HomeMy WebLinkAbout2023-05, Multifamily Tax ExemptionCity of East Wenatchee Ordinance 2023-05
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City of East Wenatchee, Washington
Ordinance No. 2023-05
An Ordinance of the City of East Wenatchee amending Chapter 4 Revenue and Finance, creating a new section for a multi-family tax exemption program, containing a severability clause, and establishing an effective date.
Una Ordenanza de la Ciudad de East Wenatchee que modifica el Capítulo 4 de Ingresos y Finanzas, creando una nueva sección para un programa de exención de impuestos para viviendas multifamiliares, que contiene una cláusula de separación y establece una fecha de entrada en vigencia.
1. Alternate format.
1.1. Para leer este documento en otro formato alternativo (español, Braille, leer en voz alta, etc.), comuníquese con el secretario de la ciudad al alternatformat@eastwenatcheewa.gov, al (509) 884-9515 o al 711 (TTY).
1.2. To read this document in an alternate format (Spanish, Braille, read aloud, etc.), please contact the City Clerk at alternateformat@eastwenatcheewa.gov, at (509) 884-9515, or at 711 (TTY).
2. Recitals.
2.1. The City of East Wenatchee (“City”) is a non-charter code city, duly incorporated and operating under the laws of the State of Washington.
2.2. The City of East Wenatchee desires to stimulate construction of multifamily housing in its multifamily zoned areas, in order to encourage increased residential opportunities, to stimulate new construction or rehabilitation of existing vacant and underutilized buildings for multifamily housing and to reduce development pressure in single-family neighborhoods.
2.3. The City designates, pursuant to authority granted by Chapter 84.14 RCW, properties zoned at Residential Medium Density, Residential High Density/Office, Mixed Use and Waterfront Mixed Use as Residential Target Areas within the City for the provision of limited property tax exemptions for new or rehabilitated multi-family residential housing.
3. Authority.
3.1. RCW 35A.11.020 and RCW 35A.12.190 authorize the City Council to adopt ordinances of all kinds to regulate its municipal affairs and appropriate to the good government of the City.
3.2. RCW 84.14 authorizes a short-term exemption from property taxation (known as the Multifamily Housing Property Tax Exemption (MFTE)) for
City of East Wenatchee Ordinance 2023-05
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the value of new housing construction in designated Residential Target Areas (RTA’s)
4. Purpose. The purpose of this ordinance is to establish a multi-family property tax exemption program.
THE CITY COUNCIL OF THE CITY OF EAST WENATCHEE DO ORDAIN AS FOLLOWS:
5. Amendments. The City Council amends EWMC Chapter 4 Revenue and Finance as set forth in Exhibit A.
6. Findings of Fact and Conclusions of Law. The City Council adopts the Recitals stated above as well as the findings of fact and conclusion of law as set forth below.
6.1. FINDINGS OF FACT
6.1.1. The multifamily designated areas (Residential Medium Density, Residential High Density/Office, Mixed Use, and Waterfront Mixed Use) within the City are the urban center of the East Wenatchee Urban Growth Area.
6.1.2. The multifamily areas within the City lack sufficient available, desirable affordable and convenient housing to meet the needs of the public.
6.1.3. Adopting a Multifamily Tax Exemption Program to encourage the development of multifamily housing assists in accomplishing the planning goals required under the Growth Management Act, RCW Chapter 36.70A, as implemented from time to time by the City’s current and future Comprehensive Plans.
6.1.4. Pursuant to RCW 84.14.040(3) advertisement of the City Council’s public hearing was published in the Wenatchee World on February 3, 2023, and February 10, 2023.
6.1.5. The East Wenatchee City Council held a duly advertised public hearing to accept public testimony, deliberate the merits of a Multifamily Tax Exemption Program and the designation for the Residential Target Areas and take action.
6.1.6. Any Finding of Fact that is more correctly a Conclusion of Law is hereby incorporated by this reference.
6.2. CONCLUSIONS
6.2.1. The proposed amendments have been processed in a manner consistent with the requirements of the Revised Code of Washington and the Washington Administrative Code.
Chapter 4.XX
Multi-Family Property Tax Exemption
Sections:
4.XX.010 Purpose
4.XX.020 Authority
4.XX.030 Definitions
4.XX.040 Designation of Residential Target Area
4.XX.050 Project Eligibility and Guidelines
4.XX.060 Application Procedure
4.XX.070 Application Review of Conditional Certificate
4.XX.080 Extension of Conditional Certificate
4.XX.090 Application for Final Certificate
4.XX.100 Issuance of Final Certificate
4.XX.110 Annual compliance review
4.XX.120 Cancellation of tax exemption
4.XX.130 Appeals to Hearing Examiner
4.XX.010 Purpose
It is the purpose of this chapter to encourage increased residential housing, including
affordable housing opportunities, in keeping with the goals and mandates of the Growth
Management Act (Chapter 36.70A RCW) so as to stimulate the construction of new
multifamily housing and the rehabilitation of existing vacant and underutilized buildings
for multifamily housing within the city.
4.XX.020 Authority
This chapter is adopted under the authority of RCW 84.14 which provides for special
valuations for eligible improvements associated with multifamily housing to improve
residential opportunities including affordable housing.
4.XX.030 Definitions
“Affordable housing” means residential housing that is rented by a person or household
whose monthly housing costs, including utilities other than telephone, do not exceed
thirty percent of the household’s monthly income. For the purposes of housing intended
for owner occupancy, “affordable housing” means residential housing that is within the
means of low or moderate-income households.
“Director” means the community development director for the City of East Wenatchee.
“Household” means a single person, family, or unrelated persons living together.
“Low-income household” means a single person, family, or unrelated persons living
together whose adjusted income is at or below eighty percent of the median family
Exhibit A
income adjusted for family size, for the county where the project is located, as reported
by the United States department of housing and urban development.
“Moderate income household” means a single person, family or unrelated persons living
together whose adjusted income is more than eighty percent but at or below one
hundred fifteen percent of the median family income adjusted for family size, for the
county where the project is located, as reported by the United States department of
housing and urban development.
“Multifamily housing” means a building having four or more dwelling units not designed
or used as transient accommodations and not including hotels or motels. Multifamily
units may result from new construction or rehabilitated or conversion of vacant,
underutilized, or substandard buildings to multifamily housing.
“Owner” means the property owner of record.
“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. Excluded from
this definition are hotels and motels that predominately offer rental accommodation on a
daily or weekly basis.
“Rehabilitation improvements” means modifications to existing structures, that are
vacant for twelve months or longer, that are made to achieve a condition of substantial
compliance with existing building codes or modification to existing occupied structures
which increases the number of multifamily housing units.
“Residential target area” means an area within an urban center or urban growth area
that has been designated by the city council as lacking sufficient, available, desirable,
affordable and convenient residential housing to meet the needs of the public.
“Substantial compliance” means compliance with local building or housing code
requirements that are typically required for rehabilitation as opposed to new
construction.
4.XX.040 Designation of Residential Target Areas
The Residential Medium Density, Residential High Density/Office, Mixed Use and
Waterfront Mixed Use zoning districts, as identified on the City of East Wenatchee
Zoning Map, are hereby designated as the residential target areas pursuant to RCW
84.14.040 within the City of East Wenatchee.
4.XX.050 Project Eligibility and Guidelines
A. Eligibility Requirements. To be eligible for a property tax exemption under this
chapter, the property must satisfy all of the following requirements:
Exhibit A
1. The new or rehabilitated multifamily housing must be located within the
Residential Target Area designated in EWMC 4.XX.040.
2. The project must be for multifamily housing in a residential structure or as part of
a mixed-use development. One hundred percent of the residential space must
provide for permanent residential occupancy.
3. The project must be designed to comply with the City’s comprehensive plan,
applicable development regulations, and applicable building codes.
4. Any multifamily residential property that is proposed to be rehabilitated must fail
to comply with one or more standards of the applicable building codes.
5. Occupied multifamily residential properties proposed for rehabilitation must meet
the following:
a) At least four additional residential units must be added; and
b) The applicant must provide each existing tenant with housing of comparable
size, quality, and price and a reasonable opportunity to relocate.
For a multifamily residential property to be considered vacant it has to have been
vacant for 12 consecutive months or more.
6. The project must be scheduled for completion within three years from the date of
the conditional certificate.
7. At least one of the contractors or subcontractors working on the project must be
a company based in Douglas or Chelan County.
8. The applicant must enter into a contract with the city, approved by the City
Council, under which the applicant has agreed to the implementation of the
project on terms and conditions satisfactory to the city.
B. Duration of Tax Exemption. The following property tax exemptions are available for
qualified properties in designated residential targeted areas:
1. The assessed value of new housing construction, conversion and rehabilitation
improvements qualifying under this chapter will be exempt from ad valorem
property taxation beginning January 1st of the year immediately following the
calendar year of issuance of the final certificate as follows:
a. For the property to qualify for the eight-year exemption, the applicant must
commit to renting or selling at least 20 percent of the multifamily housing units
as affordable housing units to low and moderate income households.
b. For the property to qualify for the twelve-year exemption, the applicant must
commit to renting or selling at least 30 percent of the multifamily housing units
as affordable housing units to low and moderate income households.
2. The exemption does not apply to the value of land or non-housing related
improvements not qualifying under this chapter, nor does the exemption apply to
increases in assessed valuation of land and non-qualifying improvements, or to
increases made by lawful order of the Douglas County Board of Equalization or
the Washington State Department of Revenue, or Douglas County to a class of
property throughout the county or a specific area of the county to achieve
uniformity of assessment or appraisal as required by law.
3. In the case of rehabilitation of existing buildings, the exemption does not include
the value of improvements construction prior to the submission of the completed
application required under this chapter.
Exhibit A
C. Extension of Tax Exemption. The owner of the property that received a tax
exemption pursuant to this chapter may apply for a twelve-year extension.
1. The extension must be applied for within 18 months of the expiration date.
2. The applicant must commit to renting or selling at least 30 percent of the
multifamily housing units as affordable housing units for low-income households.
3. At the end of the tenth and eleventh years of an extension, applicants must
provide tenants of rent-restricted units with notification of intent to provide the
tenant with rental relocation assistance as provided in subsection (4) of this
section.
4. At the expiration of the exemption, the applicant must provide tenant relocation
assistance in an amount equal to one month’s rent to a qualified tenant within the
final month of the tenant’s lease. To be eligible for tenant relocation assistance,
the tenant must occupy an income-restricted unit at the time the exemption
expires and must qualify as a low-income household under this chapter at the
time the relocation assistance is sought.
D. At the conclusion of the exemption period, the new or rehabilitated housing cost
shall be considered as new construction for the purposes of RCW 84.55 and 36.21.
4.XX.060 Application Procedure
Any property owner who wishes to propose a project for a multifamily property tax
exemption shall comply with the following procedures:
A. Prior to the issuance of any building permit for the project, the property owner shall
submit an application to the community development department on forms
established by the department along with required application fees.
B. A complete application shall contain such information as the director may deem
necessary or useful and shall include:
1. A brief written description of the project and preliminary schematic site and floor
plans of the multifamily units and structure(s) in which they are proposed to be
located setting forth the grounds for the exemption;
2. A brief statement setting forth the grounds for the qualification for exemption; and
3. A statement from the owner acknowledging the potential tax liability when the
project ceases to be eligible under this chapter.
4. For rehabilitation projects,
a. An affidavit that existing dwelling units have been unoccupied for a period of
twelve months prior to filing the application or that the applicant has provided
each existing tenant with housing of comparable size, quality, and price and a
reasonable opportunity to relocate.
b. Written verification from the city building official that the property is in
noncompliance with at least one of the current building codes.
4.XX.070 Application Review of Conditional Certificate
A. The director may certify as eligible an application which is determined to comply with
the requirements of EWMC 4.XX.050 (A) Eligibility Requirements. A decision to
Exhibit A
approve or deny an application shall be made within 90 days of receipt of a complete
application.
B. Approval. If an application is approved, the applicant shall enter into a contract with
the city, subject to approval by resolution of the city council, regarding the terms and
conditions of the project. Upon council approval of the contract, the director shall
issue a conditional certificate of acceptance of tax exemption which shall contain a
statement by the director that the property has complied with EWMC 4.XX.060 and
this section. The conditional certificate expires three years from the date of
approval.
C. Denial. If an application is denied, the director shall state in writing the reasons for
denial and shall send notice to the applicant’s last known address within 10 days of
the denial.
4.XX.080 Extension of Conditional Certificate
A. Extension. The conditional certificate and time for completion of the project may be
extended by the director for a period not to exceed a total of 24 consecutive months.
To obtain an extension, the application must submit a written request, no later than
60 days prior to the expiration of the conditional certificate, stating the grounds for
the extension. An extension may be granted if the Director 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. Director’s action on the request for extension. The director shall take action to either
grant or deny the request for an extension no later than 30 days prior to the
expiration of the conditional certificate. Written decision on the extension shall be
sent to the applicant’s last known address.
4.XX.090 Application for Final Certificate
Upon completion of the improvements agreed upon in the contract and upon issuance
of a certificate of occupancy, the applicant may request a final certificate of tax
exemption by filing with the community development department such information as
the director may deem necessary or useful to evaluate eligibility for the final certificate
and shall include:
A. A description of the completed work and a statement that the improvements qualify
for the exemption;
B. A statement that the work was completed within the required three-year period or
any authorized extension;
C. A statement of expenditures made with respect to each multifamily housing unit and
the total expenditures made with respect to the entire property;
D. A statement that the project meets affordable housing requirements of this chapter;
and
Exhibit A
E. Applicable fees as payment for the processing of the final certificate by the
community development department and the Douglas County Assessor
4.XX.100 Issuance of Final Certificate
A. Within thirty days of receipt of all materials required for the final certificate, the
director shall determine whether the completed work and the affordability of the units
is consistent with the contract between the City and the owner and is qualified for
exemption under this chapter, and which specific improvements satisfy the
requirements of this chapter.
B. If the director determines that the project has been completed in accordance with the
contract between the applicant and the City and the requirements of this chapter,
including, if applicable, affordable housing requirements, the City shall file a final
certificate of tax exemption with the assessor within 10 days of the expiration of the
thirty-day period.
C. The director shall notify the applicant in writing that the City will not file a final
certificate if the director determines that the project was not completed within the
required three-year period or any approved extension, was not completed in
accordance with the contract between the applicant and the City and the
requirements of this chapter, if applicable, that the affordable housing requirements
were not met, or if the owner’s property is otherwise not qualified.
D. If the director determines that the project has been completed in accordance with the
contract between the applicant and the City and the requirements of this chapter,
including, if applicable, affordable housing requirements, the City shall file a final
certificate of tax exemption with the assessor within sixty days.
E. The director is authorized to cause to be recorded, in the real property records of the
Douglas County Assessor, the contract with the City, or such other document(s) as
will identify such terms and conditions of eligibility for exemption under this chapter
as the director deems appropriate for recording.
4.XX.110 Annual compliance review
Within 30 days after the first anniversary of the date of filing of the final certificate of tax
exemption and each year thereafter for the tax exemption period, the property owner
shall file a notarized declaration with the community development department indicating
the following:
A. A statement of occupancy and vacancy of the multifamily units during the previous
year ending with the anniversary date;
B. A certification that the property continues to be in compliance with the contract with
the city, including that it has not changed use, and, if applicable, that the property
has been incompliance with any affordable housing requirements;
C. A description of any subsequent improvements or changes to the property; and
D. A report on affordable housing requirements, if applicable, including:
1. The total monthly rent or total sale amount of each unit produced;
Exhibit A
2. The income of each renter household at the time of initial occupancy and the
income of each initial purchaser of owner-occupied units at the time of purchase
for each of the units receiving a tax exemption; and
3. Any additional information requested by the city in regard to the units receiving a
tax exemption.
City staff shall have the right to conduct on-site verification of the declaration. Failure to
submit the annual declaration may result in the tax exemption being cancelled.
4.XX.120 Cancellation of tax exemption
If the director determines the owner is not complying with the terms of the contract, the
tax exemption will be cancelled. 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 must notify
the director and the Douglas County Assessor within 60 days of the change in use.
A. Effect of Cancellation. If a tax exemption is cancelled due to change in use or other
noncompliance, the Douglas County Assessor may impose an additional real
property tax on the value of the nonqualifying improvements in the amount that
would normally be imposed, plus a penalty of 20 percent. This additional tax is
calculated based on 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 dating back to the date that the improvements were converted to a
non-multifamily use. The tax will include interest upon the amount of the additional
tax, together with interest and penalty and will become a lien on the land and
attached at the time the property or portion of the property when it is removed from
multifamily use no longer meets the applicable requirements.
B. Upon determining that a tax exemption is to be cancelled, the director shall notify the
property owner by certified mail.
4.XX.130 Appeals to Hearing Examiner
A. An owner aggrieved by the director’s denial of an application, extension of
conditional certificate, final certification, or cancellation of an exemption under this
chapter shall have the right to appeal to the hearing examiner. Any such appeal
shall be in writing and shall be filed with the city within 30 days of the director’s
decision. The appeal shall specify the factual and legal basis on which the director’s
decision is alleged to be erroneous. The appeal shall be accompanied by the
applicable appeal fee established by resolution of the City Council. Failure to follow
the appeal procedures in this section shall preclude the owner’s right to appeal.
B. An appeal shall be processed in accordance with EWMC 19.07.020 Administrative
appeals of decision with the exception that, in accordance with RCW 84.14.070 the
owner has 30 days to file the appeal.
Exhibit A