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HomeMy WebLinkAboutAgenda AGENDA Planning & Development Committee Regular Meeting 2:30 PM - Thursday, October 27, 2016 Council Conference Room, 7th Floor, City Hall – 1055 S. Grady Way 1. HEALTHY HOUSING a) Healthy Housing Information 2. MULTI-FAMILY HOUSING PROPERTY TAX EXEMPTION For Sunset Terrace Apartments a) AB - 1779 3. EMERGING ISSUES Safe & Healthy Housing in Renton On October 20, 2016, Jack Pace, Director of the Department of Community Development for the City of Tukwila met with CED to discuss Tukwila’s rental registration program. The Tukwila program is one of the first in the state, following closely after the adoption of a similar program in Pasco. Both those programs were adopted prior to the state legislation regulating such programs was put in place. Tukwila’s program is successful in that it has resulted in safer, more environmentally healthy housing. There is also evidence of lower crime rates, a reduction in incidences of hoarding, and a leveling of the rental field to improve competition in the market. Mr. Pace believes that competition has preserved the affordability of housing in Tukwila to a certain extent. Other “take aways” from this meeting are: People should not have to make a choice between having a place to live and good health. A lot of the problem housing was built under King County standards, prior to annexation. These different standards must be considered during inspection. Tukwila is on a 4-year inspection cycle. They are considering lengthening the time between inspections for units that do not have problems. There is a Crime Prevention Program that allows landlords to have reduced registration fees. Business license fees are not subject to reduction. Staffing for this program is 0.9 FTE; they are working towards 0.5 FTE. They are continually working to improve efficiency and effectiveness while reducing the cost. It is recommended that extensive outreach be done prior to adoption of the Program. A lot of PR and hand-holding is required. The hand-holding is primarily needed for single family and duplex landlords, so city inspectors conduct those inspections and private inspectors do the inspections on larger multi-family. Both landlords and tenants need to know their responsibilities. The program has become fiscally neutral as efficiency has been increased. DASH has taken over some apartment complexes because the owners had difficulty meeting minimum standards. Program should be “streamlineable.” Need to know not only who the landlords are and how many rental units there are, but how many properties have rentals. Instead of dividing the city by zip code zones, inspections could be initiated on the oldest housing first, i.e. “built 75 years ago or more.” This could be more manageable for a city, such as Renton, that has so many rentals (Tukwila has 337 properties with rentals). The Program should have a clear expectation of outcomes, “what do you intend to accomplish?” The intended outcome of the Tukwila Program was to reduce the need for emergency relocation due to “crisis situations.” AGENDA ITEM #1. a) AB - 1779 City Council Regular Meeting - 24 Oct 2016 SUBJECT/TITLE: Sunset Terrace - Multi-Family Housing Property Tax Exemption Agreement RECOMMENDED ACTION: Refer to Planning & Development Committee DEPARTMENT: Community & Economic Development STAFF CONTACT: Mark Santos-Johnson, Community Development Project Manager EXT.: 6584 FISCAL IMPACT SUMMARY: N/A SUMMARY OF ACTION: In September 2016, the City received a Multi-Family Housing Property Tax Exemption (“Exemption”) application for the Sunset Terrace apartment project in the Sunset Area designated residential targeted area. As provided for in RMC 4-1-220, the Department of Community and Economic Development (CED) Administrator needs to approve or deny the Exemption application within 90 days of receipt of the application and, if approved, the applicant must enter into an agreement approved by Council that addresses the terms and conditions for the Sunset Terrace project to receive a partial property tax exemption upon completion. Subject to the Council’s approval of the agreement, the CED Administrator intends to approve the Exemption application for the Sunset Terrace project. The six-story mixed-use apartment project has 108 apartment units, 3,987 square feet of non-residential (commercial retail) space, and 116 structured parking spaces on three levels (two below grade). EXHIBITS: A. Issue Paper B. Draft Multi-Family Housing Property Tax Exemption Agreement STAFF RECOMMENDATION: Staff recommends that Council approve the Multi-Family Housing Property Tax Exemption Agreement that addresses the terms and conditions for the Sunset Terrace apartment project to receive a partial property tax exemption upon completion; and authorize the Mayor to execute said agreement in substantially the same form. AGENDA ITEM #2. a) DEPARTMENT OF COMMUNITY & ECONOMIC DEVELOPMENT M E M O R A N D U M DATE:October 14, 2016 TO:Randy Corman, Council President Members of Renton City Council VIA:Denis Law, Mayor FROM:C. E. “Chip” Vincent, CED Administrator STAFF CONTACT:Mark Santos-Johnson, Community Development Project Manager x6584 SUBJECT:Sunset Terrace – Multi-Family Housing Property Tax Exemption Agreement ISSUE: Should the City Council approve the Multi-Family Housing Property Tax Exemption Agreement for the Sunset Terrace apartment project and authorize the Mayor to execute the agreement? RECOMMENDATION: Staff recommends that the Council: (1) approve the Multi-Family Housing Property Tax Exemption Agreement that addresses the terms and conditions for the Sunset Terrace apartment project to receive a partial property tax exemption upon completion; and (2) authorize the Mayor to execute said agreement in substantially the same form. BACKGROUND SUMMARY: On August 11, 2016, the City received a Multi-Family Housing Property Tax Exemption (“Exemption”) application from Colpitts Development Co. (dba Colpitts Sunset, LLC) for the Sunset Terrace apartment project in the Sunset Area designated residential targeted area. As provided for in RMC 4-1-220, the Department of Community & Economic Development (CED) Administrator needs to approve or deny the Exemption application within 90 days of receipt of the application and, if approved, the applicant must enter into an agreement approved by the Council that addresses the terms and conditions for Sunset Terrace to receive a partial property tax exemption upon completion. Subject to the Council’s approval of the agreement, the CED Administrator intends to approve the Exemption application for the Sunset Terrace apartment project. BACKGROUND: As authorized by Chapter 84.14 RCW, the Council established the Multi-Family Housing Property Tax Exemption (“Exemption”) in 2003 (codified in RMC 4-1-220 as subsequently AGENDA ITEM #2. a) Randy Corman, Council President Page 2 of 3 October 14, 2016 amended) to currently encourage multi-family housing development in Downtown Renton and the Sunset Area. The Exemption provision allows the value of qualified new housing construction to be exempt from ad valorem property tax for a limited period of time after completion of the project1. However, the Exemption does not include the value of the land, existing improvements or non-housing-related improvements (e.g., commercial space). The Exemption applies to all levels of the ad valorem property tax, including the local jurisdiction, county, state, and all local taxing districts. The Exemption is in addition to any other tax credits, grants, or incentives provided by law for the multi-family housing. The City received an Exemption application for the Sunset Terrace apartment project on August 11, 2016. Sunset Terrace is a mixed-use residential rental project located at 2715 Sunset Lane NE (at the northeast corner of Harrington Avenue NE and Sunset Boulevard NE, adjacent to the new Renton Highlands Library) in the Sunset Area. The six-story mixed-use apartment project has 108 residential units and 3,987 square feet of commercial retail and residential amenity space, and 116 (105 residential and 11 commercial) parking spaces on three levels, including two floors located below grade. The estimated potential property tax savings related to the Exemption is approximately $182,129 per year ($1.46 million for the eight-year period) for Sunset Terrace. This equates to a potential property tax savings of approximately $1,686 per year per housing unit ($13,941 per housing unit for the eight-year period). The City of Renton’s portion of the above estimated potential property tax savings related to the Exemption is approximately $40,809 per year ($326,476 for the eight-year period) for the Sunset Terrace project. Although the City will receive additional property tax revenue from the new commercial space and any increased assessed value for the land as a result of the new construction on site, the City will not receive property tax revenue from the residential improvements until after the eight-year property tax exemption period. The project paid a $1,000 initial application fee and satisfies the City’s Exemption eligibility requirements as outlined in RMC 4-1-220D: The multi-family housing units are located in one or more new buildings designed for permanent residential occupancy, each with four or more dwelling units; The project is located in the Center Village (CV) zone as part of the Sunset Area designated residential targeted area; The project is a mixed-use development; and 1 In 2007, the Washington State Legislature passed the Engrossed Second Substitute House Bill 1910, in part, to modify the limited the property tax exemption for future eligible projects to eight years or 12 years (the longer term being available if the project provides at least 20% of the units as affordable housing). AGENDA ITEM #2. a) Randy Corman, Council President Page 3 of 3 October 14, 2016 The project consists of a minimum of 30 dwelling units. As provided for in RMC 4-1-220F, the CED Administrator needs to approve or deny the Exemption application within 90 days of receipt and, if approved, the applicant must enter into an agreement approved by the Council that addresses the terms and conditions for Sunset Terrace to receive a partial property tax exemption upon completion. Subject to the Council’s approval of the agreement, the CED Administrator intends to approve the application for the Sunset Terrace apartment project. (Please see Attachment 1 for the proposed Exemption Agreement for Sunset Terrace.) The Sunset Terrace apartment project is a high-profile, mixed-use project at the gateway to the Sunset Area. The project is part of the Sunset Area Community Revitalization Program and the first residential project to be constructed as part of the Sunset Terrace Redevelopment. The project will provide more than $20 million in private investment and significantly expand housing opportunities in the Sunset Area. CONCLUSION: Renton’s Multi-Family Housing Property Tax Exemption program was established to help increase housing opportunities in designated residential targeted areas, including the Sunset Area. The Sunset Terrace project will provide an additional 108 apartment units in the Sunset Area and further the City’s 2017-2022 Business Plan Goals. Enc:Attachment 1- Multi-Family Housing Property Tax Exemption Agreement for Sunset Terrace cc:Jay Covington, CAO Jason Seth, City Clerk Jan Hawn, Administrative Services Administrator Gregg Zimmerman, Public Works Administrator Kelly Beymer, Community Services Administrator Cliff Long, Economic Development Director AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 1 MULTI-FAMILY HOUSING PROPERTY TAX EXEMPTION AGREEMENT FOR SUNSET TERRACE THIS AGREEMENT is entered into this ____ day of _______________, 201__ by and between COLPITTS SUNSET, LLC (hereinafter referred to as the “Applicant”), and the CITY OF RENTON, a municipal corporation (hereinafter referred to as the “City”). Recitals. 1.Applicant has applied to the City for a limited property tax exemption as provided for in Chapter 84.14 RCW and RMC 4-1-220 for multi-family housing residential rental housing located in the Center Village (CV) zone as part of the Sunset Area residential targeted area and the Department of Community and Economic Development Administrator has approved the application; and 2.Applicant has submitted to the City preliminary site plans, floor plans, and elevations for the Sunset Terrace project with one hundred and eight (108) new multi-family housing units to be constructed as part of a mixed-use project (hereinafter referred to as the “Project”) on property located at 2715 Sunset Lane NE, Renton, Washington, and more fully described in Exhibit A attached hereto, (hereinafter referred to as the “Property”); and 3.Applicant is the owner of the Property; and 4.The City has determined that the Project will, if developed as proposed, satisfy the requirements for a Final Certificate of Tax Exemption. NOW, THEREFORE, the City and Applicant do mutually agree as follows: 1.Conditional Certificate of Acceptance of Tax Exemption City agrees, upon execution of this Agreement following approval by the City Council, to issue a Conditional Certificate of Acceptance of Tax Exemption, which conditional certificate shall expire three (3) years from the date of approval of this Agreement by the City Council, unless extended by the Administrator of the Department of Community and Economic Development (or any other City office, department or agency that shall succeed to its functions), or his or her designee, (hereafter referred to as “Administrator”) as provided in RMC 4-1-220I. AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 2 2.Agreement to Construct Multi-Family Housing. a.Applicant agrees to construct the Project on the Property substantially as described in the site plans, floor plans, and elevations on file with the City’s Department of Community and Economic Development or its functional successor (hereafter referred to as “Department”) as of the date of the City Council’s approval of this Agreement, subject to such modifications thereto as may be required to comply with applicable codes and ordinances; provided, that in no event shall such construction provide fewer than thirty (30) new multi-family housing dwelling units designed for permanent residential occupancy, nor shall permanent residential housing comprise less than fifty percent (50%) of the gross floor area of the mixed-use project constructed pursuant to this Agreement. b.Applicant agrees to construct the Project on the Property to comply with all applicable zoning requirements, land use regulations, and building and housing code requirements, including but not limited to the City’s development regulations in Title IV of the RMC and the City’s applicable design standards and guidelines. The Applicant further agrees that approval of this Agreement by the City Council, its execution by the Mayor, or issuance of a Conditional Certificate of Acceptance of Tax Exemption by the City pursuant to RMC 4-1-220F3 in no way constitutes approval of proposed improvements on the Property with respect to applicable provisions of the City’s development regulations included in Title IV of the RMC or any other applicable regulation or obligates the City to approve proposed improvements to the Property. c.Applicant agrees that the Project will be completed within three (3) years from the date of approval of this Agreement by the Council, unless extended by the Administrator for cause as provided in RMC 4-1-220I. 3.Requirements for Final Certificate of Tax Exemption. Applicant may, upon completion of the Project and upon issuance by the City of a temporary certificate of occupancy, or a permanent certificate of occupancy if no temporary certificate is issued, request a Final Certificate of Tax Exemption. The request shall be in writing directed to the Administrator and be accompanied by the following: a.A statement of expenditures made with respect to each multi-family housing unit and the total expenditures made with respect to the entire Project and Property; b.A description of the completed work and a statement of qualification for the multi-family housing property tax exemption; AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 3 c.A statement that the Project was completed within the required three-(3) year period or any authorized extension and documentation that the Project was completed in compliance with the terms of this Agreement; d.The total monthly rent of each multi-family housing unit rented to date; e.The income of each renter household to date at the time of initial occupancy; and f.Any such further information that the Administrator deems necessary or useful to evaluate the Project’s eligibility for the Final Certificate of Tax Exemption. 4.Agreement to Issue Final Certificate of Tax Exemption. The City agrees to file a Final Certificate of Tax Exemption with the King County Assessor within forty (40) days of submission by the Applicant of all materials required by paragraph 3 above, if Applicant has: a.Successfully completed the Project in accordance with the terms of this Agreement and RMC 4-1-220; b.Filed a request with the City for a Final Certificate of Tax Exemption with the Administrator and submitted the materials described in paragraph 3 above; c.Paid the City a fee in the amount of one thousand dollars ($1,000); and d.Met all other requirements provided in RMC 4-1-220 for issuance of the Final Certificate of Tax Exemption. 5.Duration of the Property Tax Exemption Subject to the terms of this Agreement and the requirements of RMC 4-1-220, the value of improvements qualifying under RMC 4-1-220 is exempt from ad valorem property taxation for eight (8) successive years beginning January 1st of the year immediately following the calendar year of issuance of the final certificate of tax exemption. 6.Annual Certification and Report. Within thirty (30) 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 noted in paragraph 5 above, Applicant agrees to file an annual report with the Administrator. The report shall contain such information as required by RCW 84.14 and as the Administrator may deem necessary or useful, and shall at a minimum include the following: AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 4 a.A statement of the occupancy and vacancy of the multi-family housing units during the twelve months ending with the anniversary date; b.A certification that the multi-family housing units, Project, and Property have not changed use since the date the City issued the Final Certificate of Tax Exemption, c.A statement that the multi-family housing units, Project, and Property continue to be in compliance with this Agreement and the requirements of RCW 84.14 and RMC 4-1-220; d.A description of any improvements or changes to the Project made after the City issued the Final Certificate of Tax Exemption; e.The total monthly rent of each multi-family housing unit rented or the total sale amount of each multi-family housing unit sold to an initial purchaser during the twelve months ending with the anniversary date; f.The income of each renter household at the time of initial occupancy and the income of each initial purchaser of owner-occupied multi-family housing units at the time of purchase during the twelve months ending with the anniversary date; g.Any additional information requested by the City pursuant to meeting any reporting requirements under RCW 84.14; and h.Any such further information that the Administrator deems necessary or useful to evaluate the Applicant’s compliance with this Agreement and the requirements of RCW 84.14 and RMC 4-1-220. 7.No Violations for Duration of Exemption. For the duration of the property tax exemption granted under RMC 4-1-220 and noted in paragraph 5 above, Applicant agrees that the Project and the Property will have no violations of applicable zoning requirements, land use regulations, and building and housing code requirements, including but not limited to the development regulations in Title IV of the RMC, for which the Department of Community and Economic Development or its functional successor shall have issued a notice of violation, citation or other notification that is not resolved by a certificate of compliance, certificate of release, withdrawal or otherwise, within the time period for compliance, if any, provided in such notice of violation, citation or other notification or any extension of the time period for compliance granted by the Department of Community and Economic Development. AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 5 8.Notification of Transfer of Interest or Change in Use. Applicant agrees to notify the Administrator within thirty (30) days of any transfer of Applicant’s ownership interest in the Project, the Property or any improvements made to the Property. Applicant further agrees to notify the Administrator and the King County Assessor within sixty (60) days of any change of use of any or all of the multi- family housing units on the Property to another use. Applicant acknowledges that such a change in use may result in cancellation of the property tax exemption and imposition of additional taxes, interest, and penalty pursuant to State law. 9.Cancellation of Exemption - Appeal. a.The City reserves the right to cancel the Final Certificate of Tax Exemption if at any time the multi-family housing units, the Project, or the Property no longer complies with the terms of this Agreement or with the requirements of RMC 4-1- 220, or for any other reason no longer qualifies for a property tax exemption. b.If the property tax exemption is canceled for non-compliance, Applicant acknowledges that state law requires that an additional real property tax is to be imposed in the amount of: [a} the difference between the property tax paid and the property tax that would have been paid if it had included the value of the nonqualifying improvements, dated back to the date that the improvements became nonqualifying; [b] a penalty of 20% of the difference calculated under paragraph (a) of this paragraph 9; [c] interest at the statutory rate on delinquent property taxes and penalties, calculated from the date the tax would have been due without penalty if the improvements had been assessed without regard to the exemptions provided by Chapter 84.14 RCW and RMC 4-1-220. Applicant acknowledges that, pursuant to RCW 84.14.110, any additional tax owed, together with interest and penalty, become a lien on the Property and attach at the time the Property or portion of the Property is removed from multi- family housing use or the amenities no longer meet applicable requirements, and that the lien has priority to and must be fully paid and satisfied before a recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which the Property may become charged or liable. Applicant further acknowledges that RCW 84.14.110 provides that any such lien may be foreclosed in the manner provided by law for foreclosure of liens for delinquent real property taxes. c.Upon determining that a tax exemption is to be canceled, the Administrator shall notify the property owner by certified mail, return receipt requested. The property owner may appeal the determination in accordance with RMC 4-1-220L2. 10.Amendments. No modification of this Agreement shall be made unless mutually agreed upon by the parties in writing and unless in compliance with the provisions of RMC 4-1-220H, AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 6 including but not limited to the Applicant’s payment of a five hundred dollars ($500) contract amendment fee. 11.Binding Effect. The provisions, covenants, and conditions contained in this Agreement are binding upon the parties hereto and their legal heirs, representatives, successors, assigns, and subsidiaries. 12.Recording of Agreement. The Administrator shall cause to be recorded at the Applicant’s expense, or require Applicant to record, in the real property records of the King County Department of Records and Elections, this Agreement and any other documents as will identify such terms and conditions of eligibility for exemption as the Administrator deems appropriate for recording. 13.Audits and Inspection of Records. Applicant agrees to maintain, retain, and make available for inspection upon seven days’ written request from the City, any records pertaining to this contract. Applicant understands and agrees that the City has the right to audit or review appropriate records to assure compliance with this Agreement and RMC 4-1-220 and to perform evaluations of the effectiveness of the multi-family housing property tax exemption program. 14.Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when hand-delivered within normal business hours, when actually received by facsimile transmission, or two business days after having been mailed, postage prepaid, to the parties hereto at the addresses set forth below, or to such other place as a party may from time to time designate in writing. APPLICANT: Colpitts Development Company, LLC 2256 38th Place E Seattle, WA 98112 Phone: 206-322-1381; Fax 206-568-8589 Attention: Judith Colpitts Nielsen, Manager AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 7 CITY:City of Renton Department of Community and Economic Development 1055 South Grady Way Renton, Washington 98055 Phone: (425) 430-6592 Fax: (425) 430-7300 Attention: Administrator 15.Severability. In the event that any term or clause of this Agreement conflicts with applicable law, such conflict shall not affect other terms of this Agreement which can be given effect without the conflicting terms or clause, and to this end, the terms of the Agreement are declared to be severable. AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year written above. COLPITTS SUNSET, LLC A Washington Limited Liability Company ____________________________ By: Judith Colpitts Nielsen, Manager CITY OF RENTON ____________________________ Denis Law, Mayor APPROVED AS TO FORM:ATTEST: _______________________________________________________ City Attorney Jason Seth, City Clerk AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 9 STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this ________ day of _____________________, 201_____, before the undersigned, a Notary Public in and for the state of Washington, duly commissioned and sworn, personally appeared before me Judith Colpitts Nielsen, to me known to be the Manager of Sunset Terrace Development, LLC that executed the within and foregoing instrument and acknowledged said instrument to be the free and voluntary act and deed of said party, for the uses and purposes therein mentioned, and on oath stated that she was authorized to execute said instrument. In witness whereof I have hereunto set my hand and affixed my official seal the day and year first above written. [notary seal] NOTARY PUBLIC Printed Name: Residing at My commission expires AGENDA ITEM #2. a) Multi-Family Housing Property Tax Exemption Agreement Sunset Terrace 10 STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this ________ day of _____________________, 201_____, before the undersigned, a Notary Public in and for the state of Washington, duly commissioned and sworn, personally appeared before me Denis Law, to me known to be the Mayor of the City of Renton, the municipal corporation that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said municipal corporation for the uses and purposes therein mentioned and on oath stated that he was authorized to execute said instrument. In witness whereof I have hereunto set my hand and affixed my official seal the day and year first above written. [notary seal] NOTARY PUBLIC Printed Name: Residing at My commission expires AGENDA ITEM #2. a) i MULTI-FAMILY HOUSING PROPERTY TAX EXEMPTION AGREEMENT EXHIBIT A LEGAL DESCRIPTION LOT A OF THE CITY OF RENTON LOT LINE ADJUSTMENT NO. LUA 13-001114, AS RECORDED IN VOLUME 302 OF SURVEYS, PAGES 162 AND 163, RECORDED OCTOBER 02, 2013 UNDER RECORDING NUMBER 20131002900011, RECORDS OF KING COUNTY WASHINGTON. AGENDA ITEM #2. a)