Chapter 3.58 MULTIFAMILY HOUSING TAX EXEMPTION

Chapter 3.58
MULTIFAMILY HOUSING TAX EXEMPTION

Sections:

3.58.010 Purpose.

3.58.020 Definitions.

3.58.030 Residential target area designation and standards.

3.58.040 Tax exemptions for multifamily housing in residential target areas.

3.58.050 Town center core and east village district – Standards and guidelines.

3.58.060 Waterfront commercial district – Standards and guidelines.

3.58.070 E Street district – Standards and guidelines.

3.58.080 Sunset of exemption for applications for conditional certificates.

3.58.010 Purpose.

It is the purpose of this chapter to encourage new private multifamily housing development and redevelopment within designated urban centers to accommodate future population growth, and provide places to live close to employment, shopping, entertainment, and transit services. (Ord. 1799 § 1 (Exh. A), 2016)

3.58.020 Definitions.

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

(2) “Growth Management Act” means Chapter 36.70A RCW.

(3) “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.

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

(5) “Permanent residential occupancy” means multifamily housing that provides either rental or owner occupancy for a period of at least one month. This excludes hotels and motels that predominately offer rental accommodation on a daily or weekly basis.

(6) “Rehabilitation improvements” means modifications to existing structures that are vacant for 12 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.

(7) “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.

(8) “Urban center” means a compact identifiable district containing several business establishments, adequate public facilities, and a mixture of uses and activities, where residents may obtain a variety of products and services. (Ord. 1799 § 1 (Exh. A), 2016)

3.58.030 Residential target area designation and standards.

(1) Criteria. Following a public hearing, 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:

(a) The target area is located within an urban center.

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

(i) Encourage increased residential opportunities within the target area; or

(ii) Stimulate the construction of new multifamily housing and/or the rehabilitation of existing vacant and under-utilized buildings for multifamily housing; or

(iii) Where appropriate, stimulate the new construction or rehabilitation of owner-occupied multifamily housing, or the conversion of existing vacant and underutilized multifamily rental units to owner-occupied multifamily housing as such property redevelops.

(d) 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 an increase in the number of permanent residents; whether an increased residential population will help alleviate detrimental conditions 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. 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.

(e) When designating a residential target area, the city council shall give notice of a hearing to be held on the matter and that notice shall be published once each week for two consecutive weeks, not less than seven days nor more than 30 days before the date of the hearing. The notice must state the time, date, place and purpose of the hearing and generally identify the area proposed to be designated.

(2) Target Area Standards and Guidelines. After designation of a residential target area, the city council shall adopt and implement standards and guidelines for both new construction and rehabilitation, including the application process and procedures and requirements that address demolition of existing structures and site utilization. The decision making process must include findings of compliance with RCW 84.14.060. The city council may also adopt guidelines which include parking, height, density, environmental impact, home ownership, public benefit features, compatibility with the surrounding property and such other amenities as will attract and keep permanent residents and will properly enhance the livability of the residential target area.

The required amenities shall be relative to the size of the proposed project and the tax benefit to be obtained.

(3) Designated Target Areas. The “following residential target areas” are designated in the city of Washougal, as shown in Figures 3.58-1 through 3.58-3 attached to the ordinance codified in this chapter:

(a) Town center core and east village district (Figure 3.58-1).

(b) Waterfront commercial district (Figure 3.58-2).

3.58.040 Tax exemptions for multifamily housing in residential target areas.

(1) Intent. Limited eight-year exemption from ad valorem property taxation for multifamily housing in urban centers is intended to:

(a) Encourage increased residential opportunities within urban centers designated by the city council as residential target areas;

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

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

(d) Encourage new construction or rehabilitation of owner-occupied multifamily housing where identified as desirable.

(2) Duration of Exemption. The value of improvements qualifying under this chapter will be exempt from ad valorem property taxation for eight successive years where all applicable criteria under this chapter are met. The duration of exemption shall be measured beginning January 1st of the year immediately following the calendar year after issuance of the final certificate of tax exemption.

(3) Limits on Exemption. The exemption does not apply to the value of land or 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.

(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 a residential target area, as designated in WMC 3.58.030.

(b) Rehabilitated or Demolished Housing – Tenant Relocation Required. Property proposed to be rehabilitated or demolished must fail to comply with one or more standards of the applicable city adopted state or local building or housing codes. If the property proposed to be rehabilitated or demolished is not vacant, the applicant must provide each existing tenant housing of comparable size, quality, and price and a reasonable opportunity to relocate.

(c) Size. The project must include at least four units of multifamily housing within a residential structure or as part of a mixed-use 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 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. More specific sizing requirements may be established for each residential target area.

(d) Permanent Residential Housing. All of the space designated for multifamily housing must be provided for permanent residential occupancy, as defined in WMC 3.58.020.

(e) Proposed Completion Date. New construction multifamily housing and rehabilitation improvements must be scheduled to be completed within three years from the date of approval of the application.

(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 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.

(5) Application Procedure. A property owner who wishes to propose a project for a tax exemption shall complete the following procedures:

(a) File with the city’s community development department the required application forms provided by the city and the required fees. The initial application fee to the city shall consist of a base fee of $300.00, plus $50.00 per multifamily unit, up to a maximum total fee to the city of $1,000. An additional $100.00 fee to cover the Clark County assessor’s administrative costs shall also be paid to the city. If the city denies the application, the city will retain that portion of the fee attributable to its own administrative costs and refund the balance to the applicant.

(b) A complete application shall include:

(i) A completed city of Washougal multifamily limited tax exemption application form setting forth the grounds for the exemption;

(ii) Preliminary floor, building elevation and site plans of the proposed project demonstrating compliance with the guidelines and standards of this chapter;

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

(iv) Verification by oath or affirmation of the information submitted; and

(v) For rehabilitation or demolition projects, the applicant shall secure from the city verification of property noncompliance with the city’s minimum building or housing code, and when applicable pursuant to subsection (4)(b) of this section, shall also submit an affidavit that existing dwelling units have been unoccupied for a period of 12 months prior to filing the application.

(6) 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. The director shall issue a decision to approve or deny an application within 90 days of receipt of a complete application.

(a) Approval. The director may approve the application upon finding that the application meets all eligibility criteria specified in this section. If an application is approved, the applicant shall enter into a contract with the city, subject to approval by the city council in the form of a resolution, regarding the terms and conditions of the project. Upon council approval of the contract, the director shall issue a conditional certificate of acceptance of tax exemption. The conditional certificate shall expire three years from the date of approval unless an extension is granted as provided in this chapter.

(b) Denial. If an applicant 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 within 30 days of receipt of notice. The appeal before the city council shall be based on the record. On appeal, the director’s decision will be upheld unless the applicant can show that there is no substantial evidence on the record to support the director’s decision. The city council’s decision on appeal will be final.

(7) 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 $100.00 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 applicant;

(b) The applicant 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.

(8) Application for Final Certificate.

(a) 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 for the newly constructed or rehabilitated multifamily housing, the applicant may request a final certificate of tax exemption. The applicant must file with the city’s community development department the following:

(i) A description of the completed work and a statement that the rehabilitation improvements or new construction on the owner’s property qualify the property for limited exemption; and

(ii) A statement that the work was completed within the required three-year period plus any authorized extension.

(b) Within 30 days of receipt of all materials required for a final certificate, the director shall determine which specific improvements satisfy the requirements, and whether the work completed is consistent with the application and the contract approved by the city and is qualified for a limited tax exemption under this chapter.

(9) Issuance of Final Certificate.

(a) Review and Approval. If, after reviewing the application for final certificate, 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, generally within 10 days, file a final certificate of tax exemption with the Clark County assessor.

(b) Denial. The director shall notify the applicant in writing that a final certificate will not be filed if the director determines that:

(i) The improvements were not completed within the authorized time period;

(ii) The improvements were not completed in accordance with the owner’s application or the contract between the applicant and the city; or

(iii) The owner’s property is otherwise not qualified under this chapter.

(c) Appeal. Within 14 days of receipt of the director’s denial of a final certificate, the applicant may file an appeal with the city council. The appeal before the city council shall be based on the record. On appeal, the director’s decision will be upheld unless the applicant can show that there is no substantial evidence on the record to support the director’s decision. The city council’s decision on appeal will be final.

(10) Annual Compliance Review. Thirty days after the first anniversary of the date of filing the final certificate of tax exemption and each year thereafter, for the duration of the tax exemption, the owner of the rehabilitated or newly constructed property shall file a notarized declaration with the director that includes the following:

(a) A statement identifying the total number of occupied and vacant multifamily units receiving a property tax exemption;

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

(c) A description of any improvements or changes to the property constructed after the issuance of the certificate of tax exemption.

(d) The property owner must maintain records supporting this declaration and those records and the multifamily units are subject to inspection by the city. Failure to submit the annual declaration or maintain adequate records may result in the tax exemption being canceled.

(11) Annual Report. By December 31st of each year the city has any outstanding limited multifamily tax exemptions the city shall submit a report to the state providing the information required by Chapter 84.14 RCW.

(12) Cancellation of Tax Exemption. If the director determines the owner is not complying with the terms of the contract, 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 or otherwise discontinues compliance with this chapter, the owner must notify the director and the Clark County assessor within 60 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 Clark County assessor may impose an additional tax on the property, together with the interest and penalty, and a priority lien may be placed on the land, pursuant to Chapter 84.14 RCW.

(b) Notice and Appeal. Upon determining that a tax exemption is to be canceled, the director shall notify the property owner by certified mail. 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 city council will conduct a hearing at which all affected parties may be heard and all competent evidence received. The city council will affirm, modify, or repeal the decision to cancel the exemption based on the evidence received. An aggrieved party may appeal the city council’s decision to the Clark County superior court. (Ord. 1799 § 1 (Exh. A), 2016)

3.58.050 Town center core and east village district – Standards and guidelines.

In approving a tax exemption under WMC 3.58.040 and in addition to compliance with the requirements of the underlying zone and design and development standards under WMC Titles 17 and 18, the following standards and guidelines shall be applicable within the town center core and east village district:

(1) Standards and Guidelines.

(a) Size. The project shall include at least four new or additional units of multifamily housing located in a minimum two-story building.

(b) Unit Type. All residential units within the project shall contain private kitchen and bathroom facilities.

(c) Parking. All multifamily units regardless of the underlying zone shall include a minimum of one off-street parking space per unit, which shall be located on the property. All parking areas shall be screened from current and future state highways, public trails and walkways, and public and private streets by a landscape buffer consistent with the provisions of WMC Title 18 or an applicable development agreement. Parking areas adjacent to private streets that serve as access to parking drive aisles located on both sides of the private street are not subject to this requirement. Alternative parking screening may be approved as part of the contract agreement.

(d) Building Design. All buildings shall meet the design standards for the zoning district or applicable development agreement. Additionally, all exterior walls visible from current and future state highways, public and private streets, public trails and walkways, and internal vehicular and pedestrian ways shall not be blank walls, and shall incorporate window glazing and at least two of the following features: wood, stone, or metal. Variety of treatments is encouraged for different elevations and when there are multiple buildings in the project. Building elevations shall be approved as part of the contract agreement. Alternative exterior wall elevation features may be approved as part of the contract agreement.

(e) Mixed-Use, General Requirements. The project shall consist of a vertical mixed-use building or buildings, or shall consist of a master-planned mixed-use development.

(f) Vertical Mixed-Use Projects. Each building shall include at least four new or additional units of multifamily housing located in a minimum two-story mixed-use building. The nonresidential mixed-use shall occupy at a minimum the ground floor along the street frontage with a depth of at least 30 feet for any building in the project. This requirement may be modified by the contract agreement.

(g) Master-Planned Mixed-Use Developments. The project shall include at least four new or additional units of multifamily housing located in a master-planned mixed-use site which shall include a minimum of one-third of the site area set aside for commercial development, which shall be limited to commercial buildings and related commercial parking. Parking areas that serve both commercial and residential uses shall not be counted toward the one-third requirement. Residential buildings shall be a minimum of two stories. Vertical mixed-use buildings are permitted in the commercial area provided the ground floor is nonresidential. The project shall contain a minimum 15 percent landscape area. Residential and commercial areas shall be part of a cohesive site plan, to include vehicular and pedestrian connectivity, pursuant to contract agreement. (Ord. 1799 § 1 (Exh. A), 2016)

3.58.060 Waterfront commercial district – Standards and guidelines.

(1) Standards and Guidelines.

(a) Size. The project shall include at least four new or additional units of multifamily housing located in a minimum two-story building.

(b) Unit Type. All residential units within the project shall contain private kitchen and bathroom facilities.

(e) Mixed-Use, General Requirements. The project shall consist of a vertical mixed-use building or buildings, or shall consist of a master-planned mixed-use development.

3.58.070 E Street district – Standards and guidelines.

(1) Standards and Guidelines.

(a) Size. The project shall include at least four new or additional units of multifamily housing located in a minimum two-story building.

(b) Unit Type. All residential units within the project shall contain private kitchen and bathroom facilities.

Alternative parking screening may be approved as part of the contract agreement.

(e) Mixed-Use, General Requirements. The project shall consist of a vertical mixed-use building or buildings, or shall consist of a master-planned mixed-use development.

3.58.080 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, 2026, unless extended by city council action. Incomplete applications for conditional certificates as of June 30, 2026, shall be returned to owners. Notwithstanding the above, the city shall process (1) pending complete applications for a conditional certificate and (2) applications for extension of the conditional certificate or final certificate received after June 30, 2026, 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. 1941 § 1, 2021; Ord. 1799 § 1 (Exh. A), 2016)