ORD 09-606ORDINANCE NO. 09-606
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON, LIMITED PROPERTY TAX EXEMPTION; AMENDING ARTICLE VII,
CHAPTER 14, MULTIFAMILY DWELLING UNIT LIMITED PROPERTY TAX
EXEMPTION (ORDINANCE NO. 03-438)
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, on February 18, 2003 the Federal Way City Council approved Ordinance 03438
amending Chapter 14 of the Federal Way City Code by adopting Article VII adding provisions
allowing a limited property tax exemption for structures containing multifamily units in the City
Center -Core and City Center -Frame zones; and
WHEREAS, in 2007 the Washington State Legislature amended Chapter 84.14 RCW,
adopting provisions to encourage affordable housing in projects for which the limited property tax
exemption would be applicable;
WHEREAS, in adopting Ordinance 03 -438 the Federal Way City Council included
FWCC 14 -242 requiring a five -year review and report, required after the end of the 2008
calendar year; and
WHEREAS, no changes to FWCC Chapter 14, Article VII have been enacted to date
reflecting the housing - affordability provisions of RCW 84.14, in anticipation of the above -cited five-
year review and report, now being considered.
Ordinance No. 09 -606 Page I of 7
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON, DO ORDAIN AS FOLLOWS:
SECTION 1. Chapter 14, Article VII, Section 231 shall be amended as follows:
14 -230 Purpose.
As provided for in Chapter 84.14 RCW, the purpose of this article is to provide limited, 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, Chapter 36.70A RCW, and
the City of Federal Way Comprehensive Plan, specifically Goals CCP 9 and 10; and/or
(2) Encourage residential opportunities, including affordable housing, 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." (Ord. No. 03 -438, § 2, 2- 18 -03)
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 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 month. This excludes hotels and motels that
predominantly 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. (Ord. No. 03 -438, § 2, 2- 18 -03)
Affordable housing means the definition provided for in RCW 84.14.010.
Household means the definition provided for in RCW 84.14.010.
Low - income household means the definition provided for in RCW 84.14.010.
Moderate - income household means the definition provided for in RCW 84.14.010.
High cost area means the definition provided for in RCW 84.14.010.
Ordinance No. 09 -606 Page 2 of 7
14 -233 Tax exemption— Duration — Valuation — Exceptions.
(a) (1) Exemption, duration o£ The vaitte of improvements qtialif . iflg ndef FWGG 14 23
exempt from ad valer-em pfepef�y taxa4ion for- 10 sueeessive years beginning janttar-y 1 st of the yea-r-
The value of new housing construction, conversion and rehabilitation improvements qualifying,
under this chapter is exempt from ad valorem property taxation, as follows:
(a ) For properties for which applications for certificates of tax exemption ell ig bility are
submitted under chapter 84.14 RCW before July 22, 2007, the value is exempt for ten successive
Bears beginning January 1 of the year immediately following the calendar year of issuance of the
certificate; and
(b) For properties for which applications for certificates of tax exemption ell ig bill are
submitted under chapter 84.14 RCW on or after July 22, 2007, the value is exempt:
(i) For eight successive years beginning Jury 1 st of the year immediately following the
calendar year of issuance of the certificate; or
(ii) For twelve successive years beginning J anuary 1 st of the year immediately following the
calendar year of issuance of the certificate, if the property otherwise qualifies for the exemption
under this chapter and meets the conditions in this subsection. For the property to qualify for the
twelve -year exemption under this subsection, the applicant must commit to renting or selling at
least twenty percent of the multifamily housing units as affordable housing units to low and
moderate- income households, and the property must satisfy that commitment and any additional
affordability and income eli ig bility 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 � housing affordable to moderate -
income households.
(b)(Q Limits on exemption. The exemption does not apply to the value of land or to the value of
nonhousing improvements not qualifying under FWCC 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 to achieve the uniformity of assessment or appraisal required by law. (Ord. No. 03 -438,
§ 2, 2- 18 -03)
14 -236 Application review— Approval — Required findings — Issuance of
conditional certificate — Denial — Appeal.
(al) The director may approve an application if he or she finds that:
(4-a) A minimum of four new units are being constructed;
(2b) 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;
Ordinance No. 09 -606 Page 3 of 7
(ac) The owner has complied with all of the requirements of this article, including but not limited
to project eligibility requirements contained in FWCC 14 -234 and application requirements
contained in FWCC 14 -235; and
(4d) The project site is located within a designated residential targeted area.
L-5e) If qpplicable, the proposed multiunit housing project meets the affordable housing
requirements as described in FWCC 14 -233;
(b2) The director shall deny an application if the foregoing criteria are not met.
(E3) 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.
(d4) Following council approval of the contract, the director shall issue a conditional certificate of
acceptance of tax exemption. The conditional certificate shall expire three years from the date of
approval unless an extension is granted as provided in FWCC 14 -238.
(e5) 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 10 days of the denial.
(46) 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 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. (Ord. No. 03 -438,
§ 2, 2- 18 -03)
14 -239 Final certificate— Application — Issuance — Denial — Appeal.
(a1) 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:
( +a) A statement of expenditures made with respect to each multifamily housing unit and the
total expenditures made with respect to the entire property;
(2b) A description of the completed work and a statement of qualification for the exemption;
(3c) If applicable, a statement that the project meets the affordable housing requirements as
described in FWCC 14 -231;
(34 A statement that the work was completed within the required three -year period or any
approved extension.
(b2) At the time of application for final certificate under this section, the owner shall pay to the
city a fee of $50.00 to cover the city's administrative costs.
(s3) Within thirty days of receipt of all materials required for a 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 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.
(d4) 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 10 days of the expiration of the 30 -day period
provided under subsection (c) of this section.
Ordinance No. 09 -606 Page 4 of 7
(e5) The director is authorized to cause to be recorded, or to require the owner to record, in the
real property records of the King County department of records and elections, the contract with the
city required under FWCC 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.
(f6) 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 -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, if applicable, the affordable housing requirements as
described in FWCC 14 -233 were not met, or the owner's property is otherwise not qualified for the
limited exemption under this article.
(g7) The owner may appeal the director's decision to the hearing examiner by filing a notice of
appeal with the city clerk within 14 calendar 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 through 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 30 days of notification by the city to the owner of the
decision. (Ord. No. 03 -438, § 2, 2- 18 -03)
14 -240 Annual certification.
(al) Within 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 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:
( +a) A statement of occupancy and vacancy of the multifamily units during the previous year;
(2b) A certification that the property has not changed use and, if applicable, that the property has
been in compliance with the affordable housing requirements as described in FWCC 14 -233
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;
(2c) A description of any improvements or changes to the property made after the filing of the
final certificate or most recent certification, as applicable.
(b2) Failure to submit the annual certification may result in cancellation of the tax exemption.
(Ord. No. 03 -438, § 2,2-18-03)
14 -.241 Cancellation of tax exemption— Appeal.
(al) 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 if the owner intends to discontinue
compliance with the affordable housing requirements as described in FWCC 14 -233, or the
Ordinance No. 09 -606 Page 5 of 7
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.
(b2) If the owner intends to convert the multifamily housing to another use or intends to
discontinue compliance with the affordable housing requirements as described in FWCC 14 -233,
the owner must notify the director and the King County assessor within 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.
(s3) 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 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 FWCC 22 -397 through 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 party may
appeal the hearing examiner's decision to the King County superior court in accordance with the
procedures in RCW 34.05.5 10 through 34.05.598, as provided in RCW 84.14.110(2), within 30
days after issuance of the decision of the hearing examiner. (Ord. No. 03 -438, § 2, 2- 18 -03)
SECTION 2. Severability.
Should any section, subsection, paragraph, sentence, clause, or phrase of this chapter, or
its application to any person or situation, be declared unconstitutional or invalid for any reason,
such decision shall not affect the validity of the remaining portions of this chapter or its
application to any other person or situation. The City Council of the City of Federal Way hereby
declares that it would have adopted this chapter and each section, subsection, sentence, clauses,
phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections,
sentences, clauses, phrases, or portions be declared invalid or unconstitutional.
SECTION 3. Corrections.
The City Clerk and the codifiers of this ordinance are authorized to make necessary
corrections to this ordinance including, but not limited to, the correction of scrivener /clerical
Ordinance No. 09 -606 Page 6 of 7
errors, references, ordinance numbering, section/subsection numbers and any references thereto.
SECTION 4. Ratification. Any act consistent with the authority and prior to the effective
date of this ordinance is hereby ratified and affirmed.
SECTION 5. Effective Date. This ordinance shall take effect and be in force thirty (30)
days from and after its passage and publication, as provided by law.
PASSED by the City Council of the City of Federal Way this 17`h day of March, 2009.
ATTEST:
CITY OF FEDERAL WAY
I � - x- Y", t P N A
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APPROVED. AS. TO FORM:.
CITY ATTORNEY, PATRICIA A. RICHARDSON
FILED WITH THE CITY CLERK: 02 -24 -2009
PASSED BY THE CITY COUNCIL: 03 -17 -2009
PUBLISHED: 03 -21 -2009
EFFECTIVE DATE: 04 -21 -2009
ORDINANCE NO.:. 09 -606
Ordinance No. 09 -606 Page 7 of 7