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HomeMy WebLinkAboutEC17-206 - Other - Marquee on Meeker - Phase I - Multifamily Housing Property Tax Exemption - 02/06/2018 Records Management,,.,. KENO Document WASHtNGTON SCANNED CONTRACT COVER SHEET M 1(r AV This is to be completed by the Contract Manager prior to submission to the City Clerk's Office. All portions are to be completed. If you have questions, please contact the City Clerk's Office at 253-856-5725. Vendor Name: Marquee on Meeker Phase I Vendor Number: JD Edwards Number Contract Number: -E --� I"fG This is assigned by City Clerk's Office Project Name: Multifamily Housing Property Tax Exemption Description: ❑ Interlocal Agreement ❑ Change Order ❑ Amendment ❑ Contract ® Other: Tax Exemption Agreement Contract Effective Date: 2/6/18 Termination Date: 2/6/26 Contract Renewal Notice (Days): Number of days required notice for termination or renewal or amendment Contract Manager: Jason Garnham Department: ECD Contract Amount: Approval Authority: ❑ Director ❑ Mayor ® City Council 12/27/17 Meeting Date Detail: (i.e. address, location, parcel number, tax id, etc.): Multifamily Housing Property Tax Exemption agreement for Phase I of the Marquee on Meeker project. Authorizes a limited 8 year exemption from "ad valorem" property tax exemption for developments meeting criteria established in City Code. I i ECONOMIC and COMMUNITY DEVELOPMENT Ben Wolters, Director Phone: 253-856-5454 KEN T Fax: 253-856-6454 WASH I N G T O N 220 Fourth Avenue S. Kent, WA 98032-5895 Date: November 8, 2017 TO: Chair Bill Boyce and Economic & Community Development Committee FROM: Jason Garnham, Planner RE: Marquee on Meeker Phase I - Multifamily Tax Exemption Agreement For Meeting of November 13, 2017 MOTION: Recommend Council authorize the Mayor to sign the Multifamily Housing Property Tax Exemption Agreement with Marquee on Meeker LLC, subject to final terms and conditions acceptable to the Economic and Community Development Director and City Attorney. SUMMARY: An application for a multifamily tax exemption was received by the City on October 4, 2017 for Phase I of the Marquee on Meeker project. Marquee on Meeker is a mixed use development comprised of 498 residential apartment units and 12,000 square feet of commercial space in twenty-three separate buildings, located at the existing Riverbend Par 3 golf course on the south side of West Meeker St. A Development Agreement establishing the terms and conditions of this project was approved by the City Council on August 1, 2017. Phase I of this project is comprised of 288 residential apartment units and 6,000 square feet of commercial space in fifteen separate buildings, located on the westernmost portion of the project site. The remainder of the Marquee on Meeker project will be the subject of a separate Multifamily Tax Exemption application at a later time. Applications for downtown design review and civil construction have been submitted to the City and are currently under review. A multifamily tax exemption provides a limited eight-year exemption from %%ad valorem" property taxation for developments that meet the 8 criteria in Kent City Code 3.25.040, which relate to the location, size, and design of the project. Adopted by the City Council 1998 and amended in 2016, the purpose of the City's multifamily tax exemption is to encourage residential development in targeted areas of the City and on vacant and underutilized sites to reduce development pressure on single family neighborhoods and support transit use in urban center areas. The applicant has worked closely with City staff to design the project to comply with the downtown design guidelines and the multifamily tax exemption criteria. Staff finds that the proposal meets the eligibility requirements and recommends approval of this request for a multifamily tax exemption. The final step in the process for the tax exemption is Council approval of the agreement. Staff will provide a summary of the project and the multifamily tax exemption eligibility requirements at the November 13, 2017 ECD Committee Meeting. EXHIBITS: Approval memo dated 10/17/17, draft contract, project plans BUDGET IMPACT: None cc: Ben Wolters,Economic&Community Development Director P:\Planning\ECDC\2017\11-13-17\MFTE_Marquee-on-MeekerPhaseI_staff memo.doc ECONOMIC &COMMUNITY DEVELOPMENT Ben Wolters Director 220 4th Avenue South KENT Kent, WA 98032 w,r Fax: 253-856-6454 PHONE: 253-856-5454 October 17, 2017 Mr. Brett Jacobsen Marquee on Meeker LLC 2711 West Val'ey Hwy N, #200 Auburn, WA 98100 RE: MARQUEE ON MEEKER PHASE I MULTIFAMILY TAX EXEMPTION APPLICATION Dear Mr. Jacobsen: I am writing to address your October 17, 2017 Multifamily Tax Exemption (METE) application for Phase I of the Marquee on Meeker project, which is comprised of 288 residential apartment units and 6,000 square feet of commercial space in fifteen separate buildings. Thank you for the information you have provided, which constitutes a complete application. Phase II of this project will be reviewed under a separate Multifamily Tax Exemption application. This second phase will include the remainder of the 498-units and 12,000 square feet of commercial retail space described in the Development Agreement that was approved by the City Council on August 1, 2017, The purpose of the MFTE is to provide a iimited eight year exemption from ad valorem property taxation for multifamily housing in Kent's residential targeted areas. This exemption is intended to stimulate new high quality residential construction, help direct future population growth toward downtown Kent and promote urban residential densities conducive to transit use. I have reviewed the application per the eligibility requirements and approval criteria of Kent City Code 3.25 and determined that the application is eligible and compliant with relevant requirements. As described in the application, the above-mentioned Development Agreement and project permit documents, the project meets the eligibility requirements found in KCC 3.25.040. These requirements pertain to location, tenant displacement, number of units, construction schedule, structured parking and compliance with city guidelines and standards. Accordingly, I have determined that the application is approved. The next step in the MFTE process is entering into a contract with the City that > addresses the terms and conditions of the project under Kent City Code 3.25. I Cr have enclosed a draft contract for your review. Once the contract is approved by the City Council and signed by the Mayor, a Y conditional certificate of acceptance of tax exemption will be issued. This certificate 0 MAYOR SU7ETTF COOKF. -c City of Kent Economic &Community Development Mr. Brett Jacobsen Page 2 will be valid for three years, while the project is under construction. Once the project is completed, a final certificate application and annual reporting will also be required per KCC 3.25. Again, thank you for your application, Please continue to work with staff towards completing the remaining steps in the process. Best Regards,"' Ben Wolters Economic & Community Development Director e,icl: draft METE contract cc: Charlene Anderson, AICP, Planning Manager Matt Gilbert, AICP, Current Planning Manager Adam Long, Assistant City Attorney MULTIFAMILY HOUSING PROPERTY TAX EXEMPTION AGREEMENT THIS MULTIFAMILY HOUSING PROPERTY TAX AGREEMENT (hereinafter "Agreement") is entered into on the last date signed below, by and between 1A uES t)-A (hereinafter "Applicant"), and the CITY OF KENT, a municipal corporation (hereinafter "City"). Recitals. 1. Applicant has applied to City for a limited property tax exemption as provided for in Chapter 84.14 RCW and Chapter 3.25, Kent City Code ("KCC") for multifamily residential housing located in the residential targeted area, as defined in KCC Section 3.25.020, and the Director of Economic and Community Development (hereinafter "Director") has approved the application; and 2. Applicant has submitted to City preliminary site plans and floor plans for new multifamily housing units to be constructed as part of a mixed-use project known as M, ' ` tVr UA (hereinafter "Project") on property located at m SI , Kent, Washington, and more fully described in Exhibit 1 attached hereto, (hereinafter "Property"); and 3. Applicant is the owner of the Property; and 4. City has determined that the Project will, if developed as proposed, satisfy the requirements for a final certificate of tax exemption. NOW, THEREFORE, in consideration of the mutual promises herein, City and Applicant do mutually agree as follows: 1. Conditional Certificate of Acceptance of Tax Exemption City agrees, upon execution of this Agreement, and subject to approval by the City Council, to issue a conditional certificate of acceptance of tax exemption (hereinafter "Conditional Certificate"), which shall expire three (3) years from the date of approval of this Agreement by the City Council, unless extended by the Director, or his or her designee, as provided in KCC Section 3.25.070. 2. Agreement to Construct Multifamily Housing_ a. Applicant agrees to construct the Project on the Property substantially as described in the site plans and floor plans on file with the City's Economic and Multifamily Housing Property Tax Page 1 of 10 Exemption Agreement Community Development Department as of the date of the City Council's approval of this Agreement, subject to such modifications thereto as may be required to comply with applicable codes and ordinances; provided, that in no event shall such construction provide fewer than thirty (30) new multifamily housing dwelling units designed for permanent residential occupancy and at least fifty percent (50%) of the space within the Project shall be intended for permanent residential occupancy. b. Applicant agrees to comply with all applicable zoning requirements, land use regulations, and building and housing code requirements, including but not limited to the City's comprehensive plan, building, fire, housing, and zoning codes, downtown design review guidelines, multifamily design review, and mixed use design review if applicable (hereinafter, collectively, "Development Regulations"). The project must be LEED® certifiable as confirmed by a LEED° certified independent third party reviewer or must be Built Green' certified, and must also comply with any other standards and guidelines adopted by the City Council for the residential targeted area. Applicant further agrees that approval of this Agreement by the City Council, its execution by the Mayor, or issuance of a Conditional Certificate by the City pursuant to KCC Section 3.25.060.0 in no way constitutes approval of proposed improvements on the Property with respect to applicable provisions of the City's Development Regulations or obligates the City to approve proposed improvements to the Property. C. Applicant agrees that the Project will be completed within three (3) years from the date of approval of this Agreement by the Council, unless extended by the Director for cause as provided in KCC Section 3.25.070. 3. Requirements for Final Certificate of Tax Exemption. Applicant may, upon completion of the Project and upon issuance by City of a temporary or permanent certificate of occupancy, request a final certificate of tax exemption (hereinafter "Final Certificate"). The request shall be made in writing to the Director, and be accompanied by the following: a. A statement of expenditures made with respect to each multifamily housing unit and the total expenditures made with respect to the entire Project and Property; b. A description of the completed work and a statement of qualification for the multifamily housing property tax exemption; C. The total monthly rent, or total sale amount of each multifamily housing unit rented or sold to date; Multifamily Housing Property Tax Page 2 of 10 Exemption Agreement d. A statement that the Project was completed within the required three- (3) year period or any authorized extension, and documentation that the Project was completed in compliance with the terms of this Agreement; e. Any further information that the Director deems necessary or useful, pursuant to Chapter 84.14 RCW or KCC Chapter 3.25, to evaluate the Project's eligibility for the Final Certificate. 4. Agreement to Issue Final Certificate of Tax Exemption. City agrees to file a Final Certificate with the King County Assessor within forty (40) days of submission by the Applicant of all materials required by paragraph 3 above, if Applicant has: a. Successfully completed the Project in accordance with the terms of this Agreement and KCC Chapter 3.25; b. Filed a request for a Final Certificate with the Director and submitted the materials described in paragraph 3 above; C. Paid to City a fee in the amount of one thousand dollars ($1,000); and d. Met all other requirements provided in KCC Chapter 3.25 for issuance of the Final Certificate, 5. Annual Certification and Report. Within thirty (30) days after the first anniversary of the date City issued the Final Certificate and each year thereafter for a period of eight (8) years, Applicant agrees to file a notarized declaration and annual report with the Director. The report shall contain such information as required by RCW 84.14 and as the Director may deem necessary or useful, and shall at a minimum include the following: a. A statement of the occupancy and vacancy of the multifamily housing units during the twelve (12) months ending with the anniversary date; b. A certification that the multifamily housing units, Project, and Property have not changed use since the date the City issued the Final Certificate; C. A statement that the multifamily housing units, Project, and Property continue to be in compliance with this Agreement and the requirements of RCW 84.14 and KCC Chapter 3.25; Multifamily Housing Property Tax Page 3 of 10 Exemption Agreement d. A description of any improvements or changes to the Project made after the City issued the Final Certificate; e. The total monthly rent of each multifamily housing unit rented or the total sale amount of each multifamily housing unit sold to an initial purchaser during the twelve (12) months ending with the anniversary date; f. 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 g. Any additional information requested by the Director pursuant to meeting any reporting requirements under RCW 84.14. 6. No Violations for Duration of Exemption. For the duration of the property tax exemption granted under KCC Chapter 3.52, Applicant agrees that the Project and the Property will have no violations of applicable zoning requirements, land use regulations, building code requirements or fire code requirements, for which the applicable code enforcement officer, pursuant to KCC Chapter 1.04, shall have issued a correction notice, a notice of violation, or other notification that is not resolved by a voluntary correction agreement, certificate of compliance, certificate of release, withdrawal or other method that proves either compliance or that no violation existed, within the time period for compliance, if any, provided in such notice of violation, citation or other notification or any extension of the time period for compliance granted by the code enforcement officer. 7. Notification of Transfer of Interest or Change in Use. Applicant agrees to notify the Director within thirty (30) days of any transfer of Applicant's ownership interest in the Project, the Property or any improvements made to the Property. Applicant further agrees to notify the Director and the King County Assessor in writing within sixty (60) days of any change of use of any or all of the multifamily housing units on the Property to another use. Applicant acknowledges that such a change in use may result in cancellation of the property tax exemption and imposition of additional taxes, interest, and penalty pursuant to state law. 8. Cancellation of Exemption - Appeal. a. The City reserves the right to cancel the tax exemption and revoke the Final Certificate if at any time the Director determines that the multifamily housing units, the Project, or the Property no longer complies with the terms of this Multifamily Housing Property Tax Page 4 of 10 Exemption Agreement Agreement or with the requirements of KCC Chapter 3.52, or for any other reason no longer qualifies for a property tax exemption. b. If the property tax exemption is canceled for non-compliance, Applicant acknowledges that state law requires that an additional real property tax is to be imposed in the amount of: [1] 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, dated back to the date that the improvements became nonqualifying; [2] a penalty of twenty percent (20%) of the difference calculated under (1) of this subsection b; and [3] interest at the statutory rate charged on delinquent property taxes, calculated from the last date the tax could have been paid without penalty if the improvements had been assessed without regard to the exemptions provided by Chapter 84.14 RCW and KCC Chapter 3.52. Applicant acknowledges that, pursuant to RCW 84.14.110, any additional tax owed, together with interest and penalty, shall become a lien on the Property and attach at the time the Property or portion of the Property is removed from multifamily housing use, and that the lien has priority to and must be fully paid and satisfied before a recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which the Property may become charged or liable. Applicant further acknowledges that RCW 84.14.110 provides that any such lien may be foreclosed in the manner provided by law for foreclosure of liens for delinquent real property taxes. C. Upon determining that the tax exemption is to be canceled, the Director shall notify the Applicant, along with any other owner of record, by certified mail, return receipt requested. The Applicant may appeal the determination in accordance with RCW 84.14.110 and KCC Section 3.25.110.B. 9. Amendments. No modification of this Agreement shall be made unless mutually agreed upon by the parties in writing and unless in compliance with the provisions of KCC Section 3.25.060.E, including but not limited to Applicant's payment of a five hundred dollars ($500) contract amendment fee. 10. Binding Effect. The provisions, covenants, and conditions contained in this Agreement are binding upon the parties hereto and their legal heirs, representatives, successors, assigns, and subsidiaries, and are intended to run with the land. 11. Recording of Agreement. The Director shall cause this Agreement to be recorded, at Applicant's expense, in the real property records of the King County Department of Records Multifamily Housing Property Tax Page 5 of 10 Exemption Agreement and Elections, along with any other documents as will identify such terms and conditions of eligibility for exemption as the Director deems appropriate for recording. 12. Audits and Inspection of Records. Applicant understands and agrees that City has the right to audit or review appropriate records to assure compliance with this Agreement and KCC Chapter 3.52 and to perform evaluations of the effectiveness of the multifamily housing property tax exemption program. Applicant agrees to make appropriate records available for review or audit upon seven (7) days' written notice by City. 13. Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when hand-delivered within normal business hours, when actually received by facsimile transmission, or two business days after having been mailed, postage prepaid, to the parties hereto at the addresses set forth below, or to such other place as a party may from time to time designate in writing. APPLICANT: N1R(kAJ1£Ic OkI4 MBIE; Phone: Attention: CITY: City of Kent Economic and Community Development 220 Fourth Avenue South Kent, WA 98032 Phone: (253) 856-5454 Fax: (253) 856-6454 Attention: Director 14. Severability. In the event that any term or clause of this Agreement conflicts with applicable law, such conflict shall not affect other terms of this Agreement that can be given effect without the conflicting terms or clause, and to this end, the terms of the Agreement are declared to be severable. Multifamily Housing Property Tax Page 6 of 10 Exemption Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates indicated below. CITY OF KENT 'APPL T a BY: c� ,o,�„ Go 16a7RclBy: Its: Mayor Its: Date: --D- Date: - APPROVE S TO FORM: J. Cit Atto y Multifamily Housing Property Tax Page 7 of 10 Exemption Agreement STATE OF WASHINGTON ) ss. COUNTY OF KING ) Orxna___=_ foal p{7 I certify that I know or have satisfactory evidence that =. is the person who appeared before me, and said person acknowledged that she signed this instrument, on oath stated that she was authorized to execute the instrument and acknowledged it as the Mayor of the City of Kent to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: -Notary Seal Must Appear Within This Box- IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written. (Signature) NOTARY PUBLIC, in and for the State of Washington, residing at My appointment expires Multifamily Housing Property Tax Page 8 of 10 Exemption Agreement STATE OF WASHINGTON ) ss. COUNTY OF KING ) I certify that I know or have satisfactory evidence that ��" I is the person who appeared before me, and said person acknowledged that he°she) signed this instrument and acknowledged it to be &/her) free and voluntary act for the uses and purposes mentioned in the instrument. Dated: -Notary Seal Must Appear Within This Box- IN WITNESS WHEREOF, I have hereunto set my hand and official seal the day and year first above written. M ic gton t RE MYEXPIRES ( gnatu e)NOTARY UBLIC, in and for th State of Washington, residing at My appointment expires 0�2 1S1rw-� P:\CivillFiles\0pen Files\0648-Economic-CD-General 2011 Wlulti-Family Housing Property Tax Exemption Agreement Template doc Multifamily Housing Property Tax Page 9 of 10 Exemption Agreement MULTIFAMILY HOUSING PROPERTY TAX EXEMPTION AGREEMENT EXHIBIT 1 LEGAL DESCRIPTION Multifamily Housing Property Tax Page 10 of 10 Exemption Agreement LEGAL DESCRIPTION: PARCEL A: THOSE PORTIONS OF GOVERNMENT LOTS 4 AND 5 IN THE SOUTHWEST QUARTER OF SECTION 23,TOWNSHIP 22 NORTH, RANGE 4 EAST, W.M., IN KING COUNTY, WASHINGTON, AND THAT PORTION OF THE SOUTHEAST QUARTER OF THE NORTHWEST QUARTER OF SAID SECTION 23, ALL LYING SOUTHERLY OF SECONDARY STATE HIGHWAY NUMBER 5-A AND WESTERLY OF JOHN DOWNEY ROAD NUMBER 722 (54TH PLACE SOUTH). EXCEPT PORTION THEREOF PLATTED AS COLONY PARK CONDOMINIUMS AS RECORDED IN VOLUME 31 OF CONDOMINIUMS., PAGES 55 THROUGH 57, INCLUSIVE, IN KING COUNTY, WASHINGTON; AND EXCEPT THAT PORTION OF GOVERNMENT LOT 5 IN SECTION 23, TOWNSHIP 22 NORTH, RANGE 4 EAST, W.M., IN KING COUNTY, WASHINGTON, DESCRIBED AS FOLLOWS: BEGINNING ON THE CENTERLINE OF SECONDARY STATE HIGHWAY NUMBER 5-A AT HIGHWAY ENGINEER'S STATION 163+00.00 BACK, 163+48.2 AHEAD AS SHOWN ON THE STATE HIGHWAY MAP BEARING DATE OF APPROVAL OF JANUARY 29, 1957, REVISED MARCH 19, 1957, THE CENTERLINE OF WHICH IS ALSO SHOWN OF RECORD IN VOLUME 1, PAGE 32 OF HIGHWAY PLATS, IN KING COUNTY, WASHINGTON; THENCE NORTH 630 53' 30" EAST, ALONG THE CENTERLINE OF SAID HIGHWAY 549.68 FEET; THENCE SOUTH 140 51' 10" EAST, 301.01 FEET; THENCE SOUTH 750 08' 50" WEST, 60.00 FEET; THENCE SOUTH 140 51' 10" EAST, 119.73 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING SOUTH 140 51' 10" EAST, 166.14 FEET; THENCE NORTH 06" 23' 25" EAST, 55,20 FEET; THENCE NORTH 140 51' 10"WEST, 76.19 FEET; THENCE NORTH 420 18' 10" WEST, 43.69 FEET TO THE TRUE POINT OF BEGINNING. PARCEL B: A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND UTILITIES AS DESCRIBED BY RECORDING NO. 9502040945. First American Title Insurance Company s -go pit _ �d Wt`r u '1 c _ gym P• mks � �■r �■r ice. =II low- } y e i } t f r 31 E- I \ d -fix; ✓✓t*" is\ `. Y f.,.7� Ft 7 � 4k I...b 11ji!1,11 H11111, On 1pf - z � x x REQUEST FOR MAYOR'S SIGNATURE KENT Please Fill in All Applicable Boxes Originator: Jason Garnham, Senior Planner Phone (originator): 5439 Date Sent: 02/01/18 Date of Council Approval: 12/21/17 Return Date of Approval from Finance: N/A Signed Document to: Jason Garnham (only required on contracts $10,000 &over or on any Grant A reements Date Required: When signed Date of Approval from Risk Manager: N/A Marquee on Meeker Phase I Multifamily Budgeted: YES ❑ NO Tax Exemption Budget Fund: Multifamily Housing Property Tax Exemption agreement for Phase I of the Marquee on Meeker project. Authorizes a limited eight-year exemption from "ad valorem" property taxation for developments meeting the criteria established in City code. Staff found that the proposal complies with the requirements and Council authorized during the December 21, 2017 meeting. All Contracts Must Be Routed Through The Law Department HEEIVEDto be completed by Law Department) Received: r��bp�2� Law Department App''''priioveed as to Form: Law Dept. FKTMI tsf-AW DEPT Date Forwarded to Mayor: Shaded Areas To Be Completed By Administration Staff Received: Recommendations and Comments: 5��� � �� �1��0N, ��"`�� m'ry of Date Returned: U P,C,[�F,,m D.c ,t Prec,s g(Pr Sh-far Mayor's Sig,,t,r,d...