Loading...
HomeMy WebLinkAboutAgenda AGENDA Planning & Development Committee Regular Meeting 4:00 PM - Thursday, May 24, 2018 Council Conference Room, 7th Floor, City Hall – 1055 S. Grady Way 1. Multi-family Tax Exemptions a) Supplemental Staff Report b) Public Comment - Sandorfy c) Public Comment - Koeppler Page 1 of 2 CITY OF RENTON Community and Economic Development Department Multi-Family Tax Exemption Boundary Staff: Angie Mathias Date: April 2, 2018 Applicant or Requestor: Michael Sandorfy, RVA Cinema LLC ______________________________________________________________________________ General Description: The City has an adopted incentive that exempts multi-family housing from paying the property tax on the value of the housing portion of the improvements for eight or twelve years. This incentive, the Multi-Family Tax Exemption (MFTE), is only available in areas the City has designated as being eligible, currently Sunset and Downtown. Any new multi-family projects in these areas can receive waived taxes for eight years. If 20% of the units constructed are affordable housing units, the taxes can be waived for twelve years. The City has received a request to make this incentive available in an area that has not been designated. Additionally, this tax exemption is set to expire at the end of the year. The code needs to be amended to extend the expiration date. This is a supplemental staff report to provide additional information and recommendation to the Planning Commission. Background Staff reviewed the amount of rent affordable to various income levels for different family sizes and what current rents are at newer apartments in Renton in order to advance a recommendation regarding the level at which affordable housing should be required for projects to be eligible for the MFTE. The information is shown below in charts. 2018 King County 80% AMI Affordable Monthly Rent Family Size 50% 60% 70% 80% 90% 100% 1 $936 $1,124 $1,311 $1,498 $1,685 $1,873 2 $1,070 $1,284 $1,498 $1,712 $1,926 $2,140 3 $1,204 $1,445 $1,685 $1,926 $2,167 $2,408 4 $1,293 $1,551 $1,810 $2,068 $2,327 $2,585 May 2018 Renton Average Rents Apartments Studio 1 Bed 2 Bed 3 Bed Altitude $1,405 $1,565 $1,930 n/a Lofts n/a $2,015 $2,090 $2,473 Sanctuary $1,560 $1,703 $2,281 n/a Avaya Trails n/a $1,865 $2,098 $2,544 It appears that current rents in Renton for newer projects are at approximately 80% AMI for studios and one bedrooms. However, for 2 and 3 bedrooms the market is charging close to 90 and 100% AMI. The AGENDA ITEM #1. a) MFTE Boundary Page 2 of 2 April 4, 2018 intent of the MFTE is to incentivize development to do something it would not do on its own. Adopting a standard that requires a 60% affordability for all units is consistent with this intent. Attached is a jurisdictional comparison of the MFTE program and the requirements for affordability at what AMI. Most jurisdictions in high cost housing markets have implemented requirements for lower affordability levels. Most jurisdictions in housing markets that are not as high cost have remained at the 80% AMI requirement. S Staff Recommendation: Create a third eligible area for the MFTE incentive, the City Center TOD area. Renew the Sunset provision with a new three year extension to December 31, 2021. Finally, adopt provisions requiring eligible projects to provide 20% of the units in the project be affordable to 60% AMI. Impact Analysis Effect on rate of growth, development, and conversion of land as envisioned in the Plan The proposed amendment has no effect on the rate of growth, development, or conversion of land as envisioned in the Plan. In fact, it may incentivize growth as envisioned in the Plan. Effect on the City’s capacity to provide adequate public facilities The collection of impact fees helps to ensure the City has the capacity to provide adequate public facilities needed by new residents and businesses. Effect on the rate of population and employment growth The proposed amendment has no effect on the rate of population and employment growth. Whether Plan objectives are being met as specified or remain valid and desirable The amendments would work to further the Comprehensive Plan goals and policies. Effect on general land values or housing costs The proposed amendment has no effect on general land values or housing costs. Whether capital improvements or expenditures are being made or completed as expected There are no capital improvements or expenditures being made or completed in association with the proposed amendment. Consistency with GMA and Countywide Planning Policies The proposed amendments and collection of the requested fire impact fee work to further the goals of the Growth Management Act and the CPP’s. Effect on critical areas and natural resource lands The proposed amendment has no effect on critical areas or natural resource lands. AGENDA ITEM #1. a) Multi-Family Property Tax Exemption Jurisdictional Comparison Jurisdiction Program Affordable Req? What % of Project? What % AMI How Long? Min Project size Other Bellevue Yes Yes 10% & 10% 60% & 70% 12 years 4 units Any unit 300 sq ft or less, must be 45% AMI Eastgate, Crossroads, Wilberton Downtown 20% 70% BelRed 10% & 10% 50% & 70% Redmond Yes Yes 10 units Have fee in lieu and can provide affordable housing off site for an 8 year exemption Marymoor 10% 50% 8 years 10% & 10% 60% and 80% 12 years Downtown & Overlake 10% 60% 8 years 10% & 10% 65% and 85% 12 years Kent Yes No Affordability not a criteria 8 years 30 units Must be LEED certifiable or BuiltGreen certified Auburn Yes No Market rate 8 years 4 units 50 if downtown urban center 20% 80% 12 years Issaquah Yes Yes 15% & 5% 60% & 80% 12 years 10 units AGENDA ITEM #1. a) Multi-Family Property Tax Exemption Jurisdictional Comparison Jurisdiction Program Affordable Req? What % of Project? What % AMI How Long? Min Project size Other Kirkland Yes Yes 10% 50% 8 years 4 units 11 eligible areas Have a fee in lieu YBD 1 Zone YBD 1 Zone 15% & 10% 50% & 75% 12 years All other zones 10% 50% - if using affordable housing incentive program 8 years 10% 80% - if not using other incentive 8 years 10% & 10% 50% & 80% 12 years Federal Way Yes No Market rate 8 years 4 units 20% 80% 12 years Seattle - Rental Yes Yes 20 – 25% of Project 12 years 4 units All areas zoned for multi-family are eligible Efficiency units 40% Studio 65% 1 bed 75% 2 bed 85% 3 bed 90% Seattle – Owner occupied Yes No Studio & 1 bed 100% 8 years 4 units AGENDA ITEM #1. a) Multi-Family Property Tax Exemption Jurisdictional Comparison 2+ bed 120% Jurisdiction Program Affordable Req? What % of Project? What % AMI How Long? Min Project size Other Burien Yes No Market rate 8 years 4 units 20% 80% 12 years Lynnwood Yes No Market rate 8 years 50 units Must be LEED silver 20% 80% 12 years AGENDA ITEM #1. a) AGENDA ITEM #1. b) AGENDA ITEM #1. b) AGENDA ITEM #1. b) AGENDA ITEM #1. b) I.1uI11III1-In-I11I:In.-H:-.IIllhluluulln LLI1-.IIu-I-II-uul-IIILII1LI.-1|| ||1|.lI.I..I.I1.I...I.IL.....I-.I.L. uu.-I-IuuI-u-I-I-I-Ifirk:Irt}] II.lI.IaI-|.|.1.I..Iw..1I.I.I.l|rI.III-I-I,I.__u..|lllIfI{|I I.|.|fI.|I.1I....I.I|l..l.11...... I..LIII|l.|Ll.L||...II..|.f |.|I.|.I..|1I.l|..I...IJ...IL-II-1 .II.|ll.Lr.LII|....I..II-.I.|1I.I |IL.|I|J||.|l1.1|rI|1. ...lu1II.IIIL.lL..IEI ll?!I-I1JI.IILI||III. .III.1l...|r...l....l|rr.I.IIl.lI.IL..I1 I.|.I.||1|-I.J_I1|.L...IL.|I. .1.l|..l.1.1.1.:1.!.r11|!El-I I.II—..IIII-|.r.r..I.IT.Irnllrr.I.I..IL. . I-|I|I-nuulnu1|-In.1II.1-I-Il-I-u.1L uul-L.-.III-II-III?LI‘EIIII‘ JII|iIliliI|]'!:11 EInL'-IInLI-rlllu|IlII-..I.. IIII-IIII1-I.I |..|I.|.I..I.....IlI|..Il|I.I..1.|... I.......u.Ilr.r.r...I-il|r|1fIflrrf .|.IL..I.I.IuII...I..mlI...lII.lI..rI...I|l...l. EL[EI'IrI[rI:rI|IIf Am_<_m<.N3m_<_m.>:o_m_<_mE_mm _umcmm2o ._.:mmamo:m<<mm:_:o8:m:a05.o.“_»m:.8:mmo::m<mmaoc?maooam«mn:_.m3m:_m3.._<=u._.m ?m?cm:»O<<33.mc_u-o:mEm_.mm:a_»_<_O¢-._-38.._._._m<_>Sm_ucUmuu__nm.._o:o::m:=<::am« oo:mEm«m:o:m.“05.a_»m:.8:Eduommm8am<m_ouEmNmmo_.mm=mm:QE_mmzmBmmnmEmm?m.ma uczoommm2"SEmaou?maooqmm3._:o_:m_o:_:Emnmam?ma_<__u._.mmnmm.woEooammm:ooEmmm m:a*mo__=m.m:m<<3:_.:m3__<ammEm:=m_Qm<m_ou3m::<<_E_<__u._.msEm:n >.4o_dm_u_m_.mmEm::m_ouvo..=._:Emmm_.moo:m:.m.:ma.O<mqm__.3:=_..m3=<..mmEm::m_ <mom:m<Emm:8:_mo::.m:._<_mmmEm:mgr<SE_:Emcam:>qmm<<:mnm<_>Sm m:m:3m:$om:cmoo:m::o.ma.o<m_.m__mumnama<mmm:m<_m_mmmEm:3..ms:Em <mom:o<_.m._m3.mmoamgm::=m_mm<m:_mmm.m:uu_<_moo:m.._.m_:mqm:a%3m_.a _m o3<<_:m.E::mo_mm_.aQm<m.m_._OE.amo_o:.m_m6mm.Hm:m:3m:.3m:mmm:._m:..._3,_w mm:3m..mo<mamo..\..2:923c=Em3__<oo:m3§_o:_:mmm=_m_wm__m<:mmzamc:.oc:a_:@ 3c:_o.um_=_mmm_.m:m_:moo:mnEo.Hma<<_E_<__u._.m. zm<<oo:m.Em._o:2m.4o..amc_m:ocm_:oE_»m:.o:_mm_mooo:w¢m_:mac<oo:._:cm__<_._m_:m oo:m..Eo=o:oom?._.m.§oomaE_.occ:oEEmPam:m.o::am?mmm?mmmom_m=:mm.m3.8: amm?m?umomEm:3:3..o«mmoamzmm:a3m_.xm.._1m.nm::=m.<_>Smom:manE :92 m....oamc_m$3_._:=m8O5.2_»m:.8:.mmmoamzm_:<m:.oJ>._.:mmom.3no:m=.._o.Em 2m:.o&mc_m..m.m::=m<<_E_:E_mu3_.mn.<<=_mu_2.ox_.:m.m2u.m8.o825 E... m_.mm=<mxnmmnEm<m_cm2nmx22_=mnmom_<m._. ._oum8<<E_:_~m:.8:_mmmmm_m~m::@m:qn:_ox_<o«mm::oBoqmam3m:Q8..3m._§8.5 m:o_m....o3mc_mmum:3m:.c:=m.<_>3m2.::8<EmBco::mmqmn:m<<_..ocm_:m_:o_omm u3x_3=<8.3m_.o<<Emmo8a_um:_o:_m:<:mm_Eomqmm:Qnmm::o_oa<.<_>Sm om: u3<Emmac:=m2:889.:92mmoamzm:ocm_:o_:o_ommu3x_3=<.8Emmm_.ocm3<<E mmn.o_1m.._.:m<_>Smc_.ouomm_<<___m_moc::mm32.2_m:acmm_3uS<m3m::8o:m 9. mm:8:.m::3m2m:Emm_mo_._Em_.m&<<m<. zmi_.::==m:._=<qmmEm::m_ouuo:::=_mmmac”_2_u__...=.m:m:o:m:o:nm:.m_.m ...._._.m:m=o._2:2.Um<m_ou3m:n..4o_u._:.._.:m<_>Emmum:3m:.mam_mma_.mom:»8 Emmo:Emm:8:._.«m:m=0m:_m_..mwcmmmua._.qm:m:qmmdom:.mq_.mom:=<<29 muu3<ma:32moc:q._._.m:m:mA..m._.m..V.._.:_m:92mmmoqmma..mo__=<<5:cmmm.=.m.mm.o __:xm_o:o_:.nm_?m..mSmoo::mo::c_»m:8:<<_Emmmam._.moo3m_:.nm3m.n_o:m_>_6o:. wm__m<cmm:ammm:_m.>_m:amom:ma..§__§8umqmmam:<<m=2<m<.m__m<_m::onm._< <m:_o_m:mm_5.:a__.mo._<=:w<_>Smm:m_..3m:.m<<_EEm:m<<=m:m=om:.nm: zm<<_.::==m3=<no:m:.:o:o:<<=_::__Nmmx_m::m_:..nmm:.:oE_.m_:m_:.=:u::__:mm. 32.9m:._cum:mvmomm.._.:mam<m_ou3m:_ea5o:_._.m:=<$233coE Q_.< _umomm AGENDA ITEM #1. b) W?u?lII—. III....IIullI.I...1.|..I.1r1.|l.LL rllL..r..In-.If.IL.I..|I.II|I.l.I.-u-I-l-l-11-Im.'- ..rI.||.L....II!-lrln..r||r .II...||..I|1|1..r.1.l|...I1!....... II|..I|.l...LIr....r...|r..II.|..|..L|I.IL. lI.I..ILIlirlnu. ll.IIII.|.I_I.........|. .I.1.1I...........|f1llI|...._1II|I||I.|I| llllhllghiiuulfn II|.L||||I.IIJ]1 .Ilu.I..II.....lI...|l.I.II:llI..I-ILL. Irr..Ir.II.1I|.I....I.I.l|.|..1rI LII1.1i.|.|.II|.f.I..JI..ILII .lm.5lru.l1I......Ir.i.Irfn...l...rfI..IIII-II. ..|..||I|I-I!..||...I.I|I. <_w_o= Am_<_m<_M2 m _<_m.>:m.m_<_m.:_mm _um©mo 2 o Am_mo._._o6mmVmagEm.?<m..m..-qo3mm=omag33c=_=_mmmS4_o_m2 .8 mm2m Em Eouomma mumnamaoo:..3::=<._<__:o_.c:am_.m_.o::a:=_=<qm<_m_o:m<<___ooocao:_<E Em _33m&m..m m_.mmo+Emunouommqas_a_8_m<<m<:03mx_m::ou:c__om_._m_._m_m. ._.:m1m<5:amsoqmnc__.m3m:...o_.:923mq<<m<am<m_ou3m:..45.4.0 $5.3 _.mn:_nmn_c< EmO=<_m_u_uCU:m<mcmm:m:_u3_:mamagEaom?mmx_mn_:mqomammammamncmzm8mm_.<m <_>Sm. _u~mm<<m<moommm8<5Sm>vm:3m_.:m.moo:<m:_m:..._.:m_Lom\mm._3 man_Lom:m_c2 mama_:.m_.o:m:ommmammmn:<<_EEX3__m9.<_>Sm>um:3m:_m. zm<<:=._==m:.__<mo:m=.:o:o:<<=_m=m<_m.moosummmosEEon:mnmmm.<<Em: oo3u_m.nm.mo:E_»m:8:._...m:m=Om:.m1_w_»._.mm2_ommag <_>Sm >nm:3m3m8::m oooumqmn_<mqm_m:o:m:_u3oam_,m.En%__<<mE_o_moocamo:_o<<m_.omumo=<0.2 m=mm,m. 2...:3:==.m=..=<oo:mn:._n:o:oo.=u_m3m:.mmxmmzzu38:manomzomcmmm.<_>Bu qmmamam<<___m:_.o<<<m_xmc_mmoommm8qmm?mcqmam.33.39 o_.oom_.<.uEm3._mo<mag um..mo:m_mm2_ommmaEmacs<=_mmmmzouuicOmamn<<m_E:mmoomwmm_momama8 :mm«_< m8.8omncmam?mm?2oaommumomEo_:a_:o._.:mm<m6_.mm:m:_a_8 mag .33:._.o<<mqm oaomoo3u_mx._um<m_ou3m..:9.<_>3m5.:So?mmmm0.?Q._»m:8:85:mm_mmnmx «m<m::m. c=%E.__.u2_mzmmoo:...=::m3_.mmEm::m_:o:mEuo_uuo..E:=_mm.._.Emam<m_ou3m:. mzm_mm:mxom__m:.mxm3u_m2::am_.:=__Nm:o:.._.:mo:_4m:.o__._m3mUEEEQ_mE_..o=o:m__< ocmo_m.m._um<m_ou3m:..9.mamumnams.oo33c:=<m,Em mxm_mEm 363mm,.man82 :mm manoo:Ecc..mm8«mmEm:=m_ouuonczammm:<_m_o:mac<mamQ.<<mm_.__:m8:Eamq zm _<_c_:..m3__<amxmxm3E_o:u8n_.m3. O38cmmoqEmo_m<m_o_u3m:.nm=m_m:9..mmmE_mEEm3_.mmmmmc_mEEE.zmm_._<898° mm9.oaommumommamo::m:._<m<m__mc_mEo_ommu8x_3=<8 Em <_>Sm mzm.>:oEm_. umoboomn:m_.m..mm~9.oaommumomm?m::o_m.oo:mE.o=o:m.mocEuo:. _umcmo AGENDA ITEM #1. b) AGENDA ITEM #1. b) I II ...u||AGENDA ITEM #1. b) AGENDA ITEM #1. b) Comments from C Koeppler From: Craig Koeppler <ckoeppler@msandorffy.com> Sent: Friday, May 18, 2018 11:24 AM To: Chip Vincent; Angie Mathias Subject: MFTE Discussion Chip and Angie I wanted to weigh in on the recommendation that Planning made to the Planning Commission Wednesday night. I know that the final motion before the Commission, which they voted in favor of, was for the option to elect 12 exemption, with 20% of units at 80% AMI. But, I believe the door was left open to re-examine the 80% threshold on future projects. Yesterday I ran some new numbers using the same model in the letter of support forwarded to Planning on Tuesday afternoon. The new analysis projected the rent loss under a 60% threshold of Area Median Income (AMI). If my numbers are reasonably accurate, and I believe that they are, the annual rent loss using the 60% AMI threshold is just over $456,000. Again, based on the numbers I’m aware of and plugging them into my analysis, the annual loss of $456,000 in rent would nearly nullify the exemption. One could make the conclusion then, that there is little to no benefit in receiving the exemption. Why apply for an exemption at all if that is the case? Please remember that the purpose of the MFTE program is to incentivize new construction. If the incentive is gone, obviously, there is no point in creating a new targeted area. The 80% threshold exemption was adopted in RCW 84.14 because it provides a reasonable incentive to spur new construction. One other important note. In the Planning presentation Wednesday night I believe I noticed an error in the representation to Commissioners. Specifically, and please correct me if I am incorrect, the Planning presentation noted that one bedroom rental at The Lofts was slightly over $2,000/month. Checking the web page for The Lofts I note that the page showing one bedroom rent at $2,008/month, actually a 2 bedroom 2 bath unit. When I first saw the number in Wednesday’s presentation to Commissioner’s I believed the $2,000/month number to be incorrect and a little further analysis seems to confirm that the $2,008 is in fact for a 2 bedroom unit, not a I bedroom unit. One bedroom rents are more likely to fall into the range of $1,600 - $1,700 per month. Was the use of the $2,008 monthly rental, perhaps, an explanation for the decision to recommend a 60% threshold? We’ve spent a great deal of time studying the market rentals and believe our numbers to be correct. Yesterday, I directed our property management company and consultant, Pinnacle Living, to conduct a new market study to confirm rents in the Renton market. I will be happy to verbally share with you some of the results of that rent survey as they pertain to MFTE. Page 1 AGENDA ITEM #1. c) Comments from C Koeppler Another MFTE point I would like to make is contained in RCW 84.14. The rent offered MFTE qualifying residents must be further reduced by the monthly cost of utilities and this is a requirement under RCW 84.14. Did Planning take those numbers into account?. * Studio -$105/mo * 1 Bedroom -$105/mo * 2 Bedroom -$155/mo * 3 Bedroom -$245/ mo * These numbers were included in my analysis forwarded to you Tuesday showing the monthly rental reduction of $194,000. The utility reductions are also included in my 60% threshold number above. There is also a further discount required in monthly rental if the project owner requires all residents to purchase renter’s insurance through the management company. This is common practice in today’s market. I don’t have an estimate on that cost at the moment, but can provide it when it becomes available. The impact of this requirement is not included in our analysis, but further reduces the gross rental income numbers discussed above.. Another fact to consider, relative to assessment and the calculation of actual tax exemption realized by a project owner, is how the assessment is calculated. RCW 84.14 only allows the ad valorem tax exemption on residential improvements. I’ve not seen how the various county assessors employ this, but it’s important. For example, the tax exemption cannot be applied to commercial space in a multi-use development like The Lofts or Via 405 when it is built. The assessed value of those improvements, according to RCW, must be excluded. It is likely that common areas such as plazas, management offices, workout rooms, and amenity rooms will be excluded also. That makes the assessment somewhat difficult for purposes of calculating the quantity of the exemption and benefit to the owner. My point is, one needs to use caution in the calculation of the developer benefit from MFTE. Generally, the specific improvement assessment from King County will include all areas and not differentiate between residential areas and amenity areas. You would have to have access to the King County tax files for each property. I believe that information is public record but you can’t pull it off the King County website. I don’t believe value of common areas is separately shown on website, but I haven’t confirmed that either. We certainly understand that the Planning recommendation to the Commission was put together in a very short time frame. We also understand that we, as developers, have a much greater understanding of and access to the multi-family residential market and how it operates. As I’ve Page 2 AGENDA ITEM #1. c) Comments from C Koeppler discussed in the past we’re more than willing to share analysis with the City when appropriate. The purpose of this letter is provide as much information of the MFTE program as possible so that informed and accurate decisions can be made. If further discussion is needed relative to future modification of the 12 year exemption option, please let me know. I’ll help wherever possible. Thank you for your work and your consideration of VIA 405 Apartments. Regards, Craig R. Koeppler RVA CINEMA LLC Vice President Parkway Capital, Inc. 520 Pike Street, Suite 1500 Seattle, WA 98101 206.682.6868 x 14 (O) 206.683.6972 (M) Page 3 AGENDA ITEM #1. c)