Chapter 3.43
MULTIFAMILY HOUSING PROPERTY TAX EXEMPTION

Sections:

3.43.010    Purpose.

3.43.020    Definitions.

3.43.030    Tax exemption.

3.43.040    Residential targeted areas – Criteria – Designation – Rescission.

3.43.050    Project eligibility.

3.43.060    Application procedure – Fee.

3.43.070    Application review and issuance of conditional certificate.

3.43.080    Final certificate – Application –Issuance – Denial and appeal.

3.43.090    Annual compliance review –Cancellation of exemption.

3.43.100    City’s reporting requirements.

3.43.010 Purpose.

As provided for in Chapter 84.14 RCW, the purpose of this chapter is to provide limited eight-year exemptions from ad valorem property taxation for qualified new multifamily housing located in designated residential targeted areas. (Ord. 664 § 1, 2018)

3.43.020 Definitions.

(1) “City” means the City of Woodinville, Washington.

(2) “Director” means Director of the City’s Development Services Department, or of any other City office, department or agency that shall succeed to its functions with respect to this chapter, or the Director’s designee.

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

(4) “Multiple-unit housing” or “multifamily housing” means a building having four or more dwelling units not designed or used as transient accommodations (such as hotels or motels) and designed for permanent residential occupancy. Multifamily units may result from new construction or rehabilitation or conversion of vacant, underutilized, or substandard buildings to multifamily housing.

(5) “Permanent residential occupancy” means multiunit 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 predominantly offer rental accommodation on a daily or weekly basis.

(6) “Rehabilitation improvements” means modifications to existing structures vacant for 12 months or longer that are made to achieve a condition of substantial compliance with existing building codes, or modifications to existing occupied structures which increase the number of multifamily housing units.

(7) “Residential targeted area” means an area within an urban center or urban growth area that has been so designated by the City Council pursuant to this chapter.

(8) “Substantial compliance” means compliance with local building or housing code requirements that are typically required for rehabilitation as opposed to new construction. (Ord. 664 § 1, 2018)

3.43.030 Tax exemption.

The value of improvements qualifying under this chapter shall be exempt from ad valorem property taxation for eight successive years beginning January 1st of the year immediately following the calendar year after issuance of the final certification of tax exemption.

The exemption does not apply to the value of land or to the value of non-housing-related improvements not qualifying under this chapter, nor does the exemption apply to increases in assessed valuation of land or nonqualifying improvements. The exemption does not apply to increases made by lawful order of the King County Board of Equalization, Washington State Department of Revenue, State Board of Tax Appeals, or King County, to a class of property throughout the County or a specific area of the County to achieve uniformity of assessment or appraisal as required by law. 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. (Ord. 664 § 1, 2018)

3.43.040 Residential targeted areas – Criteria – Designation – Rescission.

(1) Following notice and a public hearing as prescribed in RCW 84.14.040, the City Council may designate one or more residential targeted areas upon a finding by the City Council, in its sole discretion, that the residential targeted area meets the following criteria:

(a) The residential targeted area is within an urban center;

(b) The residential targeted area lacks 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 such places to live were available;

(c) The providing of additional housing opportunity in the area will assist in achieving one or more of the stated goals of Chapter 84.14 RCW – specifically, encouraging increased residential opportunities within the targeted area, stimulating the construction of new multifamily housing, and encouraging the rehabilitation of existing vacant and underutilized buildings for multifamily housing.

(2) The City Council may, by ordinance, amend or rescind the designation of the residential targeted area at any time pursuant to the same procedure set forth in this chapter for original designation.

(3) The following described area, comprised of approximately 159 acres, which is shown as Area A on the map attached to Ordinance No. 679 as Exhibit A and incorporated herein by reference, meets the criteria of this chapter on residential targeted areas and is designated as such: The area bounded on the west by 131st Avenue NE; on the south by NE 171st Street; on the east by 140th Avenue NE; and on the north by NE 175th St.; together with the area bounded on the west by 132nd Avenue NE; on the south by NE 175th Street; on the east by 140th Avenue NE; and on the north by Woodinville-Snohomish Road NE.

(4) The following described area, comprised of approximately 102 acres, which is shown as Area B on the map attached to Ordinance No. 679 as Exhibit A and incorporated herein by reference, meets the criteria of this chapter on residential targeted areas and is designated as such: The area bounded on the west by 140th Avenue NE; on the south by NE 171st Street; on the east by the approximate north-south alignment of NE Woodinville Duvall Road; and on the north by a projection of the existing alignment of NE 185th Street.

(5) The following described area, comprised of approximately 14 acres, which is shown as Area C on the map attached to Ordinance No. 679 as Exhibit A and incorporated herein by reference, meets the criteria of this chapter on residential targeted areas and is designated as such: The area bounded on the southwest by a line running parallel and approximately 100 feet southwest of NE 173rd Place; on the southeast by approximately 128th Place NE; on the northeast by the leg of the Eastside Rail Corridor running directly parallel to the northeast of NE Woodinville Drive; and on the northwest by the western margin of the electric transmission corridor crossing NE 173rd Place approximately at its junction with 124th Avenue NE. (Ord. 679 § 1, 2019; Ord. 664 § 1, 2018)

3.43.050 Project eligibility.

The property owner applying under this chapter must meet the following requirements:

(1) The new or rehabilitated multiple-unit housing must be located in a residential targeted area as designated by the City.

(2) The multiple-unit housing must meet guidelines as adopted by the governing authority that may include height, density, public benefit features, number and size of proposed development, parking, income limits for occupancy, limits on rents or sale prices, and other adopted requirements indicated necessary by the City.

(3) The new, converted, or rehabilitated multiple-unit housing must provide for a minimum of 50 percent of the space for permanent residential occupancy. 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 12 months or more does not have to provide additional multifamily units.

(4) New construction multifamily housing and rehabilitation improvements must be completed within three years from the date of approval of the application.

(5) Property proposed to be rehabilitated must fail to comply with one or more standards of the applicable State or local building or housing codes on or after July 23, 1995. If the property proposed to be rehabilitated is not vacant, an applicant must provide each existing tenant housing of comparable size, quality, and price and a reasonable opportunity to relocate.

(6) The applicant must enter into a contract with the City approved by the City Council, under which the applicant has agreed to the implementation of the development on terms and conditions satisfactory to the City Council, including compliance with this chapter.

(7) The project must:

(a) Have as a component the renovation and preservation of facilities listed on the National Register of Historic Places; and/or

(b) Provide affordable housing as provided herein.

(i) For each occupancy type identified in Table 3.43.050, the project must meet one of the identified combinations of minimum percentage of affordable units and minimum affordability level by reference to percentage of the King County median household income as specified in subsection (7)(b)(ii) of this section.

Table 3.43.050

Occupancy Type

Percentage of Affordable Units

Affordability Level

Owner-occupied

8%

50%

20%

80%

Renter-occupied

12%

50%

20%

70%

(ii) As used in this subsection (7)(b), “affordable” means housing reserved for occupancy by eligible households and affordable to households whose household annual income meets the applicable percentage of the King County median household income identified in Table 3.43.050, adjusted for household size, as determined by the United States Department of Housing and Urban Development (HUD), and no more than 30 percent of monthly household income is paid for monthly housing expenses:

(A) In the event that HUD no longer publishes median income figures for King County, the City may use another method to determine the King County median income, adjusted for household size.

(B) “Monthly housing expenses” includes rent, parking and an appropriate utility allowance for renter-occupied dwelling units. It includes mortgage, mortgage insurance, property taxes, property insurance, parking, and homeowners’ dues for owner-occupied dwelling units.

(C) If the percentage of affordable units in the project required to qualify for an exemption pursuant to this subsection (7)(b) is a fraction, then the number of required affordable units shall be rounded up to the next whole number (unit) if the fraction of the whole number is at least 0.50.

(iii) For any affordable units required in this section, the following shall apply:

(A) The mix and configuration of affordable units (e.g., very small units, studio, one bedroom, two bedroom, etc.) at each affordability level shall be substantially proportional to the mix and configuration of the total housing units in the project unless otherwise approved by the Director.

(B) The location of the affordable housing units shall be approved by the Director, with the intent that they generally be intermingled with all other units in the development.

(C) The quality of construction and finish materials in those affordable units used to qualify for the exemption shall be the same as other housing units in the project.

(iv) If a project provides affordable housing as described in this subsection (7)(b), prior to issuing a certificate of occupancy, an agreement in a form acceptable to the City Attorney that addresses price restrictions, eligible household qualifications, long-term affordability, and any other applicable topics of the affordable housing units shall be recorded with the King County Recorder’s Office. This agreement shall be a covenant running with the land and shall be binding on the assigns, heirs, and successors of the applicant. Housing units identified for households with household annual income restrictions that are provided under this section shall continue to be made available to households with the identified household annual income restrictions for a minimum of 50 years from the date of initial owner occupancy for ownership of affordable housing units and for the life of the project for rental affordable housing units.

(8) The project shall be designed in a manner generally consistent with the City’s Downtown Vision and Illustrative Guide.

(9) The project shall be designed to meet the LEED Certified Standard or higher, as established by the U.S. Green Building Council, unless the City Council specifically grants the project an exemption from this requirement.

(10) No application may result in the net loss of existing affordable housing which receives housing assistance through Federal low or moderate income housing programs (e.g., HUD Section 8 program). (Ord. 679 § 2, 2019; Ord. 664 § 1, 2018)

3.43.060 Application procedure – Fee.

An owner of property seeking tax incentives under this chapter must complete the following procedures:

(1) In the case of rehabilitation or where demolition or new construction is required, the owner must secure from the City verification of property noncompliance with applicable building and housing codes before commencement of rehabilitation improvements or new construction.

(2) In the case of new and rehabilitated multifamily housing, the owner must apply to the City on forms adopted by the City Council. The application shall contain such information as the Director may deem necessary or useful, and shall include:

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

(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 property ceases to be eligible for an exemption under this chapter;

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

(e) The application must be accompanied by the application fee.

(f) 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. (Ord. 664 § 1, 2018)

3.43.070 Application review and issuance of conditional certificate.

The Director shall approve or deny an application within 90 days after receipt of the application. The Director may approve an application which he or she determines to comply with the requirements of this chapter and where the proposed project is, or will be at the time of completion, in conformance with all approved plans, and all applicable requirements of the Woodinville Municipal Code or other applicable requirements or regulations in effect at the time the application is approved.

If the application is approved, the City shall issue the owner of the property a conditional certificate of acceptance of tax exemption. The certificate shall contain a statement by the Director or designee that the property has complied with the requirements of this chapter.

If the application is denied, the Director or his designee shall state in writing the reasons for denial and send the notice to the applicant at the applicant’s last known address within 10 days of the denial. An applicant may appeal the denial to the City Council within 30 days after receipt of the denial. The appeal before the City Council shall be based upon the record made before the Director with the burden of proof on the applicant to show that there was no substantial evidence to support the Director’s decision. The decision of the City Council in denying or approving the application is final. (Ord. 664 § 1, 2018)

3.43.080 Final certificate – Application –Issuance – Denial and appeal.

(1) Upon completion of rehabilitation or new construction for which an application for a limited tax exemption under this chapter has been approved and after issuance of the certificate of occupancy, the owner must file with the City the following:

(a) A statement of the amount of rehabilitation or construction expenditures made with respect to each housing unit and the composite expenditures made in the rehabilitation or construction of the entire property;

(b) A description of the work that has been completed and a statement that the rehabilitation improvements or new construction on the owner’s property qualify the property for limited exemption under this chapter;

(c) A statement that the work (including renovation and preservation of facilities listed on the National Register of Historic Places if such is relied upon to satisfy the requirements of WMC 3.43.050(7)) has been completed within three years of the issuance of the conditional certificate of tax exemption or any approved extension; and

(d) Any additional information requested by the City.

(2) Within 30 days after receiving the statements specified above, the City shall determine 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. The City shall also determine which specific improvements completed meet the requirements and required findings.

(3) If the rehabilitation, conversion, or construction is completed within three years of the date the application for a limited tax exemption is filed under this chapter, or within an authorized extension of this time limit, and the Director determines that improvements were constructed consistent with the application and other applicable requirements and the owner’s property is qualified for a limited tax exemption under this chapter, the City shall file the certificate of tax exemption with the County Assessor within 10 days of the expiration of the 30-day period provided above.

(4) The Director shall notify the applicant that a certificate of tax exemption is not going to be filed if the Director determines that:

(a) The rehabilitation or new construction was not completed within three years of the application date, or within any authorized extension of the time limit;

(b) The improvements were not constructed consistent with the application or other applicable requirements; or

(c) The owner’s property is otherwise not qualified for limited exemption under this chapter.

(5) If the Director finds that construction or rehabilitation of multiple-unit housing was not completed within the required time period due to circumstances beyond the control of the owner and that the owner has been acting and could reasonably be expected to act in good faith and with due diligence, the City Council or Director may extend the deadline for completion of construction or rehabilitation for a period not to exceed 24 consecutive months.

(6) Appeal. The owner may appeal a decision by the Director that the owner is not entitled to a certificate of tax exemption to the Hearing Examiner in accordance with Chapter 2.27 WMC. The owner may appeal a decision by the Hearing Examiner that the owner is not entitled to a certificate of tax exemption in Superior Court under RCW 34.05.510 through 34.05.598, if the appeal is filed within 30 days of notification by the City to the owner of the decision being challenged. (Ord. 664 § 1, 2018)

3.43.090 Annual compliance review – Cancellation of exemption.

(1) Thirty days after the anniversary of the date of the certificate of tax exemption and each year for the tax exemption period, the owner of the rehabilitated or newly constructed property must file with the Director or designee an annual report indicating the following:

(a) A statement of occupancy and vacancy of the rehabilitated or newly constructed property during the 12 months ending with the anniversary date;

(b) A certification by the owner that the property has not changed use;

(c) A description of changes or improvements constructed after issuance of the certificate of tax exemption;

(d) The total monthly rent of each unit;

(e) The income of each household at the time of initial occupancy and their current income;

(f) The value of the tax exemption for the project; and

(g) Any additional information requested by the City in regards to the units receiving a tax exemption.

(2) In addition, at the time of submittal of the annual report, the owner shall pay to the City a fee in an amount necessary to cover the City’s administrative costs for collecting and reporting information to the Washington Department of Commerce as required by RCW 84.14.100.

(3) If the Director discovers that a portion of the property is changed or will be changed to a use that is other than residential or that housing or amenities no longer meet the requirements as previously approved or agreed upon by contract between the City and the owner and that the multifamily housing, or a portion of the housing, no longer qualifies for the exemption, the tax exemption will be cancelled and additional taxes, interest and penalties imposed pursuant to State law. Upon determining that a tax exemption shall be cancelled, the Director shall notify the owner by certified mail, return receipt requested. The owner may appeal the determination by filing a notice of appeal with the City Clerk within 30 days, which must specify the factual and legal basis on which the determination of cancellation is alleged to be erroneous. The appeal may be heard by the Hearing Examiner. An aggrieved party may appeal the decision of the Hearing Officer to the Superior Court under RCW 34.05.510 through 34.05.598. (Ord. 679 § 3, 2019; Ord. 664 § 1, 2018)

3.43.100 City’s reporting requirements.

The City shall comply with the reporting requirements of RCW 84.14.100(2). (Ord. 664 § 1, 2018)