Chapter 3.27
MULTIFAMILY TAX EXEMPTION
Sections:
3.27.030 Designation of Residential Targeted Area
3.27.040 Designated Residential Target Areas
3.27.050 Project Eligibility Standards and Guidelines
3.27.060 Application Procedures
3.27.070 Application Review and Issuance of Conditional Certificate
3.27.080 Application Procedures for Final Certificate
3.27.090 Application Review and Issuance of Final Certificate
3.27.100 Annual Compliance Review
3.27.110 Cancellation of Tax Exemption
3.27.120 Appeals to Hearing Examiner
3.27.010 Purpose.
It is the purpose of this chapter to encourage increased residential housing, including affordable housing opportunities, keeping with the goals and mandates of the Growth Management Act (Chapter 36.70A RCW) to stimulate 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. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.020 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.
“Department” means the City of Lake Stevens Department of Planning and Community Development.
“Household” means a single person, family, or unrelated persons living together.
“Household annual income” means the aggregate annual income of all persons over 18 years of age residing in the same household.
“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 household income adjusted for household size for the county where the project is located, as reported by the United States Department of Housing and Urban Development. If Snohomish County is designated a high-cost area under RCW 84.14.010, “low-income household” means a household that has an income at or below 100 percent of the median household income adjusted for household size for Snohomish County.
“Moderate-income household” means a single person, family, or unrelated persons living together whose adjusted income is more than 80 percent but is at or below 115 percent of the median household income adjusted for household size for the county where the project is located, as reported by the United States Department of Housing and Urban Development. If Snohomish County is designated a high-cost area under RCW 84.14.010, “moderate-income household” means a household that is more than 100 percent, but at or below 150 percent, of the median household income adjusted for household size for Snohomish County.
“Multifamily housing” means a building or project having four or more dwelling units that are not designed or used as transient accommodations, not including hotels and motels, and designed for permanent residential occupancy resulting from new construction, rehabilitation or conversion of a vacant, underutilized or substandard building to multifamily housing.
“Owner” or “property owner” means the property owner of record.
“Permanent residential occupancy” means multifamily housing that provides either owner-occupant housing or rental accommodations that are leased for a period of at least one month on a nontransient basis. This excludes accommodations that offer occupancy on a transient basis such as hotels and motels that predominately offer rental accommodations on a daily or weekly basis.
“Target area” means the areas within or coterminous with the City’s urban center as defined in this chapter that have been designated by the City Council as the residential targeted area in accordance with this chapter and Chapter 84.14 RCW as found by the City Council to be lacking sufficient available, convenient, attractive, livable, and desirable residential housing to meet the needs of the public.
“Urban center” means a compact identifiable district where urban residents may obtain a variety of products and services including, but not limited to, shops, offices, banks, restaurants, governmental agencies, transit service, and a mixture of uses and activities that may include housing, recreation, cultural activities, commercial or office uses. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.030 Designation of Residential Targeted Area.
Following notice and public hearing as prescribed in RCW 84.14.040, the City Council may designate all of or a portion of the residential targeted area described in the notice of hearing as the residential targeted area. The designated targeted area must meet the following criteria:
(a) The targeted area is located within the urban center as determined by the City Council;
(b) The targeted area lacks sufficient available, attractive, convenient, desirable, and livable 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) Providing additional housing opportunity in the targeted area will assist in achieving the stated purposes of RCW 84.14.007, namely:
(1) Encourage increased residential opportunities within the targeted area of the City of Lake Stevens; or
(2) Stimulate the construction of new multifamily housing and the rehabilitation of existing vacant and underutilized buildings for multifamily housing that will increase and improve residential opportunities within the City’s urban centers;
(d) In designating the residential targeted area, the City Council may consider other factors, including, but not limited to, which additional housing in the targeted area will attract and maintain a significant increase in the number of permanent residents, whether additional housing in the targeted area will help revitalize the City’s urban center, whether an increased residential population will help improve the targeted area and whether an increased residential population in the targeted area will help to achieve the planning goals mandated by the Growth Management Act under RCW 36.70A.020; and
(e) The notice for the hearing has met the requirements of RCW 84.14.040. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.040 Designated Residential Target Areas.
The boundaries of the designated residential target areas are located within the urban centers listed below, and as indicated on the maps in Exhibit 1 of this chapter.
(a) Downtown.
(b) Lake Stevens Center.
(c) 20th Street.
(d) Lundeen.
(e) Soper Hill.
Exhibit 1
(Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.050 Project Eligibility Standards and Guidelines.
A proposed project must meet the following requirements to be considered for a property tax exemption:
(a) Location. The project must be located within one of the residential targeted areas designated in Section 3.27.040. If a part of any legal lot is within a designated residential targeted area, then the entire lot shall be deemed to lie within such residential targeted area. Property located outside of, but adjacent to, the described areas is not designated as a residential targeted area.
(b) Size. The project must include at least four dwelling units of multifamily housing within a residential structure or as part of a mixed-use development. For the rehabilitation of existing occupied multifamily projects, at least four additional residential units must be added except when the project has been vacant for 12 consecutive months or more, in which case the existing residential units must be brought up to current code standards to be eligible.
(c) Permanent Residential Housing. At least 50 percent of the space must provide permanent residential occupancy, as defined in Section 3.27.020.
(d) Proposed Completion Date. The project must be scheduled for completion within three years from the date of issuance of the conditional certificate.
(e) Compliance with Guidelines and Standards. The project shall be designed to comply with the City’s Comprehensive Plan, applicable development regulations, design standards and applicable building and housing code requirements.
(f) Affordable Housing. Projects intended for rental occupancy seeking a 12-year tax exemption shall provide 20 percent of the multifamily housing as affordable housing units.
(1) Affordable housing units shall be available to households whose adjusted income is at or below 80 percent of the current median family income adjusted for family size for Snohomish County.
(2) The mix and configuration of housing units used to meet the requirement for affordable units under this chapter shall be substantially proportional to the mix and configuration of all other housing units in the project.
(g) Tenant Displacement. Property proposed to be rehabilitated must fail to comply with one or more standards of the applicable adopted State or local building or housing codes. If the property proposed to be rehabilitated is not vacant, an applicant must provide each existing tenant housing for comparable size, quality and price and a reasonable opportunity to relocate.
(h) Owner Occupancy. In the case of projects intended exclusively for owner occupancy, the affordable housing requirement means residential housing that is within the means of low- or moderate-income households.
(i) Contract. The applicant must enter into a contract with the City under which the applicant has agreed to the implementation of the project on terms and conditions satisfactory to the City outlined in this chapter. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.060 Application Procedures.
A property owner who wishes to propose a project for a multifamily property tax exemption shall comply with the following procedures:
(a) Prior to the application of any building permit, the applicant shall apply with the Department of Planning and Community Development, on a form provided by the Department along with required application fees.
(b) The Director of Planning and Community Development (Director) or designee is responsible for the administration of the multifamily property tax exemption program.
(c) A complete application shall contain such information as the Director or designee 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 the 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 qualification for exemption;
(3) A statement from the owner acknowledging the potential tax liability when the project ceases to be eligible under this chapter;
(4) Information describing how the applicant shall comply with the affordability requirements of this chapter;
(5) Verification by oath or affirmation of the information submitted by the applicant.
For rehabilitation of vacant properties as defined in subsection (b) of this section, the applicant shall submit an affidavit that existing dwelling units have been unoccupied for a period of 12 months prior to filing the application and shall secure from the City verification of property noncompliance with applicable codes. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.070 Application Review and Issuance of Conditional Certificate.
The Director or designee may certify as eligible an application which is determined to comply with the requirements of this chapter. A decision to approve or deny an application shall be made within 90 days of receipt of a complete application. An application may be approved subject to such terms and conditions as deemed appropriate by the Director to ensure the project meets the land use regulations of the City.
(a) Approval. If an application is approved by the Director or designee, the approval, together with a contract between the applicant and the City regarding the terms and conditions of the project, signed by the applicant, shall be signed by the Director or designee. Once the contract is fully executed, 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.
(1) The applicant shall record, at the applicant’s expense, the contract with the Snohomish County Assessor within 10 days of contract execution and provide the City with a conforming copy.
(b) 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 nonrefundable processing fee. 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 conditions of the original contract between the applicant and the City will be satisfied upon completion of the project.
(c) Denial of Application. If the application is denied, the Director or designee 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 Hearing Examiner by filing a written appeal within 30 days of notification by the City to the applicant the application is denied. The appeal will be based upon the record made before the Director with the burden of proof on the applicant to show that there is no substantial evidence on the record to support the Director’s decision. The decision of the Hearing Examiner in denying or approving the application is final. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.080 Application Procedures for Final Certificate.
Upon completion of the improvements provided in the contact between the applicant and the City and upon issuance of a temporary or permanent certificate of occupancy, the applicant may request a final certificate of tax exemption. The applicant must file with the Director or designee such information as the Director or designee deems necessary to evaluate eligibility for the final certificate and shall include:
(a) A statement of expenditures made with respect of 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 that the improvements qualify for the exemption;
(c) Within 30 days of receipt of all materials required for a final certificate, the Director shall determine whether the improvements satisfy the requirements of this chapter;
(d) If applicable, a statement that the project meets affordable housing requirements of this chapter. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.090 Application Review and Issuance of Final Certificate.
Within 30 days of receipt of all materials required for an application for final certificate, the Director or designee shall determine whether a final certificate should be issued. The Director’s determination shall be based on whether the improvements and the affordability of units satisfy the requirements of this chapter, the requirements and findings of RCW 84.14.060, and are consistent with the approved contract.
(a) Approval. If the Director or designee determines that the project qualifies for the exemption, the Director or designee shall issue a final certificate of tax exemption. The property owner or agent must record the final certificate with the Snohomish County Assessor within 10 days of the expiration of the 30-day period provided in this section.
(b) Denial. The Director or designee shall notify the applicant in writing within 10 days of the expiration of the 30-day period provided in this section that the final certificate will not be issued if it is determined that:
(1) The improvements were not completed within three years of issuance of the conditional certificate, or any authorized extension of the time limit;
(2) The improvements were not completed in accordance with the contract between the applicant and the City;
(3) The owner’s property is otherwise not qualified under this chapter;
(4) If applicable, the affordable housing requirements of this chapter have not been met; or
(5) The owner cannot verify the value of improvements allocated to the exempt portion of the rehabilitation improvements, new construction and multiuse new construction.
(c) Within 30 days of notification to the owner of the Director’s denial of a final certificate of tax exemption, the applicant may file a written appeal with the Hearing Examiner specifying the factual and legal basis for the appeal. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.100 Annual Compliance Review.
(a) Within 30 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:
(1) A statement of occupancy and vacancy of the rehabilitated or newly constructed property during the previous year;
(2) Certification that the property continues to comply with the contract with the City;
(3) A description of any subsequent improvements or changes to the property; and
(4) If applicable, that the property complies with the affordable housing requirements of this chapter.
(b) City staff shall conduct on-site verification of the declaration. Failure to submit the annual declaration may result in the tax exemption being canceled.
(c) The City shall report by December 31st of each year to the Washington State Department of Commerce information as set forth in RCW 84.14.100(2). (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.110 Cancellation of Tax Exemption.
If at any time the Director determines the owner has not complied with the terms of the contract or with the requirements of this chapter, or that the property no longer complies with the terms of the contract or with the requirements of this chapter, or for any reason no longer qualifies for the tax exemption, the tax exemption shall be canceled and additional taxes, interest and penalties imposed pursuant to State law. 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, if applicable, the owner intends to discontinue compliance with the affordable housing requirements as required in this chapter, or any other condition to exemption, the owner must notify the Director and the Snohomish County Assessor within 60 days of the change in use or intended discontinuance. Upon such change in use or discontinuance, the tax exemption shall be canceled, and additional taxes, interest and penalties imposed pursuant to State law.
(a) Effect of Cancellation. If a tax exemption is canceled due to a change in use or other noncompliance, the Snohomish County Assessor shall comply with applicable State law to impose additional taxes, interest and penalties on the property, and a priority lien may be placed on the land, pursuant to State law.
(b) Notice and Appeal. Upon determining that a tax exemption is to be canceled, the Director or designee shall notify the property owner by certified mail, return receipt requested. The property owner may appeal the determination by filing a notice of appeal with the Hearing Examiner within 30 days, specifying the factual and legal basis for the appeal. The Hearing Examiner will conduct a hearing at which the applicant and the City will 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. (Ord. 1103, Sec. 2 (Exh. B), 2020)
3.27.120 Appeals to Hearing Examiner.
(a) The City’s Hearing Examiner is hereby provided jurisdiction to hear appeals of the decisions of the Director or designee under this chapter. Said appeals shall be as follows:
(1) Appeal of a decision of the Director or designee that the owner is not entitled to a final certificate of tax exemption, filed within 30 days of notification by the City to the owner of denial of a final certificate of tax exemption.
(2) Appeal of a cancellation of tax exemption, filed within 30 days of the notification by the City to the owner of cancellation.
(b) The Hearing Examiner’s procedures 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 Director’s or designee’s decision and the burden of proof shall be on the appellant. The decision of the Hearing Examiner constitutes the final decision of the City. An aggrieved party may appeal the decision to Superior Court under RCW 34.05.510 through 34.05.598 if the appeal is properly filed within 30 days of notification to the appellant of that decision. (Ord. 1103, Sec. 2 (Exh. B), 2020)