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ORDINANCE NO. "5 '? C2_ ..
AN ORDINANCE of the City Council of the
City of Kent, Washington, amending section 3.25
of the Kent City Code, entitled "Multifamily
dwelling tax exemptions," in order to increase the
number of permanent residents to support the
viability of the City's urban center.
RECITALS
A. Kent is a Regional Growth Center where a significant share of
the Puget Sound Region's population and employment growth is expected
to occur. Centers are characterized by compact, pedestrian-oriented
development with a mix of uses. Centers provide proximity to a diverse
collection of services, shopping, recreation, and jobs, as well as a variety
of attractive and well-designed residences.
B. The State's multifamily tax exemption program helps to focus
future multifamily growth into areas where it is most appropriate and it
makes multifamily housing development projects more appealing to
investors by freeing up capital and reducing operating costs.
C. In 1998, the City Council passed a tax exemption program to
encourage owner-occupied multifamily housing in Kent's Downtown. The
City now desires to increase the usefulness and viability of the program.
1 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
D. The goals of the amendment include: creating a vibrant
downtown to serve as a destination retail and community gathering place;
and to invest in neighborhood livability and development of neighborhood
centers.
E. The State Environmental Policy Act (SEPA) responsible official
has determined that the proposed Kent City Code amendments are
procedural in nature, and further SEPA analysis is not required for these
local code amendments.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
ORPINANCE
SECTION 1. -Amendment. Section 3.25, entitled "Multifamily
dwelling tax exemptions," of the Kent City Code is amended as follows:
Sec. 3.25.010. Purpose. As provided for in Chapter 84.14 RCW,
the purpose of this chapter is to provide limited ten (10)eight (8) year
exemptions from ad valorem property taxation for multifamily housing in
designated urban centers to:
1. Encourage increased residential opportunities within urban
centers designated by the city council as residential targeted areas; andfef
2. Stimulate new construction or rehabilitation of existingon
vacant and underutilized buildingssites for multifamily housing in
residential targeted areas to increase and improve housing opportunities;
and
2 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
3. Assist in directing future population growth in designated
urban centers, thereby reducing development pressure on single-family
residential neighborhoods; and
4. Achieve development densities which are more conducive to
transit use in designated urban centers.
Sec. 3.25.020. Definitions. When used in this chapter, the
following terms shall have the following ·meanings, unless the context
indicates otherwise:
1. Administrator means the Kent Economic Development
Director or his/her designee.
2. Mixed use means a multi-story multifamily housing
residential project with at least one nonresidential use in one or more
multi-story multifamily housing buildings in the project, such as retail,
office, entertainment. schools, conference centers or a use approved in
writing by the Administrator .
.i-J. Multifamily housing means one or more new multi-story
building~fs7 designed for permanent residential occupancy. each with
having four or more dwelling units_,_ designed for permanent residential
occupancy resulting from ne·v'v' construction or rehabilitation or conversion
of vacant, underutilized, or substandard buildings.
~1. Owner means the property owner of record.
3. Planning manager means the planning manager of planning
services office or designee.
3 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
4.5.. Permanent residential occupancy means multi-ttfl+t:family
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 (1) month. This excludes hotels and
motels that predominately offer rental accommodation on a daily or
weekly basis.
5. Rehabilitation improvements means modifications to existing
structures that are vacant for tv.·elve (12) months or longer that are made
to achieve a condition of substantial compliance 'vVith existing building,
fire, and zoning codes, or modification to existing occupied structures
·.vhich increase the number of multifamily housing units.
6. Residential targeted area means the geographic area of
downtown Kent bordered by Titus Street, State Route 167, Willis Street
and Cloudy Street, and only including zones that permit multifamily
housing. See Appendix 1 * for map.
7. Substantial comp/lance means compliance v.·ith all local
building, fire and zoning code requirements, 'v'v'hich are typically required
for rehabilitation as opposed to new construction.
Sec. 3.25.030. Terms of the tax exemptions for multifamily
housing in residential target areas.
A. Duration of exemption. The value of improvements qualifying under
this chapter is exempt from ad valorem property taxation for ten (lO)eight
.LJil successive years beginning January 1st of the year immediately
following the calendar year after issuance of the final certificate of tax
exemption.
B. Limits on exemption. The exemption does not apply to the value of
land or to the value of improvements not qualifying under this chapter,
4 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
nor does the exemption apply to increases in assessed valuation of land
and nonqualifying improvements._ 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. This chapter 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 specific area of the county to achieve
the uniformity of assessment or appraisal required by law. At the
conclusion of the exemption period, the new housing cost shall be
considered as new construction for the purposes of chapter 84.55 RCW.
Sec. 3.25.040. Project eligibility. A proposed project must
meet the following requirements for consideration for a property tax
exemption:
A. Location. The project must be located within the designated
residential targeted area as defined in KCC 3.25.020, Definitions,
Residential targeted area. 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.
B. Tenant displacement,_ prohibited. Prior to approval of an
application under KCC 3.25.060, the applicant shall provide the
Administrator with documentation satisfactory to the Administrator of the
following:
1. all tenants of residential rental structures on the project site
have been notified per state statute of the termination of their tenancy,
5 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
2. the applicant's efforts to refer tenants to similar, alternative
housing resources, and
3. any other actions the applicant has taken to minimize the
hardship on tenants whose tenancies will be terminated.
The project must not displace existing residential tenants of
structures that are proposed for redevelopment. Existing d'Nelling units
proposed for rehabilitation must be vacant for a minimum of t·vvelve (12)
consecutive months prior to submission of an application and must fail to
comply with one or more standards of the UBC or UFC on or alter July 23,
1995. Applications for nC'vv construction cannot be submitted for vacant
property upon which an occupied residential rental structure previously
stood, unless a minimum of t·lv'elve (12) months has elapsed from the time
of most recent occupancy.
C. Size. The project must include at least four (4)thirty (30) units of
new multifamily housing within a multi-storyresidential structure or as part
of an urban_development. At least fifty (50) percent of the space within
the project shall be intended for permanent residential occupancy. _A
minimum of four ne1;N units must be constructed or at least four (4)
additional multifamily units must be added to existing occupied multifamily
housing. Existing multifamily housing that has been vacant for tvv·elve (12)
months or more does not have to provide additional units.
D. Proposed completion date. New construction of multifamily housing
and rehabilitation improvements must be completed within three (3) years
from the date of approval of the application.
E. Compliance with guidelines and standards. The project must be
designed to comply with the city's comprehensive plan, building, fire,
housing, and zoning codes, Downtown Design Review guidelines,
6 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
Multifamily Design Review, Mixed Use Design Review if applicable, and any
other applicable regulations. The project must be LEEDR Certifiable as
confirmed by a LEEDR certified independent third party reviewer or must
be Built Greentm certified, and must also comply with any other standards
and guidelines adopted by the city council for the residential targeted
area.
F. Parking. All required residential parking shall be located in
structured parking garages, under buildings, or underground.
G. Class A Pedestrian Street. For buildings adjacent to a class A
pedestrian street, the first floor of the building facing the street shall
consist of residential units, commercial uses, and/or residential amenity
H. Mixed Use Development. The project shall be a mixed use project,
unless the mixed use component is waived by the Administrator.
1. The purpose of the mixed-use requirement is to implement
the intent of the land use district, maximize the efficient use of land,
support transit use, and encourage the development of well-balanced,
attractive, convenient, and vibrant urban residential neighborhoods. The
additional use excludes any accessory functions related to the residential
use. Unless otherwise modified or waived in writing by the Administrator,
the nonresidential mixed use shall occupy at a minimum the ground floor
along the street frontage with a depth of at least thirty (30) feet for any
building in the project. The Administrator may not modify or waive the
mixed use requirement, as provided in subsection 3.25.040.H.2, in the DC
zoning District, which is governed by KCC 15.04.030(4) and (5).
7 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
2. The Administrator may waive the mixed use requirement for
the purposes of this chapter. if the applicant can demonstrate that mixed
use development is impractical or infeasible due to the following factors:
__ _,a=. size or other physical characteristic of the project's
lot(s),
__ _,b"-'-. project site is not conducive to commercial use,
___ c=. classification of street(s) abutting the project, or
__ _,d=. other similar type of circumstance that make mixed
use impractical for the project.
F. Type of occupancy. At least fifty (50) percent of the space in a nevv,
converted, or rehabilitated multifamily housing structure must be for
permanent residential occupancy. To encourage home ownership
consistent 'v\'ith the comprehensive plan, the residences constructed must
be ovmer occupied for the duration of the tax exemption.
G. Condominium. All multifamily housing structures shall be
condominiums as defined in l<CC 15.02.091. The applicant shall agree to
file and record a condominium plat pursuant to Chapter 64.32 RCW prior
to approval of a development permit by the city.
Sec. 3.25.050 Application procedure. A property owner who
wishes to propose a project for a tax exemption shall complete the
following procedures:
A. The application provided by the city shall be filed with the planning
services divisionAdministrator along with the required feesinitial
application fee of one thousand dollars ($1,000)._ The application shall be
filed prior to the issuance of the building permit for the project.
B. A complete application shall include:
8 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
1. A completed city of Kent application form setting forth the
grounds for the exemption.
2. Preliminary floorA brief written description of the project, and
floor and site plans of the proposed project, which may be revised by the
owner provided such revisions are made and presented to the
Administrator prior to the City's final action on the exemption application.
3. A statement from the owner acknowledging the potential tax
liability when the project ceases to be eligible for exemption under this
chapter.
4. An affidavit signed by the owner stating the occupancy record
of the property for a period of twelve (12) months prior to filing the
application.
5. Verification of the correctness of the information submitted
by the owner's signatureoath or and affirmation made under penalty of
perjury under the laws of the State of Washingtonof the information
submitted.
6. For rehabilitation projects, if the applicant proposes replacing
the existing units and if the units 'Nere occupied within twelve (12) months
of application the applicant shall provide a report prepared by a registered
architect identifying property noncompliance with the UBC or UFC. This
report shall identify specific code violations and must include supporting
data that satisfactorily explains and proves the presence of a violation.
Supporting data must include a narrative and such graphic materials as
needed to support this application. Graphic materials may include, but are
not limited to, building plans, building details, and photographs.
9 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
Sec. 3.25.060.
conditional certificate.
Application review and issuance of
The planning manager Administrator 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 ninety (90) calendar days of receipt of a complete application.
A. Approval. The Planning ManagerAdministrator may approve the
application if he/she finds that:
1. A minimum of four (4) new units are being constructed or in
the case of occupied rehabilitation or conversion within tv.;elve (12)
months of occupancy, a minimum of four (4) additional multifamily units
are being developed.
·2-1. The proposed project is or will be, at the time of completion,
in conformance with all applicable local plans.,_ aftEl-regulations, and design
guidelines.
32.. The owner has complied with all standards and guidelines
adopted by the city under this chapter, including but not limited to the
project eligibility and application requirements.
4. The site is located in the residential targeted area.
B. Contract Required. If an application is approved, the applicant shall
enter into a contract with the city, approved by the City Council, regarding
the terms and conditions of the project, under this chapter.
C. Issuance of Conditional Certificate. Following approval of the
contract, aftEl. the planning managerAdministrator shall issue a conditional
10 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
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 this chapter.
ED. Application Denial. If an application is denied, the planning
managerAdministrator shall state in writing the reasons for denial and
shall send notice to the applicant at the applicant's last known address
within ten (10) calendar days of the denial. Per RCW 84.14.070, an
applicant may appeal a denial to the city council within thirty (30)
calendar days of receipt of the denial by filing a complete appeal
application and Council Appeal fee with the planning managercity clerk.
The appeal before the city council will be based on the record made before
the planning managerAdministrator. The planning
manager'sAdministrator's decision will be upheld unless the applicant can
show that there is no substantial evidence on the record to support the
planning managerAdministrator's decision. The city council's decision on
appeal will be final.
E. Amendment of Contract. An owner may request an amendment(s)
to the contract by submitting a request in writing to the Administrator,
together with a fee of five hundred dollars ($500), at any time within
three (3) years of the date of the approval of the contract. The date for
expiration of the conditional certificate shall not be extended by contract
amendment unless all the conditions for extension set forth in 3.25.070
are met.
11 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
Sec. 3.25.070. Extension of conditional certificate.
A. The conditional certificate and time for completion of the project
may be extended by the planning managerAdministrator for a period not
to exceed a total of twenty-four (24) consecutive months. To obtain an
extension, the applicant must submit a written request, along with a
processing fee of fifty dollars ($50), stating the grounds for the extension.
An extension may be granted if the planning managerAdministrator
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. If an extension is denied, the planning managerAdministrator shall
state in writing the reason for denial and shall send notice to the
applicant's last known address within ten (10) calendar days of the denial.
An applicant may appeal the denial of an extension to the hearing
examiner within fourteen (14) calendar days of receipt of the denial by
filing a complete appeal application and Appeal of Administrative Decision
fee with the planning managerAdministrator. The appeal before the
hearing examiner shall be as provided in Ch. 12.01 KCC for a Process I
12 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
action. No appeal to the city council is provided from the hearing
examiner's decision.
Sec. 3.25.080. Application for final certificate. Upon
completion of the improvements agreed upon in the contract 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 by filing with the planning managerAdministrator the following.,_
along with a one thousand dollar ($1,000) fee:
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 exemption; and
C. The total monthly rent or total sale amount of each multifamily
housing unit rented or sold to date:
D. Any additional information requested by the city pursuant to
meeting any reporting requirements under Chapter 84.14 RCW; and
€.E_. A statement that the work was completed within the required three
(3) year period or any authorized extension.
Sec. 3.25.090. Issuance of final certificate. Within thirty (30)
calendar days of receipt of all materials required for a final certificate, the
planning managerAdministrator shall determine whether the specific
13 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
improvements satisfy the requirements of the contract, application, and
this chapter.
A. Granting of final certificate. If the planning managerAdministrator
determines that the project has been completed in accordance with this
chapter and the contract between the applicant and the city, and has been
completed within the authorized time period, the city shall, within ten (10)
calendar days of the expiration of the thirty (30) day review period above,
file a final certificate of tax exemption with the King County assessor.
B. Recording. The Administrator is authorized to cause to be recorded,
at the owner's expense, in the real property records of the King County
Department of Records and Elections, the contract with the city, as
amended if applicable, and such other document(s) as will identify such
terms and conditions of eligibility for exemption under this chapter as the
Administrator deems appropriate for recording.
BC. Denial and appeal. The planning managerAdministrator shall notify
the applicant in writing that a final certificate will not be filed if the
planning managerAdministrator determines that:
1. The improvements were not completed within the authorized
time period;
2. The improvements were not completed in accordance with
the contract between the applicant and the city; or
3. The owner's property is otherwise not qualified under this
chapter.
14 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
An applicant may appeal a denial to the hearing examiner within
fourteen (14) calendar days of issuance of the denial of a final certificate
by filing a complete appeal application and Appeal of Administrative
Decision fee with the planning managerAdministrator. The appeal before
the hearing examiner shall be as provided in Ch. 12.01 KCC for a Process I
action. No appeal to the city council is provided from the hearing
examiner's decision. The applicant may appeal the hearing examiner's
decision to the King County superior court, under RCW 34.05.510 through
34.05.598, if the appeal is filed within thirty (30) calendar days of
receiving notice of that decision.
Sec. 3.25.100. Annual eamplianee reviewcertification and
report. Within thirty (30) calendar days after the first anniversary of the
date of filing the city issued the final certificate of tax exemption and each
year thereafter for a period of ten (10) years the duration of the tax
exemption period, the property owner shall file a notarized declaration and
annual report with the planning managerAdministrator indicating the
following:
A. A statement of occupancy and vacancy of the multifamily units
during the previous twelve (12) months;
B. A certification that the property has not changed use and continues
to be in compliance with the contract with the city and this chapter; am!-
C. A description of any subsequent improvements or changes to the
property made after the city issued the final certificate of tax exemption.
D. The total monthly rent of each multifamily housing unit rented or
the total sale amount of each multifamily housing unit sold to an initial
15 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
purchaser during the twelve (12) months ending with the anniversary
date;
E. A breakdown of the number, type and specific multifamily housing
units rented or sold during the twelve (12) months ending with the
anniversary date; and
F. Any additional information requested by the city pursuant to
meeting any reporting requirements under Chapter 84.14 RCW.
City staff may also conduct onsite verification of the declaration and
reporting. Failure to submit the annual declaration and report shall result
in a review of the exemption per RCW 84.14.110.
Sec. 3.25.110. Cancellation of tax exemption.
A. If the planning managcrAdministrator determines {Ql_the owner is
not complying with the terms of the contract or this chapter.,: (b)the use
of the property is changed or will be changed to a use that is other than
residential; (c) the project violates applicable zoning requirements, land
use regulations, building or fire code requirements; or (d) the property 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, the owner shall notify the planning managerAdministrator
and the King County assessor in writing within sixty (60) calendar days of
the change in use. Upon such change in use, the tax exemption shall be
canceled and additional taxes, interest and penalties imposed pursuant to
state law.
16 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
A. Effect of canceHation. If a tax exemption is canceled due to a
change in use or other noncompliance, the following taxes and penalties
will apply:
1. Additional real property tax, plus interest, shall be imposed
based upon the value of the nonqualifying improvements. This additional
tax is calculated based upon the difference bet·Neen the property tax paid
and the property tax that \Nould have been paid if it had included the value
of the nonqualifying improvements dated back to the date that the
improvements vvere converted to a nonqualifiying use.
2. A penalty shall be imposed amounting to t·Nenty (20) percent
of the value of the additional property tax plus interest.
3. The interest is calculated at the same statutory rate charged
on delinquent property taxes from the dates on 'Nhich the additional
property tax could have been paid 'vVithout penalty if the improvements
had been assessed at full value 'v'v'ithout regard to this tax exemption ,
program.
4. The additional taxes, interest and penalties will become a lien
on the land and attach at the time the property or portion of the property
is removed from multifamily use or the amenities no longer meet
applicable requirements. The lien has priority over and must be fully paid
and satisfied before a recognizance, mortgage, judgment, debt, obligation,
or responsibility to or with which the land may become charged or liable.
The lien may be foreclosed upon expiration of the same period after
delinquency and in the same manner provided by law for foreclosure of
liens for delinquent real property taxes. An additional tax unpaid on its
due date is delinquent. From the date of delinquency until paid, interest
must be charged at the same rate applied by la'vV to delinquent ad valorem
property taxes.
B. Notice and appeal. Upon determining that a tax exemption is to be
canceled, the planning managerAdministrator shall notify the owner by
17 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
mail, return receipt requested. The property owner may appeal the
determination by filing a notice of appeal and Appeal of Administrative
Decision fee with the city clerk within thirty (30) calendar days, specifying
the factual and legal basis for the appeal. The hearing examiner will
conduct a hearing under Ch. 12.01 KCC for a Process I action. An
aggrieved party may appeal the hearing examiner's decision to the King
County superior court under RCW 34.05.510 through 34.05.598.
Sec. 3.25.120. Sunset of exemption for applications for
conditional certificates. The city shall not accept new applications for
conditional certificates as provided in this chapter after June 30. 2014,
unless extended by City Council action. Incomplete applications for
conditional certificates as of June 30, 2014 shall be returned to owners.
Notwithstanding the above, the city shall process (1) pending complete
applications for a conditional certificate and (2) applications for extension
of the conditional certificate or final certificate received after June 30,
2014. as provided in this chapter. This chapter shall continue to apply to
all properties that have been or are issued a final certificate of tax
exemption under this chapter until expiration, termination. or cancellation
of the tax exemption.
SECTION 2. -Severabilitv. If any one or more section,
subsections, or sentences of this ordinance are held to be unconstitutional
or invalid, such decision shall not affect the validity of the remaining
portion of this ordinance and the same shall remain in full force and effect.
SECTION 3. -Effective Date. This ordinance shall take effect and
be in force thirty (30) days from and aft
Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
ATTEST:
BRENDA JACOBER, CITY Cf RK
\
APPROVED AS TO FORM:
~WI\ J?u1e L
PASSED:
APPROVED: /7 day of _----,t.+-___:._ ____ , 2009.
PUBLISHED: 2. C> day of _-'4-------' 2009.
I hereby certify that this is a true copy of Ordinance No.''="'---'--"--"--
passed by the City Council of the City of Kent, Washington, and approved
by the Mayor of the City of Kent as hereon indicated.
t~-?e,/iSEAL)
ITY CLERK
19 Multifamily Dwelling
Tax Exemptions -Amend KCC 3.25
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