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ORD 16-822ORDINANCE NO. 16 -822 AN ORDINANCE of the City of Federal Way, Washington, relating to an impact fee payment deferral program; amending FWRC 19.91.060, 19.95.050, 19.100.060, and 19.100.070; repealing FWRC 19.91.065; and adding new sections to Chapters 19.91, 19.95, and 19.100 FWRC. (Amending Ordinance Nos. 90 -39, 95 -249, 97 -293, 09- 627,10 -658, 11- 710,12 -727 and 15 -783) WHEREAS, the City recognizes the need to periodically modify Title 19 of the Federal Way Revised Code ( "FWRC "), "Zoning and Development Code," in order to conform to state and federal law, codify administrative practices, clarify and update zoning regulations as deemed necessary, and improve the efficiency of the regulations and the development review process; and WHEREAS, this ordinance, containing amendments to development regulations and the text of Title 19 FWRC, has complied with Process VI review, Chapter 19.80 FWRC, pursuant to Chapter 19.35 FWRC; and WHEREAS, it is in the public interest for the City Council to adopt code amendments to allow for deferred collection of impact fees as required by Washington State law in ESB 5923, which was passed in 2015; and WHEREAS, the new Washington State law requires cities to adopt a deferral system for the collection of impact fees; and WHEREAS, the City of Federal Way is adopting impact fee payment deferral regulations in compliance with the new State law; and WHEREAS, the Washington State law deadline for adopting the impact fee deferral regulations is September 1, 2016; and WHEREAS, the proposed amendments implement business friendly procedures and provide assurances for collection of impact fees; and WHEREAS, the proposed amendments relate to governmental procedures and do not contain substantive changes respecting use or modification of the environment; therefore, the proposed Ordinance No. 16 -822 Page 1 of 9 amendments are categorically exempt from environmental threshold determination requirements pursuant to WAC 197 -11- 800(19); and WHEREAS, the Planning Commission properly conducted a duly noticed public hearing on these code amendments on June 15, 2016, and forwarded a recommendation of approval to the City Council; and WHEREAS, the Land Use & Transportation Committee of the Federal Way City Council considered these code amendments on July 11, 2016, and recommended adoption of the text amendments as recommended by the Planning Commission. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Findings. The City Council of the City of Federal Way makes the following findings with respect to the proposed amendments. (a) These code amendments are in the best interest of the residents of the City and will benefit the City as the amendments implement a legislative mandate to allow deferral of impact fee collection and address the financial burden of paying all fees during the early stages of the building process. (b) These code amendments comply with Chapter 36.70A RCW, Growth Management. (c) These code amendments are required by Washington State law ESB 5923. (d) These code amendments are consistent with the intent and purpose of Title 19 FWRC and will implement and are consistent with the applicable provisions of the Federal Way Comprehensive Plan. (e) These code amendments bear a substantial relationship to, and will protect and not adversely affect, the public health, safety, and welfare. (f) These code amendments have followed the proper procedure required under the FWRC. Section 2. Conclusions. Pursuant to chapter 19.80 FWRC and Chapter 19.35 FWRC, and based upon the recitals and the findings set forth in Section 1, the Federal Way City Council makes the following Conclusions of Law with respect to the decisional criteria necessary for the adoption of the proposed amendments: Ordinance No. 16 -822 Page 2 of 9 (a) The proposed FWRC amendments are consistent with, and substantially implement, the following Federal Way Comprehensive Plan goals and policies: LUG2 Develop an efficient and timely development review process based on a public /private partnership. LUP4 Maximize efficiency of the development review process. LUP6 Conduct regular reviews of development regulations to determine how to improve upon the permit review process. EDP2 Periodically monitor local and regional trends to be able to adjust plans, policies, and programs. (b) The proposed FWRC amendments bear a substantial relationship to the public health, safety, and welfare because they implement business friendly procedures and will address the financial burden of paying fees at the early stages of the building process, and the amendments are required by Washington State law. (c) The proposed amendments are in the best interest of the public and the residents of the City of Federal Way because they implement a legislative mandate to allow deferral of impact fee collection. Section 3. Section 19.91.060 of the FWRC is hereby amended to read as follows: 19.91.060 Assessment of impact fees. (1) The city shall collect impact fees, based on the land use categories and rates on the current fee schedule, from any applicant seeking development permits or plat approval from the city wherc such , issuance of a building permit or approval for a change in use, except for development exempt under FWRC 19.91.080. This shall include, but is not limited to, the development of residential, commercial, retail, office, and industrial land, and includes the expansion of existing uses that creates a demand for additional system improvements as well as a change in existing use that creates a demand for additional system improvements. The public works department is authorized to determine the appropriate land use category found in the rate schedule that applies to the application. (2) All impact fees shall be due and payable pursuant to the guidelines established in FWRC 19.100.070(3), except as authorized under FWRC 19.91.066. (3) The public works department shall establish the traffic impact fee rate for a land use that is not listed in the fee schedule. The applicant shall submit all information requested by the city for purposes of determining the impact fee rate pursuant to FWRC 19.91.070. (4) For a change in use of an existing building or dwelling unit, including any alteration, expansion, replacement or new accessory building that generates additional trips, the impact fee shall be the Ordinance No. 16 -822 Page 3 of 9 applicable impact fee for the land use category of the new use, less any impact fee previously paid for the land use category of the prior use. If no impact fee was paid for the prior use, the impact fee for the new use shall be reduced by an amount equal to the current impact fee rate of the current use. (5) For mixed use developments, impact fees shall be imposed for the proportionate share of each land use based on the applicable measurement in the traffic impact fee rates set forth in the fee schedule. (6) The department of community development services shall not record a residential plat or issue the required building permit until a eevenant lien has been recorded pursuant to FWRC 19.100.070(3)(b) 19.100.075(3), or the traffic impact fees set forth in the fee schedule have been paid as set forth in the fee schedule or in the amounts that they exceed any credits allowable under this chapter. For a change in use where a building permit is not required, the applicant shall not occupy or permit a tenant to occupy the subject property unless and until the impact fee has been paid. Section 4. Section 19.91.065 of the FWRC is hereby repealed in its entirety. of transportation impact fens to thc extent the assessment of the fee is the result of a change to a land use category that results in a higher fee. This section shall not apply to a project that expands the . which existing structures arc replaced. This section shall automatically expire on December 31, 2015. (Ord. No. 15 783, § 1, 2 3 15; Ord. No. 11 710, § 1, 12 6 11) Section 5. Chapter 19.91 of the FWRC is hereby amended to add a new section 19.91.066 to read as follows: 19.91.066 Option for deferred payment of transportation impact fee. An applicant may request, at any time prior to building permit issuance, and consistent with the requirements of this section, to defer to final building inspection the payment of a transportation impact fee for single - family residential dwelling units pursuant to FWRC 19.100.075. Section 6. Section 19.95.050 of the FWRC is hereby amended to read as follows: 19.95.050 Assessment of impact fees. (1) The city shall collect school impact fees, based on the fee schedule adopted by city council, from any applicant seeking development approval from the city where such development activity requires the issuance of a residential building permit or a manufactured home permit. (2) The impact fees due on a plat or a PUD shall he-- assessed and collected from the lot owner at the time when thc building permits for ach dwelling unit is issued, using the fee schedule then in effect. Residential developments proposed for shert plats shall not be governed by this subsection, but E3) (2) For existing lots or lots not covered by subsection (2) of this section, all applications for single - family, and multifamily residential building permits, and manufactured home permits, and -site , the total amount of the impact fees shall be assessed and collected from the applicant when the building permit is issued, using the fee schedule then in effect. Irrespective of the date that the application for a building permit or manufactured home permit was submitted, no permit shall be issued until the required school impact fees set forth in the fee schedule have been paid, except as authorized under FWRC 19.95.055. Ordinance No. 16 -822 Page 4 of 9 Section 7. Chapter 19.95 of the FWRC is hereby amended to add a new section 19.95.055 to read as follows: 19.95.055 Option for deferred payment of school impact fee. An applicant may request, at any time prior to building permit issuance, and consistent with the requirements of this section, to defer to final building inspection the payment of a school impact fee for a single - family residential dwelling unit pursuant to FWRC 19.100.075. Section 8. Section19.100.060 of the FWRC is hereby amended to read as follows: 19.100.060 Methods of mitigation. (1) The methods of mitigating identified direct impacts required as a condition of any development approval may include, but are not limited to, dedication of land to any public body, off - site improvements, on -site improvements, and other capital or noncapital methods that may effectively reduce direct impacts. (2) In lieu of a dedication of land or to mitigate a direct impact that has been identified as a consequence of a proposed development, the city may approve a voluntary payment agreement with the developer, provided no such agreement shall be required as a condition of approval, and shall be subject to the following provisions: (a) The official or body approving development must find that the money offered will mitigate or is a satisfactory alternative to mitigate the identified direct impact. (b) The payment shall be held in a reserve account and may only be expended to fund a capital improvement or program agreed upon by the parties to mitigate the identified direct impact. (c) The payment shall be expended in all cases within applicable time limitations of Chapter 82.02 RCW, unless otherwise agreed to by the developer. (d) Unless the property owner elects to defer payments authorized in FWRC 19.100.070(1)(b) or (3)(b) 19.100.075, any payment not expended within applicable time limitations shall be refunded to the property owners of record at the time of the refund with interest at the rate earned in the city's reserve account applicable at the time of refund. If the payment is not expended within the applicable time limitations due to delay attributable to the developer, the payment shall be refunded without interest. (e) Property owners entitled to a refund and /or interest under the provisions of this chapter may voluntarily and in writing waive their right to a refund for a specified period of time in the interest of providing the designated capital improvement or other capital improvement or program identified by the property owner and acceptable to the city. (f) The developer may voluntarily and in writing waive on behalf of the developer and subsequent purchasers the right to interest and /or a refund in order to facilitate completion of an improvement. Under no condition shall such a waiver be required as a condition of approval. Such waiver shall be recorded with the county where the property is situated and shall be binding on subsequent owners. Section 9. Section 19.100.070 of the FWRC is hereby amended to read as follows: Ordinance No. 16 -822 Page 5 of 9 19.100.070 Timing of fee payments. Various sections of this Code require payment of fees to mitigate direct impacts of the development approval. Notwithstanding those fees eligible for deferment pursuant to subsections (1)(b), (1)(c), and (3)(c) of this section, the following describes when such fees shall be calculated and paid: (1) Open space fee -in -lieu. (a) As provided in FWRC 18.55.060 and 19.115.115, a fee in lieu of open space may be made to satisfy open space requirements at the discretion of the parks director and shall be calculated and paid at the time of plat recording for residential land divisions, or prior to building permit issuance for multifamily developments in the city center core and city center frame zoning districts, unless deferred as noted below. The fee shall be calculated based upon the square footage of open space which otherwise would have been required to ,be provided multiplied by the subject property's assessed or appraised value. (b) For those residential land divisions vested prior to July 2, 2015, open space fees -in -lieu may be deferred, but shall be paid no later than the closing of sale of each individual house or five years from deferment of the fee, whichever is earlier. Covenants prepared by the city shall be recorded at the applicant's expense on each lot at the time of plat recording to enforce payment of deferred fees. The fee shall be calculated at the time of plat recording and divided equally among all newly created lots. The fee shall be calculated based upon the square footage of open space which otherwise would have been required to be provided multiplied by the subject property's assessed or appraised value. As consideration for the ability to defer open space fee -in -lieu payments beyond plat recording, the applicant agrees to waive the right to interest and/or a refund if payment is not expended within five years of collection. (c) For multifamily developments in the city center core and city center frame, open space fees -in -lieu may be deferred, but shall be paid no later than the completion of construction and prior to receipt of certificate of occupancy /approval to occupy for each floor or each building if phased, or five years from the recording of the deferment covenants, whichever is earlier. Covenants prepared by the city shall be recorded at the applicant's expense, prior to building permit issuance, to enforce payment of deferred fees. The fee shall be calculated at the time of recording of the covenants and shall be divided equally among all residential units within the project. The fee shall be calculated based upon the square footage of open space that otherwise would have been required to be provided multiplied by the subject property's assessed or appraised value. As consideration for the ability to defer open space fee -in -lieu payments beyond building permit issuance, the applicant agrees to waive the right to interest and /or a refund if payment is not expended within five years of collection. (2) Regional stormwater facility fee -in -lieu. Developments may be able to utilize stormwater detention in one of the city's regional stormwater facilities based on an area fee -in -lieu established by the city. Fees are used for construction cost recovery and shall be paid at the time of plat recording for residential land divisions and prior to building permit issuance for commercial and multifamily developments. (3) Transportation impact fee. Unless the use of an independent fee calculation has been approved, or unless a development agreement entered into pursuant to RCW 36.70B.170 provided otherwise, the fee shall be calculated and paid per the following: (a) Wig. For : - . _ . ..: commercial developments, fees shall be calculated based on the impact fee schedule in effect at the time a completed building permit application is filed and paid prior to permit issuance. For a change in use for which no building Ordinance No. 16 -822 Page 6 of 9 permit is required, the fee shall be calculated and paid based on the impact fee schedule in effect on the date of an approved change of use. (b) The city shall collect transportation impact fees, based on the fee schedule adopted by city council, from any applicant seeking development approval from the city where such development activity requires the issuance of a residential building permit or a manufactured home permit. (c) For all applications for single - family, multifamily residential building permits, and manufactured home permits, the total amount of the impact fees shall be assessed and collected from the applicant when the building permit is issued, using the fee schedule then in effect. Irrespective of the date that the application for a building permit or manufactured home permit was submitted, no permit shall be issued until the required transportation impact fees set forth in the fee schedule have been paid, except as authorized under FWRC 19.100.075. (d) Where a building permit is not required for the development activity, the transportation impact fees shall be paid prior to issuance of the permit that authorizes the activity. Section 10. Chapter 19.100 of the FWRC is hereby amended to add a new section 19.100.075 to read as follows: 19.100.075 Option for deferred payment of transportation and school impact fee. An applicant may request, at any time prior to building permit issuance, and consistent with the requirements of this section, to defer to final building inspection the payment of a transportation impact fee and/or a school impact fee for a single - family residential dwelling unit. The following shall apply to any request to defer payment of an impact fee: (1) The applicant shall submit to the city a written request to defer the payment of an impact fee for a specifically identified building permit. The applicant's request shall identify, as applicable, the applicant's corporate identity and contractor registration number, the full names of all legal owners of the property upon which the development activity allowed by the building permit is to occur, the legal description of the property upon which the development activity allowed by the building permit is to occur, the tax parcel identification number of the property upon which the development activity allowed by the building permit is to occur, and the address of the property upon which the development activity allowed by the building permit is to occur. All applications shall be accompanied by an administrative fee as provided for in the city's adopted permit and impact fee schedule. (2) The impact fee amount due under any request to defer payment of impact fees shall be based on the schedule in effect at the time the applicant provides the city with the information required in subsection (1) of this section. (3) Prior to the issuance of a building permit that is the subject of a request for a deferred payment of the impact fee, all legal owners of the property upon which the development activity allowed by the building permit is to occur must sign a deferred impact fee payment lien in a form acceptable to the city attorney. The deferred impact fee payment lien shall be recorded against the property subject to the building permit and be granted in favor of the city in the amount of the deferred impact fee. Any such lien shall be junior and subordinate only to one mortgage for the purpose of construction upon the same real property subject to the building permit. In addition to the Ordinance No. 16 -822 Page 7 of 9 administrative fee required in subsection (1) of this section, the applicant shall pay to the city the fees necessary for recording the lien agreement with the King County recorder. (4) The city shall not approve a final inspection until the impact fees identified in the deferred impact fee payment lien and the administrative deferral fee are paid in full. (5) In no case shall payment of the impact fee be deferred for a period of more than 18 months from the date of building permit issuance. Eighteen months after building permit issuance, the impact fee shall be paid regardless of the status of the building_ permit, unless the building permit has been canceled by the city. (6) Upon receipt of final payment of the deferred impact fee as identified in the deferred impact fee payment lien, the city shall execute a release of lien for the property. The property owner may, at his or her own expense, record the lien release. (7) In the event that the deferred impact fee is not paid within the time provided in this section, the city may institute foreclosure proceedings under the process set forth in Chapter 61.12 RCW. The school district may also institute foreclosure proceedings as set forth in RCW 82.02.050(3). (8) An applicant is entitled to defer impact fees pursuant to this section for no more than 20 single - family dwelling unit building permits per year in the city. For purposes of this section, an "applicant" includes an entity that controls the applicant, is controlled by the applicant, or is under common control with the applicant. Section 11. 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 circumstance, shall not affect the validity of the remainder of the ordinance, or the validity of its application to any other persons or circumstances. Section 12. 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 errors, references, ordinance numbering, section /subsection numbers and any references thereto. Section 13. Ratification. Any act consistent with the authority and prior to the effective date of this ordinance is hereby ratified and affirmed. Section 14. Effective Date. This ordinance shall be effective five (5) days after passage and publication as provided by law. PASSED by the City Council of the City of Federal Way this 9th day of August, 2016. CITY OF FEDERAL WAY Ordinance No. 16 -822 Page 8 of 9 ATTEST: LERK, STEPHANIE COU EY, CMC APPROVED AS TO FORM: .1//s4V1 j " ' / /V% ACTING CITY ATTORNEY, MARK ORTHMANN FILED WITH THE CITY CLERK: 07/15/2016 PASSED BY THE CITY COUNCIL: 08/09/2016 PUBLISHED: 08/12/2016 EFFECTIVE DATE: 08/17/2016 ORDINANCE NO.: # 16 -822 Ordinance No. 16 -822 Page 9 of 9