HomeMy WebLinkAboutCAP 2016-11-14 COMPLETE AGENDA PACKETCity of Tukwila
Comm unity Affairs &
Parks Committee
O De'Sean Quinn, Chair
O Kathy Hougardy
O Thomas McLeod
AGENDA
Distribution:
Recommended Action
D. Quinn
C. O'Flaherty
K. Hougardy
R. Turpin
T. McLeod
L. Humphrey
J. Duffle
R. Eaton
D. Robertson
N. Gierloff
Mayor Ekberg
B. Giberson
D. Cline
D. Speck
MONDAY, NOVEMBER 14, 2016 — 5:30 PM
HAZELNUT CONFERENCE ROOM
(formerly known as CR #3) at east entrance of City Hall
Item
Recommended Action
Page
1. PRESENTATION(S)
2. BUSINESS AGENDA
a. A resolution accepting a land donation.
a. Forward to 11/28 C.O.W.
Pg.i
Robert Eaton, Parks & Recreation Manager
and 12/5 Regular Mtg.
b. An ordinance updating the rental license requirements
b. Forward to 11/28 C.O.W.
Pg.13
to match the fee resolution and require proactive pest
and 12/5 Regular Mtg.
control.
Nora Gierloff, Deputy Community Development Director
c. A resolution authorizing study of the Landscape
c. Forward to 11/28 C.O.W.
Pg.27
Conservation and Local Infrastructure Program
and 12/5 Regular Mtg.
(LCLIP).
Consent Agenda.
Nora Gierloff, Deputy Community Development Director
d. Affordable housing legislation:
d.
(1) An ordinance reducing development and land use
(1) Forward to 11/28 C.O.W.
Pg.85
fees for certain affordable housing projects.
and 12/5 Regular Mtg.
(2) An ordinance to provide an impact fee deferral
(2) Forward to 11/28 C.O.W.
Pg.97
process for single - family residential construction.
and 12/5 Regular Mtg.
Nora Gierloff, Deputy Community Development Director,
and Bob Giberson, Public Works Director.
e. Policy discussion regarding expansion of the
e. Committee consideration/
Pg.113
Multi - Family Tax Exemption program (MFTE).
decision.
Nora Gierloff, Deputy Community Development Director
f. Developer selection for motel site.
f. Forward to 11/14 C.O.W.
Pg.121
Derek Speck, Economic DevelopmentAdministrator
and 11/21 Regular Mtg.
3. ANNOUNCEMENTS
4. MISCELLANEOUS
Next Scheduled Meeting: Monday, November28, 2016
�. The City of Tukwila strives to accommodate those with disabilities.
Please contact the City Clerk's Office at 206 - 433 -1800 ( TukwilaCityClerk @TukwilaWA.gov) for assistance.
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Community Affairs and Parks Committee
FROM: Rick Still, Parks & Recreation Director
BY: Robert Eaton, Parks & Recreation Manager
CC: Mayor Ekberg
DATE: November 9, 2016
SUBJECT: Resolution Accepting Land Donation
ISSUE
Land donation at intersection of South 128th Street and 3711 Avenue South
BACKGROUND
In 2015, the City was approached by a family wishing to donate a parcel of land, approximately
16,250 square feet (0.37 acres). The land is heavily vegetated with several mature trees and an
intersection point for two tributaries of the Riverton Creek merging into one (maps attached).
This item was presented to both the Park Commission and Community Affairs and Parks
Committee last year. The Committee authorized staff to proceed with this and bring it back when
details are finalized along with a draft resolution to work through the full council process.
After completion of the details for accepting the land donation this item was discussed at the
October 12, 2016 Park Commission meeting and the Commission unanimously supported
recommending the acceptance of this land donation to the City Council.
DISCUSSION
The location of the land is along South 128th St. and 37th Ave S. and has potential to become a
restored site with improvements made to the Riverton Creek area. The Parks, Recreation and
Open Space Plan recommends the City "Continue to seek opportunities for open space acquisition
to increase land/trail connectivity, access to recreation areas and land conservation functions."
If the land donation is accepted an initial vegetation management plan would need to be
performed. The site would be categorized as a Service Level 4, "Open Space" in the Parks
Maintenance Service Levels plan and therefore would require very minimal annual maintenance.
FINANCIAL IMPACT
Approximately $10,000 includes Phase 1 Environmental Survey (completed) and vegetation
management on site funded through the 2017 P&R CIP Land Acquisition budget after title transfer.
RECOMMENDATION
The Committee is being asked to approve the draft resolution and consider this item at the
November 28, 2016 Committee of the Whole and December 5, 2016 Regular City Council
Meetings.
ATTACHMENTS
A. Location Maps
B. DRAFT Resolution
Attachment A
Land Donation Parcel (S 128th St & 37th Ave S)
(Riverton Creek Map)
0
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, ACCEPTING THE DONATION OF CERTAIN REAL PROPERTY TO
THE CITY OF TUKWILA BY GREGORY S. SARANTOS AND PETER SARANTOS.
WHEREAS, Gregory S. Sarantos and Peter Sarantos are the owners of the property as
fully described in Exhibit A attached hereto, located within Tukwila, Washington, and desire to
donate this property to the City of Tukwila; and
WHEREAS, the City of Tukwila's Parks & Recreation Department, through the Parks,
Recreation and Open Space Plan, has identified the property as beneficial to the expansion of
the publicly-owned open space;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
HEREBY RESOLVES AS FOLLOWS:
Section 1. The City Council hereby accepts the donation of certain real property from
Gregory S. Sarantos and Peter Sarantos as detailed in the attached Exhibit A.
Section 2. The City Council authorizes the Mayor to execute the appropriate documents
necessary to convey title for the property (as shown in Exhibit A) to the City of Tukwila.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a
Regular Meeting thereof this day of 12016.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk Joe Duffie, Council President
APPROVED AS TO FORM BY:
Filed with the City Clerk:_
Passed by the City Council:
Resolution Number:
Rachel B. Turpin, City Attorney
Exhibit A: King County iMaps (2) of neighborhood and parcel, and Legal Description
WAWord Processing\Resolutions\Accept donation of property-Sarantos 11 -8 -16
RE:bjs Page 1 of 1
I King County Map I
The information included on this map has been complted by King County staff from a variety of sources and is
subject to change without notice. King County makes no representations or warranties, express or implied,
as to accuracy, completeness, timeliness, or rights to the use of such information. This documentis not intended
for use as a survey product. King County shall not be liable for any general, special, indirect, incidental, or
consequential damages including, but not lirrited to, lost revenues or lost profits resulting from the use or misuse
of the information contained on this map. My sale of this map or information on this map is prohibited except by
written permission of King County.
Date: 10/31/2016 Map Parcel # 7345600722
d
a • •
renTe •
Rl
10
Exhibit A
Legal Description
ALL OF LOT 12 AND WEST 20 FEET OF LOT 13, BLOCK 9, RIVERTON, TOGETHER WITH THE VACATED
STREET ADJACENT TO THE PROPERTY.
11
12
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Community Affairs and Parks
FROM: Jack Pace, DCD Director
BY: Nora Gierloff, Deputy DCD Director
CC: Mayor Ekberg
DATE: November 7, 2016
SUBJECT: Rental Housing Update with Pest Control Requirements
ISSUE
Should the residential rental licensing code be updated to require proactive pest control in larger
complexes?
BACKGROUND
Representatives from the Tukwila School District have testified at Tukwila City Council meetings that
some apartments are infested with vermin, cockroaches, and bedbugs. While these complaints have
not been directed to Code Enforcement staff and no actionable details have been provided, Code
Enforcement reached out to the three apartment managers and owners. We found that these
complexes were already doing proactive pest management.
The proposed fee resolution for 2017 -18 includes new fees for late renewals, late inspections, and
rentals prior to license approval.
DISCUSSION
The legal process for responding to a complaint of any kind in a rental unit is to first advise the tenant
to complain to their landlord in writing and wait for the appropriate period of time for the landlord to
respond and begin the treatment. In the case of infestations, the waiting period is 10 days. If the
landlord fails to respond in that time, Code enforcement would then contact the landlord and request
that they address the complaint by hiring an exterminator and providing us with a copy of their
findings and the treatment plan.
Since we have had the rental licensing and inspection program in full force (2011), staff has received
relatively few infestation complaints - six in the past year, all of which have had a prompt response
from the landlord. Two had additional issues due to tenant hoarding and lack of cooperation, but
they have been resolved. One tenant was moved to another unit so that extermination could occur.
The other tenant did what was necessary for an IPM company to come in to treat the unit.
Overall, the required inspections of Tukwila's 3,663 rental units have had the desired effect in
addressing and correcting housing conditions. Items that are identified during the inspection process
are managed at the time of inspection. The adoption of the National Healthy Housing Standard
requires landlords to eliminate infestations using integrated pest management (IPM) when
infestations occur. This requirement is an effective tool for dealing with infestation complaints when
they arise.
13
INFORMATIONAL MEMO
Page 2
We recently surveyed apartment managers of the 62 complexes with 5 or more units about their pest
control practices and received the following responses.
#Units
Proactive
Contract
Yearly Cost
Treatment
6
No
No
$ 800
191
Yes
Yes
$ 4,000
7
Yes
Yes
$ 750
104
Yes
Yes
$ 864
114
Yes
Yes
$ 8`303
120
Yes
Yes
$ I,200
109
Yes
Yes
$ 3'I36
61
Yes
Yes
$884
51
Yes
Yes
$5-6,000
Notes
Service only when there is a problem
Multi-state Regional nnanager,aUproperbes
have monthly visits with follow upifneeded
2x per month with follow upifneeded
Quarterly spraying and monthly rodent control
Monthly since 2OI0
lx per year in each unit and asneeded,
monthly bait station checks
Monthly service
745 units total in King County, monthly service
It seems like standard practice for larger complexes to have a maintenance contract with a pest
control service. We could require the 42 properties with 20 or more units to submit confirmation of an
annual pest inspection and treatment plan prepared by a property manager or company trained in
IPM as a condition of the annual rental housing license. This would cover 85% of the rental units in
the City but Qnly affect 7% of the landlords. After a few years we could evaluate whether this has
reduced the number of pest complaints.
In September we notified the owners and managers of properties with 20 or more units, the Rental
Housing Association of Washington, and the Washington Muffi-Family Housing Association that the
City was considering implementing a proactive pest control requirement, see Attachment B.
Responses are listed in Attachments C and D.
The draft ordinance in AttachmentA also reflects procedural changes related to the fee resolution
such as late fee deadlines.
FINANCIAL IMPACT
While there would beno direct costs, adding additional requirements to the annual licensing process
wit[ increase the amount of staff time needed to process the licenses.
RECOMMENDATION
The Council is being asked to approve the ordinance and consider this item at the November 28, 2016
Committee of the Whole meeting and subsequent December 5, 2016 Regular Meeting to put these
changes in place for the 20lT license renewals.
ATTACHMENTS
A. Draft Ordinance Amending TM[S.06
B. Email to Owners/Managers of20 Plus Unit Properties
C. Comments from Rental Property Owners/Managers
D. Comment Letter from Washington Multi-Family Housing Association
ZACouncil Agenda ltems\DCD\Rental License Update PESTSTom Control |nfowomodo
Attachment A
M M8�v
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2459
§11, §2, AND §8, AND ORDINANCE NO. 2281 §1 (PART), AS
CODIFIED AT TUKWILA MUNICIPAL CODE SECTIONS
5.06.020, 5.06.040, 5.06.050 AND 5.06.140, TO UPDATE
TUKWILA'S RESIDENTIAL RENTAL BUSINESS LICENSE AND
INSPECTION PROGRAM REQUIREMENTS; PROVIDING FOR
SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City has adopted a Residential Rental Business License and
Inspection Program, pursuant to Tukwila Municipal Code (TMC) Chapter 5.06; and
WHEREAS, the program has significantly improved the condition of the City's rental
housing stock over the past six years; and
WHEREAS, preventative pest control will help preserve housing conditions; and
WHEREAS, the City has adopted an updated fee resolution for the 2017 and 2018
license years; and
WHEREAS, this resolution includes new fees that should be referenced in TMC
Chapter 5.06, "Residential Rental Business License and Inspection Program"; and
WHEREAS, timely licensing renewals and inspections help the City provide efficient
services; and
WHEREAS, the ordinance amendments are procedural in nature, and are therefore
categorically exempt from the State Environmental Policy Act (SEPA) review pursuant
to WAC 197-11-800(19);
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. TMC Section 5.06.020 Amended. Ordinance Nos. 2459 §1 and 2281
§1 (part) as codified at Tukwila Municipal Code (TMC) Section 5.06.020, subparagraph
1., are hereby amended to read as follows:
1. "Accessory dwelling unit" or "ADU" means a unit that meets the
requirements of Table 18-6, Note 17, of TMC Title
W: Word Processing\Ordinances\ResidentiaI Rental License/Inspection Program update strike-thru 10-10-16
NG:bjs Page 1 of 3
15
Section 2. TMC Section 5.06.040 Amended. Ordinance No. 2281 §1 (part), as
codified at TMC Section 5.06.040, is hereby amended to read as follows:
5.06.040 Residential Rental Business License Requirement
A. Every rental unit owner shall obtain an annual residential rental business
license, pursuant to Title 5 of the Tukwila Municipal Code, prior to operating, leasing or
causing to be leased a rental unit. Rental unit owners must file a written application
annually with the Department for each rental -location to be leased. To be
considered for approval, residential rental business license applications must be
complete and include: t4e.
1. Completed and signed Residential Rental Business License _Application
provided byitq City.
2 Aappropriate application fee as set foO in the CAy-�s fee schedule
add J1,
Ogj�ted �y_jq�iolutioQgfjhq.. City ounc. Late fees will be due for applications filed
March 1st or later.
3. For rnu1!Lfami1y--bui1din_qs _With 20 or more units, documentation of an
(IPM) Program. This could be a prop p� rt
!D,gna(jr trained in IPM QLa contract with a pest _control 2gMpqflL
B. Failure to obtain a residential rental business license will result in the inability to
rent the unit. '
Section 3. TMC Section 5.06.050 Amended. Ordinance Nos. 2459 §2 and 2281
§1 (part), as codified at TMC Section 5.06.050, are hereby amended to read as follows:
5.06.050 Inspection Required
The owner must obtain an inspection of each rental unit and submit the flnspection
Checklist fe&u4s to the code official before the Unit is initially accupied by a tenant, and
in subsequent years no later than Beptember 30 of the year the Certificate of
Compliance Owners of complexes with 5 or more units are required to utilize a
non-City inspector who meets the qualifications defined herein and who is preapproved
by the City. Owners of rental properties with fewer than 5 units may utilize a City
inspector or a non-City inspector, as defined herein. The City shall provide the
Inspection Checklist to the owner with the application form. The code official shall issue
a Certificate of Compliance for rental units that comply with applicable laws based on a
submitted Inspection Checklist. If using a non-City inspector, the owner shall be
responsible for making the inspection arrangements with the non-City inspector.
Section 4. TMC Section 5.06.140 Amended. Ordinance Nos. 2459 §8 and 2281
§1 (part), as codified at TMC Section 5.06.140, are hereby amended to read as follows:
5.06.140 Certificate of Compliance Validity and Renewal
Certificates of Compliance expire on December 31, four years from the date of issuance
by the City.
the--- Failure to renew the Certificate of Compliance
W: Word Processing\Ordinances\ResidentiaI Rental License/Inspection Program update strike-thru 10-10-16
NG:bjs Page 2 of 3
16
every four years shall result in the non-issuance or revocation of the rental business
license for that unit. Rental properties that are registered and continue to meet all the
requirements of the City's Crime-Free Rental Housing Program, or other City-
administered program to certify rental properties as working proactively at crime
prevention, may extend their required rental inspection schedule to once every 8 years.
If participation in such program is terminated due to failure to meet program
requirements or for any other reason, the rental inspection shall be due at the end of the
calendar year of the year of termination or 4 years from the last inspection, whichever is
later. Furthermore, if a property registered in the Crime-Free Rental Housing Program,
or any other City-administered program to certify rental properties as working
proactively at crime prevention, is the subject of 3 or more code violation complaints
verified by the City in any 6-month period for violations affecting the habitability of a
residential unit, the property will revert to a 4-year inspection cycle.
Section 5. Corrections by City Clerk or Code Reviser. Upon approval of the
City Attorney, the City Clerk and the code. reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to
other local, state or federal laws, codes, rules, or regulations; or ordinance numbering
and section/subsection numbering.
Section 6. Severability. If any section, subsection, paragraph, sentence, clause or
phrase of this ordinance or its application to any person or situation should be held to be
invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
* Section 7. Effective Date. This ordinance or a summary thereof shall be published
in the official newspaper of the City, and shall take effect and be in full force five days
after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this — day of 2016.
ATTEST /AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Rachel B. Turpin, City Attorney
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
W: Word Processing\Ordinances\ResidentiaI Rental License/Inspection Program update strike-thru 10-10-16
NG:bjs Page 3 of 3
17
im
Nora Gierloff
From: Nora Gierloff
Sent: Wednesday, September 28, 2016 12:42 PM
To: Nora Gierloff
Cc: Laurel Humphrey; Hoa Mai
Subject: Preventative Pest Control Proposal
Tukwila Property Owners and Managers,
Thanks to those who responded to my survey about pest management practices. The results were:
# Units
Proactive
Contract
Yearly Cost
Notes
Treatment
6
No
No
$
800
Service only when there is a problem
191
Yes
Yes
$
4,000
?
Yes
Yes
$
750
Multi -state Regional manager, all properties
have monthly visits with follow up if needed
104
Yes
Yes
$
864
2x per month with follow up if needed
114
Yes
Yes
$
8,303
Quarterly spraying and monthly rodent control
120
Yes
Yes
$
1,200
Monthly since 2010
109
Yes
Yes
$
3,136
1x per year to each unit and as needed, monthly
bait station checks
51
Yes
Yes
$5 -6,000
745 units total in King County, monthly service
It appears to be standard practice for larger complexes to have a maintenance contract with a pest control service. The
Tukwila City Council will be reviewing a proposal to require properties with 20 or more units to submit confirmation of
an ongoing pest inspection and treatment plan prepared by a company certified to perform integrated pest
management (IPM) as a condition of the annual rental housing license. After a few years we would evaluate whether
this has reduced the number of pest complaints.
If you have specific recommendations or concerns please get back to me by October 7th. The Community Affairs and
Parks Council Committee is tentatively scheduled to consider this item at their October 24th meeting. Links to agenda
materials are available the Friday before Council meetings at htt.La.e // wvwon ukwilawg.gov /c rL -council � .
Nora) (�ie,rL f
Deputy DCD Director
City of Tukwila
The City of opportunity, the community of choice.
1
Attachment B
W
20
Comments on the Proactive Pest Control Proposal
Michael J. Jansen, Principal Tecton Corporation:
My thought on this process is there must be an issue somewhere that has an owner neglecting
their responsibilities. Why not focus on this type of ownership versus adding costs to those
that are taking care of the issue. Also why 20 units? A 20 unit that has no issues will be
required to be under the focus while a 15 unit rat infested community will not. Address the
non - complaint owners.
Bryan Whiting, Manager Avalon Apartments
This new requirement is a disservice to good, responsible landlords. I spray the exterior of the
complex every 6 to 8 weeks, check bait boxes monthly and use AAA Pest Control and
Extermination whenever there is a specific issue in the complex. I am fine with the City
inspection requirement and in fact inspect all of the units every 6 months to keep on top of any
problems. However the requirement to have an ongoing contract with a company is too big a
burden when I am able to maintain the complex myself.
Rob Cravens
I see a lot of rats running around houses in the area of my complexes on S.142nd Street and
also shopping areas like Bartell Drugs located at 14277 Pacific Hwy. S. I was curious what the
city is doing about those pest issues?
We are doing our part controlling pests at our complexes but it seems to me local business and
houses in the area are not helping the situation as I don't see bait stations for rodents placed
outside at those properties!
Attachment C
21
22
19
October 6, 2016
NonaGiedoff
Fjw'MULTI
FAMILY
Deputy DCDDirector
H��������
City OfTukwila
02OUSOuihcenterBoulevard
Tukwila, WA
Re: Pest Control in Multifamily Housing
Dear Nora:
T: 425,656,9077
F: 425,656.9087
Thank you for the opportunity ho provide comment on the recent proposal
to require Integrated Pest Management /|PK4\certification on an annual
basin with the nen(o| housing license for 20+ unit rnu|iifonoUy properties.
The Washington Multi-Family Housing Association is the local affiliate of
the National Apartment Association. VVe represent owners and operators
of approximately 17O.00O rental units in the State ofWashington.
Particularly in the City of Tukwila, we represent owners and operators of
U32 units (nO separate communities. The issue of pest control came to
the City ofTukvvi|o'a attention by the principal of Foster High School, in
August 2015. |n her public testimony she discussed issues with her kids
coming from what she described om the "slums ofTVkVvi|u" ' with bites
from rats and infestation of other insects. She mentioned the high school
had decontamination stations to prevent transmission of insects through
students. |tio disappointing to hear children are living inhousing
conditions of this type.
State and local laws require pest nmanaqarnent control inrnultifarni|v
Specifically the Residential Landlord-Tenant Act requires a
landlord to "provide a reasonable program for the control of infestation by
inseots, rodantn, and other pests at the initiation of tenancy, and except in
the case of single-family reoidenma, control infestation during tenancy
except where such infestation ie caused by the tenmnt." RC|VV
The Tukwila Municipal Code goes further, adopting, with amendments,
the International Property Maintenance Code /|PK4C>. The |PMCrequires
pest free environments and requires the owner of any 2+ unit multifamily
UvVe||iD0 be responsible for pest elimination on the exterior of the
property. 309.1 et seq. Infestation that io caused bythe tenant within the
dwelling unit but isnot contained by the occupant becomes the owner's
responsibility, in part, aowell. Additional amendments t0 the |PMCbythe
City of Tukwila include identifying oo insects bed bugs and lice. -[IVIC
I She defined the area as the two blocks on each side of International Blvd.
8.28.020.8.v. Bed bugs and lice are not recognized by the |PMCaepests
and generally are infestations that would be caused bvatenant, The
Code also requires IPM programs for all nouhiharni|y buildings. 308,7.
MULTI
FAMILY The survey results indicate it is the standard practice for communities with
HOUSING
20 and more units to maintain a pro-active treatment and o contract with 8
pest control company. They are already maintaining a reasonable pest
control program as required by State |evv.
#Unhs
Proactive Treatment
Contract
6
No
No
r::zs,ssnaorr 191
Yes
Yes
F:*z5�sss.eoo, ?
Yes
Yes
104
Yes
Yes
114
Yes
Yes
120
Yes
Yes
109
Yes
Yes
51
Yes
Yes
These communities are also professionally rnanaoed, lessening the
degree to which defective conditions may exist. |tis not appropriate and
does not solve any existing pest control problems ho focus on large
multifamily oonnnnuniUeo when the crux of the problem exists in annaUar
communities. There are existing mechanisms within the current |avv to
prevent the type of pest infestation the Council is seeking t0remedy.
w
What problem is being addressed bv requiring e certification of
w
The proposal seeks h) further regulate 7%of rental properties in
Tukwila. What effect will o regulation have ifS3Y6of the rental
properties are not required to comply?
Moreover the most effective remedy b] defective conditions and hzthose
issues identified as health and safety issues in the rental inspection
ordinance is for tenants to be proactive in reporting defective oonditions,
including infestahon, to their rental housing providers. Rental housing
providers are best equipped to remedy a defective condition when the
condition ioknown. Barring tenant request to fix a defective condition, a
neOt8| housing provider will not know.
Fims|k/. the Community Affairs and Parks Committee any unintended
War— consequences that may result from any new regulations imposed on
multifamily properties. Namely increased rent due to increased
regulations. VVK8FHAie committed bm working with our members to
=
comply with existing law and provide 8n affordable and safe living
MULTI environment ho residents of the city ofTukwila.
FAMILY
OU����
Thank you for the opportunity t0 provide comment On this proposal. We
look forward to further discussion and being a resource for the City of
Tukwila on multifamily property issues,
Sincerely,
-�_
T:42ses59or/ ---
e4zsssaeoa/ Brett Waller
Deputy Director of Government Affairs
Washington Multi-Family Housing Association
co: City of Tukwila Community Affairs and Parks Committee
26
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Community Affairs and Parks Committee
FROM: Jack Pace, Community Development Director
BY: Lynn Miranda, Senior Planner
CC: Mayor Ekberg
DATE: November 8, 2016
SUBJECT: Resolution in support of regional transfer of development rights (TDR) as part of a
Landscape Conservation and Local Infrastructure Program (LCLIP)
iM-11] 2
Should the Council adopt a resolution expressing support for regional Transfer of Development Rights
(TDRs) and their willingness to consider, at the appropriate time, developing an interlocal agreement
with King County to establish a Landscape Conservation and Local Infrastructure Program (LCLIP) that
includes TDR policies?
BACKGROUND
History
In 2014, Tukwila received a $42,060 grant to evaluate the viability of implementing LCLIP within the
City. LCLIP is a state program offering cities access to a portion of their County's property tax revenue
from new development for up to 25 years in return for acceptance and purchase of a certain number of
development rights transferred from regional farms and forests. Cities must then use this revenue to
fund infrastructure improvements that support infill growth and redevelopment.
The consultant team of Forterra, ECONorthwest, and Heartland were hired to prepare the LCLIP
feasibility analysis. The City Council received a full briefing on the results of the analysis at its May 26,
2015 Committee of the Whole meeting. At their July 25, 2016 meeting, the Community Affairs and
Parks Committee requested a subsequent briefing from Forterra, who gave an abbreviated version of
the presentation made in 2015 and encouraged the City to adopt a LCLIP. The LCLIP discussion was
continued at the August 8, 2016 CAP meeting, where the Committee supported moving forward with
the process of establishing a LCLIP.
Findings of LCLIP Feasibility Analyses
Two studies evaluated the feasibility of implementing a LCLIP program — one in 2015 funded by a grant
and a more recent one in 2016 (Attachments A & B). A summary of the findings follows:
2015 Report
The consultants' final report, Tukwila LCLIP.- Findings and Recommendations, discussed the two most
promising opportunities for the City to pursue for "placing" TDR credits: 1) allowing developers to use a
Multifamily Property Tax Exemption (MFTE) only when purchasing TDR credits; and 2) requiring
developers to purchase TDR credits when asking for special dispensations through a Developer
Agreement.
27
INFORMATIONAL MEMO
Page 2
In the IVIFTE approach, developers would purchase TDR credits as a means to access 8 years of
property tax exemptions, which is attractive to developers. In the Developer Agreement approach, the
City could negotiate TDR purchase by developers for projects of a larger scale. The advantage of both
approaches is that TDR credits are placed through the private market. However, there are issues that
make these approaches less attractive for the City: 1) it is uncertain how many projects would buy
credits for access to the IVIFTE program; and 2) the need for developer agreements in the future is
uncertain, and because there is no fixed process (like an exchange rate) for establishing the amount of
credits a project would acquire, TDR credit utilization is subject to negotiation.
The report's recommended approach was to pursue a TDR credit placement strategy that combines
private market mechanisms (i.e., IVIFTE and Developer Agreements) augmented by the City using
public funds to purchase some of the specified TDR credits, if necessary, to reach the performance
milestones needed to continue the LCLIP program and to continue receiving a portion of the County's
property tax revenue from new development.
The report's findings show that the anticipated amount of new growth, even when projected
conservatively, may be sufficient to warrant participation in the LCLIP program. The report also added a
note of caution, emphasizing that the actual amount of future growth or development is an important
factor in the viability of a LCLIP program. To retire enough TDR credits for the program to be financially
feasible, the City would need to realize significantly more growth over the 25-year study period than it
has historically experienced. In addition to the amount of growth needed, success will depend on a high
utilization of the IVIFTE program by multi-family residential development projects.'
At that time, considering the uncertainty regarding the amount and timing of future growth, combined
with the potential risk of needing to use City funds to cover a potential gap in the purchase of TDR
credits, it did not seem feasible to move forward with adoption of the program.
2016 Evaluation
In February 2016, the City contracted with ECONorthwest to refine the 2015 LCLIP assessment by
evaluating the potential construction of a very large project - the multi-use arena in the Southcenter
area. This project presented a unique opportunity to possibly negotiate the acquisition of TDR credits
by the developer through the Developer Agreement that would have been prepared for the project. The
arena project would have made LCLIP adoption more feasible and attractive since it would have
allowed the City to retire a significant portion of its TDR credit commitment in one single, large project.
The evaluation showed that using LCLIP as part of the development mitigation for the project would
possibly generate between $22 and $26 million in infrastructure funding from King County. In June
2016 the City terminated the contract with ECONorthwest, as the arena construction was uncertain.
Resolution
Passage of the attached Resolution would be the first step in establishing a TDR/LCLIP program in
Tukwila. Approval of the Resolution would notify King County of the City Council's support for regional
Transfer of Development Rights (TDR) and their willingness to consider at the appropriate time, as
determined by criteria established collaboratively by the City and the County, establishing a Transfer of
Development Rights (TDR) Landscape Conservation and Local Infrastructure Program (LCLIP) through
which developers in the City would receive development incentives in exchange for the purchase of
1 Tukwila LCLIP: Findings and Recommendations, 5.3.5 Summary, pg. 31
WP
INFORMATIONAL MEMO
Page 3
T[@OSfe[@b|e OeVe|OpDlert Rights originating hD0 nJr8| and resource a[e@S. and the City would receive
funding for infrastructure. This resolution would also serve as notice from the City to the County that,
after 180 days of the effective date, the City may hold @ public hB@hOg to consider the adoption Of
Next Step
If the City Council approves the Resolution, there are several actions that are required hvRCVV
Chapter 39.108 that must take place for the Council to implement LCLIP. These actions include the
1) executing aOintedOC@| agreement with King County agreeing to terms for the T[}Rand
infrastructure funding pnDg[@DlS;
2\ adopting an ordinance accepting an allocation of regional TC>R credits to be obtained through
the Regional T[}Fl program and adopting a p|8O for development of public infrastructure to be
financed by the infrastructure funding program; and
3\ adopting an ordinance identifying the Local Infrastructure Project AFe@vVhiChdeSigOateSth8
area in which property tax revenues are generated and allows the Regional TDR and
infrastructure funding programs to commence.
U ShOU|d be noted that the N]Dg County Council OlUSt also determine that the details Of any interoC@|
agreement with Tukwila is in their best interest and achieves their goals for resource land preservation,
since they will b8 relinquishing their property tax revenue tO the City.
FINANCIAL IMPACT
NUD8 at this time. U8 LCL|P is adopted in the future, the financial impact tOthe City will vary based on
the specific policies and mechanism the City crafts in partnership with King County to implement the
RECOMMENDATION
Staff recommends forwarding the attached Resolution iDthe Council Of the Whole Meeting On
November 28, 2O16 for discussion, then to the Regular Meeting OO December 5, 2O1G for approval or
denial. Approval Of the Resolution does not commit the City tO implementing aLCL|PiO the future, but
provides the County with the indication of the City's iOtBFBSt and initiates the 180-d@y OCtiC8 required
before the City could adopt an LCL|P.
ATTACHMENTS
A. Draft Resolution
B. Final Report — Tukwila LCL|P: Findings and Recommendations. May 1Q.2O15
C. Memo from Morgan Shook, ECONorthwest to Lynn Miranda. July 25, 2016
30
DRAFT
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, EXPRESSING THE CITY COUNCIL'S SUPPORT FOR
REGIONAL TRANSFER OF DEVELOPMENT RIGHTS AND THE CITY
COUNCIL'S WILLINGNESS TO CONSIDER, AT THE APPROPRIATE
TIME, DEVELOPING AN INTERLOCAL AGREEMENT WITH KING
COUNTY TO ESTABLISH A LANDSCAPE CONSERVATION AND
LOCAL INFRASTRUCTURE PROGRAM THAT INCLUDES TRANSFER
OF DEVELOPMENT RIGHTS POLICIES.
WHEREAS, the Tukwila Comprehensive Plan contains goals to implement regional
growth management strategies to help reduce sprawl, including goals that support the
preservation of open space, encourage coordination with other jurisdictions, and support
incentive programs to achieve these goals; and
WHEREAS, the Washington State Growth Management Act ("GMA"), RCW 36.70A,
establishes a policy of directing development density into urban areas and discouraging
development of rural land; and
WHEREAS, the GMA encourages the conservation of productive forest and
agricultural lands and the retention of open space to conserve fish and wildlife habitat and
enhance recreational opportunities; and
WHEREAS, the GMA requires counties to adopt county-wide planning policies in
cooperation with cities; and
WHEREAS, by interlocal agreement, King County ("County") and the City of Tukwila
("City") adopted and ratified the Countywide Planning Policies for the County; and
WHEREAS, the Countywide Planning Policies call for programs and regulations to
protect and maintain the rural character of farm and forest lands and direct growth to cities
and urban centers; and
W:\Word Processing\Resolutions\Support for TDR and LCLIP 11-8-16
NG:bjs Page 1 of 3
31
WHEREAS, the City recognizes the importance of working with the County to reduce
sprawl and protect lands important to salmon habitat, farmlands, and forestlands and
other rural open space by encouraging development in designated urban centers, while
funding and creating urban infrastructure necessary to foster livability in growing urban
communities; and
WHEREAS, inter-jurisdictional Transfer of Development Rights ("TDR") is an
important tool that can help the City and the County achieve these goals; and
WHEREAS, in 2011, the Washington State Legislature approved, and the Governor
signed, ESSB 5253, also called the Landscape Conservation and Local Infrastructure
Program ("LCLIP", RCW 39.108); and
WHEREAS, LCLIP is a new tool for cities and counties to partner on a program that
links regional TDR with local infrastructure financing; and
WHEREAS, under LCLIP, in exchange for the City receiving TDR credits from rural
and resource lands for increased urban development, the County would partner with the
City to help fund City infrastructure investments and public improvements to support the
new growth by sharing a portion of the County's property tax revenue with the City, and
WHEREAS, the City collaborated with the County on a National Estuaries Program
grant to pay for consultant studies to evaluate implementing regional TDR and the
economic feasibility of LCLIP and other financing tools to fund infrastructure needed to
support growth in Southcenter, Tukwila's designated urban center, and the Tukwila
International Boulevard District and Tukwila Valley South areas; and
WHEREAS, the consultant analyses indicated that the LCLIP tool may be useful to
generate additional revenue for such infrastructure and amenities, and that the projected
benefits of the LCLIP tool depend on a variety of factors and choices-, and
WHEREAS, any future TDR/LCLIP interlocal agreement between the City and the
County should include funding from the County for public amenities in the City's
neighborhoods that accept rural development rights for greater development-,
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. The City Council supports the concept of regional Transfer of
Development Rights (TDR).
Section 2. The City Council supports considering, at the appropriate time as
determined by criteria established collaboratively by the City and the County,
establishment of a Transfer of Development Rights (TDR) Landscape Conservation and
Local Infrastructure Program (LCLIP) through which developers in the City would receive
development incentives in exchange for the purchase of Transferable Development
Rights originating from rural and resource areas, and the City would receive funding for
infrastructure. The terms of the TDR LCLIP would be specified in an interlocal agreement
WAWord Processing\Resolutions\Support for TDR and LCLIP 11 -8 -16
NG:bjs Page 2 of 3
32
between the City and the County, which could be executed by the City and the County
prior to the commencement of the LCLIP program so LCLIP could begin promptly at the
appropriate time as determined through established criteria.
Section 3. This resolution serves as notice from the City to the County that, after
180 days of the effective date, the City may hold a public hearing to consider the adoption
of LCLIP, pursuant to RCW 39.108.120(1)(a).
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of $2016.
ATTEST /AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
Rachel B. Turpin, City Attorney
WAWord Processing\Resolutions\Support for TDR and LCLIP 11-8-16
NG:bjs
Joe Duffie, Council President
Filed with the City Clerk:
Passed by the City Council:
Resolution Number:
Page 3 of 3
33
34
36
Matt Hoffman, Nick Bratton Morgan Shook, and Erik Rundell prepared this report. Heartland LLC
gratefully acknowledges the substantial assistance provided by staff at Forterra and ECONorthwest.
Since forming the firm in 1984, Heartland's real estate advisory practice has been rooted in a deep
understanding of the fundamental drivers of real estate economics. With experience across both the
public and private realm, we offer a unique ability to blend the needs of the private sector
developer /user with public sector processes and initiatives.
For more information about Heartland, visit our website at www.heartlandllc.com.
For more information about this report, please contact:
Matt Hoffman
Heartland LLC
1301 15Y Avenue, Suite 200
Seattle, WA 98101
206.682.2500
mhoffman @htland.com
Tukwila LCLIP: Findings and Recommendations
:911
This page intentionally left blank.
Tukwila LCLIP: Findings and Recommendations
i
ExecutiveSummary .......................................................................................................
ES1
1 Project Overview ..........................................................................................................
1
11 Why Use TDR and LCUPinTuhwi|e ...........................................................................
1
12 Key Questions .............................................................................................................
2
13 Report Oirganizeton....................................................................................................
3
2 LCL|P Program Review ...............................................................................................
5
2.1 PnogiramOveniew.......................................................................................................
5
2.2 Use ofLCL|P Funds .....................................................................................................
5
23 DetenminentsofLCUP Revenues ..............................................................................
G
2.4 PnogiramFiremeworhforLCUP ...................................................................................
B
3 Study Area Assessment and Growth Estimates ...................................................
11
5.1 Study AnaeContext ._________________________________11
4 TDR Bonus Provisions and Placement Approach .................................................
21
4.1 Existing and potentie|deve|opmentbonua provisions ...........................................
21
4.2 Approach for the phvetep|ecementofTDRcnadhs ...............................................
22
5 LCL|P Revenue Testing - Scenarios .......................................................................
25
5.1 DeflningeUPA..........................................................................................................
25
5.2 The| impact ofDeve|opmentVeheb|es ....................................................................
2G
53 Assumptions and Revenues .....................................................................................
26
G LCL|P Program Findings and Recommendations ................................................
33
0.1 SummeryofFilndings ................................................................................................
33
0.2 Recommendetio iris ....................................................................................................
34
7 Implementation Road Map ......................................................................................
37
UEANTiA, O
---- TukwilaLCUP: Findings and Recommendations
This page intentionally left blank.
Tukwila LCLIP: Findings and Recommendations
nil
1.1.1 Why is the City of Tukwila undertaking this study?
The City of Tukwila (City) is exploring the viability of the Landscape Conservation and Local
Infrastructure Program (LCLIP) for the Tukwila Urban Center (TUC) and Tukwila International Boulevard
(TIB) District, collectively referred to herein as the Study Areas. The City has created a compelling vision
for the Study Areas through recent planning efforts that anticipates higher levels of activity through
mixed -use, high- density development. The growth and development envisioned for the Study Areas can
support the City in achieving its broader community goals, such as economic development, fiscal
sustainability, environmental conservation, and higher quality of life for its current and future residents.
To catalyze and support growth in the Study Areas, the City will need to make substantial investments in
infrastructure. While funding for these capital needs will come from a variety of sources, the City will
likely need to contemplate pursuing innovative funding tools beyond those already identified to address
potential funding gaps. One funding tool the City is exploring the use of is LCLIP, a form of tax increment
financing.
1.1.2 What is LCLIP?
LCLIP is a form of tax increment financing enacted in 2011. The program offers cities access to tax
increment financing in return for their acceptance of development rights transferred from regional
farms and forests. These transfers are typically conducted as private real estate transactions, but can
also be conducted by cities.
In exchange for the placement of development rights in LCLIP districts, the jurisdictional county (in this
case King County) agrees to contribute a portion of its regular property tax to the sponsoring city for use
for a defined period (up to 25 years). Cities may use this revenue to fund infrastructure improvements
that support infill growth and redevelopment. The program is only available to select cities in the central
Puget Sound counties of King, Pierce, and Snohomish.
1.1.3 What did the study find?
. � .
The analysis shows a range of situations in which LCLIP would be beneficial to the City. Even in a
scenario assuming conservative growth, LCLIP could generate net revenue of $2.5 million (net present
value, or $5.4 million in nominal terms) for infrastructure in Tukwila. Should the City meet its growth
targets, the net revenue would increase to $5.1 million (net present value, or $10.3 million in nominal
terms). Should the City exceed its growth targets, net revenue would increase to $9.5 million (net
present value, or $18.2 million in nominal terms).
The TUC can play a central role in the city meeting its growth targets. Following a recent rezone it has
the capacity to accommodate considerable population and employment growth. The City has identified
Tukwila LCLIP: Findings and Recommendations ES1
41
a range of infrastructure improvements, many involving improved access to transit, where LCLIP can
finance investments that will support redevelopment.
. • . ....
zffnm
Conditions in Tukwila at present would support use of the tool. This analysis shows that growth, even
when projected conservatively, is sufficient to make LCLIP a success. At minimum the City would receive
new revenue for infrastructure that it otherwise could not access and at best that revenue would exceed
$41 million over the life of the program. Under such a growth scenario, the Study Areas could support
approximately 13 new office projects, 11 retail projects, 18 multifamily projects, and 8 more hotels over
a 25 year period.
1.1.4 What is the path forward for LCLIP?
Redevelopment of the TUC with more intensive mixed use development represents a departure from
historical growth patterns for Tukwila. Primarily an area centered on commerce, the new zoning reflects
plans for mixed use residential growth, especially of a transit - oriented nature near the rail station. This
expansion of uses represents a timely opportunity for the City to benefit from a widening market for
growth to finance infrastructure investments that will support redevelopment and help the City achieve
its growth targets. Meanwhile, the aggregation of properties along Tukwila International Boulevard
creates another area in the City that could both support the City's use of LCLIP (either through incentive
zoning or developer agreements) and also benefit from public improvements. Finally, while uncertain,
the build out of Tukwila South or the emergence of a single large project could result in revenues for the
City at or beyond the upper end of the ranges projected in the analysis. There are three approaches the
consultant team identified for proceeding with LCLIP, of which the most promising paths forward involve
adoption of a LCLIP program.
The current analysis shows that while (1) even with conservative growth estimates the City may net $2.5
million (NPV, or $5.4 million nominal) in new revenue, and (2) a simple and desirable market mechanism
can drive the use of TDR, uncertainty remains around what demand for redevelopment will be in the
Study Areas. The risk of taking no action in the near term, however, is that the City misses the
opportunity to capture value from redevelopment until after the process has already started, thereby
passing up revenue from LCLIP.
Tukwila LCLIP: Findings and Recommendations ES2
42
i'
In 2014 the City of Tukwila applied for and won a grant through the Environmental Protection Agency's
National Estuary Program, administered by the Washington State Department of Commerce. This grant
funded a study exploring the viability of the Landscape Conservation and Local Infrastructure Program
(LCLIP) for the Tukwila Urban Center (TUC) and Tukwila International Boulevard (TIB) District, collectively
referred to herein as the Study Areas. The City has created a compelling vision for the Study Areas
through recent planning efforts that envisions higher levels of activity through mixed -use, high- density
development. The growth and development envisioned for the Study Areas can support the City in
achieving its broader community goals, such as economic development, fiscal sustainability,
environmental conservation, and higher quality of life for its current and future residents.
In order to catalyze and support growth in these areas, the City will need to make substantial
investments in infrastructure. While funding for these capital needs will come from a variety of sources,
the City will likely need to contemplate other innovative funding tools to address potential funding gaps.
The City is exploring the use of the LCLIP, a form of tax increment financing (TIF) enacted in 2011 (RCW
39.108). This program allows cities to access incremental county property tax revenues to fund and
finance public improvements within designated LCLIP districts of their choosing. In exchange for
receiving a portion of county revenues, cities agree to accept a number of regional development rights
of their choosing. This program creates a new revenue stream for cities to help pay for infrastructure
and is designed to be flexible to suit a wide range of city needs and objectives.
This report provides a series of findings and recommendations for a potential LCLIP program for the City
based on:
• LCLIP legislation and program features.
• The City's incentive zoning and TDR code.
• Historical development trends, projections on future growth and estimates of TDR use.
• Estimates of LCLIP funding potential.
1.1 Why Use TDR and LCLIP in Tukwila
The Puget Sound Regional Council's (PSRC) Vision 2040 is the region's strategy for accommodating
growth through 2040. The strategy focuses on concentrating population and employment growth in
regional growth centers, such as the Study Areas, that are best suited for growth through more efficient
land use patterns. Individual cities implement the goals of Vision 2040 through their comprehensive
plans and zoning regulations in accordance with the Growth Management Act (GMA).1
1 Washington State Department of Commerce. Website accessed March 2015.
Tukwila LCLIP: Findings and Recommendations 1
43
The GMA encourages "innovative land use management techniques" such as transfer of development
rights (TDR) to help local governments achieve their planning goals.z TDR programs are a tool for
implementing growth and planning goals that goes beyond traditional zoning by giving landowners
other real estate options, by protecting resource lands from development in perpetuity, and by
engaging the market to generate private funding for land conservation.
As mandated by VISION 2040 and by the King County Population and Employment Allocations the City
has adopted population and employment planning targets as part of its comprehensive plan, and must
act to accommodate that growth within the City over the next 20 years. In addition, the comprehensive
plan envisions approximately half of this new growth being directed to the TUC and the TIB District.
The Study Areas are anticipated to play a central role in accommodating new growth. These areas have
the capacity to accommodate a large amount of population and employment; however, each is in need
of infrastructure improvements. The City has limited capacity to pay for all the desired projects through
the general fund. As an alternative, LCLIP could help support future growth in accordance with the City's
comprehensive plan by generating revenue to fund improvements that are needed to accommodate
that growth and realize the City's vision.
1.2 Key Questions
This report outlines a series of considerations relating to the use of LCLIP to help inform the City's
decisions on program participation. These considerations will also help the City to understand how to
optimize use of the tool in a way that best advances its infrastructure, growth, and conservation
objectives. The key questions for this analysis cover:
• What is the policy basis for using LCLIP and broader community goals?
• What are the key LCLIP program issues for how the city may construct its LCLIP program?
• What is the structure of the City's incentive zoning program and how would implementing a TDR
program fit within that structure?
• Under current market and development conditions, how might development projects use TDR to
access additional building capacity?
• What are a range of LCLIP revenues that might be possible?
• Based on the cumulative understanding of the questions above, how might the city think about
moving forward with an LCLIP program?
z RCW 36.70A.090
Tukwila LCLIP: Findings and Recommendations 2
44
1.3 Report Organization
The report is organized into six sections that provide an analysis of the feasibility of LCLIP in the Study
Areas and recommendations for moving forward with a Landscape Conservation and Local
Infrastructure Program. The main sections of the report are:
• LCLIP Review: This section reviews the LCLIP legislation and identifies a framework for thinking
about incentive zoning, TDR, and LCLIP program choices.
• Incentive Zoning and TDR Policy Review: This section reviews the City's incentive zoning within the
Study Areas.
• Incentive Zoning and TDR Assessment: This section summarizes the capacity for development in the
Study Areas and provides an assessment of the feasibility of TDR under current development
economics and offers some insight on its potential use.
• LCLIP Revenue Assessment: This section reviews development trends in the Study Area and
projected development over the next 25 years. This section then assesses the revenue potential of
an LCLIP program under a different growth and TDR absorption scenarios.
• Program Findings and Recommendations: This section summarizes the key findings from previous
sections and provides recommendations for establishing a LCLIP program based on those findings.
• Implementation Road Map: Lastly, this section outlines the steps necessary should the City decide
to establish a TDR mechanism and adopt LCLIP.
Tukwila LCLIP: Findings and Recommendations 3
45
This page intentionally left blank.
Tukwila LCLIP: Findings and Recommendations
M.
r.
This section presents an overview of the LCLIP enabling legislation and key features of the program that
are relevant to program assessment and strategy.
2.1 Program Overview
LCLIP is a form of tax increment financing enacted in 2011. The Washington State legislature created the
LCLIP program based on its finding that:
The state and its residents benefit from investment in public infrastructure that is associated with urban
growth facilitated by the transfer of development from agricultural and forest lands of long -term
commercial significance. These activities advance multiple state growth management goals and benefit
the state and local economies. It is in the public interest to enable local governments to finance such
infrastructure investments and to incentivize development right transfer in the central Puget Sound
through this chapter.
The program offers the City a new funding source: a portion of the jurisdictional county's regular
property tax in return for 1) mechanisms to place development rights and 2) the acceptance of a
specified amount of regional development rights. In exchange for the placement of rural development
rights in LCLIP districts, the jurisdictional county (King County for the City) agrees to contribute a portion
of its regular property tax revenue to the sponsoring city for use for a defined period. The program is
only available to select cities in the central Puget Sound counties of King, Pierce, and Snohomish.
LCLIP targets only a portion of the incremental property taxes generated from new development. This is
not a new tax to residents or businesses. The remaining portion of the property tax still accrues to the
sponsoring city and to the jurisdictional county. Existing and incremental revenues flowing from sales,
business and occupation, and utility taxes still accrue to the City, as well as other capital restricted
revenues.
2.2 Use of LCLIP Funds
Under the LCLIP program cities can use LCLIP- generated funds to pay for public improvements in the
LCLIP district as follows:
• Street, road, bridge, and rail construction and maintenance;
• Water and sewer system construction and improvements;
• Sidewalks, streetlights, landscaping, and streetscaping;
• Parking, terminal, and dock facilities;
• Park and ride facilities of a transit authority and other facilities that support transit - oriented
development;
Tukwila LCLIP: Findings and Recommendations 5
EYA
• Park facilities, recreational areas, bicycle paths, and environmental remediation;
• Storm water and drainage management systems;
• Electric, gas, fiber, and other utility infrastructures;
• Expenditures for facilities and improvements that support affordable housing as defined by WA law;
• Providing maintenance and security for common or public areas; and
• Historic preservation activities authorized under WA law.
LCLIP is different from previous versions of TIF in Washington in that it provides more flexibility on how
the funds can be used. Specifically, LCLIP enables funding for more than just capital improvements and
can support some operational activities related to the maintenance and security of public areas.
2.3 Determinants of LCLIP Revenues
2.3.1 LCLIP District Revenue Calculation
The tax basis of LCLIP originates from new construction so it excludes existing buildings and revaluation.
LCLIP revenues are derived from the allocation of a portion of the city's and county's regular property
tax (e.g. current expense levy) to the LCLIP district. Once a district has been created by a city, 75% of the
assessed value of new construction — multiplied by a city's sponsoring ratio (explained below) — is
allocated to the LCLIP district and used as the tax basis to distribute revenues from the regular property
tax using the current year's regular property tax rate.
For example, suppose a newly constructed building generates $1,000 in regular property tax revenues
on a property tax rate of $1.00. If this same building is valued at $1,000,000 for the purposes of new
construction, then 75% (multiplied by the Sponsoring City Ratio, explained below) of the new
construction would place $750,000 in the LCLIP assessed value base and lead to the distribution of $750
of the $1,000 paid in regular property tax to the LCLIP area. The remaining $250 would still go to the
jurisdiction's general fund. As noted, the Sponsoring City Ratio acts to pro -rate how much of the 75% of
new construction is added to the LCLIP district assessed value base. The example above assumes a ratio
of 1.0. Alternatively, a ratio 0.50 would reduce that $750 revenue apportionment to $375.
The calculation of LCLIP district assessed value basis starts at the time that the district(s) is created. The
dedication of city and county property tax revenues to the district commence the second year after the
district is established. The program can run for a maximum of 25 years on the condition that cities meet
performance milestones (explained below).
2.3.2 LCLIP Sponsoring City Ratio
In adopting an LCLIP program, the city must select a specific number of TDR credits to accept based on a
regional allocation set by PSRC. These allocations are generally proportional to a city's growth targets;
Seattle's allocation is 3,440 credits while Everett's is 1,491 and Tacoma's is 1,843. Tukwila's allocation
from PSRC is 405 TDR credits. The "Sponsoring City Ratio" reflects the proportion of development rights
a city has chosen to accept (the specific number above) relative to the city's allocated share, as
Tukwila LCLIP: Findings and Recommendations 6
M1
determined by PSRC. The resulting ratio of "specified portion" to "allocated share" (anywhere from 0 to
1) acts to pro -rate the amount of new construction value that can accumulate to a LCLIP district. A city
must set its sponsoring city specified portion that is equal to or greater than 20% of its allocation. For
Tukwila, that amount is 81 development rights or higher.
Accepting the full allocated share would maximize potential LCLIP revenues while taking something less
than the full allocated share reduces the potential value of the program to a city. For example, Tukwila's
allocation is 405 rights; supposing it chooses to accept 101 of them (specified portion), its resulting
sponsoring city ratio is 0.25 (101 divided by 405). The City would receive 25% of the county's portion of
property tax revenue over the course of the program. If the City accepted 405 credits it would receive
100% of the county's portion.
In choosing its ratio, the city is trying to select an amount of credits it expects to be able to place over a
20 -year period to meet the threshold requirements (discussed below) and extend the program (and
revenues) to the full 25 years. In doing so, the city is balancing the feasibility /likelihood of TDR being
used by development against the amount of revenue LCLIP can generate. Ideally the private market for
growth will place the credits, but as the analysis shows, even in a situation where Tukwila would need to
use public funds to purchase some of the specified credits the resulting revenue stream may be large
enough to result in net positive earnings for the city.
2.3.3 LCLIP Performance: Credit Placement Thresholds
While the LCLIP program can run for a maximum of 25 years, the legislation requires participating cities
to demonstrate performance on the use of credits within their Local Improvement Project Area (LIPA).
Cities using the LCLIP tool must meet a series of performance thresholds pegged to their specified
portion and are given a choice in regards to permitting or acquisition of development rights if they want
to start and extend the program revenues. These thresholds are as follows:
• Threshold #1: Placement of 25% of the specified portion of TDR credits is required to start the
revenue stream. This is not a time -based milestone, but rather a performance -based milestone.
• Threshold #2: Placement of 50% of the specified portion of TDR credits is required by year 10 to
extend it by 5 years.
• Threshold #3: Placement of 75% of the specified portion of TDR credits is required by year 15 to
extend it by 5 years.
• Threshold #4: Placement of 100% of the specified portion of TDR credits is required by year 20 to
extend it by 5 years to its conclusion.
In previous examples of LCLIP implementation, there has been some difference in interpretation from
program partners as to what is required to start an LCLIP program. Briefly, the difference in
interpretation is whether the placement of 25% of the specified portion is required to start the program
or whether the creation of the LCLIP program through ordinance is the trigger. Should Tukwila adopt
LCLIP, this question of timing will be resolved through an interlocal agreement with King County.
Tukwila LCLIP: Findings and Recommendations 7
i
Program revenue is a function of three central factors:
• Specified portion (City TDR credit commitment). Higher commitment = higher revenue
• New construction activity. More construction = higher revenue
• Market participation vs. City credit acquisition. More market activity = more revenue
Exhibit 1 below illustrates the relationships between city TDR commitment, growth, and revenue.
M5
a,
c
a�
cu
a
U
Growth (New Construction)
Source: Forterra, 2015
It
vent
tment
2.3.4 LIPA(s) District Formation
A LIPA or LCLIP district is the designated area in which:
• TDR credits will be placed by market transfers and measured for performance monitoring.
• Infrastructure projects will be constructed and funding will be used.
• The calculation of the new construction as the tax basis for LCLIP revenues will be based.
A city may have multiple and non - contiguous LIPA(s) as long as the area(s) meet the requirement of
containing less than 25% of the city's assessed value. While a city may create multiple LIPA(s), LCLIP
works on a cumulative citywide basis and not an independent district basis — meaning the same program
parameters apply to all LIPA(s) regardless of start date and configuration. Therefore if a city is
Tukwila LCLIP: Findings and Recommendations 8
50
considering multiple LIPAs, it is advantageous to establish them all at the program launch rather than
adding them incrementally over time, which would result in foregone revenue.
2.4 Program Framework for LCLIP
A strong LCLIP program for the City of Tukwila must position the City to maximize LCLIP revenues
through structuring the following program parameters:
• LIPA geography. The City will want to create a LIPA(s) that meets the nexus requirements stated
above. However, creating a district(s) that contain areas where development is expected will help
create a large new construction tax base used as the basis of the revenue calculation. The larger the
tax base, the more funding leverage the City will have.
• TDR code provisions. The number of TDR credits used is a function of several factors:
• The size and structure of the incentive zoning capacity increment. The city must determine how
much demand there may be for building projects that will utilize TDR. The amount of incentive
zoning is fixed and the placement of TDR within the structure of the incentive zone factors in
how it may be accessed by developers. For example, TDR may be among a menu of options that
developers can choose from, or TDR may be tiered with other options requiring developers to
sequence options that may place TDR first or last in that sequence.
• The nature of the incentive associated with TDR. Typical TDR incentives offer additional FAR or
height; however, TDR can be connected with any variety of opportunities associated with
development ( "conversion commodities "). Other examples include connecting TDR with
reduced setbacks, structured parking requirements, or impervious surface limitations.
• The "exchange rate" for TDR. The amount of incentive a developer receives per TDR credit used
in large part determines the extent to which a TDR consumes the incentive zoning available. The
incentive created by the TDR exchange rate must be equal to (or exceed) a developer's
willingness- and ability -to -pay, otherwise TDR will not be used.
• City specified portion and program timing. In order to optimize the flow of LCLIP revenues, the City
has an incentive to meet all four performance thresholds. Doing so means the city must select a
specified portion that is targeted at some expected use of incentive zoning and the absorption of
TDR credits over the horizon of the program. This element of LCLIP is the most difficult technical
aspect that the city must consider. Forecasting future development is challenging, much less
determining the rate at which that development will access incentives that use TDR.
Tukwila LCLIP: Findings and Recommendations 9
51
This page intentionally left blank.
Tukwila LCLIP: Findings and Recommendations 10
52
Study ' , Assessment and Growth Estimates
The City does not currently have a TDR program; however, it has in place other development incentives
including incentive zoning and the employment of developer agreements. This section provides an
overview of the Study Area context and current development bonus offerings.
3.1 Study Area Context
The Study Areas are TUC and the TIB District. The TUC has recently been rezoned into five unique
districts that permit a variety of intense residential and commercial uses. For this report commercial use
is broadly defined as
multifamily, office, retail, Exhibit 2: Overview of the Study Areas
industrial hospitality, and Iff
senior housing. The TIB District
is a truly international �,(t
neighborhood with a mix of
ukwwdta
g
lower intensity residential and1�� �t �i�omo�iri�oiu1 TIBSaLOCYyAra ro
y MINJIJI M, 'TUC Study Area
commercial uses. This is a �!1� 'LO41MdCk'MAw SIT LINK tiIGHT RAIL
Route Station
neighborhood the City has
wrrwauNG wAANSot So,wuuiuu.M TmaAnN
identified as one that may (k1z ' Route Station
accommodate future growth.
Exhibit 2 depicts the Study
Areas. The TUC was rezoned in
2014 to allow for increased
residential and mixed uses.
The TIB District offers a
number of redevelopment
opportunities; however, based
on the current land use code,
this portion of the Study Area
does not have the
development capacity of the
TUC. The City's vision for
redevelopment along the
Boulevard includes demolition
of derelict motels to enhance
safety and neighborhood
perception while encouraging
y�y kr
,� � 'M'• L Gov
TO t
Inn rn ►can l ,
IV a�
I R
STS Txw�uau
L� Cr T4TO 405
ILA
ON
t
Urban
k ` I Center (TUC)
DORIC
a t )10), r
a J
P/i ,r
Tukwila LCLIP: Findings and Recommendations 11
53
new mixed -use development comprising multifamily residential, senior housing, service - providing office
space, and retail. The City created an Urban Renewal Overlay near the center of the TIB District that
expands the flexibility of the land use code to promote redevelopment of this area. One goal for the City
in the Urban Renewal Overlay is to aggregate properties in preparation for new projects. Infrastructure
needs that Tukwila has identified for the neighborhood include streetscaping and traffic safety
improvements with potential long term goals ranging from a potential "street diet" to slow traffic, right
of way development to reshape the street grid, and transportation enhancements such as a circulator to
help move transit riders from the TIB Light Rail Station north along the boulevard.
Tukwila South is another area that was examined in some aspects of the analysis, but was not part of
the Study Areas. This area is located south of the TUC and has considerable potential for commercial
and office development. Certain revenue scenarios include the assumption that the property will be
developed during the LCLIP performance period. In its current state the Tukwila South area has a very
low assessed value, making it ideal for including in a LIPA since development has the potential to
generate substantial revenue for the City, as discussed in later sections.
3.1.1 Regional Context
The City totals approximately 30.5 million square feet of industrial, office, retail, multifamily, and
hospitality developments. Of this total, nearly 3.0 million square feet or roughly 10% of the City's total
commercial inventory has been built since 2000. By comparison, the rest of South King County3 had
approximately 20% of its current commercial inventory constructed since 2000, and the area comprised
of Seattle, the Eastside, and North King County had 30% of its current inventory constructed since 2000.
This comparison reveals that development activity in the City has been slow relative to other areas in
the county.
The chart in Exhibit 3 illustrates
the City's commercial inventory
relative to the rest of South King
County. The City's total
commercial square footage
represents approximately 13% of
South King County's total (Kent
totals roughly 30% and Renton is
17% for reference). However,
since 2000 the City's commercial
development has represented
only 7% of South King County's
total during this period
Overall
2000+
AU.13ON A. 11 "/o
DIVA.'...... 1
AUBURN 1111111INJIM 15%
AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA 24 %
BLACK DIAMOND 0%
a%
BURIEN AAAAAAAAAA 4%
AIAAIA 2%
COVIV'4CTON VIII 1%
3%
DES MOINES 2 °/a
AAAA 2%
ENU.UMCLdM1W 1%
AAAI1%
FEDERAL WA AAAAAAAAAAAAAAAAAAAAAAAA''..... 10%
AAAAaAAAAaAAAAIMAM 12%
KENT
INAPLIE:MALLEY 1%
2%
MOU."VON 0%
A 1%
NORMANDY PA RK p a%
l0%
PACIFIC 10%
l0%
REN1fON 17%
20%
BF.,A -TAC AAAAAAAAAAA 5%
UM 5 %
0M 20M 40M'... 60M 80M
0M .roM Ii 0M
C;¢anrrakemd r1uH¢9mg Gimss Square Feet
Corns ercW Budding 6 »mss ,15Mmrs Feet
3 South King County is defined in this report as the incorporated municipalities of King County locate south of Seattle. For
reference, the northern most cities in South King County are Burien, SeaTac, Tukwila, and Renton.
54
Tukwila LCLIP: Findings and Recommendations
12
Development in the rest of South King County since 2000 has been concentrated in Auburn (24% of
South King County's total), Renton (20 %), Kent (20 %), and Federal Way (12 %). This context illustrates
that historically Tukwila has been an important part of South King County's commercial real estate
composition; however in the recent past the focus has been on other areas such as Auburn, Kent, and
Renton.
The TUC is a Regional Growth Center (RGC), as designated by the PSRC. A designated RGC is an area that
has been identified for housing and employment growth, as well as an area that is prioritized for
regional funding. The PSRC and the cities with RGCs are in the process of updating the population and
employment growth targets for Vision 2040; however, the development trends and urban form help
frame the TUC's position (referred to in the exhibits below as Tukwila) compared to other RGCs in the
county.
Exhibit 4, like Exhibit 3, compares the commercial inventory in RGCs most similar to the TUC. This
reveals that the TUC has the most commercial square footage at 26% of the total square footage in
these seven RGCs; however, since 2000 development in the TUC represents only 9% of the commercial
space that was built all of these RGCs. While roughly 835,000 square feet has been built in 14 projects
since 2000, relative to its total inventory development activity in the TUC has been the lowest among
these seven areas.
Overall pp2000+
umten ��! 6% 4%
Kent Downtown 4% 8%
Noot h ate 1IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIM 15% IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII 26 °r�
Rentors
32%
eaTac III�IIIII�IIIII�IIIII�IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII�II�III�III�I����� 16% � IIIIIIIIIIIIIIIIIIIIIIIIIIIIIII�IIIIIIIIIIIIIIII 14%
Totem Lake RVV�V�V�V�V�V�V�V�V�V�V 14 °!o VVVVVVVVVVVVVVVVV 8%
Tutawiga 126% ' 9 °fa
0M Std 101St 15M 0M IM 2M 3M
Cornrrreycu al BLAdli x5 Gross Square Feet t `onnrner�cW BuMing Gvoss S qusuu Feat
Source: King County Assessor, Heartland 2015
Exhibit 5 summarizes how the TUC's urban form compares with that of the other six similar RCGs. This
chart shows that the TUC is more like SeaTac and Totem Lake with its urban form than it is with Burien,
Kent, Northgate, or Renton. The TUC comprises roughly 850 acres, or 14% of the City's total land area
with an average parcel size of 3 acres and a very large average block size of nearly 23 acres. These large
blocks present both a challenge and an opportunity for redevelopment. To create a more walkable
urban environment that encourages both jobs and housing the blocks will likely need to be divided. One
key hurdle for redevelopment is the cost to split the blocks up and the market fundamentals that
currently are challenged to support urban form multifamily development and taller office projects.
However, the opportunity is with patient developers that may do a phased development on a single
block or portion of a block once the market fundamentals support such investment.
Tukwila LCLIP: Findings and Recommendations 13
55
As the City attempts to evolve the Study Areas into a places where a more urban form of commercial
development is attractive to developers and investors the market will need to "prove" itself with
projects that perform financially in a location where office, and particularly, multifamily have not
thrived. A successful LCLIP program can be a potentially powerful tool to support this process.
3.1.2 Study Area Land Use Summary
The two Study Areas differ from one another in many ways including land use patterns and
development trends. The table in Exhibit 6 illustrates how the land area, building intensity, and land use
in each Study Area compare.
Land % of City
Avg Parcel Avg Block
Sidewalk
508
Acres Land Area
Acres
Acres
Comp
Burien
354 6%
0.3
4.9
48%
Kent Downtown
°
292 2/°
0.5
3.6
Avg Bldg NSF Overall
Northgate
409 1%
0.9
9.6
42,867
Renton
606 4%
0.7
6.8
1969
SeaTac
�����������������������
ry
�Illlllllll��
13.6
41%
Totem Lake
������������������� �1���1�1�1�1�1�����������1��������
��%
2.2�
10.6
%
Tukwila
Source: PSRC 2014
As the City attempts to evolve the Study Areas into a places where a more urban form of commercial
development is attractive to developers and investors the market will need to "prove" itself with
projects that perform financially in a location where office, and particularly, multifamily have not
thrived. A successful LCLIP program can be a potentially powerful tool to support this process.
3.1.2 Study Area Land Use Summary
The two Study Areas differ from one another in many ways including land use patterns and
development trends. The table in Exhibit 6 illustrates how the land area, building intensity, and land use
in each Study Area compare.
These two areas have historically served different
purposes. The TUC is a regional center for retail and
industrial due in large part to its location at the
confluence of 1 -5 to the west and 1 -405 to the north.
This area began development in earnest in the 1960s
with the introduction of the Westfield Shopping Center
and a total of nearly 2.4 million square feet of auto -
oriented commercial space. Industrial development
was prevalent in the 1960s with over 1.2 million of
square feet developed; however, the 1970s were a
boom decade for industrial development in the TUC
with 3.4 million square feet delivered. These two
decades combined to account for 75% of the total
square footage that is in the TUC today. The location of this Study Area within the region along with a
land use code that has encouraged this development pattern are the significant factors in contributing
to the building stock that exists in the TUC today.
In comparison, the TIB District is primarily residential in nature with 68 % of the building square footage
being single family or multifamily. This residentially used land is oriented east and west of the Tukwila
International Boulevard, which is the Study Area's main arterial. The remaining 32% is a relatively evenly
distributed mix of office, retail, industrial, and lodging uses (13 %, 9 %, 7% and 3 %, respectively). The age
of the building stock, like the TUC, has primarily been built prior to 1980. While 63% of the square
footage has been built pre 1980, 29% of the inventory was built in prior to 1960 in comparison to the
Tukwila LCLIP: Findings and Recommendations
56
14
"Fie
TUC
Net Acres*
508
802
Building Count
1,.232
265
Pct Commercial
1.3%
99%
Bldg Net Sq Ft
4,1.57,993
11,232 „516
Pct Commercial
32°
100%
Avg Bldg NSF Overall
3,375
42,387
Avg Commecial Bldg NSF
8,432
42,867
Avg yr Built
Cont mercl all
1969
1978
Residential
1956
1946
' Net of rV1,i "Ets of way 6arer6"rv, but Volr`Q uda6Y,F, Park land
Source: King County Assessor, Heartland,
2014
These two areas have historically served different
purposes. The TUC is a regional center for retail and
industrial due in large part to its location at the
confluence of 1 -5 to the west and 1 -405 to the north.
This area began development in earnest in the 1960s
with the introduction of the Westfield Shopping Center
and a total of nearly 2.4 million square feet of auto -
oriented commercial space. Industrial development
was prevalent in the 1960s with over 1.2 million of
square feet developed; however, the 1970s were a
boom decade for industrial development in the TUC
with 3.4 million square feet delivered. These two
decades combined to account for 75% of the total
square footage that is in the TUC today. The location of this Study Area within the region along with a
land use code that has encouraged this development pattern are the significant factors in contributing
to the building stock that exists in the TUC today.
In comparison, the TIB District is primarily residential in nature with 68 % of the building square footage
being single family or multifamily. This residentially used land is oriented east and west of the Tukwila
International Boulevard, which is the Study Area's main arterial. The remaining 32% is a relatively evenly
distributed mix of office, retail, industrial, and lodging uses (13 %, 9 %, 7% and 3 %, respectively). The age
of the building stock, like the TUC, has primarily been built prior to 1980. While 63% of the square
footage has been built pre 1980, 29% of the inventory was built in prior to 1960 in comparison to the
Tukwila LCLIP: Findings and Recommendations
56
14
TUC where almost none of the current building stock was built prior to 1960. The TIB District's
development patterns have also largely been a function of King County's land use code, which applied
until the City annexed the area in 1990. Exhibit 6 illustrates the development patterns by decade and by
land use type in the Study Areas.
SM
800K - 4M1
5 600K
2M 200K
GK
OM
P..-N950 1950. 1960. 1970. MO. 'M90. 2000. 2MO -14 Paa -1950
Rv Uffl 4 ?'16 01 11, 1, 110 N2 C, N111 l(� ,'11 NO 4 , . ✓ ,:,n1& Ftrott, 44
MF ;'9,;5' 7 219 8;2 (71. 4"1 4 r 4i ^,'40, 993 319) rxf .
S;ki'firt- :S,4 YF 17,485 @F,'f 92 22,7110 1"A 809 2511,09a ft.gpd.Ny
H-JAWky 12 Vs 28 MB 68 753 46,197
4,du.um,W ,r,,. klRRipAlw4"W
9w1e 6PUe
T*ta9 697169 845.938 %2.593 185.584 737.8731 521,432 431.82! 24.288 iMa7 1,260
3.1.3 Existing zoning and Development capacity
PoM1A604 fl9k'0m
26 28 001 052
1516 6N
3,655,556 4,782,633
an
053804
22�1 311
71,6817
264
777,334
11y95�
J,
435 J 9
1,432.857
zaaao
579004 2010 44
A D f J0 "J''u7
I W:3
435.532 162.728
The land use code in both Study Areas offer a wide range of uses. While the existing uses in the TIB
District generally reflect the intent of the current code4, the land uses in the TUC are intended to evolve
over time from auto - oriented low rise commercial to mid -rise and high -rise commercial development
that includes multi - family is most of the zoning districts. A detailed summary of the land use code for
each zoning district is provided in Appendix 1.
To analyze the future development opportunities in the Study Areas a two -step process was employed.
First a buildable lands assessment was conducted and then a capacity analysis to estimate the maximum
total quantity of building square footage that may be developed in the Study Areas. The buildable lands
were identified using the assessed value approach where propertiess with a building where the
improvements assessed value to the property's total value was less than 50% were flagged as potential
redevelopable. Those properties where the improvement to total ratio is less than 25% are considered
likely to redevelop in the next 25 years while those properties with a ratio between 25% and 50% were
considered potentially redevelopable (or noted as "Maybe" in Exhibit 7). Parks and greenbelts,
cemeteries, essential public services, and rights of way were excluded. The table in Exhibit 7 summarizes
the buildable lands for each zoning district in the Study Areas.
4 The existing land use code for the TIB District may be revised in the future as a result of the Comprehensive Plan Update for
this neighborhood that is underway.
5 Properties may consist of one or more parcels. A review of existing ownerships was conducted and adjacent parcels with
common owners were combined to be classified as a single property.
Tukwila LCLIP: Findings and Recommendations
15
MA
Source: Heartland, King County Assessor, 2014
Next, a capacity analysis was conducted. The first step in this process was to interpret the land use code
for each zoning district to estimate a typical floor area ratio (FAR), or the ratio of total potential building
square footage to land area .6 The next step involves projecting how the market will utilize the land.
Future land use is a key variable because different land uses will result in different FARS due to the form
based code and parking requirements. For example, in the TUC - Transit Oriented Development (TOD)
zoning district multifamily uses could support a FAR of 2.1 while an office use may result in a FAR up to
1.8. Finally, to estimate the capacity for a zoning district and the Study Areas cumulatively the total
square footage of likely or maybe redevelopable land is _ - , 0M,
multiplied by the blended FAR based on the land use 20,000,000
distribution for that zone. Using this approach the total ) 60,000,000 iiiiiiii Hospitaltity
capacity on potentially red 50,000,000 Retail
evelopable properties in the � Multifamily
TUC is illustrated in Exhibit 8. If the potentially 4Q'Q0Q'Q00 111111111 oiuuu Office
30,000,000
redevelopable properties in the TUC are fully built out to � 20000000
the maximum FAR it would total roughly 63 million 10,000,000
square feet for an average FAR of 4.1 and the TIB District o
could support roughly 6.5 million square feet for an TUC (4.2 FAR) TIB (0.6 FAR)
Source: Heartland, King County Assessor, 2015
average FAR of 0.6.
6 Floor area ratio is calculated by dividing the total building square footage, typically excluding parking square footage, by the
land area. For example, a 50,000 square foot parcel with a FAR of 2.0 could support up to a 100,000 square foot building
while a FAR of 0.5 would result in a 25,000 square foot building.
i
Tukwila LCLIP: Findings and Recommendations
16
Count of Properties
ILand Acre Summary by Redevelopment Potential
Redevelopable Property Use and Size
Likely or
Avg
Maybe
Pipeline
Likely
Maybe
Unlikely
%
Existing
Zone
Total Redevelopable
Projects
Redevelopable Redevelopable Redevelopable Unlikely
FAR
Avg Lot SF
Min Lot SF
Max Lot SF
Tukwila International Boulevard District
TIB- Urban Renewal
21
19
1
10.9
9.7
8.7
29%
0.2
47,246.8
9,546
217,268
RC
50
36
0
40.3
18.0
9.6
14%
0.2
70,613
5,398
669,910
NCC
21
9
1
3.2
0.8
4.6
48%
0.1
19,404
4,389
47,378
MUD
12
6
0
4.7
0.5
2.0
28%
0.1
38,114
6,000
148,540
HDR
99
21
0
3.4
9.2
59.8
83%
0.1
26,069
10,261
80,491
MDR
49
22
0
4.2
3.5
32.5
81%
0.1
15,257
5,848
38,687
LDR
815
478
0
42.4
103.5
107.0
42%
0.1
13,300
4,568
473,693
CLI
4
2
0
6.2
1.4
13.2
63%
0.0
165,761
61,419
270,102
MIC /H
1
1
0
6.1
0.0
0.0
0%
0.0
263,966
263,966
263,966
0
4
0
0
0.0
0.0
2.6
100%
0.0
0
0
0
TOTAL
11,076
594
2
1121.4
146.7
240.0
47%
0.1
19,662
0
669,910
Tukwila Urban Center
TUC -CC
20
8
0
11.1
19.2
71.5
70%
0.2
164,861.3
38,080
433,727
TUC -P
5
2
0
1.4
1.0
40.8
94%
0.1
52,546
42,495
62,596
TUC -P 150
8
4
0
27.6
14.2
26.0
38%
0.4
455,673
309,494
850,726
TUC -RC
8
2
0
0.0
5.6
55.4
91%
0.2
121,119
30,000
212,237
TUC -RC 300
3
1
0
0.0
46.2
5.2
10%
0.2
2,013,548
2,013,548
2,013,548
TUC -TOD
86
32
5
31.1
28.3
161.3
71%
0.3
80,886
10,518
469,291
TUC -WP
53
17
0
1.4
91.5
74.2
44%
0.4
237,945
12,258
801,777
TUC -WP River
11
8
0
8.1
65.7
14.6
17%
0.3
401,834
79,264
792,702
TOTAL
194
74
5
80.7
271.7
449.0
56%
0.3
207,440
10,518
2,013,548
Source: Heartland, King County Assessor, 2014
Next, a capacity analysis was conducted. The first step in this process was to interpret the land use code
for each zoning district to estimate a typical floor area ratio (FAR), or the ratio of total potential building
square footage to land area .6 The next step involves projecting how the market will utilize the land.
Future land use is a key variable because different land uses will result in different FARS due to the form
based code and parking requirements. For example, in the TUC - Transit Oriented Development (TOD)
zoning district multifamily uses could support a FAR of 2.1 while an office use may result in a FAR up to
1.8. Finally, to estimate the capacity for a zoning district and the Study Areas cumulatively the total
square footage of likely or maybe redevelopable land is _ - , 0M,
multiplied by the blended FAR based on the land use 20,000,000
distribution for that zone. Using this approach the total ) 60,000,000 iiiiiiii Hospitaltity
capacity on potentially red 50,000,000 Retail
evelopable properties in the � Multifamily
TUC is illustrated in Exhibit 8. If the potentially 4Q'Q0Q'Q00 111111111 oiuuu Office
30,000,000
redevelopable properties in the TUC are fully built out to � 20000000
the maximum FAR it would total roughly 63 million 10,000,000
square feet for an average FAR of 4.1 and the TIB District o
could support roughly 6.5 million square feet for an TUC (4.2 FAR) TIB (0.6 FAR)
Source: Heartland, King County Assessor, 2015
average FAR of 0.6.
6 Floor area ratio is calculated by dividing the total building square footage, typically excluding parking square footage, by the
land area. For example, a 50,000 square foot parcel with a FAR of 2.0 could support up to a 100,000 square foot building
while a FAR of 0.5 would result in a 25,000 square foot building.
i
Tukwila LCLIP: Findings and Recommendations
16
3.1.4 Growth Scenarios
Once a full build -out capacity is estimated the next step is to determine how much development may
occur over the next 20 to 30 years. A common approach to estimating future growth is to use past
development trends as a proxy for future growth. Development in the Study Areas since 1990 has been
relatively slow and the type of product developed in terms of use and density is not like what is
envisioned for the future of the Study Areas. The TUC is intended to support mid -rise and high -rise
buildings with a mix of office and multifamily products integrated into the area replacing underutilized
existing industrial and retail uses. The TIB District has not been rezoned, but the vision is for an urban
corridor with a mix of uses and building heights replacing the low -rise development that is currently in
place. Growth projections used in the LCLIP revenue model were based around the PSRC growth targets
for the City and the Study Areas. Another approach that could have been utilized would be to base
future growth on past development trends; however, because the past development patterns in the
Study Areas will not likely be the same as the future the PSRC estimates were relied on. The table in
Exhibit 9 summarizes the resulting total gross building square footage for three future growth scenarios.
As this table reveals, there is ample capacity to support growth in the Study Areas.'
Capacity
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,119,045
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,923,213
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,200000
,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Growth Target
830,000
6,060,000
11,070,000
% of Capacity
39%
14%
73%
Conservative
620,000
2,490,000
8,960,000
% of Capacity
29%
6%
59%
High Growth
620,000
8,570,000
11,070,000
% of Capacity
29%
20%
73%
Source: Heartland LLC, 2015
The Growth Target scenario is based on estimates provided by PSRC for the Study Areas. The
distribution of uses was scaled so that the total amount of gross building square footage delivered over
the next 25 years could achieve the growth targets. The Conservative scenario is a scaled back version of
the Growth Target scenario. This scenario was developed because the output of projects that could
result from the modeled development would exceed historical trends in the City as well as in South King
County. The High Growth scenario was developed to estimate the impact of the LCLIP program if
developers found the Study Areas to be attractive areas due to a shift in market dynamics. A catalyst
project or major employer electing to locate in this area could help spur development to achieve the
Growth Target or High Growth scenarios.
7 The Capacity and growth scenarios shown in these tables do not represent the entire Study Area, but rather just the parcels
that have been identified as parcels likely to be located in the LIPA. This includes all of the TUC with the exception the
properties located in the Commercial Corridor zoning district, property in the Urban Renewal Overlay of the TIB District, and
all of Tukwila South. Note that the modeled scenarios for Tukwila South's have the share of its capacity at 73% for the
Growth Target scenario and the High Growth scenario. This is based on an opinion that this area will not likely build out to its
full capacity.
Tukwila LCLIP: Findings and Recommendations 17
+Ze
The table in Exhibit 10 shows the total estimated amount of square footage by use type that was
modeled for each scenario as well as how many projects that building area may support. This helps to
contextualize the scale of these scenarios. The average office project estimated to be 300,000 square
feet and between 5 and 8 stories. The typical multifamily and hospitality project would be a 5 to 7 story
project with 120 units. A portion of the retail modeled was ground floor commercial space in office and
multifamily projects, but an assumption was made that developers will still see this area as strong retail
location and improve some of the land with new retail projects. These were the assumed averages;
some buildings developed in the TUC may take advantage of the bonus incentives and build tall
structures. For reference, there have not been any multifamily projects built in Tukwila that have been
over 3 stories since 1990 and in all of South King County there have only been 25 built.
Square Feet
Total Study Area
TIB District
I Tukwila South
Land Use Delivered
Projects
Projects
TUC Projects
I Projects
Growth Target Scenario
'.
Office 5,045,066
5
0
5
12
Multifamily 3,248,454
22
7
15
; 6
Retail 2,175,581
0
16
Hospitality 3,321,559
2
2
13
Conservative Scenario
I
Office 3,354,643
2
0
2
9
Multifamily 2,023,976
12
5
7
6
Retail 1,707,633
0
0
0
13
Hospitality 2,490,451
1
1
10
High Growth Scenario
Office 5,770,299
8
0
8
; 11
Multifamily 3,719,455
25
5
20
7
Retail 2,190,872
0
16
Hospitality 3,498,791
3
3
13
Source: Heartland LLC, 2015
One final reference point for the estimates used in the model is how each compares to the most current
PSRC growth targets. PSRC projects the City should be able to support approximately 23,350 new jobs
and 10,680 new people between 2010 and 20358. The table in Exhibit 11 estimates the number of jobs
and people estimated to be supported by new development in the Study Areas and compares that total
to the City -wide growth targets. Both this table and the table in Exhibit 10 show that if the Tukwila
South project is built out per its development agreement the City will easily meet its growth targets.
8 PSRC Land Use Targets. Release Date: 4/14/2014
Tukwila LCLIP: Findings and Recommendations 18
W
Study Area
Land Use Total
% of Tukwila
Growth Targets
TIB
District
TUC
Tukwila
South
Growth Target Scenario
Jobs 9,462
Households 3,709
41%
35%
361
1,048
9,101
2,661
28,031
1,042
Conservative Scenario
Jobs 3,737
Households 1,991
16%
19%
271
786
3,467
1,205
22,425
958
High Growth Scenario
I
Jobs 13,434
Households 4,431
58%
41%
271
786
13,164
3,645
28,031
! 1,042
Source: Heartland LLC, 2015
Tukwila LCLIP: Findings and Recommendations
19
61
This page intentionally left blank.
Tukwila LCLIP: Findings and Recommendations 20
62
This section reviews the feasibility of TDR placement within the Study Area. The section summarizes the
range of bonus provisions that may be employed to utilize TDR credits and evaluates the recommended
approach for the private placement of TDR credits.
4.1 Existing and potential development bonus provisions
The absence of TDR policy is not an obstacle to the success of LCLIP in the City. The LCLIP program is
flexible and allows for multiple approaches to achieve market -based credit placement. Options the City
might consider include the expansion of incentive zoning in the TUC or the introduction of incentive
zoning in the TIB District, private placement via a multi - family tax exemption incentive, development
agreements, public acquisition of credits, or a combination of approaches to create a portfolio of
mechanisms to place TDR credits and meet LCLIP performance milestones.
Incentive Zoning
The City has incentive zoning in the TUC in place; however, the incentives involve affordable housing
and the provision of design elements to access bonus heights. The TIB District may present an
opportunity for the use of incentive zoning. The City desires considerable land use in the TIB District
to encourage a more dense mix of uses relative to historical patterns. There is an opportunity to
include provisions for bonus incentives that would use TDR in a TIB District rezone. Even with this
opportunity, the capacity and demand for growth in that area is comparatively small and other
mechanisms may generate more demand for TDR placement, such as a multifamily tax exemption
(MFTE) incentive.
Private Placement
Recently the City implemented a short -term MFTE program for one year with objectives around
incentivizing projects in a specific area within the TUC. The concept of MFTE is simple: developers
receive an 8 -year exemption from property taxes for constructing multifamily residential projects
that provide a public benefit. The City could generate demand for TDR by allowing developers to
access the property tax relief offered via the MFTE through the purchase of TDR credits. Later
sections detail this approach, along with costs and revenues associated with the mechanism. This
approach would be considerably simpler from a policy and regulatory standpoint to implement than
incentive zoning that includes TDR, and could potentially reduce uncertainty in implementation of
LCLIP by providing a more streamlined and valuable bonus to developers.
Development Agreements
Another avenue by which the City can generate demand for TDR credit placement from private
development is with development agreements. This approach is more opportunistic than MFTE or
incentive zoning, and is more variable in its ability to absorb credits. When a developer proposes a
Tukwila LCLIP: Findings and Recommendations 21
63
large project to the City and requests special dispensations to facilitate its construction the City has
an opportunity to negotiate the acquisition of TDR credits by the developer into the agreement.
There is no formula or guideline for this, and since the pipeline of projects that could potentially
place credits is uncertain the viability of this approach is difficult to predict with certainty. A single
large project, however, could result in the placement of a substantial portion of the City's TDR
commitment.
Public Acquisition
While not likely the first choice for the City as a means to meet performance milestones in LCLIP the
use of public funds to acquire credits needed to continue the program is another option. Any public
money that the City expends to buy credits to achieve milestones reduces the net revenue that
would accrue to the City. That being said, it is important to keep as a backstop to close any gap left by
the private market. The City could negotiate pricing agreements with King County or other flexible
terms as part of an interlocal agreement implementing LCLIP. The revenue projections for the City
are such that even if public acquisition became necessary the City would still come out ahead
financially — possibly far ahead — given the prospects for the program.
4.2 Approach for the private placement of TDR credits
In the absence of a more common TDR program based on incentive zoning, the City will need to create a
mechanism by which private developers can use TDR to gain a benefit. The two most promising
opportunities to achieve private placement is by using TDR to allow developers access to a MFTE and
through the use of a Development Agreement for projects of significance. The Development Agreement
opportunity is opportunistic and the number of credits that a project may utilize will be negotiated
between the City and the developer. In regards to the MFTE opportunity, under RCW 84.36 a city may
grant a developer an 8 -year exemption on property taxes if a multi - family project provides some public
benefit. This mechanism has traditionally been used to incentivize the construction of affordable
housing and can also apply to TDR and the LCLIP program, which clearly provides multiple public
benefits.
Under this approach, the bonus that the developer would gain is access to operational cost savings
through the 8 -year tax exemption. In order to access this, the developer would buy TDR credits. The
number of credits needed to access the MFTE would be calibrated such that the net savings to the
developer is still sufficiently high to justify the credit purchase.
Analysis of developer willingness to pay suggests that a prototypical 120 -unit project could place
approximately 30 credits. This model results in an exchange rate of 1.3 credits per 5 units in the project
or a fee in lieu of $28 per net square foot assuming an average unit size of 900 square feet and the
average TDR credit costs $20,000 today. By participating in this program the owner of this prototypical
project could realize a tax savings of nearly $355,000 in nominal terms over the 8 -year exemption for
very little effort. This assumes that 65% of the benefit goes toward TDR acquisition and the remainder to
the project owner. The City would need to amend its development regulations to define the terms and
Tukwila LCLIP: Findings and Recommendations 22
M
create the mechanism for developers to access MFTE through purchase of TDR credits. The table in
Exhibit 12 on the following page details the inputs used to estimate TDR utilization.
Exhibit
12:
DIR Credits
to Access MIFTE
Program
Annual Tax A
Split
TDR Cost: $20,000
1%
1 65%
Inflation:2%
MFTE
TDR
Project Tax
TDR Credits
Year
Benefit
Contribution
Savings
Afforded
1.
2015
$122,400
$79,560
$42,840
3.9
2
2016
$123,624
$80,356
$43,268
3.9
2017
$124,860
$81,159
$43,701
3.8
4
2018
$126,109
$81,971
$44,138
3.8
5
2019
$127,370
$82,790
$44,579
3.7
6
2020
$128,644
$83,618
$45,025
3.7
C
2021
$129,930
$84,455
$45,476
3.7
S
2022
$131,229
$85,299
$45,930
3.6
Total
$1,014,166
$659,208
$354,958
30.2
NPV
$725,598
$471,639
$253,959
Total credits over 8 year period for a 120 project
30.2
Exchange Rate 1: TDR credits needed
per 5 units
1.3
Exchange Rate 2: Fee in lieu per net square feet
$28
Source: Heartland, 2015
Blending the MFTE program with LCLIP in this manner allows a developer to access a portion of the tax
savings for eight years, but with a cost of TDR acquisition. In the model above the developer would
realize approximately 35% of the total tax savings benefit while placing roughly 30 TDR credits. The
MFTE program does come with an opportunity cost for the City in the form of lost tax revenue on these
units for 8 years. Further analysis may be warranted to study the fiscal impacts of this program relative
to the benefits of added units and LCLIP revenue.
Tukwila LCLIP: Findings and Recommendations 23
65
This page intentionally left blank.
Tukwila LCLIP: Findings and Recommendations 24
•-
Using a LCLIP revenue model developed for the City, the analysis tested the three different scenarios to
assess the number of TDR credits potentially placed and revenues generated through the LCLIP program.
Each scenario assumes different levels of growth and TDR use to test how sensitive the revenues are to
the assumed amount of growth and the TDR mechanism used. The mechanism used to retire TDR
credits for all scenarios in this analysis is an eight -year multi - family tax exemption program.
The analysis uses a number of common assumptions for all scenarios. The analysis assumes that the
LCLIP program would start in 2016 and run for 25 years. All scenarios assume the price of TDR credits is
$20,000 and increase to $36,000 (in 2015 dollars) at year 15. The analysis also assumes all TDR credits
are first purchased by the private market, and the City only purchases credits to meet the program
placement thresholds to continue the program going if needed.
The LCLIP revenue assessment identifies a LIPA study area and develops a forecast of future
development amounts. Using these inputs, several LCLIP parameters are tested to better understand
the impact of different TDR use and development growth variables as drivers of potential LCLIP
revenues.
5.1 Defining a LIPA
For the revenue analysis, it is assumed that the
areas inclusive of the Urban Renewal Overlay of
the TIB District, the TUC Study Area excluding
the Commercial Corridor zoning district, and
Tukwila South would comprise LIPAs for the
City. The TUC's Commercial Corridor zoning
district was excluded from this analysis in order
for these LIPAs to meet the legislative
requirement of containing less than 25% of the
City's current assessed value. The City may
choose to draw the LIPA(s) differently to
optimize where new development may occur
prior to proposing the LCLIP legislation.
Additionally, if the City waits to adopt LCLIP the
assessed values may rise, thereby necessitating
a re- evaluation of LIPAs. The current valuation
supports the pursuit of LCLIP sooner rather than
later.
Tukwila LCLIP: Findings and Recommendations 25
MA
The table in Exhibit 15 summarizes the 2014 assessed value for the areas that are modeled to be
included in the LIPA for purposes of this analysis.
Source: King County Assessors, Heartland
5.2 The Impact of Development Variables
The following scenarios assessed LCLIP revenue based on assumptions about the timing, scale, and
quality of development. Outside of the LCLIP program parameters, the three main development -based
determinants of revenue impact are:
• Scale and Mix of Development. The revenue impact is likely to change as developers contemplate
differing types and amounts of residential and commercial development.
• Value of Development. While the baseline assumptions around development value (normalized
on a square footage basis) were drawn from reliable data, it is difficult to predict future
development value with great certainty.
• Timing of Development. The timing of construction can either accelerate or delay the onset of
LCLIP revenues. Delay reduces the revenues under the LCLIP time window by pushing out the
impacts into the future, resulting in reduced years of benefits that are discounted more heavily.
The opposite is true in a situation where development happens earlier.
It should be noted that changes to any of these (whether driven by future policy or market dynamics)
can have a significant impact on the amount of LCLIP revenue generated. A difficult issue to disentangle
from the analysis is the degree in which potential LCLIP- driven infrastructure improvements may
facilitate (i.e. lower the overcall cost or feasibility) development by solving critical site and /or access
issues.
5.3 Assumptions and Revenues
The revenue analysis assumes that the primary mechanism used to place TDR credits is the eight -year
MFTE program. Under this approach, developers of multi - family residential buildings in the LIPA would
be eligible to purchase TDR credits and in exchange receive an eight -year property tax exemption on the
residential improvements of their project. These scenarios are one approach to credit utilization that
relies on market participation via an MFTE program. Alternatives could be developer agreements and
Tukwila LCLIP: Findings and Recommendations 26
M.:
Total Assessed
Total Assessed
Area
Value
Value (%)
TIB -UR
$46,793,200
0.6%
TUC -P
$317,337,100
4.1%
TUC -RC
$418,493,000
5.4%
TUC -TOD
$551,411,000
7.1%
TUC -WP
$561,307,800
7.2%
Tukwila South
$45,790,200
0.6%
Total
$1,895,342,100
25.0%
Source: King County Assessors, Heartland
5.2 The Impact of Development Variables
The following scenarios assessed LCLIP revenue based on assumptions about the timing, scale, and
quality of development. Outside of the LCLIP program parameters, the three main development -based
determinants of revenue impact are:
• Scale and Mix of Development. The revenue impact is likely to change as developers contemplate
differing types and amounts of residential and commercial development.
• Value of Development. While the baseline assumptions around development value (normalized
on a square footage basis) were drawn from reliable data, it is difficult to predict future
development value with great certainty.
• Timing of Development. The timing of construction can either accelerate or delay the onset of
LCLIP revenues. Delay reduces the revenues under the LCLIP time window by pushing out the
impacts into the future, resulting in reduced years of benefits that are discounted more heavily.
The opposite is true in a situation where development happens earlier.
It should be noted that changes to any of these (whether driven by future policy or market dynamics)
can have a significant impact on the amount of LCLIP revenue generated. A difficult issue to disentangle
from the analysis is the degree in which potential LCLIP- driven infrastructure improvements may
facilitate (i.e. lower the overcall cost or feasibility) development by solving critical site and /or access
issues.
5.3 Assumptions and Revenues
The revenue analysis assumes that the primary mechanism used to place TDR credits is the eight -year
MFTE program. Under this approach, developers of multi - family residential buildings in the LIPA would
be eligible to purchase TDR credits and in exchange receive an eight -year property tax exemption on the
residential improvements of their project. These scenarios are one approach to credit utilization that
relies on market participation via an MFTE program. Alternatives could be developer agreements and
Tukwila LCLIP: Findings and Recommendations 26
M.:
city purchase, but for purposes of this analysis the focus was on private placement. Adding incentive
zoning to portions of the TIB would be a way to encourage more private market absorption of TDR
credits to augment the other mechanisms identified. Generally speaking, it is in the City's interest to
establish an integrated approach to credit utilization that maximizes opportunities for market placement
of credits and strengthens certainty around achieving program milestones to extend revenues.
It is likely a large share of new multi - family residential development would use the MFTE program. If
structured correctly, the MFTE would provide a small cost saving to the developer after purchasing the
required development rights. The program is voluntary, but there is no financial advantage to not use
the program for a developer.
The MFTE program would delay the new construction value contributions to the LCLIP program for the
City until the eight -year exemption expired. After the exemption expires the value would be added to
the City's assessed value used in calculating how much revenue the City is receiving under the program.
The delay in adding new construction value will somewhat reduce the amount of LCLIP revenues to the
City, however this near -term impact should be viewed in context of the overall revenue projections of
the program.
5.3.1 Scenario 1: Conservative Growth Target Forecast with MFTE Program
This scenario assumes 4.6 million square feet of development by 2040. This level of growth is less than is
needed for the City to meet its growth targets, but significantly more than the City has experienced
historically. This scenario assumes an eight -year multi - family tax exemption (MFTE) program is
established when the program begins and that 80% of multi - family residential development would
utilize the program. This figure is derived based on utilization of the MFTE program in the City of Seattle.
The scenario also assumes that the City accepts 100% of the 405 allocated credits to maximize revenue.
Using these assumptions, over 1.0 million square feet of development would utilize the TDR incentive
and the private market would place 300 of the City's 405 allocated credits over 25 years. However, the
private market would not meet the first threshold of 203 credits after 10 years. As a result, the City
would have to purchase the necessary credits to keep the program active at each performance
threshold. The total costs to the City to make these gap purchases under this scenario would be $1.9
million. Even with the additional cost to the City, total County revenues to the City would be $4.4 million
(net present value). Less the $1.9 million acquisition costs, net revenues to the city would be $2.5
million. This net amount equates to almost $300,000 in 2015 dollars annually by year 25 of the program.
Exhibit 16 and 17 show the growth in annual revenues for inflation and non - inflation (nominal) adjusted
dollars.
Tukwila LCLIP: Findings and Recommendations 27
•e
Total LCLIP Revenues
$22.3 Million
$42.1 Million
City Allocation Revenues
$17.9 Million
$33.6 Million
County Allocation Revenues
$4.4 Million
$8.4 Million
City TDR Acquisition Cost
-$1.9 Million
-$3.0 Million
City Net Revenue
$2.5 Million
$5.4 Million
Source: ECONorthwest. Note all figures in 2015 dollars; 25 -year present value at 4% discount rate
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
y0 y1 y% y0 y0 yti y'L 1'' ya y0 y0 L1 y% y0 �0 3N 3ti �"I , ,�9 # '31 , ' 10 �°
'yo 'yo 'yo yo yo yo yo 'yo 'yo 'yo 'yo 'yo 'yo 'yo 'yo yo yo yo yo yo '0 yo yo yo 'yo
Source: ECONorthwest.
5.3.2 Scenario 2: Growth Target Forecast with MFTE Program
This scenario assumes 6.1 million square feet of development by 2040. This level of growth is what
would be needed for the City to meet its growth targets, but significantly more than the City has
experienced historically. This scenario assumes an eight -year MFTE program is established when the
program begins and that 80% of multi - family residential development would utilize the program. The
scenario also assumes that the City accepts 100% of the 405 allocated credits to maximize revenue.
Using these assumptions, almost 1.3 million square feet of development would utilize the TDR incentive
and the private market would place 381 of the City's 405 allocated credits over 25 years. The private
market would not quite meet the first threshold of 203 credits after 10 years. As a result, the City would
have to purchase the necessary credits to keep the program active at each performance threshold. The
total costs to the City to make these gap purchases under this scenario would be $800,000. Even with
the additional cost to the City, total County revenues to the City would be $5.9 million (net present
value, $11.3 million nominal). Less the $800,000 acquisition costs, net revenues to the city would be
$5.1 million ($10.3 million nominal). This net amount equates to almost $400,000 in 2015 dollar
annually by year 25 of the program. Exhibit 18 and 19 show the growth in annual revenues for inflation
and non - inflation (nominal) adjusted dollars.
Tukwila LCLIP: Findings and Recommendations
70
28
Total LCLIP Revenues
$30.0 Million
$56.6 Million
City Allocation Revenues
$24.1 Million
$45.2 Million
County Allocation Revenues
$5.9 Million
$11.3 Million
City TDR Acquisition Cost
-$0.8 Million
-$1.1 Million
City Net Revenue
$5.1 Million
$10.3 Million
Source: ECONorthwest. Note all figures in 2015 dollars; 25 -year present value at 4% discount rate
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
StO y1 yR� yA y0 yti yL y3 LR yti 16 1^ 1� y0 �O 3ti '�i1' '�3 . 3y 30 31 3%
LO LO LO LO LO LO LO y0 y0 y0 y0 y0 y0 y0 'y0 y0 y0 y0 '10 o 'LO 'LO 'LO LO LO
Source: ECONorthwest. Note all figures in 2015 dollars; 25 -year present value at 4% discount rate
5.3.3 Scenario 3: High Growth with MFTE Program
The High Growth scenario tests the upside potential if the City realizes more development than planned
for under the City's growth target. This scenario assumes the City realizes 9.5 million square feet of new
development by 2040. This growth is significantly more development than historically experienced and
about twice the 4.6 million square feet assumed in Scenario 1.
Under these assumptions the LCLIP program would produce significant funding benefits to the city. The
program would likely retire all 405 credits via the private market and the City would not have to
purchase any credits. As a result, assuming 100% specified ratio, the program would generate a
significant amount of new revenue for the City. Total revenue to the city from the County's
contributions would be substantial at $9.5 million (net present value, $18.2 million nominal) over the
25 -year period and reach over $600,000 in 2015 dollar annually by year 25 of the program. Exhibit 20
and 21 show the growth in annual revenues for inflation and non - inflation (nominal) adjusted dollars.
B,i F A I: F 6_ A `tiI D
Tukwila LCLIP: Findings and Recommendations
29
71
Total LCLIP Revenues $48.3 Million $90.8 Million
City Allocation Revenues $38.8 Million $72.7 Million
County Allocation Revenues $9.5 Million $18.2 Million
City TDR Acquisition Cost $0 $0
City Net Revenue $9.5 Million $18.2 Million
Source: ECONorthwest. Note all figures in 2015 dollars; 25 -year present value at 4% discount rate
$1,800,000
$1,600,000
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$0
StO y1 yR� yA y0 yti yL y3 LR yti 16 1^ 1� y0 �O 3ti '�i1' '�3 . 3y 30 31 3%
LO LO LO LO LO LO LO y0 y0 y0 y0 y0 y0 y0 l '10 '10 '10 '10 o 'LO 'LO 'LO LO LO
Source: ECONorthwest
5.3.4 Addition of Tukwila South to LIPA
The three scenarios assume that the Tukwila South subarea is not included in the LIPA and does not
develop during the 25 -year study period. However, if Tukwila South was included in the LIPA, and the
area did develop in a manner in line with the development agreement for the area, the City would
realize sizably more development and revenue from the LCLIP program. Exhibit 22 compares the square
feet of projected development for each scenario with and without Tukwila South in the LIPA. The
development of Tukwila South adds about 10 million square feet of development or more to each
scenario.
Conservative Growth Target 4.6 Million 14.6 Million
Growth Target Forecast 6.1 Million 18.7 Million
High Growth 9.5Million 19.6 Million
Source: Heartland LLC. Note: square footage in this table includes area of parking garages. While parking do not provide for jobs or housing it
generates tax revenue through sales taxes.
72
Tukwila LCLIP: Findings and Recommendations
30
The additional new development generates considerably more revenues via the LCLIP program under all
three scenarios.
Exhibit compares the revenues for each scenario without and with Tukwila South developing. The
additional new development generates considerably more revenues via the LCLIP program under all
three scenarios.
Conservative Growth Target $2.5 Million ($5.4 Million) $16.4 Million ($32.2 Million)
Growth Target Forecast $5.1 Million ($10.3 Million) $20.8 Million ($40.9Million)
High Growth $9.5Million ($18.2 Million) $22.2 Million ($41.9 Million)
Source: ECONorthwest
5.3.5 Summary
Overall, the amount of growth is an important factor in the viability of a LCLIP program. To retire enough
TDR credits for the program to be financially feasible, the City will need to realize significantly more
growth over the 25 -year study period than it has historically experienced. For Tukwila specifically, the
development potential of the Tukwila South subarea represents a large opportunity to increase LCLIP
revenues.
In addition, to the amount of development, high utilization of the MFTE program by multi - family
residential development in the LIPA is also needed. As a result, factors such as when the City starts the
program and the sponsorship ratio the city chooses will be important in determining LCLIP success.
Tukwila LCLIP: Findings and Recommendations 31
73
This page intentionally left blank.
Tukwila LCLIP: Findings and Recommendations 32
74
r
6.1 Summary of Findings
The analysis shows a range of situations in which LCLIP would be beneficial to the City. Even in a
scenario assuming conservative growth, LCLIP could generate net revenue of $2.5 million (net present
value, or $5.4 million in nominal terms) for infrastructure in Tukwila. Should the City meet its growth
targets, the net revenue would increase to $5.1 million (net present value, or $10.3 million in nominal
terms). Should the City exceed its growth targets, net revenue would increase to $9.5 million (net
present value, or $18.2 million in nominal terms).
The TUC can play a central role in the city meeting its growth targets. Following a recent rezone it has
the capacity to accommodate considerable population and employment growth. The City has
identified a range of infrastructure improvements, many involving improved access to transit, where
LCLIP can finance investments that will support redevelopment.
E. r . r r •'; . . . I=
The City recently adopted a rezone of the TUC. The rezone did not include provisions for incentive
zoning that could use TDR; however, there are other mechanisms by which growth would drive
demand for TDR. The two most promising opportunities for the City are to pursue TDR utilization
through development agreements and to offer TDR as a means for developers to access the 8 -year
multifamily tax exemption (RCW 84.36).
Development agreements are an opportunistic means by which the City can negotiate TDR acquisition
by developers in projects of larger scale. The advantage of this approach is increased placement of
credits through the private market (potentially a substantial portion of the City's allocation in the case
of a single large project), however it also has tradeoffs. The need for these agreements in future
projects is uncertain and because there is no fixed process (like an exchange rate) for establishing the
amount of credits a project would acquire, utilization is subject to negotiation. Still, given the study's
revenue projections and potential for this approach to place credits, the pursuit of development
agreements by the City should remain a focus.
In the multifamily tax exemption approach, developers would purchase TDR credits as a means to
access 8 years of property tax exemption. Along Tukwila International Boulevard there is an
opportunity to implement incentive zoning that would create demand for TDR (the use of
development agreements to place credits in larger projects could generate further TDR utilization).
Offering access to the MFTE program through TDR credits (or a fee in lieu) will be a simple way for
developers to lower operating costs without much impact on the development pro forma. The value
this approach creates for developers should make it attractive, however the certainty of projects using
the tool is unclear.
Tukwila LCLIP: Findings and Recommendations 33
75
State law limits cities to creating districts for using LCLIP that constitute a maximum of 25% of a
participating city's total assessed value. To maximize revenues the City should create LCLIP districts
that include as much assessed value as possible where growth will occur. Including portions of the TUC
and the TIB District, as well as Tukwila South, the City can optimize the future increases in assessed
value while staying beneath the 25% limit at the time of program creation.
. .:• . r.r r . - III
r . r
Conditions in the City at present would support use of the tool. This analysis shows that growth, even
when projected conservatively, is sufficient to make LCLIP a success. At minimum the City would
receive new revenue for infrastructure that it otherwise could not access and at best that revenue
would exceed $41 million over the life of the program.
6.2 Recommendations
There are various options the City can pursue to take an opportunistic approach to creating an LCLIP
program. Before considering these strategies, there are ranges of policy actions that the City should
contemplate.
6.2.1 Policy and Code Recommendations
In the absence of a traditional TDR program based on incentive zoning, Tukwila will need to create a
mechanism by which private developers can use TDR to gain a bonus. The best approach for the City to
reduce uncertainty and maximize revenue over the duration of the program is to pursue a credit
placement strategy that combines complementary private market mechanisms augmented, if necessary,
by public purchases. The two most promising private market mechanisms for placing credits are
through negotiating TDR acquisitions in development agreements and by offering TDR as a means for
developers to access MFTE.
Development agreements, while potentially able to place large numbers of credits in a relatively small
number of projects, are also highly unpredictable and should be complemented with a mechanism that
is more likely to place credits over time. By pursuing an approach of seeking to include a TDR
component in every developer agreement, coupled with MFTE utilization, the city can mitigate the high
variability of one tool with the smaller scale, but likely steadier demand of the other. While a
development agreement for a sizable project may place upwards of 60 credits in a single transaction,
this type of proposal may be few and far between. By contrast, offering MFTE could create sufficient
savings for developers to use the tool more frequently in projects that would be more typical of
redevelopment in the Study Areas. These MFTE projects might place fewer credits each, but more
projects over the duration of the program would help maintain the City's progress towards the
performance milestones.
Tukwila LCLIP: Findings and Recommendations 34
76
Even if the private market falls short of meeting the performance milestones at years 10, 15, and 20, the
revenues projected are high enough that a purchase by the City of credits to achieve the thresholds
would justify the public investment. Furthermore, terms of an interlocal agreement with King County
might include flexibility around meeting milestones if the City is demonstrating significant progress
towards those goals. Other ways to reduce City risk is to seek a price guarantee on county -owned
credits from King County should the private market not reach credit placement goals.
6.2.2 Potential LCLIP Approaches
The following section lays out three approaches to proceeding with LCLIP.
�. . .
The current analysis shows that while (1) even with conservative growth estimates the City will likely
net $2.5 million (NPV, or $5.4 million nominal) in new revenue, and (2) a simple and desirable market
mechanism can drive the use TDR, uncertainty remains around what demand for redevelopment will
be in the study areas. The risk of taking no action in the near term, however, is that the City misses the
opportunity to capture value from redevelopment until after the process has already started, thereby
passing up revenue from LCLIP.
111124T WON
This approach would establish LCLIP program targeted at placing all 405 credits allocated to the City.
The program is structured to provide greater financial incentives for cities accepting higher numbers
of credits. This would maximize revenue to the City but also carries increased risk. In a conservative
growth scenario the City might need to purchase some TDR credits to meet performance milestones,
however the result would still be net positive and King County has expressed a willingness to find ways
to reduce the City's financial exposure. In this scenario the City would rely on the private market to
place a considerable number of credits (381 under conservative assumptions) and the City could
acquire the balance — over the course of the program - to reach the target of 405. In addition to using
the MFTE incentive described the City should also pursue development agreements whenever the
opportunity presents itself as a complementary mechanism to drive private market utilization of TDR.
The opportunity to implement incentive zoning as a means to place TDR credits through
redevelopment along Tukwila International Boulevard remains an option, however the analysis
suggests that the number of credits placed would be small and the most promising opportunity for
market based placement of credits remains the MFTE approach or the use of development
agreements. That being said, every credit placed by the private market increases revenue and
program certainty for the city, so pursuing an incentive zoning approach in TIB may be worthwhile.
Under conservative growth estimates this approach could net Tukwila $2.5 million in revenue (NPV,
$5.4 million over the course of the program), while growth that reaches the City's targets would
increase revenue to $5.1 million (NPV, $10.3 million over the course of the program). The advent of a
large project that could include a development agreement to place a large proportion of the City's
credits would raise revenues to $9.5 million (NPV, $18.2 million over the course of the program).
Tukwila LCLIP: Findings and Recommendations 35
III
f w 0 0` 0 M f# r• R
The City can structure the start of the LCLIP program with either a single or multiple major
developments, such as a project that utilizes TDR. Timing the program to the start of a known large -
scale development within the growth center would allow Tukwila to capitalize on known demand and
maximize the benefits to the City. This would help the City target the maximum number of credits and
would reduce risk by achieving progress towards that goal at the launch of the program.
Pegging the program to a known quantity of TDR use would allow the city to comfortably structure the
LCLIP program to run for the full 25 years (i.e. meet performance thresholds). Solving the performance
threshold a priori would allow the city more flexibility on the use of funds by allowing some public
infrastructure costs to be financed with debt.
1. Commit to full allocation of 405 credits to maximize revenue potential.
2. Establish LIPA boundaries to include the Urban Renewal Overlay portion of the TIB District,
portions of Tukwila Urban Center, and Tukwila South to maximize revenue potential and market
opportunities for TDR credit placement.
3. Take a proactive approach to pursuing development agreements for projects that could absorb
TDR credits as a supplemental market mechanism to the MFTE incentive.
4. Implement MFTE incentive as a private market mechanism to place TDR credits through
multifamily residential and mixed -use projects in TUC and Tukwila International Boulevard at
recommended exchange rates.
5. Negotiate a price guarantee on county -owned TDR credits through the ILA process as a backup
measure should the City need to acquire credits to meet performance milestones.
6. Time the launch of the program with a known project that would place TDR credits.
In moving forward the following conditions should be monitored:
• Indications that confirm market interest in TDR, such as development applications that have
been or are expected to be proposed that will need TDR credits in different zones.
• Analysis of the expected use of TDR credits confirms a reasonably high likelihood of meeting
threshold requirements for TDR use in the LCLIP district.
• Infrastructure projects have been identified that qualify under the LCLIP program.
• A LCLIP district can be created that maximizes the projected LCLIP revenue to pay for
infrastructure projects while meeting the requirements of the LCLIP legislation.
• As needed, a shared strategy approach with King County or another partner agency should be
included in an approach to retiring TDR credits.
Tukwila LCLIP: Findings and Recommendations 36
i
• • TI M-0
Should the City choose to use LCLIP, the following next steps are necessary to implement the program:
Step 1: Identify a specific geographic area(s) for increased density that will become a LIPA. The LIPA
must:
• Include contiguous land (no "islands ");
• Not include more than 25% of the total assessed taxable property within the City;
• Not overlap another LIPA;
• In the aggregate, be of sufficient size to:
• Use the City's "specified portion" of transferable development rights (unless the City has
purchased the transferable development rights to reserve for future development); and
• Not be larger than reasonably necessary.
• Contain all public improvements to be financed within its boundaries.
Step 2: Accept responsibility for all or a share (a "specified portion ") of the transferable development
rights allocated from the Puget Sound Regional Council to the city. Consider whether to include any
rights from another city through an interlocal agreement.
Step 3: Adopt a plan for development of public infrastructure within the LIPA. The plan must:
• Utilize at least 20% of the city's allocated share of transferable development rights;
• Be developed in consultation with the Department of Transportation and the county where the
LIPA is located;
• Be consistent with any transfer of development rights policies or development regulations
adopted by the City;
• Specify the public improvements that will be financed;
• Estimate the number of transferable development rights that will be used; and
• Estimate the cost of the public improvements.
Step 4: Adopt transfer of development rights policies or implement development regulations, or make
a finding that the city will receive its specified portion within one or more LIPAs, or make a finding that
the City will purchase its specified portion. Adoption of transfer of development rights policies or
implementation of development regulations must:
• Comply with the Growth Management Act;
• Designate a receiving area(s);
• Adopt developer incentives, which should be designed, at the City's election, to:
• Achieve the densities or intensities in the City's plan;
• Include streamlined permitting strategies; and
• Include streamlined environmental review strategies.
Tukwila LCLIP: Findings and Recommendations 37
IN,
• Establish an exchange rate, which should be designed to:
• Create a marketplace where transferable development rights can be bought and sold;
• Achieve the densities or intensities in the city's plan;
• Provide for translation to commodities in addition to residential density (e.g., building
height, commercial floor area, parking ratio, impervious surface, parkland and open space,
setbacks and floor area ratio);
• Allow for appropriate exemptions from land use and building requirements;
• Require that the sale of the transferable development rights be evidenced by its permanent
removal from the sending site (such as through a conservation easement on the sending
site); and
• Not be based on a downzone within the receiving area.
The City may elect to adopt optional comprehensive plan element and optional development
regulations that apply within the LIPA.
Step 5: Hold a public hearing on the proposed formation of the LIPA. Notice must be provided to the
county assessor, county treasurer, and county within the proposed LIPA of the City's intent to create
the area. Notice must be provided at least 180 days in advance of the public hearing.
Step 6: Adopt an ordinance or resolution creating the LIPA. The ordinance or resolution must:
• Describe the proposed public improvements
• Describe the boundaries of the proposed LIPA
• Provide the date when the use of local property tax allocation revenues will commence and a
list of the participating tax districts (the City and county)
A certified copy of the adopted ordinance or resolution must be delivered to the county assessor,
county treasurer and each participating tax district.
Step 7: Provide a report along with the county to the Department of Commerce by March 15T of each
year. A requirement of participating in the LCLIP program is for Counties in cooperation with cities, to
provide the Department of Commerce with a report on March 15T of every other year. Should the City
of Tukwila choose to participate, the City in cooperation with King County would compile a report
containing the following information:
• Number of cities within the county participating in LCLIP;
• The number of TDR transactions that have occurred;
• The number of acres conserved through the program, broken out by land type, agricultural,
forest, or rural;
• The number of TDR credits transferred;
• The number of TDR credits transferred into the cities:
• The total number of new residential units in the city;
• The number of additional residential units allowed due to TDR credit transfers;
• The amount of additional commercial space allowed due to TDR credit transfers;
Tukwila LCLIP: Findings and Recommendations 38
80
• The amount of additional building height allowed due to TDR credit transfers;
• The amount of structured parking spaces reduced due to TDR credit transfers;
• The amount of additional parking spaces allowed due to TDR credit transfers; and
• The amount of additional impervious surface allowed due to TDR credit transfers.
• The amount of property tax revenues per city received from the county;
• A list of public improvements paid for or financed by the received revenues;
• The names of businesses locating within the district as a result of the public improvements:
• The number of permanent jobs created in the district as a result of the public
improvements; and
• The average wages and benefits received by the employees.
• The date at which any indebtedness issued for LCLIP financing is expected to be retired.
Tukwila LCLIP: Findings and Recommendations 39
i
M.
ECONorthwest
ECONOMICS - FINANCE - PLANNING
DATE: July 25, 2016
TO: Lynn Miranda
FROM: Morgan Shook
SUBJECT: LCLIP REVENUE REFINEMENT AND PROGRAM IMPLEMENTATION
The City of Tukwila is building on a recently completed assessment of the Landscape
Conservation Local Infrastructure Program (LCLIP) and would like to further refine their
LCLIP assessment to explore an emerging opportunity to include a transfer of development
rights provision. The city would like to refine some LCLIP projections to include opportunity
and challenges assessment as part of potential LCLIP program.
Previous LCLIP revenue forecasts assessed varying levels of new investment at different levels
of development right absorption. Relying on new information that includes some valuation and
timing of development relative to the scenarios, ECO revised its revenue forecast to account for
the development of multiuse sports arena in downtown Tukwila.
Assessment of an Downtown Multi -Use Arena
ECONorthwest evaluated the impact of the near term construction of a multi -use sports arena
in downtown Tukwila. The analysis shows only the anticipated revenue impact of using LCLIP
as part of the development mitigation for that project would generate between $22 to $26
million (25 -year PV at 4% discount rate) in infrastructure funding from King County.
The following terms were assumed:
• The new construction value of the arena would be valued at $1 billion.
• It was assumed that the arena would start construction in 2017 and open 2019.
• The City would accept all of the allocated development rights.
• The arena would be responsible for acquiring some large portion of development rights
as part of negotiated development agreement to support needed infrastructure.
ECONorthwest I Portland I Seattle I Eugene I Boise I econw.com
i
Fir,
City of Tukwila
Allan Ekberg, Mayor
TO: Community Affairs and Parks Committee
FROM: Jack Pace, DCD Director
Bob Giberson, PW Director
BY: Nora Gierloff, Deputy DCD Director
CC: Mayor Ekberg
DATE: November 3, 2016
SUBJECTS: Fee Reductions for Affordable Housing Developments and Impact Fee
Deferrals
ISSUES
Should certain Tukwila permit and impact fees be reduced to encourage development of
affordable housing?
Recent State legislation requires that cities and counties create an impact fee deferral process
for single family construction.
BACKGROUND
During the Comprehensive Plan outreach we heard repeatedly about the unmet need for
affordable family-sized housing and housing for those with very low incomes. Tukwila could
reduce certain permit fees to incentivize the development of these housing types.
In 2015, the state legislature enacted ESB 5923, which requires counties, cities, and towns to
adopt a deferral system for the collection of impact fees for new single-family residential
construction. Upon developer request, payment of impact fees would be delayed until the time
of:
1. Final inspection;
2. Issuance of the certificate of occupancy or equivalent certification; and/or
3. The closing of the first sale of the property.
DISCUSSION
Affordable Housing Development Fee Reduction
Some communities have adopted exemptions, waivers or reductions of charges normally
assessed to residential development when those units are made affordable to low-income
owners or renters. Examples include discounted building or planning fees, or reduced sewer
and water connection fees. This is a way for the jurisdiction to reduce costs and increase
feasibility for affordable housing projects without spending existing general fund money, though
it would reduce permit revenue.
Affordability is defined as monthly housing costs that do not exceed 30% of the household's
monthly income. It is usually expressed as a percentage of the King County median income.
F.*R
1111009111,11r,
UNNIgg
2016 King County Median Income by Household Size
Person
2 Person
'--3 -Person F4 Person 5 Person
F
6 Person
$63,210
$72,240
F
F$81,270 $90,300 $97,524
$104,7748
Proposal
Unit Size
Affordability Target
Fee Reduction
2 or more bedrooms
80%
40%
2 or more bedrooms
60%
60%
Any size
50%
80%
• Certain development and land use permit fees for the entitlement, construction, and
substantial improvement of dwelling units may be reduced by the Public Works and/or
DCD Director when requested by the property owner prior to permit submittal.
• If the project contains a mix of dwelling units that qualify for fee reduction and units that
do not qualify due to unit size or expense, the fee reduction shall be pro-rated to reflect
the proportion of qualifying low-income units in the project.
• If more than 15% of the total project square footage is devoted to commercial use the
fee reduction shall be pro-rated by the commercial percentage.
• If converted to market rate housing within 10 years of the issuance of the certificate of
occupancy, the full applicable permit fees at the time of conversion shall be paid to the
city.
Options:
A. Waive all development fees for all types of affordable housing projects.
B. Add or exclude additional permit types from the reduction process
C. Allow a full waiver of development fees for projects at 30% or lower income levels.
D. Allow different fee reductions for ownership verses rental housing projects
E. Do not reduce development fees for affordable housing
Affordable Housinq Impact Fee Reductions
Cities and Counties may provide for impact fee reductions (as authorized by RCW
82.02.060(3)), to encourage the development of low-income housing. Tukwila currently allows
exemptions from Fire and Parks impact fees for low-income housing developments, but does
not take advantage of the provision in the RCWs that allows for reductions of up to 80% of
impact fees without reimbursement from the City's general fund. Exemptions for traffic impact
fees are not currently allowed. Impact fee reductions would reduce funds available for the
infrastructure to accommodate growth.
86 W2016 Info MernosTee Reduction InfoMerno CAP 11-14.docx
INFORMATIONAL MEMO
Page 3
Proposal:
Unit Size
Affordability Target
Impact Fee Reduction
2 or more bedrooms
80%
40%
2 or more bedrooms
60%
60%
Any size
50%
80%
Low-income housing developments may be partially exempted from Parks, Fire and
Traffic impact fees at the discretion of the Public Works Director when requested by the
property owner prior to permit submittal.
• Submittal of a fiscal impact analysis of the effect of impact fees upon the proposed low-
income housing and how exempting such housing from impact fees would contribute to
the creation of low-income housing is required.
The developer must record a covenant per RCW 82.02.060 (3) that prohibits using the
property for any purpose other than for low-income housing for a period of at least 10
years. At a minimum, the covenant must address price restrictions and household
income limits for the low-income housing, and that if the property is converted to a use
other than for low-income housing within 10 years, the property owner must pay the
applicable impact fees in effect at the time of conversion.
Options:
A. Exempt all types of affordable housing projects from 80% of impact fees
B. Allow a full exemption of impact fees for projects at 30% or lower income levels and
reimburse 20% of the impact fee from public funds as required by RCW 82.02.060
C. Do not include an exemption for Traffic impact fees
D. Allow different fee reductions for ownership verses rental housing projects
E. Do not exempt affordable housing from any impact fees
Single Family Impact Fee Deferral
The City desires to encourage the development of new single family housing so in accordance
with State law is allowing flexibility on the timing of parks, fire and traffic impact fee payments.
Proposal:
• Deferral applications must be made in writing at the earlier of preliminary plat or building
permit application.
• The term of the deferral is 18 months from the date of building permit issuance or the
final inspection, certificate of occupancy, or first sale whichever occurs first.
• An applicant seeking a deferral must grant and record a lien against the property in favor
of the municipality in the amount of the deferred impact fee.
• Fees may be deferred for up to twenty houses per applicant per year.
• None. Required by state law.
W:12016 Info MennosTee Reduction InfoMenno CAP 11-14.docx 87
INFORMATIONAL MEMO
Page 4
FINANCIAL IMPACT
Fee reductions would reduce the permit revenue to the City associated with the development of
affordable housing projects. The amount of this reduction would depend on the waiver types
approved, the number of units and the affordability target of the given project.
As an example, the Homestead Community Land Trust single family project on the Riverton
United Methodist Church site proposes 34 family-sized homes at 80% median income
affordability. Under the proposal above they would be eligible for an approximate reduction of
$100,000 in DCD and PW development permit fees, $19,400 in Park Impact fees, $12,500 in
Fire Impact fees, and $13,800 in Traffic Impact fees from their total permit cost of $371,500.
In addition to Tukwila's fees, the project would be subject to an additional $875,000 in water,
sewer, and electrical connection fees from other agencies. The construction cost for the houses
and site work is approximately $4,565,000. Land costs would be a separate negotiation with the
Church. Without the proposed reduction, Tukwila's fees would amount to approximately 6% of
total project costs.
The impact on Tukwila's revenue would vary depending on the type of fee reductions approved
and the type of projects developed in Tukwila each year. DCD averages over two million dollars
annually in permit revenue of which a minor percentage is related to residential development.
Traffic impact fees for both residential and commercial development have averaged $113,752
annually over the past three years.
RECOMMENDATION
Council is being asked to select from the policy options above and consider ordinances with any
amendments at the November 28, 2016 Committee of the Whole meeting and subsequent
December 5, 2016 Regular Meeting.
ATTACHMENTS
A. Existing Impact Fee Regulations
B. Draft Development Fee Reduction Ordinance
C. Draft Impact Fee Reduction and Deferral Ordinance
88 W:12016 Info MernosTee Reduction InfoMerno CAP 11-14.docx
Attachment A
TMC CHAPTER 16.26 - FIRE IMPACT FEES
16.26.120 Exemptions
6. Low - income housing developed by individuals, nonprofit corporations, or a housing authority may be exempted
from impact fees at the discretion of City staff subject to:
a. Submittal of a fiscal impact analysis of the effect of impact fees upon low- income housing and how
exempting such housing from impact fees would forward the goals for low- income housing in the City and
King County;
b. Submittal of adequate documentation showing that housing will remain available for low- income persons for
a 10 -year period of time at affordable rents; and
c. In the case of owner - occupied dwellings, submittal of adequate documentation showing that such housing
will be sold or leased at affordable rates to low- income households for a period of 10 years.
d. The impact fee for exempt development under this subsection shall be calculated as provided by this
ordinance and paid with public funds. Such payments may be made by including such amounts in the
public share of the system improvements undertaken within the City for fire protection services and facilities.
TMC CHAPTER 16.28 - PARKS IMPACT FEES
16.28.120 Exemptions
6. Low- income housing developed by individuals, nonprofit corporations, or a housing authority may be exempted
from impact fees at the discretion of City staff subject to:
a. Submittal of a fiscal impact analysis of the effect of impact fees upon low- income housing and how exempting
such housing from impact fees would forward the goals for low- income housing in the City and King County;
b. Submittal of adequate documentation showing that the housing will remain available for low- income persons
for a 10 -year period of time at affordable rents; and
c. In the case of owner - occupied dwellings, submittal of adequate documentation showing that such housing will
be sold or leased at affordable rates to low- income households for a period of 10 years.
d. The impact fee for exempt development under this subsection shall be calculated as provided by this
ordinance and paid with public funds. Such payments may be made by including such amounts in the
public share of the system improvements undertaken within the City for parks services and facilities.
RCW 82.02.060 Impact fees —Local ordinances — Required provisions.
The local ordinance by which impact fees are imposed:
(3) May provide an exemption from impact fees for low- income housing. Local governments that grant exemptions
for low- income housing under this subsection (3) may either: Grant a partial exemption of not more than eighty
percent of impact fees, in which case there is no explicit requirement to pay the exempted portion of the
fee from public funds other than impact fee accounts; or provide a full waiver, in which case the remaining
percentage of the exempted fee must be paid from public funds other than impact fee accounts. An exemption
for low- income housing granted under subsection (2) of this section or this subsection (3) must be conditioned
upon requiring the developer to record a covenant that, except as provided otherwise by this subsection,
prohibits using the property for any purpose other than for low- income housing. At a minimum, the covenant
must address price restrictions and household income limits for the low- income housing, and that if the property
is converted to a use other than for low- income housing, the property owner must pay the applicable impact fees
in effect at the time of conversion. Covenants required by this subsection must be recorded with the applicable
county auditor or recording officer. A local government granting an exemption under subsection (2) of this
section or this subsection (3) for low- income housing may not collect revenue lost through granting an exemption
by increasing impact fees unrelated to the exemption. A school district who receives school impact fees must
approve any exemption under subsection (2) of this section or this subsection (3);
For purposes of this section, "low- income housing" means housing with a monthly housing expense, that is no
greater than thirty percent of eighty percent of the median family income adjusted for family size, for the county
where the project is located, as reported by the United States department of housing and urban development.
we
•m
Attachment B
MGmff
v
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, ESTABLISHING NEW REGULATIONS
TO REDUCE DEVELOPMENT AND LAND USE FEES FOR
CERTAIN - AFFORDABLE HOUSING PROJECTS, TO BE
CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTERS 16.04,
16.54, AND 18.88; PROVIDING FOR SEVERABILITY; AND
ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, while updating its Comprehensive Plan the City determined that Tukwila
has a shortage of housing affordable to larger families and-those households earning less
than the King County median income; and
WHEREAS, the housing shortage is especially acute for those households earning less
than 30% of the King County median income; and
WHEREAS, the City wishes to incentivize the development of affordable housing by
reducing City development and land use fees for selected projects; and
WHEREAS, the ordinance amendments are procedural in nature, and are therefore
categorically exempt from the State Environmental Policy Act (SEPA) review pursuant to
WAC 197-11-800(19);
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
W: Word Processing\Ordinances\Fee reductions for affordable housing 10-18-16
NG:bjs Page 1 of 5
91
Section 1. Regulations Established. Tukwila Municipal Code (TMC) Section
16.04.260, "Affordable Housing Fee Reductions," is hereby established to read as follows:
16.04.260 Affordable Housing Fee Reductions
Development permit fees for the construction or substantial improvement of dwelling units
may be reduced by the DCD Director. Development permits include building, mechanical,
electrical and plumbing permits. "Substantial improvement" is a repair, reconstruction or
rehabilitation of a building or structure the cost of which exceeds 50 percent of the building
or structure's assessed value. The property owner must request the reduction in writing
prior to permit submittal and when all of the following conditions are met:
1. Fee reduction table.
Unit Size
Affordability Target
Fee Reduction
2 or more bedrooms
80%2
40%
2 or more bedrooms
60%2
60%
Any size
50%2
80%
Units to be sold or rented to a person or household whose monthly housing
costs, including utilities other than telephone, do not exceed 30% of the
household's monthly income.
2 Percentage of King County Median family income adjusted for family size as
reported by the U.S. Department of Housing and Urban Development.
2. If the project contains a mix of dwelling units that qualify for fee reduction per
the table in subparagraph 1 above and units that do not qualify due to unit size or
expense, the fee reduction shall be pro-rated to reflect the proportion of low-income units
in the project.
3. If converted to market rate housing within 10 years of the issuance of the
Certificate of Occupancy, the full applicable permit fees at the time of conversion shall be
paid to the City.
4. If the project contains commercial tenant space that occupies more than 15%
of the building, along with dwelling units that qualify for fee reduction per the table in
subparagraph 1 above, the fee reduction shall be pro-rated to reflect the proportion of the
total building square footage occupied by the low-income units. Commercial spaces that
occupy less than 15% of the building are considered accessory and will not affect the fee
reduction.
W: Word Processing\Ordinances\Fee reductions for affordable housing 10-18-16
NG:bjs Page 2 of 5
92
Section 2. Regulations Established. TMC Section 16.54.110, "Affordable Housing
Fee Reductions," is hereby established to read as follows:
16.54.110 Affordable Housing Fee Reductions
Type C permit fees for the construction of dwelling units may be reduced by the Public
Works Director when requested in writing by the property owner prior to permit submittal
and when all of the following conditions are met:
Fee reduction table.
Unit Size
Affordability Target 1
Fee Reduction
2 or more bedrooms
80%2
40%
2 or more bedrooms
60%2
60%
Any size
50%2
80%
1 — Units to be sold or rented to a person or household whose monthly housing
costs, including utilities other than telephone, do not exceed 30% of the
household's monthly income.
2 — Percentage of King County Median family income adjusted for family size as
reported by the U.S. Department of Housing and Urban Development.
2. If the project contains a mix of dwelling units that qualify for fee reduction per
the table in subparagraph 1 above and units that do not qualify due to unit size or
expense, the fee reduction shall be pro -rated to reflect the proportion of low- income units
in the project.
3. If converted to market rate housing within 10 years of the issuance of the
Certificate of Occupancy, the full applicable permit fees at the time of conversion shall be
paid to the City.
4. If the project contains commercial tenant space that occupies more than 15%
of the building, along with dwelling units that qualify for fee reduction per the table in
subparagraph 1 above, the fee reduction shall be pro -rated to reflect the proportion of the
total building square footage occupied by the low- income units. Commercial spaces that
occupy less than 15% of the building are considered accessory and will not affect the fee
reduction.
W: Word Processing \Ordinances\Fee reductions for affordable housing 10 -18 -16
NG:bjs Page 3 of 5
93
Section 3. Regulations Established. TIVIC Section 18.88.020, "Affordable Housing
Fee Reductions," is hereby established to read as follows:
18.88.020 Affordable Housing Fee Reductions
Design review, reasonable use exception, platting, planned residential development,
SEPA, conditional use and shoreline permit fees for the entitlement of dwelling units may
be reduced by the DCD Director when requested in writing by the property owner prior to
permit submittal and when all of the following conditions are met:
Fee reduction table.
Unit Size
Affordability Target
Fee Reduction
2 or more bedrooms
80%2
40%
2 or more bedrooms
60%2
60%
Any size
50%2
80%
Units to be sold or rented to a person or household whose monthly housing
costs, including utilities other than telephone, do not exceed 30% of the
household's monthly income.
2 Percentage of King County Median family income adjusted for family size as
reported by the U.S. Department of Housing and Urban Development.
2. If the project contains a mix of dwelling units that qualify for fee reduction per
the table in subparagraph 1 above and units that do not qualify due to unit size or
expense, the fee reduction shall be pro-rated to reflect the proportion of low:-income units
in the project.
3. If converted to market rate housing within 10 years of the issuance of the
Certificate of Occupancy, the full applicable permit fees at the time of conversion shall be
paid to the City.
4. If the project contains commercial tenant space that occupies more than 15%
of the building, along with dwelling units that qualify for fee reduction per the table in
subparagraph 1 above, the fee reduction shall be pro-rated to reflect the proportion of the
total building square footage occupied by the low-income units. Commercial spaces that
occupy less than 15% of the building are considered accessory and will not affect the fee
reduction.
Section 4. Corrections by City Clerk or Code Reviser. Upon approval of the City
Attorney, the City Clerk and the code reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to other
local, state or federal laws, codes, rules, or regulations; or ordinance numbering and
section/subsection numbering.
W: Word Processing\Ordinances\Fee reductions for affordable housing 10-18-16
NG:bjs Page 4 of 5
M]
Section 5. Severability. If any section, subsection, paragraph, sentence, clause or
phrase of this ordinance or its application to any person or situation should be held to be
invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
Section 6. Effective Date. This ordinance or a summary thereof shall be published
in the official newspaper of the City, and shall take effect and be in full force five days
after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this — day of 12016.
ATTEST /AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Rachel B. Turpin, City Attorney
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
W: Word Processing\Ordinances\Fee reductions for affordable housing 10-18-16
NG:bjs
Page 5 of 5
95
U-9
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, ESTABLISHING REGULATIONS
FOR A RESIDENTIAL IMPACT FEE DEFERRAL, TO BE
CODIFIED IN TUKWILA MUNICIPAL CODE CHAPTERS 9.48,
16.26 AND 16.28; AMENDING AND/OR ADDING SECTIONS
IN EACH OF THE AFOREMENTIONED CHAPTERS
RELATING TO EXEMPTIONS AND DEFINITIONS (AMENDING
ORDINANCE NOS. 2366 §1 (PART), 2365 §1 (PART), 2305 §1
AND 2111 §1 (PART) AS DELINEATED; PROVIDING FOR
SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City of Tukwila ("City") is authorized by Chapter 82.02 RCW to
require new growth and development within the City to pay a proportionate share of the
cost of new facilities to serve such new growth and development through the
assessment of impact fees; and
WHEREAS, pursuant to such authority and the police powers of the City, the City
has enacted Chapters 9.48, 16.26 and 16.28 of the Tukwila Municipal Code to establish
such impact fees; and
WHEREAS, the current impact fee provisions provide flexibility for developers by
staggering some payments for various impact fees, which creates an administrative
burden on City staff; and
WHEREAS, the State recently amended RCW 82.02.050, requiring that all
counties, cities, and towns provide a mechanism for which impact fees for single-family
detached and single-family attached residential construction may be deferred to either
final inspection, issuance of a Certificate of Occupancy or equivalent certification, or the
closing of the first sale of the property; and
WHEREAS, the City desires to encourage new growth and development in the City,
to ease the financial burden on individual home builders, and to promote economic
recovery in the construction industry, and finds that adopting an impact fee deferral
mechanism provides the needed flexibility on the timing of impact fee payments and is
in the public interest; and
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 1 of 15
WA
WHEREAS, City staff has proposed the addition of a new Tukwila Municipal Code
section entitled "Exemptions" (Section 9.48.120) for transportation impact fees, while
similar sections currently exist in Tukwila Municipal Code Chapters 16.26, "Fire Impact
Fees," and 16.28, "Parks Impact Fees"; and
WHEREAS, the ordinance amendments are procedural in nature, and are therefore
categorically exempt from the State Environmental Policy Act (SEPA) review pursuant
to WAC 197-11-800(19);
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. TMC Section 9.48.020 Amended. Ordinance Nos. 2305 §1 and 2111
§1 (part), as codified at Tukwila Municipal Code (TMC) Section 9.48.020, "Definitions,"
is hereby amended to read as follows:
9.48.020 Definitions
The words and terms contained in this chapter shall have the following meanings for the
purposes of this chapter, unless the context clearly requires otherwise. Terms or words
not defined herein shall be defined pursuant to RCW 82.02.090 when given their usual
and customary meaning.
1. The "Act" means the Growth Management Act, Chapter 17, Laws of 1990,
First Extraordinary Session, Chapter 36.70A RCW et seq., and Chapter 32, Laws of 1991,
First Special Session, as now in existence or hereinafter amended.
2. "Building permit" means an official document or certification of the City of
Tukwila issued by the City's building official which authorizes the construction, alteration,
enlargement, conversion, reconstruction, remodeling, rehabilitation, erection, placement,
demolition, moving, or repair of a building or structure.
3. "City" means the City of Tukwila, Washington.
4. "Development" means the construction, reconstruction, conversion, structural
alteration, relocation or enlargement of any structure that requires a building permit.
5. "Development activity" means any construction of a building or structure that
creates additional demand and need for transportation facilities.
6. "Development approval" means any written authorization from the City, which
authorizes the commencement of the "development activity."
97. "Fee payer" is a person, corporation, partnership, an incorporated association
or governmental agency, municipality, or similar entity commencing a land development
activity, which requires a building permit and creates a demand for additional facilities.
P8. "Impact fee" means the payment of money imposed by the City on
development activity pursuant to this chapter as a condition of granting development
approval, in order to pay for the transportation facilities needed to serve new growth and
development that is a proportionate share of the cost of the capital facilities that is used for
facilities that reasonably benefit new development. Impact fees are independent of a
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 2 of 15
M
permit fee, an application fee, a concurrency test fee, and the administrative fee for
collecting and handling impact fees or cost of reviewing independent fee calculations.
79. "Letter encumbered" means to reserve, set aside, or earmark the impact fees
in order to pay for commitments, contractual obligations, or other liabilities incurred for the
provision of transportation facilities.
10. "Low-income housina" means housina where monthiv costs, includ
utilities other than telephone, do not exceed 30% of the resident's household monthly
income and where household monthly income must be 80 percent or less of the King
County Median family income adjusted for family size as reported by the U.S.
Department of Housing and Urban Development.
4011. "Owner" means the owner of record of real property, as found in the
records of King County, Washington, or a person with an unrestricted written option to
purchase property; provided, that if the real property is being purchased under a recorded
real estate contract, the purchaser shall be considered the owner of the property.
4412. "Proportionate fair share" means that portion of the cost for transportation
facility improvements that are reasonably related to the service demands and needs of
new development.
Section 2. Regulations Established. TIVIC Section 9.48.125, "Exemptions," is
hereby established to read as follows:
9.48.125 Exemptions
A. The impact fees are generated from the formula for calculating the fees as set
forth in this chapter. The amount of the impact fees is determined by the information set
forth in the Public Works Fee Schedule adopted by resolution of the City Council and
related documents. All development activity located within the City shall be charged a
transportation impact fee, provided that the following exemptions shall apply._
B. The following shall be exempt from transportation impact fees:
1. Replacement of a structure with a new structure having the same use, at
the same site and with the same gross floor area, when such replacement is within 12
months of demolition or destruction of the previous structure.
2. Alteration, expansion, or remodeling of an existing dwelling or structure
where no new units are created and the use is not changed.
3. Construction of an accessory residential structure.
4. Miscellaneous improvements including, but not limited to, fences, walls,
swimming pools and signs that do not impact the transportation sVstem.
5. Demolition of or moving an existing structure within the City from one site
to another.
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 3 of 15
we
6. Transportation impact fees for the construction of low-income housing may
be reduced at the discretion of the Public Works Director when requested by the
property owner in writing prior to permit submittal and subject to the following criteria:
a. Submittal of a fiscal impact analysis of how a reduction in impact fees
for the Droiect would contribute to the creation of low-income housina:
Fee reduction table.
Unit Size
Affordability Target'
Fee Reduction
2 or more bedrooms
80%2
40%
2 or more bedrooms
60%2
60%
Any si ze
50%2
80%
Units to be sold or rented to a person or household whose monthly housing
costs, including utilities other than telephone, do not exceed 30% of the
household's monthly income.
2 Percentage of King County Median family income adjusted for family size as
reported by the U.S. Department of Housing and Urban Development.
c. The developer must record a covenant per RCW 82.02.060 (3) that
prohibits using the property for any purpose other than for low-income housing at the
original income limits for a period of at least 10 years. At a minimum, the covenant
must address price restrictions and household income limits for the low-income housing,
and that if the property is converted to a use other than low-income housing within 10
vears. the DrOlDertv owner must pav the Citv the applicable impact fees in effect at the
time of conversion.
7. Change of Use. A development permit for a change of use that has less
impact than the existing use shall not be assessed a transportation impact fee.
8. A fee Paver required to pay for system improvements pursuant to RCW
43.21C.060 shall not be required to pay an impact fee for the same improvements
under this ordinance.
Section 3. Regulations Established. TIVIC Section 9.48.130, "Residential Impact
Fee Deferral," is hereby established to read as follows:
9.48.130 Residential Impact Fee Deferral
A. Purpose. The purpose of this chapter is to comply with the requirements of
RCW 82.02.050, as amended by ES135923, Chapter 241, Laws of 2015, to provide an
impact fee deferral process for single- family -residential construction in order to promote
economic recovery in the construction industry.
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 4 of 15
100
10-JIM =I. -
1. The provisions of this chapter shall apply to all impact fees established and
adopted by the City pursuant to Chapter 82.02 RCW, including transportation system
impact fees assessed under Tukwila Municipal Code Chapter 9.48.
2. Subject to the limitations imposed in the Tukwila Municipal Code, the
provisions of this chapter shall apply to all building permit applications for single - family
detached and single- family attached residential construction. For the purposes of this
chapter, an "applicant" includes an entity that controls the named applicant, is controlled
by the named applicant. or is under common control with the named applicant.
C. Impact Fee Deferral.
1. Deferral Request Authorized. Applicants for single-family attached or
single-family detached residential building permits may request to defer payment of
required impact fees until the sooner of:
a. final inspection; or
b. the closing of the first sale of the property occurring after the issuance
of the applicable building permit;
which request shall be granted so long as the requirements of this chapter are
satisfied.
2. Method of Request. A request for impact fee deferral shall be declared at
the time of preliminary plat application (for platted development) or building permit
application (for non-platted development) in writing on a form or forms provided by the
City, along with applicable application fees.
3. Calculation of Impact Fees. The amount of impact fees to be deferred
under this chapter shall be determined as of the date the request for deferral is
submitted.
D. Deferral Term. The term of an impact fee deferral granted under this chapter
may not exceed 18 months from the date the building permit is issued ("Deferral Term').
If the condition triggering payment of the deferred impact fees does not occur prior to
the expiration of the Deferral Term, then full payment of the impact fees shall be due on
the last date of the Deferral Term.
E. Deferred Impact Fee Lien.
1. Applicant's Duty to Record Lien. An applicant requesting a deferral under
this chapter must grant and record a deferred impact fee lien, in an amount equal to the
deferred impact fees, against the property in favor of the City in accordance with the
requirements of RCW 82.02.050(3)(c).
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 5 of 15
101
2. Satisfaction of Lien. Upon receipt of final payment of all deferred impact
fees for the property, the City shall execute a release of deferred impact fee lien for the
property. The property owner at the time of the release is responsible, at his or her own
exr)ense, for recordina the lien release.
F. Limitation on Deferrals. The deferral entitlements allowed under this chapter
shall be limited to the first 20 single-family residential construction building permits per
applicant, as identified by contractor registration number or other unique identification
number, per year.
Section 4. TMC Section 16.26.030 Amended. Ordinance No. 2365 §1 (part), as
codified at TIVIC Section 16.26.030, "Definitions," is hereby amended to read as follows:
16.26.030 Definitions
Terms or words not defined herein shall be defined pursuant to RCW 82.02.090 when
given their usual and customary meaning. For the purposes of this ordinance, unless
the context or subject matter clearly requires otherwise, the words or phrases defined in
this section shall have the following meanings:
1. "Building permit" means an official document or certification of the City of
Tukwila issued by the City's building official which authorizes the construction,
alteration, enlargement, conversion, reconstruction, remodeling, rehabilitation, erection,
placement, demolition, moving, or repair of a building or structure.
2. "City" means the City of Tukwila, Washington, County of King.
3. "Development activity" means any construction, reconstruction, or
expansion of a building, structure, or use, or any changes in use of a building or
structure, or any changes in the use of land, requiring development approval.
4. "Development approval" means any written authorization from the City,
which authorizes the commencement of the "development activity."
5. "Encumber" means to reserve, set aside, or earmark the fire impact fees in
order to pay for commitments, contractual obligations, or other liabilities incurred for the
provision of fire protective services.
6. "Fee payer" is a person, corporation, partnership, an incorporated
association or governmental agency, municipality, or similar entity commencing a land
development activity that requires a building permit and creates a demand for additional
fire capital facilities.
4-07. "Fire protection facilities" means all publicly owned apparatus and
buildings within the City that are used for fire protection and/or emergency response
and aid.
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 6 of 15
102
7�8. "Impact fee" means the payment of money imposed by the City on
development activity pursuant to this ordinance as a condition of granting development
approval in order to pay for the fire facilities needed to serve growth and development
that is a proportionate share of the cost of fire capital facilities used for facilities that
reasonably benefit development. Impact fees do not include reasonable permit fees,
application fees, administrative fees for collecting and handling fire impact fees, or the
cost of reviewing independent fee calculations.
9. "Low-income housinq" means housing where monthly costs, including
utilities other than telephone, do not exceed 30% of the resident's household monthly
income and where household monthly income must be 80 percent or less of the King
County Median family income adjusted for family size as reported by the U.S.
Department of Housing and Urban Development.
910. "Owner" means the owner of record of real property, as found in the
records of King County, Washington, or a person with an unrestricted written option to
purchase property; provided, that if the real property is being purchased under a
recorded real estate contract, the purchaser shall be considered the owner of the
property.
911. "Proportionate share" means that portion of the cost for fire facility
improvements that are reasonably related to the service demands and needs of
development.
Section 5. TIVIC Section 16.26.120 Amended. Ordinance No. 2365 §1 (part), as
codified at TIVIC Section 16.26.120, "Exemptions," is hereby amended to read as
follows:
16.26.120 Exemptions
A. The fire impact fees are generated from the formula for calculating the fees as
set forth in this ordinaRGe chapter. The amount of the impact fees is determined by the
information contained in the adopted fire department master plan and related
documents, as appended to the City's Comprehensive Plan. All development activity
located within the City shall be charged a fire impact fee, provided that the following
exemptions shall apply. Any development activity or projeGt whiGh has submitted a
teGhRiGally GOMplete building permit appliGation prior to the effeGtive date of this
E)FdinaRGe shall be exempt from the payment of fire impact fees.
B. The following shall be exempt from fire impact fees:
1. Replacement of a structure with a new structure having the same use, at
the same site, and with the same gross floor area, when such replacement is within 12
months of demolition or destruction of the previous structure.
2. Alteration, expansion, or remodeling of an existing dwelling or structure
where no new units are created and the use is not changed.
3. Construction of an accessory residential structure.
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 7 of 15
103
4. Miscellaneous improvements including, but not limited to, fences, walls,
swimming pools, and signs that do not create an increase in demand for fire services.
Demolition of or moving an existing structure within the City from one site
to another.
SPEMI
will. ......
1. -
0. g HUMNAM.— ffl Imol I N WNN.Ir � OVIAN • fram"M "MIM"Mm
.l
b. Submittal of adequate dOGUmentatien showing that housing will Fem
epj.-V"�aIn f&r 4 ► - ?�! F S
�rc,� t he ent
gjs :- Car n-94-pn-ar -&,nri,rpa� • fi--affla n nIV
• " 2. -1 -V K� M.. ..
. ..........
.711
...... ... . .......... . .....
6. Fire impact fees for the construction of low-income housing may be
reduced at the discretion of the Fire Chief when requested by the property owner in
writing prior to permit submittal and subject to the following criteria:
a. Submittal of a fiscal impact analysis of how a reduction in impact fees
for the project would contribute to the creation of low-income housing;
b. Fee reduction table.
Unit Size
Affordability Target
Fee Reduction
2 or more bedrooms
80%2
40%
2 or more bedrooms
60%2
60%
Any size
50%2
80%
Units to be sold or rented
to a person or household whose monthly housing
costs, including utilities other than telephone, do not exceed 30% of the
household's monthly income.
2 Percentage of King County Median family income adjusted for family size as
reported by the U.S.
Department of Housing and Urban Development.
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 8 of 15
104
c. The developer must record a covenant per RCW 82.02.060 (3) that
prohibits using the property for any purpose other than for low-income housing at the
original income limits for a period of at least 10 years. At a minimum, the covenant
must address price restrictions and household income limits for the low-income housim
and that if the property is converted to a use other than low-income housing within 10
years, the property owner must pay the City the applicable impact fees in effect at the
time of conversion.
7. Change of Use. A development permit for a change of use that has less
impact than the existing use shall not be assessed a fire impact fee.
8. A fee payer required to pay for system improvements pursuant to RCW
43.21C.060 shall not be required to pay an impact fee for the same improvements
under this ordinance.
9. A fee payer installing a residential fire sprinkler system in a single family
home shall not be required to pay the fire operations portion of the impact fee. The
exempted fire operations impact fee shall not include the proportionate share related to
the delivery of emergency medical services.
Section 6. Regulations Established. TIVIC Section 16.26.125, "Residential
Impact Fee Deferral," is hereby established to read as follows:
16.26.125 Residential Impact Fee Deferral
A. Purpose. The purpose of this chapter is to comply with the requirements of
RCW 82.02.050, as amended by ES135923, Chapter 241, Laws of 2015, to provide an
impact fee deferral process for single-family residential construction in order to promote
economic recovery in the construction industry.
Me - rMO11nrj
1. The provisions of this chapter shall apply to all impact fees established and
adopted by the City pursuant to Chapter 82.02 RCW, including impact fees for fire
facilities assessed under Tukwila Municipal Code Chapter 16.26.
2. Submect to the limitations imposed in the Tukwila Municipal Code, the
provisions of this chapter shall apply to all building permit applications for single-family
detached and single - family attached residential construction. For the purposes of this
chapter, an "applicant" includes an entity that controls the named applicant, is controlled
by the named applicant, or is under common control with the named applicant.
C. Impact Fee Deferral.
1. Deferral Request Authorized. Applicants for single - family attached or
single-family detached residential building permits may request to defer payment of
required impact fees until the sooner of:
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 9 of 15
105
a. final inspection-, or
b. the closing of the first sale of the property occurring after the issuance
of the applicable building permit.-
which request shall be granted so long as the requirements of this chapter are
satisfied.
2. Method of Request. A request for impact fee deferral shall be declared at
the time of preliminary plat application (for platted development) or building permit
application (for non-platted development) in writing on a form or forms provided by the
City, along with applicable application fees.
3. Calculation of Impact Fees. The amount of impact fees to be deferred
under this chapter shall be determined as of the date the request for deferral is
submitted.
D. Deferral Term. The term of an impact fee deferral granted under this chapter
may not exceed 18 months from the date the building permit is issued ("Deferral Term").
If the condition triggering payment of the deferred impact fees does not occur prior to
the expiration of the Deferral Term, then full payment of the impact fees shall be due on
the last date of the Deferral Term.
E. Deferred Impact Fee Lien.
1. Applicant's Duty to Record Lien. An applicant requesting a deferral under
this chapter must grant and record a deferred impact fee lien, in an amount equal to the
deferred impact fees, against the property in favor of the City in accordance with the
requirements of RCW 82.02.050(3)(c).
2. Satisfaction of Lien. Upon receipt of final payment of all deferred impact
fees for the propertV, the City shall execute a release of deferred impact fee lien for the
property. The propertV owner at the time of the release is responsible, at his or her own
expense, for recording the lien release.
F. Limitation on Deferrals. The deferral entitlements allowed under this chapter
shall be limited to the first 20 single-family residential construction building permits per
applicant, as identified by contractor registration number or other unique identification
number, per year.
Section 7. TMC Section 16.28.030 Amended. Ordinance No. 2366 §1 (part), as
codified at TIVIC Section 16.28.030, "Definitions," is hereby amended to read as follows:
16.28.030 Definitions
Terms or words not defined herein shall be defined pursuant to RCW 82.02.090 when
given their usual and customary meaning. For the purposes of this ordinance, unless
the context or subject matter clearly requires otherwise, the words or phrases defined in
this section shall have the following meanings:
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 10 of 15
106
1. 'Building permit" means an official document or certification of the City of
Tukwila issued by the City's building official which authorizes the construction,
alteration, enlargement, conversion, reconstruction, remodeling, rehabilitation, erection,
placement, demolition, moving, or repair of a building or structure.
2. "City" means the City of Tukwila, Washington, County of King.
3. "Development activity" means any construction, reconstruction, or
expansion of a building, structure, or use, or any changes in use of a building or
structure, or any changes in the use of land, requiring development approval.
4. "Development approval" means any written authorization from the City,
which authorizes the commencement of the "development activity."
5. "Encumber" means to reserve, set aside, or earmark the parks impact fees
in order to pay for commitments, contractual obligations, or other liabilities incurred for
the provision of parks services.
6. "Fee payer" is a person, corporation, partnership, an incorporated
association or governmental agency, municipality, or similar entity commencing a land
development activity that requires a building permit and creates a demand for additional
parks capital facilities.
7. "Impact fee" means the payment of money imposed by the City on
development activity pursuant to this ordinance as a condition of granting development
approval in order to pay for the parks facilities needed to serve growth and development
that is a proportionate share of the cost of parks capital facilities used for facilities that
reasonably benefit development. Impact fees do not include reasonable permit fees,
application fees, administrative fees for collecting and handling parks impact fees, or the
cost of reviewing independent fee calculations.
8. "Low-income housing" means housing where monthly costs, including
utilities other than telephone, do not exceed 30% of the resident's household monthly
income and where household monthly income must be 80 percent or less of the King
County Median family income adjusted for family size as reported by the U.S.
Department of Housing and Urban Development.
99. "Owner" means the owner of record of real property, as found in the
records of King County, Washington, or a person with an unrestricted written option to
purchase property; provided, that if the real property is being purchased under a
recorded real estate contract, the purchaser shall be considered the owner of the
property.
10. "Parks facilities" means those capital facilities identified as park and
recreational facilities in the City's Capital Facilities Plan.
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 11 of 15
107
-911. "Proportionate share" means that portion of the cost for parks facility
improvements that are reasonably related to the service demands and needs of
development.
Section 8. TMC Section 16.28.120 Amended. Ordinance No. 2366 §1 (part), as
codified at TIVIC Section 16.28.120, "Exemptions," is hereby amended to read as
follows:
16.28.120 Exemptions
A. The parks impact fees are generated from the formula for calculating the fees
as set forth in this erdinanGe_qhater. The amount of the impact fees is determined by
the information contained in the adopted parks master plan and related documents, as
appended to the City's Comprehensive Plan. All development activity located within the
City shall be charged a parks impact fee, provided that the following exemptions shall
apply. Any development aGtiVity or prejeGt whiGh has submitted a techniGally Gomp!
building permit appliGation prior to the effeGtive date of this ordinaRGe shall be exempt
from the payment of parks impaGt fees.
B. The following shall be exempt from parks impact fees:
1. Replacement of a structure with a new structure having the same use, at
the same site, and with the same gross floor area, when such replacement is within 12
months of demolition or destruction of the previous structure.
2. Alteration, expansion, or remodeling of an existing dwelling or structure
where no new units are created and the use is not changed.
3. Construction of an accessory residential structure.
4. Miscellaneous improvements including, but not limited to, fences, walls,
swimming pools, and signs that do not create an increase in demand for parks services.
5. Demolition of or moving an existing structure within the City from one site
to another.
6. Low inGGme housing developed by individuals, nORPrOfit GGIFpGrations, or-a
housing authority may be exempted from impaGt fees at the diSGFetieR Of City S
subjeGt t(Y-
a. Submittal of a fiscal impaGt analysis of the effeGt of impaGt fees up
IGW iRGGme heusing and hew exempting SUGh housing frem impaGt fees uld forward
the goals fer low in e housing in the City and Kong GGURty;
b. Submi#al of adequate GUmentation showing that the housing will
remain available for low iRGerne persons for a 10 year period ef time at affordable
and
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 12 of 15
WIN
6. Parks impact fees for the construction of low-income housing may be
reduced at the discretion of the Parks and Recreation Director when requested by the
property owner in writing prior to permit submittal and subject to the following criteria:
a. Submittal of a fiscal impact analysis of how a reduction in impact fees
for the project would contribute to the creation of low-income housing;
b. Fee reduction table.
Unit Size
Affordability Target
M6
2 or more bedrooms
80%2
40%
....... . .....
A,. L-911 III 1 0
AV VNV;q1.V V�FOM- gjZlar A r ART V
4
I A A
M.
m[Agn
6. Parks impact fees for the construction of low-income housing may be
reduced at the discretion of the Parks and Recreation Director when requested by the
property owner in writing prior to permit submittal and subject to the following criteria:
a. Submittal of a fiscal impact analysis of how a reduction in impact fees
for the project would contribute to the creation of low-income housing;
b. Fee reduction table.
Unit Size
Affordability Target
Fee Reduction
2 or more bedrooms
80%2
40%
2 or more bedrooms
60%2
60%
Any size
50%2
80%
Units to be sold or rented to a person or household whose monthly housing
1
costs, including utilities other than telephone, do not exceed 30% of the
household's monthly income.
2 — Percentage of King County Median family income adjusted for family size as
reported by the U.S. Department of Housing and Urban Development.
c. The developer must record a covenant per RCW 82.02.060 (3) that
prohibits using the property for any purpose other than for low-income housing at the
original income limits for a period of at least 10 years. At a minimum, the covenant
must address price restrictions and household income limits for the low-income housing,
and that if the property is converted to a use other than low-income housing within 10
vears. the property owner must pav the City the applicable impact fees in effect at the
time of conversion
7. Change of Use. A development permit for a change of use that has less
impact than the existing use shall not be assessed a parks impact fee.
8. A fee payer required to pay for system improvements pursuant to RCW
43.21C.060 shall not be required to pay an impact fee for the same improvements
under this ordinance.
Section 9. Regulations Established. TIVIC Section 16.28.125, "Residential
Impact Fee Deferral," is hereby established to read as follows:
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 13 of 15
WIR
16.28.125 Residential Impact Fee Deferral
A. Purpose. The purpose of this chapter is to comply with the requirements of
RCW 82.02.050, as amended by ESB5923, Chapter 241, Laws of 2015, to provide an
impact fee deferral process for single-family residential construction in order to promote
economic recovery in the construction industry.
-
..
1. The provisions of this chapter shall apply to all impact fees established and
adopted by the City pursuant to Chapter 82.02 RCW, including parks impact fees
assessed under Tukwila Municipal Code Chapter 16.28.
2. Subject to the limitations imposed in the Tukwila Municipal Code, the
provisions of this chapter shall apply to all building permit applications for single- family
detached and single- family attached residential construction. For the purposes of this
chapter, an "applicant" includes an entity that controls the named applicant, is controlled
by the named applicant, or is under common control with the named applicant.
C. Impact Fee Deferral.
1. Deferral Request Authorized. Applicants for single-family attached or
single-family detached residential building permits may request to defer payment of
required impact fees until the sooner of:
a. final inspection; or
b. the closing of the first sale of the property occurring after the issuance
of the applicable building permit;
which request shall be granted so long as the requirements of this chapter are
satisfied.
2. Method of Request. A request for impact fee deferral shall be declared at
the time of preliminary plat application (for platted development) or building permit
application (for non-platted development) in writing on a form or forms provided by the
CitV, along with applicable application fees.
3. Calculation of Impact Fees. The amount of impact fees to be deferred
under this chapter shall be determined as of the date the request for deferral is
submifted.
D. Deferral Term. The term of an impact fee deferral granted under this chapter
may not exceed 18 months from the date the building permit is issued ("Deferral Term').
If the condition triggering payment of the deferred impact fees does not occur prior to
the expiration of the Deferral Term, then full payment of the impact fees shall be due on
the last date of the Deferral Term.
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs Page 14 of 15
110
E. Deferred Impact Fee Lien.
1. Applicant's Duty to Record Lien. An applicant requesting a deferral under
this chapter must grant and record a deferred impact fee lien, in an amount equal to the
deferred impact fees, against the property in favor of the City in accordance with the
requirements of RCW 82.02.050(3)(c).
2. Satisfaction of Lien. Upon receipt of final payment of all deferred impact
fees for the property, the City shall execute a release of deferred impact fee lien for the
property. The property owner at the time of the release is responsible, at his or her own
expense, for recording the lien release.
F. Limitation on Deferrals. The deferral entitlements allowed under this chapter
shall be limited to the first 20 single-family residential construction building permits per
applicant, as identified by contractor registration number or other unique identification
number, per year.
Section 10. Corrections by City Clerk or Code Reviser. Upon approval of the
City Attorney, the City Clerk and the code reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to
other local, state or federal laws, codes, rules, or regulations; or ordinance numbering
and section/subsection numbering.
Section 11. Severability. If any section, subsection, paragraph, sentence, clause
or phrase of this ordinance or its application to any person or situation should be held to
be invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
Section 12. Effective Date. This ordinance or a summary thereof shall be
published in the official newspaper of the City, and shall take effect and be in full force
five days after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of 12016.
ATTEST/AUTH E NTI CATE D:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Rachel B. Turpin, City Attorney
Allan Ekberg, Mayor
Filed with the City Clerk:—
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
W: Word Processing\Ordinances\ResidentiaI impact fee deferral 10-20-16
BG:bjs
Page 15 of 15
111
112
City of Tukwila
Allan Ekberg, Mayor
TO: Community Affairs and Parks Committee
FROM: Nora Gierloff, DCD Deputy Director
CC: Mayor Ekberg
DATE: November 9, 2016
SUBJECT: Multi- Family Tax Exemption Discussion
ISSUE
Should Tukwila's Multi - Family Tax Exemption (MFTE) program be continued, expanded or revised?
BACKGROUND
The City Council adopted the MFTE program via Ordinance 2462 on December 1, 2014 with a sunset
date of December 31, 2016. Under Washington State law (RCW 84.14) new or remodeled residential
buildings meeting specific criteria may be exempted from paying property taxes for 8 or 12 years.
Market rate projects may apply for the 8 -year exemption while the 12 -year exemption requires that at
least 20 percent of the units be available to low and moderate income households. Various cities such
as Seattle, SeaTac and Bremerton have MFTE programs. Cities may adopt additional eligibility
criteria.
Under Tukwila's current rules residential units must meet the following criteria to be eligible for
exemption:
1. Be located within the "residential target area," which is defined as that portion of the TUC -
TOD Zone of the Southcenter District that lies west of the Green River (see Attachment A);
2. The units must be in a residential or mixed -use structure containing at least four dwelling
units;
3. The units in the project must average at least 500 square feet;
4. A minimum of 15 percent of the units must be at least 900 square feet and contain at least two
bedrooms;
5. The units must be designed and used for permanent residential occupancy (thus, hotels and
motels are not eligible);
6. The units must meet additional criteria related to private bathrooms and kitchens, meeting
zoning and other code requirements, meetingtime limits, and the mix and configuration of
any affordable units must be configured proportional to the mix of units (e.g. number of
bedrooms).
Tukwila's MFTE was adopted to incentivize residential development in the Southcenter District and
Washington Place, the City's first residential high rise, has applied for the eight -year exemption.
Unless extended via Council action, this incentive will sunset for new applicants at the end of this
calendar year.
113
INFORMATIONAL MEMO
Page 2
DISCUSSION
CAP has requested a discussion of future options for extending and expanding the MFTE. It may be
helpful to frame the discussion in terms of:
What households are we trying to help? For example, what household income levels? What
size of households? Renters and /or owners?
MFTE could be used as an incentive to create more affordable housing. The minimum
requirements for the 12 -year exemption are quite modest, 20% of units available to renters or
buyers earning 80 -150% of area median income (AMI). The City has the ability under state law
to set the affordability threshold and could lower it to encourage affordable housing for
families on the lower end of the AMI scale.
Setting limits on the unit mix, minimum square footage or number of bedrooms for all orjust
affordable units would help fill the gaps in the City's housing stock. The concern in the past
was that studio and 1 bedroom units are generally more profitable per square foot than larger
units but contribute less to neighborhood stability and meeting the need for family sized
housing. Tukwila could set different criteria for different areas of the City.
2. What geographic areas are we trying to affect? For example, are we trying to stimulate
development in certain parts of Tukwila or everywhere?
• The program has helped to support one pioneer project in the TUC -TOD but the
Comprehensive Plan calls for even more residential development there. We have received
interest from other multi - family housing developers and, at this time, we don't know if a
property tax exemption is necessary to attract more housing in this area.
• Another target area could be created in the Tukwila International Boulevard neighborhood.
This could be a tool to incentivize new urban scale affordable housing development near the
light rail station.
3. What sort of built environment are we trying to achieve? For example, are we trying to
upgrade existing buildings or do we want to encourage new construction?
Some cities allow existing buildings to be upgraded, with the added value of the
improvements exempt from property tax. MFTE could be a tool to improve the poor housing
conditions found in some of Tukwila's older apartment buildings while preserving that
existing affordable housing.
On TIB the incentive could be limited to only buildings that replace older buildings. To prevent
displacement of existing tenants, the property owner could be required to adequately
relocate them. The new building could be required to provide more units than the demolished
building with at least the same number of affordable units as were previously there.
114 Z: \Council Agenda Items \DCD \MFTE Discussion \11 -14.16 CAP MFTE.doc
INFORMATIONAL MEMO
Page 3
FINANCIAL IMPACT
If an MFTE qualified project was built on a vacant site the City, school district and other taxing districts
would not receive property tax revenue for the project during the tax exemption period. If a currently
taxable building was demolished and replaced with a building that qualifies for the MFTE then
revenues would actually decrease during the tax exemption period by the amount the existing
building had paid.
RECOMMENDATION
Information and discussion only. If there is interest in pursuing a new MFTE ordinance staff will
develop language and return with a draft in 2017.
ATTACHMENTS
A. Map of Current MFTE Targeted Residential Area
B. Comprehensive Plan Policy Relevant to MFTE Discussion
Z:1Council Agenda Items \DCD \MFTE Discussion \11 -14 -16 CAP MFTE.doc
115
116
- - --------
MUM 3-1
I of Tukwila
Iti-Family Property Tax Exemption
;idential Targeted Area
ITarget Parcels
ingCode
j TUC-TOD Zone
XEM
117
118
Comprehensive Plan Policy Relevant to the MFTE Discussion
Housing Element
GOAL 3.2 The City of Tukwila has safe, healthy and affordable homes for all residents in Tukwila.
3.2.4 Work with the owners and managers of Tukwila's new and existing permanent or long -term low -
income housing to maximize desirability, long -term affordability, and connection with the
community.
3.2.5 Develop affordable housing preservation programs and strategies, including prevention of the
displacement of low - income households in areas of redevelopment.
• Develop specific statements regarding location,.type and characteristics of desired housing
affordable to a variety of incomes, for presenting to local for - profit and non - profit developers.
• Partner with non - profit organizations and for - profit developers to acquire, rehabilitate,
construct, preserve and maintain permanent affordable housing and support services.
• Explore and develop incentive zoning, a housing trust fund, density bonuses, parking
exemptions, deferred or reduced payment of impact fees, multi- family tax exemptions, and /or
other tools to develop or maintain affordable housing that meets the needs of the community,
specifically units sized and priced for low- and very- low - income residents.
GOAL 3.3 The City of Tukwila supports and collaborates with other jurisdictions and organizations to
assess. housing needs, coordinate funding, and preserve and create affordable housing opportunities.
3.3.2 Ina "State of Housing" report, periodically review regional low - income housing goals to
evaluate the City's compliance with regional standards and to ensure that the City's affordable
housing units are being preserved and maintained. Adjust policies as needed if affordable
housing goals are not being met.
3.3.3 Continue supporting very low -, low- and moderate - income housing as defined by King County
income levels, to address the Countywide need by supporting regional affordable housing
development and preservation efforts.
GOAL 3.4 The City of Tukwila has an improved and continually improving housing stock in support of
enhanced neighborhood quality.
3.4.2 Continue to support the maintenance, weatherization, rehabilitation, and long -term
preservation or replacement of existing housing for low- and moderate - income residents.
• Explore partnerships with non - profits to facilitate the purchase and upgrade of poorly
maintained rental housing.
Attachment B
119
Tukwila International Boulevard District Element
GOAL 8.8 The TIB District has stable neighborhoods, and residents and businesses that are actively
engaged in improving the quality of life in the area.
8.8.1 Encourage private landowners to maintain and upgrade their property to protect the
neighborhood from adverse impacts of vacant and underutilized sites and blighted buildings
and structures.
GOAL 8.10 Public and private investment in the TIB District has sparked additional project and
business success and increased the overall pace of redevelopment.
8.10.5 Utilize developer incentives and funding strategies that would attract uses desired by the
community, improve a project's performance, and make redevelopment financially attractive
to developers.
• Explore adopting a variety of development incentives and funding tools, such as the
Multifamily Tax Exemption program for residential and residential /mixed -use projects; Land
Conservation and Local Infrastructure Program (LCLIP) through Transfer of Development
Rights (TDR) to add density, preserve developable open space, and fund infrastructure
needed for development; pioneer project provisions; access to alternative financing including
EB5 and New Market Tax Credits; transportation, concurrency adjustments; and developer
agreements.
Southcenter District Element
GOAL 10.1 LAND USE Southcenter will contain an intense, diverse mix of uses, which will evolve over
time. The character and pace of this change will be set by a combination of guidelines, regulations,
incentives, market conditions, and proactive private /public actions, which will reinforce existing
strengths and open new opportunities. The desire for a high - quality environment for workers, visitors
and residents will also drive this character transition.
10.1.4 Tukwila Urban Center (Southcenter) Residential Uses. To preserve Tukwila's existing
residential neighborhoods and to provide a diverse set of housing alternatives and locations,
a large percentage of the City's future housing needs will be accommodated in the urban
center. Residential development is encouraged in proximity to water amenities or within
walking distance of the Sounder commuter rail /Amtrak station or the bus transit center,
subject to design standards and incentives.
120
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Community Affairs and Parks Committee
FROM: Derek Speck, Economic Development Administrator
CC: Mayor Ekberg
DATE: November 9, 2016
SUBJECT: Developer Selection Process for Motel Site
ISSUE
City staff is seeking Council approval of a process to select a developer for the four parcels of
land the City owns at 14420, 14440, 14442, and 14452 Tukwila International Boulevard.
BACKGROUND
In 2014 and 2015 the City purchased the Great Bear Motel, Boulevard Motel, Spruce Motel, and
Sam Smoke Shop properties located at 14420, 14440, 14442, and 14452 Tukwila International
Boulevard to reduce crime and revitalize the neighborhood. In 2016 the buildings were
demolished and the land is now vacant. At the time of the acquisition the City had planned to
sell the properties and currently has budgeted the sale to occur in 2018.
Recently the City received letters from two organizations, El Centro de la Raza and HealthPoint,
expressing interest in purchasing the properties. The letters are attached and provide a
description of the organizations' proposed development of the site. Both organizations have
expressed a desire to seek funding for their proposed development from Washington State in
the 2017-18 biennium, which starts this January. HealthPoint anticipates the State funding
could be as much as $3 million. They believe that an organization would need to have been
selected by the City to begin negotiations in order to be competitive for State funding.
DISCUSSION
This staff report is not requesting a Council decision on whether to select either of the two
organizations. The key questions at this time are whether to start a developer selection process
and on what schedule. If the Council approves a developer selection process then staff would
invite statements of interest from all organizations, evaluate them, and bring them back to the
Council for a decision on whether to select one.
Even if the City starts a selection process, the Council is not required to select any of the
applicants. Further, even if the Council selects an application for negotiations, the City is not
required to enter into an agreement with the applicant. Of course, we do not want to conduct a
selection process and enter into negotiations if the Council is not willing to consider selling the
property.
In terms of whether to start a developer selection process, one key consideration is whether the
City wants to use the property for a new Justice Center to house the police department and
municipal court. We should note that this site is 1.7 acres and the facilities plan estimated the
Justice Center would need 5 acres. The City has not yet conducted a study of possible sites for
the Justice Center. If the Public Safety bond passes, it may take a few months to make a site
location decision which could risk the state funding opportunity.
121
INFORMATIONAL MEMO
Page 2
If the City wants to complete the selection process in time for the selected organization to
compete for State funding, we would need to proceed on the following schedule:
11/8/16 Finance and Safety Committee discussion (completed)
11/8/16 Briefing to Tukwila International Boulevard Action Committee (completed)
11/14/16 Community Affairs and Parks Committee discussion
11/14/16 Council COW discussion of process
11/17/16 First publication inviting statements of interest and qualifications
11/21/16 Council Regular meeting with vote approving process
11/24/16 Second publication
12/1/16 Third publication
12/5/16 Statements of interest and qualifications due by 12:00 PM
12/9/16 Staff analysis and Council agenda published for public review
12/12/16 Council COW discussion of statements, staff analysis and options
12/12/16 Council Special Meeting authorizing Mayor to enter into negotiations
12/19/16 Council Regular meeting (if a decision is not made on 12/12)
The opportunities for formal public input would be at the Council meetings on 11/17, 11/21, and
12/9, plus community members can always provide informal input through direct communication
with Council and staff. It is important to note that if a developer is selected, there will be
additional opportunities for public input as negotiations proceed and the City makes decisions
on what requirements to include as part of the land sale.
This schedule is very fast compared to the typical developer selection schedule. This is
reasonable because the City already has a wealth of public input in terms of the community
vision for the TIB neighborhood since the public has provided significant input through the
Tukwila International Boulevard Revitalization Plan, Tukwila Village, the Tukwila International
Boulevard Element of the Comprehensive Plan, and other community conversations.
Staff believes that both organizations are well respected, experienced, and have positive visions
for the community and the site and we don't want to miss an opportunity for a high quality
project to receive state funding. We recommend the Council approve a selection process as
outlined above.
FINANCIAL IMPACT
This item would have no financial or budget impact at this time. At some point the City will need
to decide whether to sell the property. If the City does not sell the property, it will need to
remove the revenue projection from the budget. If the City sells the property, it would receive
revenue.
RECOMMENDATION
The Council is being asked to pass a motion approving the developer selection process as
outlined in this memo and consider this item at the November 14, 2016 Committee of the Whole
meeting and subsequent November 21, 2016 Regular Meeting.
ATTACHMENTS
Map of properties
Letter from HealthPoint dated October 24, 2016
Letter from El Centro de la Raza dated November 7, 2016
122
Developer Selection Discussion
-1 , al **v b.. _
=
Sri
I•s
Or
•
Parcels Under Consideration
A: Great Bear Motel, 14420 TIB
B: Boulevard Motel, 14440 TIB
C: Spruce Motel, 14442 TIB
D: Sam Smoke Shop, 14452 TIB
Note: Parcel E, Travelers Choice Motel is not included in the developer
selection discussion.
y
Printed: 11/9/16
124
rv) T�� 1�1 ^ |
[ ����| ���1M ���,cx^[^^^ ��^^x[
nwmxoolthvvmuhcorg
October Z4,20I6
Mayor Allan Ekberg
City ofTukwila
63O0SouthcenterBoulevard
Tukwila, WA 98188
Dear Mayor Ekberg,
xom|w|sTnxnow
ea Powell Avenue Sw
Renton, wmna05r
mam(425)2n-13n
raix (425) 277-1566
| am writing this letter toexpress Hea|thPoint'ufinn interest in purchasing the "motel" properties on
International Boulevard between S.144m and S.14Gmstreets. VVe would like to purchase these
properties in order to build a comprehensive health and wellness center.
Hea|thPoint'sTukvvi|a Health and Wellness Resource Center is envisioned as a centrally located and well
integrated facility that would include comprehensive primary medical and dental care as well as a host
of other programs, services and resources that help the community get well and stay well. Hea|thPoint
would expand upon its work to develop an innovative model that extends the traditional health center —
a model that takes an active role in addressing community factors and the social conditions that impact
the health of individuals and the community.
HealthPoint has grown rapidly to meet increasing demand for affordable and accessible primary care,
but has also realized the need for a more comprehensive approach that addresses the many needs of a
community through collaborative partnerships and shared space. The Tukwila Health and Wellness
Resource Center would engage and co-locate other partners working on important issues such as mental
health and substance abuse, economic development, housing, education and job training. We envision
a center with partners who work creatively and collaboratively to address the health needs of the
Tukwila community and promote wellness. Early conversations have included leaders from the
following organizations: Valley Cities Counseling, Navos, RAYS, LiheLnng, Global to Local, SHAG,
Providence, Sa|a| Credit Union, the YMCA, and Bellwether Housing, and vve continue 10 consider and
evaluate other potential partnerships. VVe recognize the pressures of affordable housing intoday's
economy and are committed to exploring affordable housing as part of the development.
HealthPoint has been providing affordable quality health care to South King County residents for 45
yea/s. Early clinic locations in Renton and SeaTac provided care to Tukwila residents, and in December,
2011 we opened our first location in Tukwila in partnership with Highline Hospital (at the old Riverton
Hospital ER) to provide better access to primary care for area residents. Today, at Hea|thPointTukwi|a
on Military Road we are a health care home to almost 2,000 Tukwila residents. This fall vve opened our
adjacent dental clinic to provide better access to dental care for the community. While we are pleased
to provide services at this location (Cascade Medical Building) the space is limited and the location
continues tobeachallenge. With a relatively short lease /4.S years) we are ready to begin planning for
a greater presence and new development,
cum/C LOCATIONS:
Avhv^ ^xohornNorth ' Bothell ' Federal Wa ^ �n ^w�w^ ' Redmond `nux*` `So�c 'T�w� ' Ewrg��,[ampv '�e {w�v
' ' 125
We've been planning for the Tukwila Health and Wellness Resource Center for many years. Our original
planning for this started in 2012 when we were hoping to be a part of the Tukwila Village development.
As our plans grew it became apparent that we would not be able to fit within that site. The properties
adjacent to Tukwila Village would be a perfect location for this center, as our services would fit well with
this new senior housing development.
We are submitting this request now because there is an opportunity to approach the State Legislature in
January, 2017 to ask for funding during the 2017 -2018 biennium. We believe we have the opportunity
to receive as much as $3,000,000 to purchase the property and get the planning underway. In addition,
there will likely be funding for projects like this during the 2019 -2020 biennium, so we would go back to
the Legislature with a second ask for help in construction of the center. We would like to best position
ourselves for these next two cycles of State funding that may be available to us, as the funding is critical
to executing a project like this.
We have been advised that in order to be selected for State funding we need the City to select us to
begin negotiations to purchase the property. We are ready now to begin those negotiations to purchase
the properties at market rates.
For many years HealthPoint has partnered with the City of Tukwila to better understand the unique
needs of this community and to bring services to the community. We have always planned to bring
more comprehensive services to better address the needs and improve the health of individuals and
community. We believe we can do this with the development of HealthPoint's Tukwila Health and
Wellness Resource Center.
We are grateful for your consideration of this request and we look forward to hearing back from you
soon. In the meantime, please let us know if there is any additional information we can provide to you
with this request.
Since ely,
�-
Thomas Trompeter ti
President and CEO
126
Programs & Services
With over z 6, 000 volunteer hours,
El Centro de to Roza serves 16,072
idividuals and 9,989 families through
the following programs and services:
Basic Healthcare Enrollment
Bebes! Infant Mortality Prevention
Cafe con El Centro
Cesar Chavez Demonstration Garden
College Readiness
Comadres
Community Meeting Space
Community Service
Crisis Advocacy
Cultural / Political / Social Events
DSHS People Point WA Connection
Economic Development
ECR Transitional Housing
El Patio Apartments
Employment Assistance
ESL Classes / Spanish Classes
Families & Education Levy Case
Management
Financial Empowerment
Food Bank
Foreclosure Counseling
Growing & Learning Together
Homeless Assistance
Healthy Cooking Classes I
Nuestras Comidas
Hope for Youth Poetry & Civil Rights
History Classes
HUD Housing Counseling
Immigrant / Human / Civil Rights Social
Justice Advocacy
Jose Marti Child Development Center
Latino Hot Meal Program
Legal Clinic Site
Local, State, National & International
Coalition Building
Luis Alfonso Velasquez Flores
After School Program
Parent -Child Home Program
Plaza Roberto Maestas
Santos Rodriguez Memorial Park
Senior Nutrition & Wellness
Senior Home Delivered Meals
Smoking Cessation
Tax Prep Site
Transit Oriented Parking
Veteran's Services
Youth Case Management & Cultural
Enrichment
Youth Employment
Youth Technology Training
Youth Violence Prevention
Mayor Allan Ekberg
City of Tukwila
6200 Southcenter Blvd.
Tukwila, WA 98188
Estimado Mayor Ekberg,
The Center for People of All Races
A voice and a hub for the Latino community
as we advocate on behalf of our people
and work to achieve social justice.
The intent of this letter is to inform the City of Tukwila of the interest of El
Centro de la Raza in the development of the properties at: 14420, 14440,
14442, and potentially 14452 Tukwila International Boulevard, Tukwila WA
98168. In addition, El Centro is interested in the potential development of
property in the Tukwila Transit Overlay Zone and other areas along Tukwila
International Blvd.
As an organization grounded in the Latino community, it is El Centro de la Raza's
mission to build unity across all racial and economic sectors; to organize,
empower and defend our most vulnerable and marginalized populations; and to
bring justice, dignity, equality, and freedom to all the peoples of the world. El
Centro de la Raza was founded in 1972, when a group of diverse community
members led a peaceful three -month occupation of the abandoned Beacon Hill
School to protest cuts in English as a Second Language classes.
Today, as a hub of the Latino community in Seattle and King County, El Centro
de la Raza provides 49 comprehensive programs and services that empower
members of the Latino community and other diverse and historically
underserved populations as fully participating members of society. El Centro de
la Raza responds to the broad range of community needs with culturally and
linguistically competent programs in areas of human and emergency services,
children and youth, asset - building and education, and housing and economic
development. Of the 16,072 individuals and 9,989 households served in 2015,
55% of participants were Latino, 91% were people of color, and 93% were low -
income.
Our vision for development would include a community inspired, mixed use
transit oriented development along Tukwila International Blvd., to include
affordable housing, retail space, and offices to support educational, asset
building, economic development, child care and human services programs.
In addition, our development would include a multicultural- community center space,
a commissary kitchen and public open space that would support the development of
small businesses and the establishment of an international style market.
Community Action Agency • United Way Agency • Affiliate of National Council of La Raza
2524 16t1, Avenue South, Seattle, WA 98144 • (2o6) 957 -4634 tel • (2o6) 329 -0786 fax 27
www.elcentrodelaraza.org • 501(03 Nonprofit Tax ID: 91- o899927
El Centro hopes to expand its existing skills training and small business development services to the Tukwila
area. Finally, the model we have in mind would develop retail business space and community and office space
on the ground level and, affordable apartments in the upper floors. El Centro is open to partnerships with other
organizations to provide additional services from the site, such as health care providers who have experience
providing services to diverse communities and also led by communities of color.
This project would support several elements of the City of Tukwila Comprehensive Plan, particularly in the
Housing, TIB and Economic Development areas.
To support economic development, El Centro would provide programs to improve and support the opportunities
for education, skills training and job acquisition for Tukwila residents. By expanding our existing business
opportunity center that supports entrepreneurs to develop their own small businesses, we would encourage
and support aspiring local entrepreneurs, local startups and businesses to establish in Tukwila. An emphasis
would be placed on businesses owned by people of color, women and veterans.
With the inclusion of a commissary kitchen in the facility, the development will support food- related workforce
development and entrepreneurship training, creating small businesses and new jobs for residents.
A principal element of the development would be the creation of a significant number of high quality,
affordable housing apartments. The mixed use development would feature ground level commercial and office
space, and residences in the floors above street level. With a variety of educational and human services on site,
families would be supported to permanently improve their economic well - being.
El Centro de la Raza has a successful track record of working with affordable housing development consultants
and funders to successfully finance the type of mixed use development we are proposing in the form of tax
credits, fund development and other creative financing strategies.
In relation to the Tukwila Village, this development would constitute an expansion of mixed use development,
and an increase of local consumers living in the immediate area which will have a significant positive impact for
local merchants. The development would support the community's expressed desire for attractive, walkable,
locally- oriented activities that build on the Tukwila Village Project. The project would orient businesses along
Tukwila International Blvd. to support a more vibrant, walkable business district.
The project will provide public and private community gathering spaces for temporary events including food, art,
music, pop -ups and activities that leverage nearby assets, such as schools and the library, and would reflect the
international, multicultural character of the TIB area. Space and infrastructure will be provided to support
permitted food vendors, pop -ups, and a farmer's market where residents and visitors will gather and sample
multicultural flavor of the TIB area.
For over four decades El Centro de la Raza has provided services and opportunities to immigrant, refugee,
English Language Learners, low income, communities of color and other historically under - represented
communities.
In relation to affordable housing, El Centro's experience includes the development and management of
affordable housing over the last 20 years. Our largest and most recent development is Plaza Roberto Maestas,
Community Action Agency • United Way Agency • Affiliate of National Council of La Raza
,) 2$ 252416th Avenue South, Seattle, WA 98144 • (206) 957-4634 tel • (2o6) 329 -0786 fax
www.elcentrodelaraza.org • 501(03 Nonprofit Tax ID: 91- 0899927
which is a new development at El Centro de la Raza, adjacent to the Beacon Hill Light Rail Station. This $45
million development, which was completed in the summer of 2016, has a total of 110 units of affordable housing
available to individuals and families who earn between 30 % -60% of Area Median Income.
This project was completed on time and under budget and also includes a new 9,200 square foot child
development center. 3,200 square feet of Retail Restaurant space, a 570 square foot commercial kitchen, 4,500
square feet of office space and a beautiful 12,000 square foot public plaza. This development is a five over one
design with the ground floor consisting of retail office and classroom space, and the top five floors consisting of
affordable housing on the ground floor, and one, two and three bedroom apartments on the top five floors.
El Centro de la Raza is interested in a partnership with the City of Tukwila that will support the creation of the
development described above that will serve the residents of Tukwila for decades to come. We would look to
negotiate a fair purchase price for the property, that makes this development affordable and mutually beneficial.
In summary, with quality affordable housing, economic and retail development, job creation and educational and
human services, this development will directly impact the quality of life for residents, help alleviate and eliminate
poverty and offer amenities that support the social and economic health and vitality of the City of Tukwila and its
residents.
We appreciate your consideration and look forward to hearing back from you.
Mil Gracias,
Estela Ortega
Executive Director
El Centro de la Raza
Community Action Agency • United Way Agency • Affiliate of National Council of La Raza
252416t" Avenue South, Seattle, WA 98144 • (206) 957 -4634 tel • (2o6) 329 -0786 fax
www.elcentrodelaraza.org • 501(03 Nonprofit Tax ID: 91- 0899927 129
130