Chapter 4.54
MULTIFAMILY PROPERTY TAX EXEMPTION
Sections:
4.54.040 Designation of residential target areas.
4.54.050 Project eligibility and guidelines.
4.54.060 Application procedure.
4.54.070 Application review of conditional certificate.
4.54.080 Extension of conditional certificate.
4.54.090 Application for final certificate.
4.54.100 Issuance of final certificate.
4.54.110 Annual compliance review.
4.54.120 Cancellation of tax exemption.
4.54.130 Appeals to hearing examiner.
4.54.010 Purpose.
It is the purpose of this chapter to encourage increased residential housing, including affordable housing opportunities, in keeping with the goals and mandates of the Growth Management Act (Chapter 36.70A RCW) so as to stimulate the construction of new multifamily housing and the rehabilitation of existing vacant and underutilized buildings for multifamily housing within the city. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.020 Authority.
This chapter is adopted under the authority of Chapter 84.14 RCW which provides for special valuations for eligible improvements associated with multifamily housing to improve residential opportunities including affordable housing. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.030 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.
“Director” means the community development director for the city of East Wenatchee.
“Household” means a single person, family, or unrelated persons living together.
“Low-income household” means a single person, family, or unrelated persons living together whose adjusted income is at or below 80 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.
“Moderate-income household” means a single person, family or unrelated persons living together whose adjusted income is more than 80 percent but at or below 115 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.
“Multifamily housing” means a building having four or more dwelling units not designed or used as transient accommodations and not including hotels or motels. Multifamily units may result from new construction or rehabilitation or conversion of vacant, underutilized, or substandard buildings to multifamily housing.
“Owner” means the property owner of record.
“Permanent residential occupancy” means multifamily 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. Excluded from this definition are hotels and motels that predominately offer rental accommodation 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 increases the number of multifamily housing units.
“Residential target area” means an area within an urban center or urban growth area that has been designated by the city council as lacking sufficient, available, desirable, affordable and convenient residential housing to meet the needs of the public.
“Substantial compliance” means compliance with local building or housing code requirements that are typically required for rehabilitation as opposed to new construction. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.040 Designation of residential target areas.
The residential medium density, residential high density/office, mixed use and waterfront mixed use zoning districts, as identified on the city of East Wenatchee Zoning Map, are hereby designated as the residential target areas pursuant to RCW 84.14.040 within the city of East Wenatchee. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.050 Project eligibility and guidelines.
A. Eligibility Requirements. To be eligible for a property tax exemption under this chapter, the property must satisfy all of the following requirements:
1. The new or rehabilitated multifamily housing must be located within the residential target area designated in EWMC 4.54.040.
2. The project must be for multifamily housing in a residential structure or as part of a mixed use development. One hundred percent of the residential space must provide for permanent residential occupancy.
3. The project must be designed to comply with the city’s comprehensive plan, applicable development regulations, and applicable building codes.
4. Any multifamily residential property that is proposed to be rehabilitated must fail to comply with one or more standards of the applicable building codes.
5. Occupied multifamily residential properties proposed for rehabilitation must meet the following:
a. At least four additional residential units must be added; and
b. The applicant must provide each existing tenant with housing of comparable size, quality, and price and a reasonable opportunity to relocate.
For a multifamily residential property to be considered vacant it has to have been vacant for 12 consecutive months or more.
6. The project must be scheduled for completion within three years from the date of the conditional certificate.
7. At least one of the contractors or subcontractors working on the project must be a company based in Douglas or Chelan County.
8. 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 project on terms and conditions satisfactory to the city.
B. Duration of Tax Exemption. The following property tax exemptions are available for qualified properties in designated residential targeted areas:
1. The assessed value of new housing construction, conversion and rehabilitation improvements qualifying under this chapter will be exempt from ad valorem property taxation beginning January 1st of the year immediately following the calendar year of issuance of the final certificate as follows:
a. For the property to qualify for the eight-year exemption, 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.
b. For the property to qualify for the 12-year exemption, the applicant must commit to renting or selling at least 30 percent of the multifamily housing units as affordable housing units to low- and moderate-income households.
2. The exemption does not apply to the value of land or non-housing related improvements not qualifying under this chapter, nor does the exemption apply to increases in assessed valuation of land and nonqualifying improvements, or to increases made by lawful order of the Douglas County board of equalization or the Washington State Department of Revenue, or Douglas 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.
3. In the case of rehabilitation of existing buildings, the exemption does not include the value of improvements construction prior to the submission of the completed application required under this chapter.
C. Extension of Tax Exemption. The owner of the property that received a tax exemption pursuant to this chapter may apply for a 12-year extension.
1. The extension must be applied for within 18 months of the expiration date.
2. The applicant must commit to renting or selling at least 30 percent of the multifamily housing units as affordable housing units for low-income households.
3. At the end of the tenth and eleventh years of an extension, applicants must provide tenants of rent-restricted units with notification of intent to provide the tenant with rental relocation assistance as provided in subsection (C)(4) of this section.
4. At the expiration of the exemption, the applicant must provide tenant relocation assistance in an amount equal to one month’s rent to a qualified tenant within the final month of the tenant’s lease. To be eligible for tenant relocation assistance, the tenant must occupy an income-restricted unit at the time the exemption expires and must qualify as a low-income household under this chapter at the time the relocation assistance is sought.
D. At the conclusion of the exemption period, the new or rehabilitated housing cost shall be considered as new construction for the purposes of Chapters 36.21 and 84.55 RCW. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.060 Application procedure.
Any property owner who wishes to propose a project for a multifamily property tax exemption shall comply with the following procedures:
A. Prior to the issuance of any building permit for the project, the property owner shall submit an application to the community development department on forms established by the department along with required application fees.
B. A complete application shall contain such information as the director may deem necessary or useful and shall include:
1. A brief written description of the project and preliminary schematic site and floor plans of the multifamily units and structure(s) in which they are proposed to be located setting forth the grounds for the exemption;
2. A brief statement setting forth the grounds for the qualification for exemption; and
3. A statement from the owner acknowledging the potential tax liability when the project ceases to be eligible under this chapter.
4. For rehabilitation projects:
a. An affidavit that existing dwelling units have been unoccupied for a period of 12 months prior to filing the application or that the applicant has provided each existing tenant with housing of comparable size, quality, and price and a reasonable opportunity to relocate.
b. Written verification from the city building official that the property is in noncompliance with at least one of the current building codes. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.070 Application review of conditional certificate.
A. The director may certify as eligible an application which is determined to comply with the requirements of EWMC 4.54.050(A), Eligibility Requirements. A decision to approve or deny an application shall be made within 90 days of receipt of a complete application.
B. Approval. If an application is approved, the applicant shall enter into a contract with the city, subject to approval by resolution of the city council, 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 which shall contain a statement by the director that the property has complied with EWMC 4.54.060 and this section. The conditional certificate expires three years from the date of approval.
C. Denial. If an application is denied, the director shall state in writing the reasons for denial and shall send notice to the applicant’s last known address within 10 days of the denial. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.080 Extension of conditional certificate.
A. Extension. 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 24 consecutive months. To obtain an extension, the application must submit a written request, no later than 60 days prior to the expiration of the conditional certificate, stating the grounds for the extension. An extension may be granted if the director determines that:
1. The anticipated failure to complete construction or rehabilitation within the required time period is due to circumstances beyond the control of the owner;
2. The owner has been acting and could reasonably be expected to continue to act in good faith and with due diligence; and
3. All the conditions of the original contract between the applicant and the city will be satisfied upon completion of the project.
B. Director’s Action on the Request for Extension. The director shall take action to either grant or deny the request for an extension no later than 30 days prior to the expiration of the conditional certificate. Written decision on the extension shall be sent to the applicant’s last known address. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.090 Application for final certificate.
Upon completion of the improvements agreed upon in the contract and upon issuance of a certificate of occupancy, the applicant may request a final certificate of tax exemption by filing with the community development department such information as the director may deem necessary or useful to evaluate eligibility for the final certificate and shall include:
A. A description of the completed work and a statement that the improvements qualify for the exemption;
B. A statement that the work was completed within the required three-year period or any authorized extension;
C. A statement of expenditures made with respect to each multifamily housing unit and the total expenditures made with respect to the entire property;
D. A statement that the project meets affordable housing requirements of this chapter; and
E. Applicable fees as payment for the processing of the final certificate by the community development department and the Douglas County assessor. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.100 Issuance of final certificate.
A. Within 30 days of receipt of all materials required for the final certificate, the director shall determine whether the completed work and the affordability of the units is consistent with the contract between the city and the owner and is qualified for exemption under this chapter, and which specific improvements satisfy the requirements of this chapter.
B. If the director determines that the project has been completed in accordance with the contract between the applicant and the city and the requirements of this chapter, including, if applicable, affordable housing requirements, the city shall file a final certificate of tax exemption with the assessor within 10 days of the expiration of the 30-day period.
C. The director shall notify the applicant in writing that the city will not file a final certificate if the director determines that the project was not completed within the required three-year period or any approved extension, was not completed in accordance with the contract between the applicant and the city and the requirements of this chapter, if applicable, that the affordable housing requirements were not met, or if the owner’s property is otherwise not qualified.
D. If the director determines that the project has been completed in accordance with the contract between the applicant and the city and the requirements of this chapter, including, if applicable, affordable housing requirements, the city shall file a final certificate of tax exemption with the assessor within 60 days.
E. The director is authorized to cause to be recorded, in the real property records of the Douglas County assessor, the contract with the city, or such other document(s) as will identify such terms and conditions of eligibility for exemption under this chapter as the director deems appropriate for recording. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.110 Annual compliance review.
Within 30 days after the first anniversary of the date of filing of 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 community development department indicating the following:
A. A statement of occupancy and vacancy of the multifamily units during the previous year ending with the anniversary date;
B. A certification that the property continues to be in compliance with the contract with the city, including that it has not changed use, and, if applicable, that the property has been in compliance with any affordable housing requirements;
C. A description of any subsequent improvements or changes to the property; and
D. A report on affordable housing requirements, if applicable, including:
1. The total monthly rent or total sale amount of each unit produced;
2. The income of each renter household at the time of initial occupancy and the income of each initial purchaser of owner-occupied units at the time of purchase for each of the units receiving a tax exemption; and
3. Any additional information requested by the city in regard to the units receiving a tax exemption.
City staff shall have the right to conduct on-site verification of the declaration. Failure to submit the annual declaration may result in the tax exemption being canceled. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.120 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, the owner must notify the director and the Douglas County assessor within 60 days of the change in use.
A. Effect of Cancellation. If a tax exemption is canceled due to change in use or other noncompliance, the Douglas County Assessor may impose an additional real property tax on the value of the nonqualifying improvements in the amount that would normally be imposed, plus a penalty of 20 percent. This additional tax is calculated based on the difference between the property tax paid and the property tax that would have been paid if it had included the value of the nonqualifying improvements dating back to the date that the improvements were converted to a nonmultifamily use. The tax will include interest upon the amount of the additional tax, together with interest and penalty and will become a lien on the land and attached at the time the property or portion of the property when it is removed from multifamily use no longer meets the applicable requirements.
B. Upon determining that a tax exemption is to be canceled, the director shall notify the property owner by certified mail. (Ord. 23-05 § 5 (Exh. A), 2023)
4.54.130 Appeals to hearing examiner.
A. An owner aggrieved by the director’s denial of an application, extension of conditional certificate, final certification, or cancellation of an exemption under this chapter shall have the right to appeal to the hearing examiner. Any such appeal shall be in writing and shall be filed with the city within 30 days of the director’s decision. The appeal shall specify the factual and legal basis on which the director’s decision is alleged to be erroneous. The appeal shall be accompanied by the applicable appeal fee established by resolution of the city council. Failure to follow the appeal procedures in this section shall preclude the owner’s right to appeal.
B. An appeal shall be processed in accordance with EWMC 19.07.020, Administrative appeals of decisions, with the exception that, in accordance with RCW 84.14.070, the owner has 30 days to file the appeal. (Ord. 23-05 § 5 (Exh. A), 2023)