Chapter 3.85
MULTI-FAMILY PROPERTY TAX EXEMPTION
Sections:
3.85.010 Repealed.
3.85.040 Tax exemption – Duration – Valuation – Exceptions.
3.85.060 Application procedure.
3.85.080 Amendment of contract.
3.85.090 Extension of conditional certificate – Required findings – Denial – Appeal.
3.85.100 Final certificate – Application – Issuance – Denial – Appeal.
3.85.110 Annual certification.
3.85.120 Cancellation of tax exemption – Appeal.
3.85.010 Findings of fact.
Repealed by Ord. 19-1023. (Ord. 08-1022 § 1 (part))
3.85.020 Purpose.
As provided for in Chapter 84.14 RCW, the purpose of this chapter is to provide limited exemptions from ad valorem property taxation for qualified new multi-family housing constructed in the Urban Center in order to:
A. Accomplish the planning goals of the Growth Management Act (Chapter 36.70A RCW), the City of SeaTac Comprehensive Plan, and the South 154th Street Station Area and Angle Lake Station Area Plans; and
B. Encourage residential opportunities within the Urban Center; and
C. Stimulate new construction of multi-family housing in the Urban Center to increase housing opportunities; and
D. Assist in directing future population growth into the Urban Center, thereby encouraging the most efficient use of the City’s infrastructure and high capacity transit; and
E. Achieve development densities that enhance the use of the community’s mass transit opportunities and the public investment in such opportunities and promote community development and fulfillment of the City’s South 154th Street and Angle Lake Station Area Plans. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.030 Definitions.
In construing the provisions of this chapter, the definitions set forth in RCW 84.14.010, as set forth now or hereafter amended, shall apply, unless modified in this section. The following definitions shall also apply:
A. “Assessor” means the King County Assessor.
B. “Affordable housing” has the same meaning as set forth in RCW 84.14.010(1), as set forth now or hereafter amended.
C. “City Manager” means the City of SeaTac City Manager, or his/her authorized designee.
D. “Multi-family housing” or “multiple-unit housing” means a building having twenty (20) or more dwelling units designed for permanent residential occupancy.
E. “Residential targeted area” means an area so designated by the City Council as a residential targeted area in accordance with RCW 84.14.040. If a part of any legal lot is within the residential targeted area, then the entire lot shall be deemed to lie within the residential targeted area. Specifically, the following area is designated as a residential targeted area:
1. The Urban Center, as designated in the City’s Comprehensive Plan. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.040 Tax exemption – Duration – Valuation – Exceptions.
A. Duration of Exemption. The value of improvements for property qualifying under this chapter is exempt from ad valorem property taxation as follows:
1. For eight (8) successive years beginning January 1st of the year immediately following the calendar year of issuance of the final certificate of tax exemption; or
2. For twelve (12) successive years beginning January 1st of the year immediately following the calendar year of issuance of the final certificate of tax exemption, if the property otherwise qualifies for the exemption under Chapter 84.14 RCW and this chapter, and meets the conditions in this subsection. For the property to qualify for the twelve (12) year exemption under this subsection, the applicant must commit to renting or selling at least twenty percent (20%) of the multi-family housing units as affordable housing units to low- and moderate-income households, and the property must satisfy that commitment and any additional affordability and income eligibility conditions adopted by the local government under this chapter. In the case of projects intended exclusively for owner occupancy, the minimum requirement of this subsection may be satisfied solely through housing affordable to moderate-income households.
B. Limits on Exemption. The exemptions provided in subsections (A)(1) and (2) of this section do not include the value of land or the value of nonhousing improvements, nor does the exemption apply to increases in assessed valuation of land and nonqualifying improvements. This chapter also does not apply to increases in assessed valuation made by the assessor on nonqualifying portions of building and value of land, nor to increases made by lawful order of a county board of equalization, the Department of Revenue, or a county, to a class of property throughout the county or a specific area of the county to achieve the uniformity of assessment or appraisal required by law. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.050 Project eligibility.
To qualify for exemption from property taxation under this chapter, the property must satisfy all of the following requirements:
A. The property must be located in the designated residential targeted area; and
B. The project must consist of at least twenty (20) dwelling units of multi-family housing, located within a residential structure or a mixed use development, which are intended for permanent residential occupancy; and
C. The property must be used and/or developed in a way that increases or preserves property valuation, and the use or development of the property must represent an increased investment in the property and property maintenance that results in an increase in the over-all property values in the target area; and
D. The project must comply with all zoning requirements, land use regulations, and building code requirements contained in the SeaTac Municipal Code and applicable upon land use permit approval or submittal of a complete building permit application, whichever occurs sooner; and
E. For the duration of the exemption granted under this chapter, the property shall be in full compliance with the provisions of the SeaTac Municipal Code; and
F. New construction of multi-family housing must be completed within three (3) years from the date of approval of the application or by any extended deadline granted by the City Manager, pursuant to SMC 3.85.070; and
G. The owner must enter into a written agreement with the City, approved by the City Manager, in which the owner has agreed to the implementation of the development on terms and conditions satisfactory to the City. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.060 Application procedure.
A. The owner of property applying for exemption under this chapter shall submit an application to the City Manager or designee, on a form established by the City. The owner shall verify the correctness of the information contained in the application by his/her signature and affirmation made under penalty of perjury under the laws of the State of Washington. The application shall contain such information as the City Manager may deem necessary or useful, which at a minimum shall include:
1. A completed City of SeaTac application form, including information setting forth the grounds for tax exemption; and
2. A brief written description of the project, and schematic site and floor plans of the multi-family units and the structure(s) in which they are proposed to be located; and
3. Floor and site plans of the proposed project, which plans may be revised by the owner, provided, in the opinion of the City Manager, such revisions do not materially alter the nature of the project or the rationale substantiating the exemption application; and
4. A statement from the owner acknowledging the potential tax liability when the property ceases to be eligible for exemption under this chapter;
B. At the time of initial application under this section, the owner shall pay to the City an initial application fee as established in the City’s fee schedule, plus an amount necessary to cover recording fees under SMC 3.85.100;
C. Except as otherwise provided in SMC 3.85.070, the application shall be submitted any time before or in conjunction with an application for a building or other construction permit; and
D. No new applications shall be accepted under this section after December 31, 2024. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.070 Application review – Approval – Required findings – Issuance of conditional certificate – Denial – Appeal.
A. The City Manager may approve an application if he or she finds that:
1. When a new structure is being created, a minimum of twenty (20) new multi-family units are being constructed; and
2. The proposed project is, or will be at the time of completion, in conformance with all approved plans, and all applicable requirements of the SeaTac Municipal Code or other applicable requirements or regulations in effect at the time the application is approved; and
3. The owner has complied with all of the requirements of this chapter, including but not limited to project eligibility requirements contained in SMC 3.85.050, and application requirements contained in SMC 3.85.060; and
4. The project site is located within a designated residential targeted area.
B. The City Manager shall deny an application if the foregoing criteria are not met. If the application is denied, the City Manager shall state in writing the reasons for the denial and send notice of denial to the owner’s last known address within ten (10) working days of the denial.
C. If the application is approved, the owner shall enter into a contract with the City, approved by the City Council, regarding the terms and conditions of the project under this chapter.
D. Following City Council approval of the contract, and acceptance of the contract by the owner, the City Manager shall issue a conditional certificate of acceptance of tax exemption. The conditional certificate shall expire three (3) years from the date of approval unless an extension is granted as provided in SMC 3.85.090.
E. An owner may appeal a denial of a tax exemption application to the City Council by filing a notice of appeal with the City Clerk within fifteen (15) calendar days of the date that the notice of the denial was mailed, and paying an appeal fee as established in the City’s fee schedule. The appeal before the City Council shall be based upon the record before the City Manager, and the City Manager’s decision will be upheld unless the owner can show that there is no substantial evidence on the record to support the City Manager’s decision. The decision of the City Council on appeal is final. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.080 Amendment of contract.
A. Any owner seeking amendment(s) to the contract approved by the City Council may do so by submitting a request in writing to the City Manager at any time within three (3) years of the date of the City Council’s approval of the contract. Within sixty (60) days of the City’s receipt of the written request, the City Council shall either approve or deny the amendment.
B. Any owner seeking amendments to the approved form of contract shall pay to the City an amendment application fee as established in the City’s fee schedule for administrative costs, plus any amount necessary to cover recording fees.
C. The date for expiration of the conditional certificate shall not be extended by contract amendment unless all conditions for extension set forth in SMC 3.85.090 are met. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.090 Extension of conditional certificate – Required findings – Denial – Appeal.
A. The conditional certificate may be extended by the City Manager for a period not to exceed twenty-four (24) consecutive months. The owner shall submit a written request stating the grounds for the extension together with a fee as established in the City’s fee schedule for the City’s administrative cost to process the request. The City Manager may grant an extension if the City Manager finds that:
1. The anticipated failure to complete construction within the required time period is due to circumstances beyond the control of the owner; and
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 owner and the City will be satisfied upon completion of the project.
B. If an extension is denied, the City Manager shall state in writing the reason for denial and shall send notice to the owner’s last known address within ten (10) working days of the denial. An owner may appeal the denial of an extension to the Hearing Examiner by filing a notice of appeal with the City Clerk within fourteen (14) calendar days after issuance of the notice of the denial. The appeal before the Hearing Examiner shall be based upon the record before the City Manager, and the City Manager’s decision will be upheld unless the owner can show that there is no substantial evidence on the record to support the City Manager’s decision. The decision of the Hearing Examiner on appeal is final. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.100 Final certificate – Application – Issuance – Denial – Appeal.
A. Upon completion of the construction as provided in the contract between the owner and the City, and upon issuance of a temporary certificate of occupancy, or a permanent certificate of occupancy if no temporary certificate is issued, the owner may request a final certificate of tax exemption. The owner shall file with the City Manager such information as the City Manager may deem necessary or useful to evaluate eligibility for the final certificate, which shall at a minimum include:
1. An audited statement of expenditures made with respect to each multi-family housing unit and the total expenditures made with respect to the entire property, including total project costs, which statement shall be approved by the City of SeaTac Finance Director.
2. A description of the completed work and a statement of qualification for the exemption.
3. A statement that the work was completed within the required three (3) year period or any approved extension.
B. Within thirty (30) calendar days of receipt of all materials required for a final certificate, the City Manager shall determine whether the completed work is consistent with the contract between the City and owner, whether all or a portion of the completed work is qualified for exemption under this chapter and, if so, which specific improvements satisfy the requirements of this chapter.
C. If the City Manager determines that the project has been completed in accordance with the contract between the owner and the City and the requirements of this chapter, the City shall file a final certificate of tax exemption with the Assessor within ten (10) calendar days of the expiration of the thirty (30) calendar day period provided under subsection (B) of this section.
D. The City Manager is authorized to cause to be recorded or to require the owner or owners to record, in the real property records of the appropriate office of the county in which the property is located, the contract with the City required under SMC 3.85.050, or such other document(s) as will identify such terms and conditions of eligibility for exemption under this chapter as the City Manager deems appropriate for recording.
E. The City Manager shall notify the owner 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 three (3) year period or any approved extension, or was not completed in accordance with the contract between the owner and the City and the requirements of this chapter, or the owner’s property is otherwise not qualified for the limited exemption under this chapter.
F. The owner may appeal the City Manager’s decision to the Hearing Examiner by filing a notice of appeal with the City Clerk within fourteen (14) calendar days after issuance of the notice of the denial. The appeal before the Hearing Examiner shall be based upon the record before the City Manager, and the City Manager’s decision will be upheld unless the owner can show that there is no substantial evidence on the record to support the City Manager’s decision. The owner may appeal the Hearing Examiner’s decision to the King County Superior Court according to the procedures contained in RCW 34.05.510 through 34.05.598, as provided in RCW 84.14.090(6), within thirty (30) days of notification by the City to the owner of the decision. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.110 Annual certification.
A. Within thirty (30) days after the first anniversary of the date the City filed the final certificate of tax exemption and each year thereafter, for the duration of the exemption as set forth in SMC 3.85.040, the property owner shall file a certification with the City Manager, verified upon signed affirmation under penalty of perjury under the laws of the State of Washington. The certification shall contain such information as the City Manager may deem necessary or useful, and shall at a minimum include the following information:
1. A statement of occupancy and vacancy of the multi-family units during the previous year; and
2. A certification that the property has not changed use 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; and
3. A description of any improvements or changes to the property made after the filing of the final certificate or most recent certification, as applicable.
B. Failure to submit the annual certification may result in cancellation of the tax exemption. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.120 Cancellation of tax exemption – Appeal.
A. If at any time the City Manager determines that the property no longer complies with the terms of the contract or with the requirements of this chapter, or the use of the property for any reason no longer qualifies for the tax exemption, the tax exemption shall be cancelled and additional taxes, interest and penalties shall be imposed pursuant to State law.
B. If the owner intends to convert the multi-family housing to another use the owner must notify the City Manager and the King County Assessor within sixty (60) days of the change in use. Upon such change in use, the tax exemption shall be cancelled and additional taxes, interest and penalties shall be imposed pursuant to State law.
C. Upon determining that a tax exemption shall be cancelled, the City Manager 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 City Clerk, together with the required appeal fee, within thirty (30) calendar days after issuance of the decision by the City Manager, specifying the factual and legal basis for the appeal. The appeal will be heard by the Hearing Examiner. At the appeal hearing, all affected parties may be heard and all competent evidence received. The Hearing Examiner shall either affirm or repeal the decision to cancel the exemption based on the evidence received. The Hearing Examiner shall give substantial weight to the City Manager’s decision to cancel the exemption, and the City Manager’s decision will be upheld unless the owner can show that there is no substantial evidence on the record to support the City Manager’s decision. An aggrieved party may appeal the Hearing Examiner’s decision to the King County Superior Court in accordance with the procedures in RCW 34.05.510 through 34.05.598, as provided in RCW 84.14.110(2), within thirty (30) days after issuance of the decision of the Hearing Examiner. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))
3.85.130 Review of program.
The provisions of this chapter shall be reviewed by the City Council approximately five (5) years after the effective date of the ordinance codified herein. Such review may include, but not be limited to, the number of dwelling units granted property tax exemption under this program, consideration of the multi-family development trends in the City and region, review of administrative processes and procedures, as well as public comment. If the program is terminated, no further applications for a conditional certificate of tax exemption shall be accepted. Incomplete applications shall be returned to the owner. (Ord. 19-1023 § 2 (part): Ord. 08-1022 § 1 (part))