if he/she finds that:

1.    A minimum of four new units are being constructed or in the case of occupied rehabilitation or conversion a minimum of four additional multifamily units are being developed;

2.    If applicable, the proposed multi-unit housing project meets the affordable housing requirements as described in RCW 84.14.020;

3.    The proposed project is or will be, at the time of completion, in conformance with all local plans and regulations that apply at the time the application is approved;

4.    The owner has complied with all standards and guidelines adopted by the city under this chapter; and

5.    The site is located in a residential targeted area of an urban center that has been designated by the city council in accordance with procedures and guidelines of this chapter.

B.    Before application approval the applicant shall enter into a contract with the city, approved by the city council, regarding the terms and conditions of the project. After city council approval of the contract, and director approval of the application, 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.

C.    Denial. The director shall state in writing the reasons for denial and shall send notice to the applicant at the applicant’s last known address within ten calendar days of the denial. An applicant may appeal a denial to the city council within thirty days after receipt of the denial. The appeal before the governing authority must be based upon the record made before the administrative official with the burden of proof on the applicant to show that there was no substantial evidence to support the administrative official’s decision. The decision of the governing body in denying or approving the application is final.

(Ord. O2017-004, Added, 04/18/2017)

3.30.080 Extension of conditional certificate.

The conditional certificate and time for completion of the project may be extended by the director for a period not to exceed a total of twenty-four consecutive months. The applicant must submit a written request stating the grounds for the extension, accompanied by any required fees as established by a resolution of the city council. 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.

(Ord. O2017-004, Added, 04/18/2017)

3.30.090 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 must file with the director the following:

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.    If applicable, a statement that the project meets the affordable housing requirements as described in RCW 84.14.020; and

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

Within thirty calendar days of receipt of all materials required for a final certificate, the director shall determine whether the specific improvements, and the affordability of the units, satisfy the requirements of the contract, application, and this chapter.

(Ord. O2017-004, Added, 04/18/2017)

3.30.100 Issuance of final certificate.

If the director determines that the project has been completed in accordance with this chapter and the contract between the applicant and the city has been completed within the authorized time period, the city shall, within ten calendar days of the expiration of the thirty-day review period provided in TMC 3.30.090, file a final certificate of tax exemption with the Thurston County assessor.

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

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

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

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

Within fourteen calendar days of receipt of the director’s denial of a final certificate, the applicant may file an appeal with the city’s hearing examiner, as provided in TMC Chapter 2.58.

(Ord. O2017-004, Added, 04/18/2017)

3.30.110 Annual compliance review.

Within thirty calendar days after the first anniversary of the date of filing the final certificate of tax exemption and each year thereafter for the tax exemption period, the property owner shall file a notarized declaration with the director indicating the following:

A.    A statement of occupancy and vacancy of the multifamily units during the previous year;

B.    A certification that the property continues to be in compliance with the contract with the city and this chapter and, if applicable, that the property has been in compliance with the affordable housing requirements as described in RCW 84.14.020 since the date of the approved certificate;

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

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

E.    City staff may also conduct on-site verification of the declaration.

F.    Failure to submit the annual declaration shall result in a review of the exemption per TMC 3.30.120.

(Ord. O2017-004, Added, 04/18/2017)

3.30.120 Cancellation of tax exemption.

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

A.    Effect of Cancellation. If a tax exemption is canceled due to a change in use or other noncompliance, the provisions of RCW 84.14.110(1) will apply.

B.    Notice and Appeal. Upon determining that a tax exemption is to be canceled, the director shall notify the property owner by mail, return receipt requested. The property owner may appeal the determination by filing a notice of appeal with the clerk within thirty calendar days, specifying the factual and legal basis for the appeal. The hearing examiner will conduct a hearing at which all affected parties may 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. An aggrieved party may appeal the hearing examiner’s decision to the Thurston County superior court.

(Ord. O2017-004, Added, 04/18/2017)

3.30.130 Application deadline and program expiration.

A.    Applications for the multifamily housing tax exemption program will not be accepted after December 31, 2026. Applications for final certificate of tax exemption will not be accepted after December 31, 2029.

B.    The multifamily housing tax exemption program, this chapter, shall expire March 31, 2042.

(Ord. O2017-004, Added, 04/18/2017)