Chapter 3.96
MULTIFAMILY TAX EXEMPTION1
Sections
3.96.050 Application procedure.
3.96.060 Application review – Issuance of conditional certificate – Denial – Appeal.
3.96.070 Amendment of the MFTE agreement.
3.96.080 Extension of conditional certificate.
3.96.090 Final certificate – Application – Issuance – Denial – Appeal.
3.96.100 Exemption – Duration – Limitations.
3.96.110 Annual certification – Cancellation of exemption.
3.96.120 Appeals to the hearing examiner.
3.96.010 Findings of fact.
This chapter shall be known as the multifamily tax exemption ordinance (hereinafter MFTE). The findings of fact set forth in Exhibit 1, attached to the ordinance codified in this chapter and incorporated by this reference, are adopted in full by the city council in support of its decision to designate areas of the Pacific Ridge neighborhood as illustrated in DMMC 3.96.040, Figure 1, as a residential target area as required by chapter 84.14 RCW. [Ord. 1540 § 1, 2012: Ord. 1457 § 1, 2009.]
3.96.020 Purpose.
The purpose of this chapter is to establish the criteria for allowing an MFTE and to achieve the following purposes:
(1) To achieve the purposes and goals established by RCW 84.14.007;
(2) To accomplish the planning goals required under the Growth Management Act, chapter 36.70A RCW, as implemented by Des Moines’ comprehensive plan;
(3) To encourage additional housing in certain areas to support investment in public transit projects. [Ord. 1457 § 2, 2009.]
3.96.030 Definitions.
In construing the provisions of this chapter, the definitions set forth in RCW 84.14.010, now or hereafter amended, shall apply, unless modified by this section. The following definitions shall also apply:
(1) “Assessor” means the King County assessor.
(2) “Multifamily tax exemption” (hereinafter “MFTE”) shall refer to the tax exemption allowed pursuant to this chapter.
(3) “Project” is the development that will occur on property where the MFTE is sought.
(4) “Residential target area” (hereinafter “RTA”) means the area within the identified urban center that has been designated by the city council as a targeted area in accordance with chapter 84.14 RCW. [Ord. 1457 § 3, 2009.]
3.96.040 Project eligibility.
To be eligible for the MFTE the property sought to be exempted shall satisfy all of the following requirements:
(1) The property shall be located within the RTA area, which is the area within the Pacific Ridge neighborhood south of South 216th Street.
(2) The MFTE shall only be available for a maximum of 3,000 residential units or 10 years after the approval date of Ordinance No. 1457, whichever occurs first.
(3) The property sought to be exempted shall be developed in a manner that furthers the city’s goals and objectives for the Pacific Ridge neighborhood in the Des Moines comprehensive plan, the Pacific Ridge neighborhood improvement plan and integrated draft environmental impact statement, and DMMC 18.31.010 as adopted or subsequently amended.
(4) The project sought to be exempted must be multifamily housing within a residential structure or as part of a mixed use development consistent with the following requirements:
(a) Building(s) shall be a minimum of 50 feet in height as calculated by DMMC 18.31.090(7)(b).
(b) Building(s) shall contain a minimum of 60 residential units.
(c) A minimum of 50 percent of the space within such residential structure or mixed use building shall be for permanent residential occupancy.
(5) The property owner(s) shall be required to have 24-hours-a-day/seven-days-a-week on-site property management by a professional management company with a minimum of five years of experience in providing property management for large-scale residential projects. The property owner(s) shall also be required to provide 24-hours-a-day/seven-days-a-week private security on site, to include on-site security offices, office space for public safety use, and video camera monitoring.
(6) The property sought to be exempted shall be developed in a manner that increases or preserves property valuation, and the development of the property must represent an increased investment in the property that results in an increase in the overall property values in the area.
(7) The taxes collected during the MFTE period shall be sufficient to cover the city’s costs required to provide necessary services to the residents of the property sought to be exempted. If the city determines that taxes collected do not cover the city’s costs required to provide necessary services to the residents of the property sought to be exempted, the property owner(s) shall make an annual payment in lieu of taxes to cover the estimated difference.
(8) The project shall comply with all applicable Des Moines Zoning Code, land use regulations, and other requirements, including those contained in Titles 12, 14, 16, 17, and 18 DMMC.
(9) Construction of any project approved with an MFTE shall be completed within three years from the date of approval of the MFTE by city council as provided in DMMC 3.96.060. [Ord. 1550 § 1, 2012: Ord. 1540 § 2, 2012: Ord. 1457 § 4, 2009.]
3.96.050 Application procedure.
(1) The owner(s) of property seeking an MFTE under this chapter shall submit an application to the city, on a form provided by the city manager. The property owner(s) shall verify the information contained in the application by oath or affirmation. The application shall contain such information as the city manager 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.
(b) A statement from the property owner(s) acknowledging the potential tax liability for the property when the MFTE ends.
(c) The property owner(s) shall also provide the city with a declaration as to the owner’s interest in the property and identify any other parties with an ownership interest. If someone other than the property owner(s) is developing the property, then the owner shall declare that the developer has authority to speak on behalf of the property owner(s) and to bind the property owner(s) by any representations made by that developer.
(2) At the time of application, the property owner(s) shall pay to the city an initial application fee as established by the city manager to cover the cost of the city’s review of the application and the cost to hire an independent consultant to complete a financial analysis of the economic impacts if the application is approved by the city council. In addition, at the time of application, the property owner(s) shall pay to the city the fee required to cover the county assessor’s administrative costs. If the city council approves the application pursuant to DMMC 3.96.090, the city shall forward the fee for the county assessor’s administrative costs to the county assessor. If the city council denies the application pursuant to DMMC 3.96.090, the city shall refund the fee for the assessor’s administrative costs to the property owner(s).
(3) The city manager or designee shall notify the property owner(s) within 28 days of the application being filed if the application is not complete and shall identify what additional information is required before the application will be deemed complete. Within 14 days of receiving additional information, the city manager or designee shall notify the property owner(s) in writing if the application is incomplete, and what additional information is necessary. An application shall be deemed to be complete if the city manager or designee does not notify the property owner(s) in writing by the deadlines in this section that the application is incomplete; however, a determination of completeness does not preclude the city manager or designee from requiring additional information during the review process if more information is needed to evaluate the application according to the criteria in this chapter. Failure to complete the application will be deemed to be an abandonment of the application.
(4) The application shall be approved before, but no later than, the date the building or other construction permit is issued under Title 14 DMMC. [Ord. 1457 § 5, 2009.]
3.96.060 Application review – Issuance of conditional certificate – Denial – Appeal.
(1) The city council shall approve or deny an application under this chapter. If the application is approved, the applicant shall enter into an MFTE agreement with the city, subject to approval by resolution of the city council, regarding the terms and conditions of the project and eligibility for the MFTE. The city council’s resolution to approve the applicant’s contract with the city shall take place within 90 days of the city manager’s or designee’s receipt of the completed application. Upon city council approval of the contract, the city manager or designee shall execute the contract as approved by the city council, and 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 DMMC 3.96.080.
(2) If the application is denied, the city council shall state in writing the reasons for the denial and send notice of denial to the applicant’s last known address within 10 days of the denial.
(3) An applicant may ask for reconsideration if the city council denies the application by filing a request for reconsideration with the city clerk along with the fee as established by the city manager within 30 calendar days of the date of the denial. The reconsideration before the city council shall be based upon the existing record developed during the consideration of the application; provided, that the person requesting reconsideration may enter previously unavailable information that is more likely than not to affect the outcome of the decision. Except as provided in this chapter, the request for reconsideration shall otherwise be processed in conformance with chapter 4.12 DMMC. The city council’s decision on the reconsideration is final. [Ord. 1457 § 6, 2009.]
3.96.070 Amendment of the MFTE agreement.
(1) Any property owner(s) seeking amendment(s) to the MFTE agreement approved by the city council may do so by submitting a request in writing to the city manager at any time within three years of the date of the city council’s approval of the MFTE agreement.
(2) Amendments to the approved MFTE agreement shall be submitted to the city council for approval by resolution.
(3) Any property owner(s) seeking amendments to the approved MFTE agreement shall pay to the city an amendment application fee as established by the city manager.
(4) The date for expiration of the conditional certificate shall not be extended unless all the conditions for extension set forth in DMMC 3.96.080(1) and (2) are met and the city council specifically approves the extension. [Ord. 1457 § 7, 2009.]
3.96.080 Extension of conditional certificate.
The conditional certificate may be extended for a period not to exceed 24 consecutive months. The applicant shall submit a written request stating the grounds for the extension together with a fee as established by the city manager. The city may grant an extension if the city council determines that:
(1) The anticipated failure to complete construction within the required time period is due to circumstances beyond the control of the applicant;
(2) The applicant has been acting and could reasonably be expected to continue to act in good faith and with due diligence;
(3) All the conditions of the MFTE agreement between the applicant and the city will be satisfied upon completion of the project; and
(4) Construction of the building(s) that received the exemption is significantly underway. [Ord. 1457 § 8, 2009.]
3.96.090 Final certificate – Application – Issuance – Denial – Appeal.
(1) Upon completion of the construction as provided in the contract between the applicant and the city, and upon issuance of a certificate of occupancy, the applicant may request a final certificate of tax exemption. The applicant shall file with the city manager or designee such information as the city manager or designee may deem necessary or useful to evaluate eligibility for the final certificate, and shall include:
(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 MFTE.
(c) A statement that the work was completed within the required three-year period or any approved extension.
(2) Within 30 days of receipt of all materials required for the final certificate, the city manager or designee shall determine whether the work completed is consistent with the application and MFTE agreement approved by the city council and is qualified for the MFTE pursuant to chapter 84.14 RCW, and which specific improvements completed meet the requirements of this chapter and the required findings of RCW 84.14.060.
(3) If the city manager determines that the project has been completed in accordance with subsection (1) of this section, the city shall file a final certificate of tax exemption with the King County assessor within 10 days of the expiration of the 30-day period provided under subsection (2) of this section.
(4) The city manager or designee is authorized to cause to be recorded, or to require the property owner(s) or owner to record, in the real property records of the King County department of records and elections, the MFTE agreement which the city required under DMMC 3.96.060(1), and such other document(s) as will identify such terms and conditions of eligibility for the MFTE as the city manager or designee deems appropriate.
(5) The city manager or designee shall notify the property owner(s) in writing that the city will not file a final certificate if the city manager determines that the project was not completed within the required time limitations as set forth in this chapter; or if the city manager determines that the owner’s property is not otherwise qualified under this chapter or if the owner and the city manager cannot agree on the allocation of the value of the improvements allocated to the exempt portion of the new construction in mixed use new construction.
(6) Within 30 days of the date of notice of denial of final certificate, the property owner(s) may file a notice of appeal with the city clerk along with the appeal fee as established by the city manager specifying the factual and legal basis for the appeal. The appeal shall be heard by the city’s hearing examiner pursuant to DMMC 3.96.120. [Ord. 1457 § 9, 2009.]
3.96.100 Exemption – Duration – Limitations.
(1) The value of new housing construction qualifying under this chapter shall be exempt from ad valorem property taxation for eight successive years as provided in RCW 84.14.020(1)(a)(ii)(A).
(2) The exemption established in subsection (1) of this section does not apply to:
(a) The value of land and non-housing-related improvements constructed as part of a mixed use structure.
(b) Increases in assessed valuation of land and nonqualifying improvements.
(c) Increases made by lawful order of the King County board of equalization, the Washington State Department of Revenue, the State Board of Tax Appeals, or King County, to a class of property throughout King County or a specific area of King County to achieve uniformity of assessment or appraisal as required by law. [Ord. 1457 § 10, 2009.]
3.96.110 Annual certification – Cancellation of exemption.
(1) A property that receives the MFTE under this chapter is obligated to continue to comply with the MFTE agreement and the requirements of this chapter in order to retain its MFTE.
(2) Within 30 days after the first anniversary of the date the city filed the final certificate of tax exemption and each year thereafter, for a period of eight years, the property owner(s) shall file a certification with the city manager, verified upon oath or affirmation, which shall contain such information as the city manager may deem necessary or useful, and shall include the following information:
(a) A statement of occupancy and vacancy of the multifamily units during the previous year.
(b) A certification that the property has not changed use and that the property has been in compliance with the requirements set forth in chapter 84.14 RCW since the date of filing of the final certificate of tax exemption, and continues to be in compliance with the contract with the city and the requirements of this chapter.
(c) A description of any improvements or changes to the property made after the filing of the final certificate or last declaration, as applicable.
(d) Any additional information requested by the city manager or designee in regards to the units receiving the MFTE.
(3) Failure to submit the annual declaration may result in cancellation of the MFTE.
(4) For the duration of the MFTE, the property shall have no violation of applicable Des Moines zoning codes, land use regulations, and other requirements contained in Titles 14 and 18 DMMC for which the designated city department shall have issued a notice of violation or notice of civil infraction that is not resolved by a certificate of compliance, certificate of release, or withdrawal within the time period for compliance provided in such notice of violation or notice of civil infraction and any extension of the time period for compliance granted by the city manager or designee.
(5) If the owner intends to convert the multifamily housing to another use, the owner shall notify the city manager or designee and the county assessor within 60 days of the change in use or noncompliance with this chapter. Upon such change in use, the MFTE shall be canceled and additional taxes, interest and penalty imposed pursuant to state law.
(6) The city manager shall cancel the MFTE for any property that no longer complies with the terms of the MFTE agreement or with the requirements of this chapter. Upon cancellation, additional taxes, interest and penalties may be imposed pursuant to state law. Upon determining that an MFTE shall be canceled, the city manager shall notify the property owner(s) by certified mail, return receipt requested. The property owner(s) may appeal the determination by filing a notice of appeal with the city clerk along with the appeal fee established by the city manager within 30 days of the date of notice of cancellation, specifying the factual and legal basis for the appeal. The appeal shall be heard by the city’s hearing examiner pursuant to DMMC 3.96.120. [Ord. 1457 § 11, 2009.]
3.96.120 Appeals to the hearing examiner.
(1) The city’s hearing examiner is provided jurisdiction to hear appeals of the decisions of the city manager on the final certificate of tax exemption and cancellation thereof.
(2) The hearing examiner procedures established by chapter 18.94 DMMC 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 city manager’s decision, and the burden of proof shall be on the appellant to demonstrate that the city manager abused his/her discretion in denying the final certificate. The decision of the hearing examiner shall constitute the final decision of the city. An aggrieved party may appeal the decision to King County superior court under RCW 34.05.510 through 34.05.598 if the appeal is properly filed within 30 days of the date of the notification by the city to the appellant of that decision. [Ord. 1457 § 12, 2009.]
3.96.130 Annual reporting.
(1) Annually by December 31st of each year the city shall report to the Department of Community, Trade, and Economic Development information required pursuant to RCW 84.14.100(2).
(2) The city manager or designee shall review the program established by this chapter and provide a report to the city council outlining development activity, types and numbers of units produced and their locations, rent and sales prices, and other appropriate factors. These reports may include recommendations on whether any neighborhoods should be added or removed and will analyze any issues related to the use of the program for homeownership units. The annual report shall be submitted to the city council no later than March 30th of each year the program is in effect, starting in 2010; each report shall include information for the previous year. [Ord. 1457 § 13, 2009.]
Code reviser’s note: Ord. 1457 § 14 adds these provisions as Chapter 3.92; the chapter has been editorially renumbered to avoid duplication.