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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 1 r�R.'zyyy kA�'1{�+yy' j4i 17 Repeal and Replace KCC 3.25 - Targeted Residential Investment Program 5 232 Pl Q > < EXHIBIT A Greater Downtown RTA < z V, > W z Q O > sloF 6 Q 1O^ UDY ST Z lL0 �Q v W W JAMES ST W JAMES ST W JAMES ST .. S ST z ; - = > z A � z ."�'� a z > o � o a 4 z Q A W SMITH ST = E SMITH ST � N W SMITH Sj \ ,r : $ SMITH ST I � t v W MEEKER ST �, ��� srsi �TFV RD S ko W GOWE ST E GOWE ST > W GOWE ST Q n ` >z R' I: m s. . Q � S DES MO\NES RO 3 ^ a n S BEN rZ EXHIBIT B Midway RTA AWW .� VETERANS DR s r Z S 240 ST ; . Ln tp <tLn i F r. M P S 252 ST '� r� ;r. et d rn Q � m 00 �' Z � n x S 260 S59 cn Q > to 5 262 STJrv 1� a tj 14 F, S 268 ST ,, ,. ` S ST 2 S 272 ST s l Toe $eattte t oAdhe 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