Ord 03-438ORDINANCE NO. 03-438
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF FEDERAL WAY, WASHINGTON,
AMENDING CHAPTER 14 OF THE FEDERAL WAY
CITY CODE BY ADOPTING ARTICLE VII
RELATING TO A PROPERTY TAX EXEMPTION
INCENTIVE FOR THE DEVELOPMENT OF
MULTIFAMILY HOUSING IN THE CITY CENTER
CORE ("CC-C") AND FRAME ("CC-F") ZONES.
WHEREAS, in 1995 the Washington State Legislature adopted Chapter 84.14
RCW, to encourage increased residential opportunities in cities required to plan under the
Growth Management Act, by providing for special property tax valuations for eligible
multifamily housing in targeted urban, residential areas; and
WHEREAS, Chapter 84.14 further authorized cities with a population of at least
fifty thousand to adopt procedures to implement the special property tax valuations; and
WHEREAS, in 1998 the Federal Way City Council adopted the Federal Way
Comprehensive Plan, to implement the planning requirements of the Growth
Management Act, RCW 36.70A; and
WHEREAS, the Comprehensive Plan designates City Center Core ("CC-C")
and City Center Frame ("CC-F") areas, to "redevelop the City Center and create a
compact urban community and vibrant center of activity," with the crux of the strategy
being the promotion of"a compact urban center with connections between where we live,
work and recreate,"; and
WHEREAS, the Comprehensive Plan contains goals (CCP9 and 10)
encouraging the City to "provide incentives to encourage residential development in City
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Center, core/frame areas", and to "Revise land use regulations to allow the frame area to
accommodate higher density residential uses accompanied by residentially oriented retail
and services uses"; and
WHEREAS, on December 3, 2002 the City Council designated the City Center
Core and Frame zoning districts as a "residential targeted area" for the purpose of
allowing a limited property tax exemption for qualifying multifamily housing, pursuant to
RCW 84.14.040(2); and
WHEREAS, the City Council desires to adopt procedures for the application for
and approval of property tax incentives for qualifying multifamily housing within the
"residential targeted area";
NOW THEREFORE', THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON, DOES HEREBY ORDAIN AS FOLLOWS:
Section 1. Findings of Fact.
A. The City Center Core and Frame zones are an urban center, as defined
in RCW 84.14.010, because they are an identifiable district where urban residents may
obtain a variety of products and serVices.
13. The City Center Core and Frame currently lack sufficient available,
desirable, and convenient residential housing to meet the needs of the public who would
be likely to live in the City Center Core and Frame if desirable, attractive and livable
places to live were available.
C. The provision of special property tax valuations within the City Center
Core and Frame will encourage construction of new multifamily housing, and that
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provision such additional housing opportunities in the City Center Core and Frame will
assist in achieving the goals of the City's Comprehensive Plan and the parallel purposes
set forth in RCW 84.14.007.
D. Encouraging the development of new residential units in the City
Center Core and Frame will also assist in reducing development pressures on single-
thmily residential neighborhoods.
E. Additional residential development within the City Center Core and
Frame will help achieve development densities that are more conducive to transit use.
Section 2. Amendment of Chapter 14 of the Federal Way City Code, to add
a new Article VII, "Multifamily Dwelling Unit Limited Property Tax Exemption".
Chapter 14 of the Federal Way City Code is hereby amended by the addition of Article
VII, Multifamily Dwelling Unit Limited Property Tax Exemption, as follows:
Article VII.
Multifamily Dwelling Unit Limited Property Tax Exemption
Section 14-230. Purpose.
As provided for in chapter 84.14, RCW, the purpose of this article is to provide
limited, ten (10) year exemptions from ad valorem property taxation for qualified new
multifamily housing constructed in the City Center Core and Frame zones, in order to:
(1) Accomplish the planning goals of the Growth Management Act, RCW
36.70A, and the City of Federal Way Comprehensive Plan, specifically Goals CCP 9 and
10; and/or
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(2) Encourage residential opportunities within the City Center Core and
Frame residential targeted area; and/or
(3) Stimulate new construction of multifamily housing in the City Center
- Core and Frame to increase housing opportunities; and/or
(4) Assist in directing future population growth into the City Center Core
and Frame, thereby reducing development pressures on single-family residential
neighborhoods; and/or
(5) Achieve development densities that are more conducive to transit use
in the City Center Core and Frame; and/or
(6) Promote community development and City Center Core and Frame
revitalization, in fulfillment of the Comprehensive Plan City Center "Vision."
Section 14-231. Definitions.
In construing the provisions of this article, the following definitions shall be
applied:
(1) "Assessor" means the King County Assessor.
(2) "Director" means the Director of the Federal Way Community
Development Services Department, or any other City office, department or agency that
shall succeed to its functions with respect to this article, or his or her authorized designee.
(3) "Multifamily housing" means a building or townhouse having four (4)
or more dwelling units designed for permanent residential occupancy.
(4) "Owner" means the property owner of record.
(5) "Permanent residential occupancy" means multifamily housing that
provides either rental or owner occupancy for a period of at least one (1) month. This
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excludes hotels and motels that predominately offer rental accommodation on a daily or
weekly basis.
(6) "Residential targeted area" means the City Center Core and Frame
zones, as designated by the City Council pursuant to this article.
Section 14-232. Residential targeted areas -- Designation.
(a) Pursuant to this Section, the Federal Way City Center, consisting of
the areas zoned CC-C and CC-F, is designated as a "residential targeted area."
(b) If a part of any legal lot is within the residential targeted area, then the
entire lot shall be deemed to lie within the residential targeted area.
Section 14-233. Tax Exemption - Duration - Valuation - Exceptions.
(a) Exemption, Duration of. The value of improvements qualifying under
Section 14-234 is exempt from ad valorem property taxation for ten (10) successive years
beginning January 1 st of the year immediately following the calendar year of 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 nonhousing improvements not qualifying under Section 14-234,
nor does the exemption apply to increases in assessed valuation of land and
nonqualifying improvements. This article also does not apply to increases in assessed
valuation made by the assessor on nonqualifying portions of building and value of land,
nor to increases made by lawful order of a 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 achieve the uniformity of assessment or appraisal required by law.
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Section 14-234. Project eligibility.
To qualify for exemption from property taxation under this article, the property
must satisfy all of the following requirements:
(1) The property must be located in the designated residential targeted area.
(2) The project must consist of at least four (4) dwelling units of multifamily
housing, located within a residential structure or a mixed use development, in which at
least fifty (50) percent of the space within such residential structure or mixed use
development is intended for permanent residential occupancy.
(3) The project must comply with all zoning requirements, land use
regulations, and building code requirements contained in Federal Way City Code
Volumes I and II and applicable upon land use permit approval or submittal of a
complete building permit application, whichever occurs sooner.
(4) For the duration of the exemption granted under this article, the property
shall have no violations of applicable zoning requirements, land use regulations, or
building code requirements contained in Federal Way City Code Volumes I and II for
which the Community Development Services Department shall have issued an order to
cease activity ("OTC") or notice of violation and order to correct ("NOV") that are not
resolved by a voluntary correction agreement, vacation by the hearing examiner, or action
of the property owner in compliance with the applicable code requirements as determined
by the Director, within the time period for compliance provided in such OTC or NOV
and any extension of the time period for compliance granted by the Director.
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(5) New construction multifamily housing must be completed within three (3)
years from the date of approval of the application or by any extended deadline granted by
the Director pursuant to Section 14-238.
(6) The owner must enter into a contract with the City, approved by the City
Council, under which the owner has agreed to the implementation of the development on
terms and conditions satisfactory to the City Council.
Section 14-235. Application procedure.
The owner of property applying for exemption under this article shall submit an
application to the Director on a form established by the Director. The owner shall verify
the correctness of the information contained in the application by his/her signature and
affirmation made under penalty of perjury under the laws of the State of Washington. The
application shall contain such information as the Director may deem necessary or useful,
which at a minimum shall include:
(1) A completed City of Federal Way application form, including
information setting forth the grounds for tax exemption.
(2) A brief written description of the project, and schematic site and floor
plans of the multifamily units and the structure(s) in which they are proposed to be
located;
(3) Floor and site plans of the proposed project, which plans may be
revised by the owner provided such revisions are made prior to the City's final action on
the exemption application;
(4) A statement from the owner acknowledging the potential tax liability
when the property ceases to be eligible for exemption under this article;
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(5) At the time of initial application under this section, the owner shall
pay to the City an initial application fee of one hundred fifty dollars ($150), plus an
amount necessary to cover recording fees under Section 14-239.
(6) Except as otherwise provided in subsection 7 of this section, the
application shall be submitted any time before the earlier of (1) an application for a land
use approval process FWCC Chapter 22, and (2) an application for a building or other
construction permit under FWCC Chapter 5.
(7) If, on the effective date of this Article, the owner has applied for a
permit identified in subsection 6 of this section, then application for exemption under this
section may be submitted any time prior to issuance of a building permit.
Section 14-236. Application Review - Approval - Required findings - Issuance of
conditional certificate - Denial - Appeal.
(a) The Director may approve an application if he or she finds that:
(1) a minimum of four (4) new units are being constructed;
(2) the proposed project is or will be, at the time of completion, in
conformance with all approved plans, and all applicable requirements of the Federal Way
City Code or other applicable requirements or regulations in effect at the time the
application is approved;
(3) the owner has complied with all of the requirements of this article,
including but not limited to project eligibility requirements contained in Section 14-234
and application requirements contained in Section 14-235; and
(4) the project site is located within a designated residential targeted
area.
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met.
(b) The Director shall deny an application if the foregoing criteria are not
(c) If the application is approved, the owner shall enter into a contract with
the City, approved by the City Council, regarding the terms and conditions of the project
under this article.
(d) Following Council approval of the contract, the Director shall issue a
conditional certificate of acceptance of tax exemption. The conditional certificate shall
expire three (3) years from the date of approval unless an extension is granted as
provided in Section 14-238.
(e) If the application is denied, the Director shall state in writing the reasons
for the denial and send notice of denial to the owner's last known address within ten (10)
days of the denial.
(f) An owner may appeal a denial of a tax exemption application to the City
Council by filing a notice of appeal with the City Clerk within thirty (30) calendar days
of receipt of notice of the denial. The appeal before the City Council shall be based upon
the record before the Director, and the Director's decision will be upheld unless the
owner can show that there is no substantial evidence on the record to support the
Director's decision. The City Council's decision on appeal is final.
Section 14~237. Amendment of contract.
(a) Any owner seeking amendment(s) to the contract approved by the
Director may do so by submitting a request in writing to the Director at any time within
three (3) years of the date of the Director's approval of the contract.
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(b) Any owner seeking amendments to the approved form of contract shall
pay to the City an amendment application fee of one hundred fifty dollars ($150) for
administrative costs, plus any amount necessary to cover recording fees under Section
14-239.
(c) The date for expiration of the Conditional Certificate shall not be
extended by contract amendment unless all the conditions for extension set forth in
Section 14-238 are met.
Section 14-238. Extension of conditional certificate - Required findings - Denial -
Appeal.
(a) The conditional certificate may be extended by the Director for a period
not to exceed twenty-four (24) consecutive months. The owner shall submit a written
request stating the grounds for the extension together with a fee of one hundred fifty
dollars ($150) for the City's administrative cost to process the request. The Director may
grant an extension if the Director finds that:
(1) The anticipated failure to complete construction within the required time
period is due to circumstances beyond the control of the owner; and
(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 owner and the
City will be satisfied upon completion of the project.
(b) If an extension is denied, the Director shall state in writing the reason
for denial and shall send notice to the owner's last known address within ten (10)
calendar days of the denial. An owner may appeal the denial of an extension to the
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Hearing Examiner by filing a notice of appeal with the City Clerk within fourteen (14)
calendar days after issuance of the notice of the denial. The appeal before the Hearing
Examiner shall follow the provisions of the Federal Way City Code, Sections 22-397 -
22-406. The Heating Examiner's decision shall be the final decision of the City, and is
not subject to further appe'al.
Section 14-239. Final certificate - Application - Issuance - Denial - Appeal.
(a) Upon completion of the construction as provided in the contract
between the owner and the City, and upon issuance of a temporary certificate of
occupancy, or a permanent certificate of occupancy if no temporary certificate is issued,
the owner may request a final certificate of tax exemption. The owner shall file with the
Director such information as the Director may deem necessary or useful to evaluate
eligibility for the final certificate, which shall at a minimum include:
(1) A statement of expenditures made with respect to each multifamily
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;
(3) A statement that the work was completed within the required three (3)
year period or any approved extension; and
(b) At the time of application for final certificate under this section, the
owner shall pay to the City a fee of fifty dollars ($50) to cover the City's administrative
costs.
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(c) Within thirty (30) days of receipt of all materials required for a final
certificate, the Director shall determine whether the completed work is consistent with
the contract between the City and owner, whether all or a portion of the completed work
is qualified for exemption under this article and, if so, which specific improvements
satisfy the requirements of this article.
(d) If the Director determines that the project has been completed in
accordance with the contract between the owner and the City and the requirements of this
article, the City shall file a final certificate of tax exemption with the Assessor within ten
(10) days of the expiration of the thirty (30) day period provided under subsection C of
this section.
(e) The Director is authorized to cause to be recorded, or to require the
owner or owner to record, in the real property records of the King County Department of
Records and Elections, the contract with the City required under Section 14-236, or such
other document(s) as will identify such terms and conditions of eligibility for exemption
under this article as the Director deems appropriate for recording.
(f) The Director shall notify the owner 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 (3) year period or any approved extension, or was not completed in
accordance with the contract between the owner and the City and the requirements of this
article, or the owner's property is otherwise not qualified for the limited exemption under
this article.
(g) The owner may appeal the Director's decision to the Hearing
Examiner by filing a notice of appeal with the City Clerk within fourteen (14) calendar
ORD#03-438, Page 12
days after issuance of the notice of the denial. The appeal before the Hearing Examiner
shall follow the provisions for appeal contained in FWCC 22-397 - 22-406. The owner
may appeal the Hearing Examiner's decision to the King County Superior Court
according to the procedures contained in RCW 34.05.510 through 34.05.598, as provided
in RCW 84.14.090(6), within thirty (30) days of notification by the City to the owner of
the decision.
Section 14-240. Annual certification.
(a) Within thirty (30) days after the first anniversary of the date the City
filed the final certificate of tax exemption and each year thereafter, for a period of ten
(10) years, the property owner shall file a certification with the Director, verified upon
signed affirmation under penalty of perjury under the laws of the State of Washington.
The certification shall contain such information as the Director may deem necessary or
useful, and shall at a minimum include the following information:
(1) A statement of occupancy and vacancy of the multifamily units during
the previous year;
(2) A certification that the property has not changed use since the date of
filing of the final certificate of tax exemption, and continues to be in compliance with the
contract with the City and the requirements of this article;
(3) A description of any improvements or changes to the property made
after the filing of the final certificate or most recent certification, as applicable.
(b) Failure to submit the annual certification may result in cancellation of
the tax exemption.
ORD #03-438, Page 13
Section 14-241. Cancellation of tax exemption - Appeal.
(a) If at any time the Director determines that the property no longer
complies with the terms of the contract or with the requirements of this article, or the use
of the property is changed or will be changed to a use that is other than residential, or 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.
(b) If the owner intends to convert the multifamily housing to another use,
the owner must notify the Director and the King County Assessor within sixty (60) 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.
(c) Upon determining that a tax exemption shall be canceled, the Director
shall notify the property owner by certified mail, return receipt requested. The property
owner may appeal the determination by filing a notice of appeal with the City Clerk,
within thirty (30) days after issuance of the decision by the Director, specifying the
factual and legal basis for the appeal. The appeal before the Hearing Examiner shall
follow the procedures set forth in Sections 22-397 - 22-406. At the appeal hearing, all
affected parties may be heard and all competent evidence received. The Hearing
Examiner shall affirm, modify, or repeal the decision to cancel the exemption based on
the evidence received. The Hearing Examiner shall give substantial weight to the
Director's decision to cancel the exemption, and the burden of proof and the burden of
overcoming the weight accorded to the Director's decision shall be upon the appellant.
An aggrieved par'~y may appeal the Hearing Examiner's decision to the King County
Superior Court in accordance with the procedures in RCW 34.05.510 through 34.05.598,
ORD #03-438, Page 14
as provided in RCW 84.14.110(2), within thirty (30) days after issuance of the decision
of the Hearing Examiner.
Section 14-242. Review of program.
(a) The provisions of this article shall be reviewed five (5) years after the
effective date of the ordinance codified herein. Such review may include, but not be
limited to, the number of dwelling units granted property tax exemption under this
program, consideration of the multifamily development trends in the City and region,
review of administrative processes and procedures, as well as public comment. If the
program is terminated, no further applications for a conditional certificate of tax
exemption shall be accepted. Incomplete applications shall be returned to the owner.
(b) Notwithstanding subsection (a) of this section, pending complete
applications for a conditional certificate, extension of conditional certificate or final
certificate shall be processed as provided in this article under Sections 14-234 - 14-238.
Sections 14-233, 14-236, 14-239, and 14-240 shall survive the expiration of this article
and shall apply to all properties that have been issued a final certificate of tax exemption
under this article until expiration, termination or cancellation of the certificate.
Section 3. Amendment of Chapter 14, Article VI, "School Impact Fees."
Chapter 14, Article VI, School Impact Fees, is hereby amended to add the following as
the last line of that article:
14-220- 14-229. Reserved.
Section 4. Severability. The provisions of this ordinance are declared separate
and severable. The invalidity of any clause, sentence, paragraph, subdivision, section, or
portion of this ordinance or the invalidity of the application thereof to any person or
ORD #03-438, Page 15
circumstance, shall not affect the validity of the remainder of the ordinance, or the
validity of its application to other persons or circumstances.
Section 5. Ratification. Any act consistent with the authority and prior to the
effective date of this ordinance is hereby ratified and affirmed.
Section 6. Effective Date. This ordinance shall take effect and be in force five
(5) days from the time of its final passage, as provided by law.
PASSED by the City Council of the City of Federal Way this
~;~ ,2003.
day of
CITY OF FEDERAL WAY
ATTEST:
APPROVED AS TO FORM:
CITY ATTORNEY, PATRICIA A. RICHARDSON
FILED WITH THE CITY CLERK:
ORD #03-t/3~, Page 16
PASSED BY THE CITY COUNCIL:
PUBLISHED:
EFFECTIVE DATE:
ORDINANCE NO.
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02/18/03
02/22/03
02/23/03
03-438
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