HomeMy WebLinkAbout4360 ORDINANCE NO. 4360
AN ORDINANCE of the City Council of the
City of Kent, Washington, repealing Chapter 3.25 of
the Kent City Code, entitled "Multifamily Dwelling
Tax Exemptions," and replacing it with a new
Chapter 3.25, entitled "Targeted Residential
Investment Program," and designating greater
Downtown Kent and Midway as residential targeted
areas.
RECITALS
A. The Washington State Legislature passed Second Substitute
Senate Bill 5387 in 1995, "Taxation of New and Rehabilitated Multi-Unit
Dwellings in Urban Centers." The legislature found that attracting and
maintaining permanent residents to urban centers, a key planning concept
related to growth management, would help alleviate the detrimental
conditions and social liability that can exist in the absence of a viable
residential population. To stimulate new residential opportunities within
urban centers, a tax incentive was implemented that exempted the value
of new housing construction or rehabilitation from ad valorem property
taxation for ten years. This chapter, 84.14 RCW, was subsequently
amended to include two levels of tax exemption—an eight-year exemption
and a twelve-year exemption, with the latter stipulating affordability
requirements.
B. Attracting residential growth to downtown and activity centers
is a core tenet of the City of Kent's Comprehensive Plan and Economic
Development Plan. The City's adopted Midway Subarea Plan (2011), and
1 Repeal and Replace KCC 3.25-
Targeted Residential Investment Program
updated Downtown Subarea Action Plan (2013) both call for residential
growth to capitalize on high-capacity transit and other infrastructure.
Transit-oriented development and growth in urban centers are also key
frameworks in King County's Countywide Planning Policies and Puget
Sound Regional Council's draft Vision 2050.
C. Use of the exemption laid out in Chapter 84.14 RCW has
become common practice for development in the Puget Sound; the vast
majority of neighboring cities have adopted programs utilizing the
exemption. The City of Kent has previously utilized the program as well; it
expired on June 30, 2019.
D. The State Environmental Policy Act (SEPA) responsible official
has determined that the proposed code amendments are procedural in
nature, and further SEPA analysis is not required.
E. By resolution on April 21, 2020, the City Council expressed its
intent to designate the greater Downtown Kent and Midway Residential
Targeted Areas. On May 19, 2020, the City Council held a public hearing to
consider its designation of these areas as Residential Targeted Areas.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF KENT,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
ORDINANCE
SECTION 1. - Repeal. Chapter 3.25 of the Kent City Code entitled
"Multifamily Dwelling Tax Exemptions," is repealed in its entirety.
SECTION 2. - New Chapter. A new Chapter 3.25 of the Kent City
Code is enacted as follows.
2 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
CHAPTER 3.25
TARGETED RESIDENTIAL INVESTMENT PROGRAM
Sec. 3.25.010. 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 multifamily housing in designated urban
centers to:
1. Encourage increased residential opportunities within urban
centers designated by the City Council as residential targeted areas; and
2. Stimulate new construction on vacant and underutilized sites
and the rehabilitation of existing vacant and underutilized buildings for
multifamily housing in residential targeted areas to increase and improve
housing opportunities; and
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. Multifamily housing means one or more new multi-story
buildings designed for permanent residential occupancy, each with four or
more dwelling units.
3 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
3. Owner means the property owner of record.
4. Permanent residential occupancy means multifamily housing
that provides either rental or owner occupancy on a nontransient basis.
This includes owner-occupied or rental accommodation that is leased for a
period of at least one month. This excludes hotels and motels that
predominately offer rental accommodation on a daily or weekly basis.
5. Residential targeted areas include (a) the geographic area of
greater Downtown Kent bordered generally by Titus Street, the Green
River, Willis Street, South 240th/James Street, and Cloudy Street, and
only including zones that permit multifamily housing, and (b) the Midway
subarea as laid out in the Midway Subarea Plan, which geographic area is
bordered generally by Interstate 5 on the east, and the city limits on the
west and south. See Exhibits A and B to the ordinance establishing this
chapter for maps of the greater Downtown Kent Residential Targeted Area
and Midway Residential Targeted Area, respectively.
Sec. 3.25.030. General terms of the tax exemptions
A. Duration of exemption. The value of improvements qualifying under
this chapter is exempt from ad valorem property taxation 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, nor
does the exemption apply to increases in assessed valuation of land and
nonqualifying improvements. This chapter does not apply to increases in
assessed valuation made by the assessor on nonqualifying portions of
buildings and value of land nor to increases made by lawful order of a
4 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
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. General project eligibility. A proposed project
must meet the specific project eligibility requirements of the Residential
Targeted Area provided in this chapter and the following general
requirements in order to be considered for a property tax exemption:
A. Location. The project must be located within a designated residential
targeted area as defined in KCC 3.25.020. If any portion of a legally
created lot is within the residential targeted area, then the entire lot shall
be deemed to lie within the residential targeted area.
B. Tenant displacement. Prior to approval of an application under KCC
3.25.060, the applicant shall provide the administrator with documentation
satisfactory to the administrator that RCW 84.14.030 has been complied
with, including, but not limited to, 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;
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 by the proposed
project.
5 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
C. Size. The project must include at least 4 units of multifamily
housing. At least 50 percent of the space within the proposed project shall
be intended for permanent residential occupancy.
D. Proposed completion date. New construction or rehabilitation of
multifamily housing must be completed within three 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,
multifamily design review, mixed use design review as applicable, and any
other applicable regulations. The project must comply with any other
standards and guidelines adopted by the City Council for the residential
targeted area.
F. Parking. Parking shall be located in structured parking garages,
under buildings, or underground.
G. On-site management. Projects creating one hundred (100) or more
rental units under this section must include 24-hour, 7-day-per-week on-
site management by a company with at least five years of experience in
rental management.
H. Use of existing financial incentive programs. The project shall not be
eligible for exemption under this chapter if its construction is being aided
in whole, or in part, by any local, state or federal financial incentives, tax
credits, or other grant funding programs.
Sec. 3.25.050. Midway Residential Targeted Area Guidelines.
In the Midway Residential Targeted Area, only new construction projects
shall be eligible for tax exemptions under this chapter as follows:
6 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
A. 8-Year Exemption. The value of new housing construction
improvements qualifying under this chapter is exempt from ad valorem
property taxation for eight successive years beginning January 1st of the
year immediately following the calendar year of issuance of the certificate.
B. 12-Year Exemption. The value of new housing construction
improvements qualifying under this chapter is exempt from ad valorem
property taxation for twelve successive years beginning January 1st of the
year immediately following the calendar year of issuance of the certificate,
if twenty percent of the residential units will be rented or sold as affordable
housing units to low-income households. For purposes of this subsection,
low-income household means a single person, family, or unrelated persons
living together whose adjusted income is at or below thirty percent of the
median family income adjusted for family size for King County, as reported
by the United States department of housing and urban development. For
the purposes of housing intended for owner occupancy, affordable housing
means residential housing that is within the means of low-income
households.
Sec. 3.25.060. Downtown Residential Targeted Area
Guidelines. In the Downtown Residential Targeted Area, new
construction, conversion, and rehabilitation projects shall be eligible for tax
exemptions under this chapter as follows:
A. 8-Year Exemption. The value of new housing construction,
conversion, and rehabilitation improvements qualifying under this chapter
is exempt from ad valorem property taxation for eight successive years
beginning January 1st of the year immediately following the calendar year
of issuance of the certificate.
7 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
B. 12-Year Exemption. The value of new housing construction,
conversion, and rehabilitation improvements qualifying under this chapter
is exempt from ad valorem property taxation for twelve successive years
beginning January 1st of the year immediately following the calendar year
of issuance of the certificate, if all of the residential units will be sold as
affordable housing units for owner occupancy to moderate-income
households. For purposes of this subsection, moderate-income household
means a single person, family, or unrelated persons living together whose
adjusted income is between 100 and 120 percent of the median family
income adjusted for family size for King County, as reported by the United
States department of housing and urban development. For the purposes of
housing intended for owner occupancy, affordable housing means
residential housing that is within the means of moderate-income
households.
Sec. 3.25.070. 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
administrator along with the required initial application fee of $1,000. The
application shall be filed prior to the issuance of the building permit for the
project.
B. A complete application shall include:
1. A completed City of Kent application form setting forth the
grounds for the exemption.
2. A brief written description of the project, and floor and site
plans of the proposed project, which may be revised by the owner,
8 Repeal and Replace KCC 3.25-
Targeted Residential Investment Program
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 I
liability when the project ceases to be eligible for exemption under this
chapter.
I
4. An affidavit signed by the owner stating the occupancy record
of the property for a period of 12 months prior to filing the application.
5. Verification of the correctness of the information submitted by
the owner's signature and affirmation made under penalty of perjury under
the laws of the state of Washington.
Sec. 3.25.080. Application review and issuance of conditional
certificate. The 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 90 calendar days of
receipt of a complete application.
A. Approval. The administrator may approve the application if he/she
finds that:
1. The proposed project is or will be, at the time of completion,
in conformance with all applicable local plans, regulations, and design
guidelines.
2. 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.
9 Repeal and Replace KCC 3.25-
Targeted Residential Investment Program
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, the administrator shall issue a conditional certificate of
acceptance of tax exemption. The conditional certificate shall expire three
years from the date of approval unless an extension is granted as provided
in this chapter.
D. Application denial. If an application is denied, the administrator shall
state in writing the reasons for denial and shall send notice to the applicant
at the applicant's last known address within 10 calendar days of the denial.
Per RCW 84.14.070, an applicant may appeal a denial to the City Council
within 30 calendar days of receipt of the denial by filing a complete appeal
application and council appeal fee with the City Clerk. The appeal before
the City Council will be based on the record made before the administrator.
The administrator's decision will be upheld unless the applicant can show
that there is no substantial evidence on the record to support the
administrator'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 $500.00, at any time within three 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 KCC 3.25.070 are met.
Sec. 3.25.090. Extension of conditional certificate.
10 Repeal and Replace KCC 3.25-
Targeted Residential Investment Program
A. The conditional certificate and time for completion of the project
may be extended by the administrator for a period not to exceed a total of
24 consecutive months. To obtain an extension, the applicant must submit
a written request, along with a processing fee of $50, stating the grounds
for the extension. An extension may be granted if the administrator
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 administrator shall state in writing the
reason for denial and shall send notice to the applicant's last known
address within 10 calendar days of the denial. An applicant may appeal the
denial of an extension to the hearing examiner within 14 calendar days of
receipt of the denial by filing a complete appeal application and appeal of
administrative decision fee with the administrator. The appeal before the
hearing examiner shall be as provided in Chapter 12.01 KCC for a Process
I action. No appeal to the City Council is provided from the hearing
examiner's decision.
Sec. 3.25.100. 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
11 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
exemption by filing with the administrator the following, in accordance with
RCW 84.14.090, along with a $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;
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-
year period or any authorized extension.
Sec. 3.25.110. Issuance of final certificate. Within 30 calendar
days of receipt of all materials required for a final certificate, the
administrator shall determine whether the specific improvements satisfy
the requirements of the contract, application, and this chapter.
A. Granting of final certificate. If the administrator 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 10 calendar days of
the expiration of the 30-day review period above, file a final certificate of
tax exemption with the King County assessor.
12 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
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.
i
C. Denial and appeal. The administrator shall notify the applicant in
writing that a final certificate will not be filed if the administrator
1 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.
An applicant may appeal a denial to the hearing examiner within 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 administrator. The appeal before the hearing examiner shall be as
provided in Chapter 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 30 calendar days of receiving notice of that decision.
13 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
Sec. 3.25.120. Annual certification and report. Within 30
calendar days after the first anniversary of the date the City issued the
final certificate of tax exemption and each year thereafter for the duration
of the tax exemption period, the property owner shall file a notarized
declaration and annual report with the administrator indicating the
following:
A. A statement of occupancy and vacancy of the multifamily units
during the previous 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;
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
purchaser during the 12 months ending with the anniversary date;
E. A breakdown of the number, type, and specific multifamily housing
units rented or sold during the 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. 3.25.130. Cancellation of tax exemption.
14 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
A. If the administrator determines (1) the owner is not complying with
the terms of the contract or this chapter; (2) the use of the property is
changed or will be changed to a use that is other than residential; (3) the
project violates applicable zoning requirements, land use regulations,
building or fire code requirements; or (4) 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 administrator and the King County assessor in writing within 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.
B. Notice and appeal. Upon determining that a tax exemption is to be
canceled, the administrator shall notify the owner by 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 30 calendar days, specifying the factual and legal basis for the
appeal. The hearing examiner will conduct a hearing under Chapter 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.
SECTION 2. - Residential Targeted Areas Established. Residential
targeted areas hereby established and include (a) the geographic area of
greater Downtown Kent bordered generally by Titus Street, the Green
River, Willis Street, South 240th/James Street, and Cloudy Street, and
only including zones that permit multifamily housing, and (b) the Midway
15 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
subarea as laid out in the Midway Subarea Plan, which geographic area is
bordered generally by Interstate 5 on the east, and the city limits on the
west and south. Exhibits A and B attached to this ordinance provide maps I
of the greater Downtown Kent Residential Targeted Area and Midway
Residential Targeted Area, respectively. Pursuant to RCW 84.14.040, the
City Council finds that these areas do not have sufficient available,
desirable, affordable, and convenient residential housing, and if such
housing were available, the public would be likely to live in these areas.
The City Council further finds that the designation of these areas as
i
Residential Targeted Areas would encourage increased residential
opportunities and stimulate construction of new multifamily housing that
will increase and improve residential housing opportunities in these areas.
i
SECTION 3. - Severability. If any one or more section, subsection,
or sentence of this ordinance is 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 4. - Corrections by City Clerk or Code Reviser. Upon
approval of the City Attorney, the City Clerk and the code reviser are
authorized to make necessary corrections to this ordinance, including the
correction of clerical errors; ordinance, section, or subsection numbering;
or references to other local, state, or federal laws, codes, rules, or
regulations.
SECTIONS. - Effective Date. This ordinance shall take effect and
be in force 30 days from and after its passage, as provided by law.
S May 19, 2020
DANA RALPH, MAYOR \ Date Approved
16 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
ATTEST:
tit. May 19, 2020
KIMBERLEY A. MOTO, CITY CLER Date Adopted
May 22, 2020
Date Published
APPROVED-�\S TO FORM:
r'
R "P FI ZPATRICK, CITY ATTORNEY
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17 Repeal and Replace KCC 3.25 -
Targeted Residential Investment Program
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City of Kent, City Clerk's Office
Kim Komoto
220 4th Ave S
Kent, WA 98032
Re:Advertiser Account# 480940 Agency Account#: 0
Ad#: 941547 Agency Name:
Affidavit of Publication
STATE OF WASHINGTON Newspaper and Publication Date(s)
Counties of King and Snohomish
The undersigned, on oath states that he/she is an authorized
representative of The Seattle Times Company,
publisher of The Seattle Times of general circulation
published daily in King and Snohomish Counties, State
of Washington.The Seattle Times has been approved as a
legal newspaper by others of the Superior Court of King and
Snohomish Counties. Seattle Times 04/30/20
The notice, in the exact form annexed,was published in the Seattle Times 05/07/20
regular and entire issue of said paper or papers and distrib-
uted to its subscribers during all of the said period.
ti ff
Rg"14_�MPut I SignaturewL.C�.a
FRANKIE FLIGHT
Notary Public
State of Washington
License Number 191 1035,qbs ibed and sworn to before me on CaC�
My Commission Expires DATE
November 04, 2023 Frankie Flight
(Notary Signature) Notary-Fa is i a or the State o Washington, residing at Seattle
TOOO C $C
attte
Re:Advertiser Account# 480940 Ad#: 941547
Agency Account#: 0 Agency Name:
AD TEXT CITY OF KEPT CITY COUNCIL
A NOTICE OF PUBLIC HEARING
ON THE CITY OF KENT'S INTENT TO
DESIGNATE
RESIDENTIAL TARGETED AREAS
FOR MULTIFAMILY TAX EXEMPTION
NOTICE IS HEREBY GIVEN that the
Kent City Council will hold a public hear-
ing during a regularly-scheduled City
Council meeting on Tuesday,May 19,2020,
at 7 p.m.in Kent City Hall Chambers,lo-
cated at 220 Fourth Avenue North, Kent,
WA 98032, (due to COVID-19 and health
safety requirements, this meeting may
be a remote meeting)to discuss the City's
intent to designate Residential Targeted
Areas for multifamily tax exemptions.
The City of Kent declares its intent, for
Public consideration, to designate the
greater Downtown Kent and the Midway
subarea as a Residential Targeted Areas
within urban centers to include (1) the
geographic area of greater Downtown
Kent bordered generally by Titus Street,
the Green River,Willis Street,South 240th/
James Street,and Cloudy Street,and (2)
the Midway subarea as laid out in the
Midway Subarea Plan,which geographic
area is bordered generally by Interstate 5
on the east,and the city limits on the west
and south.
If this is a remote meeting and you wish to
present testimony during the public hear-
ing, please contact the City Clerk in ad-
vance.Members of the public may submit
written comments at the public hearing it-
self,or in advance by regular U.S.Mail to
the City Clerk's Office,220 Fourth Avenue
South, Kent, WA 98032, or by electronic
mail to Cityclerk@KentWA.gov. Any writ-
ten comments sent in advance must be
received no later than 4 P.m.on Tuesday,
May 19,2020,in order to be considered.
Any Person requiring a disability accom-
modation should contact the City Clerk's
Office in advance at 253-856-5725. For
TTD relay service, call the Washington
Telecommunications Relay Service at
7-1-1.
Kimberley A.Komoto
City Clerk
253-856-5725
CityClerkO KentWA.gov