15.45.030 Tax exemptions for multi-family housing in residential target areas.
A. Intent. Limited eight- or twelve-year exemptions from ad valorem property taxation for multi-family housing in residential target areas are intended to:
1. Encourage increased residential opportunities within urban centers designated by the city council as residential target areas;
2. Stimulate new construction or rehabilitation of existing vacant and underutilized buildings for multi-family housing in residential target areas to increase and improve housing opportunities;
3. Assist in directing future population growth to 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.
B. Duration of Exemption. The value of improvements qualifying under this chapter will be exempt from ad valorem property taxation for eight or twelve successive years (depending on whether the property includes affordable housing component as described in subsection E and F below) beginning January 1 of the year immediately following the calendar year of issuance of the final certificate of tax exemption.
C. 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 non-qualifying improvements. In the case of rehabilitation of existing buildings, the exemption does not include the value of improvements constructed prior to submission of the completed application required under this chapter.
D. Rehabilitation Provisions. Property proposed to be rehabilitated must fail to comply with one or more standards of the applicable state or local building or housing codes on or after July 23, 1995.
E. Eight-Year Exemption Project Eligibility. A proposed project must meet the following requirements for consideration for a property tax exemption:
1. Location. The project must be located within a residential target area, as designated in Section 15.45.020.
2. Tenant Displacement Prohibited. The project must not displace existing residential tenants of structures that are proposed for redevelopment. Existing dwelling units proposed for rehabilitation must have been unoccupied for a minimum of twelve months prior to submission of application and must have one or more violations of the city’s minimum housing code. Applications for new construction cannot be submitted for vacant property upon which an occupied residential rental structure previously stood, unless a minimum of twelve months has elapsed from the time of most recent occupancy.
3. Size. The project must include at least two units of multi-family housing within a residential structure or as part of a mixed-use development. A minimum of two new units must be constructed or at least two additional multi-family units must be added to existing occupied multi-family housing. Existing multi-family housing that has been vacant for twelve months or more does not have to provide additional units so long as the project provides at least two units of new, converted, or rehabilitated multi-family housing.
4. Permanent Residential Housing. At least fifty percent of the space designated for multi-family housing must be provided for permanent residential occupancy, as defined in Section 15.45.010.
5. Proposed Completion Date. New construction multi-family housing and rehabilitation improvements must be scheduled to be completed within three years from the date of approval of the application.
6. Compliance With Guidelines and Standards. The project must be designed to comply with the city’s comprehensive plan, building, housing, and zoning codes and any other applicable regulations in effect at the time the application is approved. The project must be LEED ® certifiable, or must be Built Greentm certified, or an equivalent alternate as determined by the city building official. New construction, rehabilitation and conversion improvements must comply with AMC Title 15. The project must also comply with any other standards and guidelines adopted by the city council for the residential target area in which the project will be developed.
7. Parking. All required residential parking shall be located in structure parking garages, under buildings, or underground for all new construction.
8. Vacancy Requirement. The project must not displace existing residential tenants of structures that are proposed for redevelopment. Existing dwelling units proposed for rehabilitation must have been unoccupied for a minimum of six months prior to submission of application and must have one or more violations of the city’s minimum housing code. Applications for new construction cannot be submitted for vacant property upon which an occupied residential rental structure previously stood, unless a minimum of six months has elapsed from the time of most recent occupancy.
9. Mixed Use Development. The project shall be a mixed use project as defined by AMC 15.45.010(B).
F. Twelve-Year Exemption Project Eligibility. A proposed project must meet the following requirements for consideration for a twelve-year property tax exemption:
1. All requirements set forth in subsection E above; and
2. The applicant shall commit to renting or selling at least twenty percent of the multi-family housing units as affordable housing units to low and moderate income households respectively, and the property must satisfy that commitment and any additional affordability and income eligibility conditions adopted by the local government under this chapter. In the case of projects intended exclusively for owner occupancy, the minimum requirement of this subsection may be satisfied solely through housing affordable to moderate income households.
G. Application Procedure. A property owner who wishes to propose a project for a tax exemption shall complete the following procedures:
1. File with the department of planning, community and economic development the required application along with the required fees. The application fee to the city shall be one thousand dollars for up to four units, plus one hundred dollars per additional multi-family unit, up to a maximum total fee to the city of five thousand dollars. If the application shall result in a denial by the city, the city will retain that portion of the fee attributable to its own administrative costs and refund the balance to the applicant.
2. A complete application shall include:
a. A completed City of Anacortes application form setting forth the grounds for the exemption;
b. Preliminary floor and site plans of the proposed project;
c. A statement acknowledging the potential tax liability when the project ceases to be eligible under this chapter; and
d. Verification by oath or affirmation of the information submitted.
e. For rehabilitation projects, the applicant shall also submit an affidavit that existing dwelling units have been unoccupied for a period of twelve months prior to filing the application and shall secure from the city verification of properly noncompliance with the city’s minimum housing code.
H. Application Review and Issuance of Conditional Certificate. The director may certify as eligible an application which is determined to comply with the requirements of this chapter. A decision to approve or deny an application shall be made within ninety days of receipt of a complete application.
1. 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. The conditional certificate expires three years from the date of approval unless an extension is granted as provided in this chapter.
2. Denial. The director shall state in writing the reasons for denial and shall send notice to the applicant at the applicant’s last known address.
3. Appeal. An applicant may appeal a denial to the city council within 14 days of the issuance of the notice of denial. On appeal, the director’s decision will be upheld unless the applicant can show that there is no substantial evidence on the record to support the director’s decision. The city council’s decision on appeal will be final.
I. Extension of Conditional Certificate. The conditional certificate may be extended by the director for a period not to exceed twenty-four consecutive months. The applicant must submit a written request stating the grounds for the extension, accompanied by a processing fee established by resolution. 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;
3. The project shall comply with the city’s comprehensive plan, building, housing, and zoning codes, and any other applicable regulations in effect at the time the extension of the conditional certificate is granted; and
4. All the conditions of the original contract between the applicant and the city will be satisfied upon completion of the project.
J. 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 certificate of occupancy, the applicant may request a final certificate of tax exemption. The applicant must file with the planning, community and economic development department the following:
1. A statement of expenditures made with respect to each multi-family housing unit and the total expenditures made with respect to the entire property;
2. A description of the completed work and a statement of qualification for the exemption; and
3. A statement that the work was completed within the required three-year period or any authorized extension. Within thirty days of receipt of all materials required for a final certificate, the director shall determine which specific improvements satisfy the requirements of this chapter.
K. Issuance of Final Certificate. If the director determines that the project has been completed in accordance with the contract between the applicant and the city and has been completed within the authorized time period, the city shall, within fourteen days, file a final certificate of tax exemption with the Skagit County Assessor.
1. Denial and Appeal. The director shall notify the applicant in writing that a final certificate will not be filed if the director determines that:
a. The improvements were not completed within the authenticated time period;
b. The improvements were not completed in accordance with the contract between the applicant and the city; or
c. The owner’s property is otherwise not qualified under this chapter.
2. Within fourteen days of the issuance of the director’s denial of a final certificate, the applicant may file an appeal with the city council. The applicant may appeal the city council decision in Superior Court, if the appeal is filed within thirty days of receiving notice of that decision.
L. Annual Compliance Review. Within thirty days after the first anniversary of the date of filing the final certificate of tax exemption, and each year thereafter, for a period of eight or twelve years, the property owner shall file a notarized declaration with the director indicating the following:
1. A statement of occupancy and vacancy of the multi-family units during the previous year;
2. A certification that the property continues to be in compliance with the contract with the city; and if applicable, a certification of affordability based on documentation that the property is in compliance with the affordable housing requirements as described in Section 15.45.030(F); and
3. A description of any subsequent improvements or changes to the property. City staff shall also conduct on-site verification of the declaration. Failure to submit the annual declaration may result in the tax exemption being canceled.
M. Cancellation of Tax Exemption. If the director determines the owner is not complying with the terms of the contract, the tax exemption will be canceled. This cancellation may occur in conjunction with the annual review or at any other time when noncompliance has been determined. If the owner converts the multi-family housing to another use, the owner must notify the director and the Skagit County Assessor within sixty days of the change in use.
1. Effect of Cancellation. If a tax exemption is canceled due to a change in use or other noncompliance, the Skagit County Assessor may impose an additional tax on the property, together with interest and penalty, and a priority lien may be placed on the land, pursuant to state legislative provisions.
2. Notice and Appeal. Upon determining that a tax exemption is to be canceled, the director shall notify the property owner by certified mail. The property owner may appeal the determination by filing a notice of appeal with the city clerk within thirty days, specifying the factual and legal basis for the appeal. The city council will conduct a hearing at which all affected parties may be heard and all competent evidence received. The city council will affirm, modify, or repeal the decision to cancel the exemption based on the evidence received. An aggrieved party may appeal the city council’s decision to Superior Court. (Ord. 2814 § 1(Exh. A), 2010)