HomeMy WebLinkAboutPCD 2021-11-01 COMPLETE AGENDA PACKETCity of Tukwila
Planning and Community
Development Committee
O Kathy Hougardy, Chair
O Verna Seal
O Thomas McLeod
AGENDA
MONDAY, NOVEMBER 1, 2021-5:30 PM
HAZELNUT CONFERENCE Room
(At cost cntrancc of City Hall)
Distribution:
K. Hougardy
V. Seal
T. McLeod
K. Kruller
Mayor Ekberg
D. Cline
R. Bianchi
C. O'Flaherty
A. Youn
L. Humphrey
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Item
Recommended Action
Page
1. BUSINESS AGENDA
a. An Interlocal Agreement for inspections between the
a. Forward to 11/8 C.O.W. and
Pg.1
City of SeaTac and the City of Tukwila.
11/15 Consent Agenda.
Jerry Hight, Building Oficial
b. An update on the Multi -Family Property Tax Exemption
b. Discussion only.
Pg.7
Program.
Brandon Miles, Business Relations Manager
2. MISCELLANEOUS
Next Scheduled Meeting: November 15, 2021
S. The City of Tukwila strives to accommodate individuals 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: Planning & Community Development Committee
FROM: Nora Gierloff, Director of Community Development
BY: Jerry Hight, Building Official
CC: Mayor Ekberg
DATE: November 1, 2021
SUBJECT: Interlocal Agreement for Inspection Services Between the City of SeaTac
and the City of Tukwila
ISSUE
Should the City enter into an Interlocal Agreement with the City of SeaTac to provide each other
backup building and electrical inspection coverage?
BACKGROUND
In the past we have contracted with BHC Consultants to provide building and electrical
inspection coverage during staff vacations or sick leave. However, when BHC Consultants are
busy they may not always be able to provide next day inspection coverage.
DISCUSSION
The City has several building inspectors but only a single electrical inspector. An Interlocal
Agreement for Inspection Services with the City of SeaTac would provide another source of
dependable coverage to maintain our commitment to 24-hour inspection turnaround time.
SeaTac staff is bringing this agreement to their Council for approval in November. Both Councils
will need to give approval before the Interlocal can go into effect.
FINANCIAL IMPACT
Both Parties will document the number of hours spent on inspections requested and performed
by each City. At the end of each quarter, the number of hours of inspections performed shall be
totaled. If the balance is deficient, the balance is to be paid to the deficient City on an hourly
basis ($80.00 per hour flat rate in 2021 and subject to adjustment per the mutual agreement of
the Parties by written amendment). This could be considerably less expensive than using a
consultant as many of the hours may cancel out and any additional coverage hours used by
Tukwila would be paid at a lower hourly rate.
RECOMMENDATION
Staff recommends this Interlocal Agreement be placed on the Consent Agenda at the November
15, 2021 Council meeting for approval.
ATTACHMENTS
Interlocal Agreement for Inspection Services Between the City of SeaTac and the City of
Tukwila
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INTERLOCAL AGREEMENT FOR INSPECTION SERVICES
Between the City of SeaTac and the City of Tukwila
This Interlocal Agreement ("Agreement") is entered into pursuant to Chapter 39.34 RCW
between the City of Tukwila, Washington (hereafter referred to as the "City of Tukwila") and the
City of SeaTac, Washington (hereafter referred to as the "City of SeaTac") (collectively referred
to as "the Parties") to describe the terms and conditions under which the City of SeaTac will
provide inspection services on behalf of the City of Tukwila, and the City of Tukwila will in turn
provide inspection services on behalf of the City of SeaTac.
WHEREAS, the City of Tukwila and the City of SeaTac employ electrical inspectors qualified
pursuant to RCW 19.28.010 (3) who perform electrical inspections and customer service related
to electrical installations; and
WHEREAS, the City of Tukwila and the City of SeaTac employ certified inspectors pursuant to
Chapter 19.27 RCW who perform mechanical, plumbing and building inspections; and
WHEREAS, the City of Tukwila and the City of SeaTac desire to obtain the aforesaid mutual
coverage to insure electrical and building inspection services; and
WHEREAS, the City of Tukwila and the City of SeaTac are willing to provide such mutual
services pursuant to this Agreement on an hour -to -hour exchange or the hourly pay rate of the
Inspector; and
WHEREAS, Inspectors from the City of SeaTac and the City of Tukwila will provide the services
of its Inspectors who will remain employees of the City of SeaTac the City of Tukwila,
respectively, for all purposes; and
WHEREAS, the City Council deems it appropriate and in the interest of public health and safety to
enter into this Interlocal Agreement to provide reciprocal inspection services in certain situations;
NOW THEREFORE,
IN CONSIDERATION OF THE MUTUAL PROMISES CONTAINED HEREIN, the
Parties agree as follows:
1. Administration. It is recognized that this Agreement has been formulated to provide broad
outlines of responsibilities, and it is anticipated that the details of the relationship formed by this
Agreement will be arrived at through written understandings between the Building Officials of
the respective cities. Building Officials will strive to provide written notice two (2) weeks in
advance of any request for inspection coverage to the other party. In the case of an unplanned
absence, the Building Official will request coverage as soon as the need is known and the other
jurisdiction will respond as soon as possible as to whether the request can be accommodated.
In the event such Officials are unable to agree on any provision relative to the administration of
this Agreement, any such dispute shall be resolved at a meeting of the Director of the
{KZS2488327.DOCX; 1/13175.000001/
Page 1 of 3
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Department of Community & Economic Development for the City of SeaTac and the Director of
the Department of Community Development for the City of Tukwila.
2. Responsibilities. The Building and Electrical Inspectors of the City of SeaTac and the City of
Tukwila will coordinate to provide inspections on an "as needed" and as available basis. The
purpose of such coordination will be to provide inspections in a timely and efficient manner.
3. Appeals. In the event of an appeal of any administrative decision of the Building Officials,
such appeals related to sites within Tukwila will be heard by the City of Tukwila's Hearing
Examiner in accordance with Chapter 18.116 of the Tukwila Municipal Code, and appeals related
to sites within SeaTac will be heard by the City of SeaTac's Hearing Examiner in accordance
with Chapter 16A.17 of the SeaTac Municipal Code.
4. Indemnification . Both Parties, the City of SeaTac and the City of Tukwila, hereby release and
agree to indemnify and hold harmless the other municipal corporation, its successors and assigns
and the officers, employees and agents of each ("Indemnities"), from and against any and all
claims of third parties and losses, harm, cost, liabilities, damages and expenses (including, but not
limited to, reasonable attorneys' fees) arising from willful or negligent acts or omissions of either
City including, but not limited to acts which abrogate the public duty doctrine; PROVIDED,
however, that neither City shall be required to indemnify against liability for damages caused by
or resulting from the sole negligence of the Indemnities of either City; PROVIDED FURTHER
that if such damages are caused by or result from the concurrent negligence of Indemnities for
both Cities or their officers, employees, or agents, then each City's Indemnity hereunder shall be
limited to the extent of the negligence of each City.
5. Insurance. Both Parties are members of the Washington Cities Insurance Authority and are
required to carry insurance that names each City and its officers and employees as primary non-
contributory additional insureds, with policy limits in the following amounts:
Commercial General Liability $1,0000,000
Automobile Liability $2,000,000 per occurrence
Worker's Compensation Employees of Contractors and Subcontractors are to be insured
under Washington State Industrial Insurance.
The above policy limits may be obtained through the use of excess liability (umbrella) insurance.
Each City shall obtain a certificate of insurance that complies with the requirements above, which
must be approved by each City's Risk Management department.
6. Fiscal Responsibilities. Both Parties will document the number of hours spent on inspections
requested and performed by each City. At the end of each quarter, the number of hours of
inspections performed shall be totaled. If the balance is deficient, the balance is to be paid to the
deficient City on an hourly basis ($80.00 per hour flat rate in 2021 and subject to adjustment per
the mutual agreement of the Parties by written amendment).
7. Termination. This agreement shall be ongoing. However, either party may terminate this
Agreement upon written notice to the other City with not less than thirty (30) days' notice prior to
the intended date of termination, unless some shorter time period is deemed acceptable by both
{KZS2488327.DOCX; 1/13175.000001/
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Page 2 of 3
cities. Notice shall be provided by either the City of SeaTac's Community and Economic Director
or designee or by the City of Tukwila's Director of Community Development or designee.
8. Amendment or Modification. This Agreement may be amended or modified only by a
subsequent written document executed by the City of Tukwila and the City of SeaTac upon
approval by the department directors of each City.
CITY OF TUKWILA, WASHINGTON CITY OF SEATAC, WASHINGTON
Name: Allan Ekberg
Title: Mayor
Date:
ATTEST/AUTHENTICATED:
Name: Christy O'Flaherty
Title: City Clerk
APPROVED AS TO FORM:
Name: Kari Sand
Title: City Attorney
{KZS2488327.DOCX; 1/13175.000001/
Name: Evan Maxim
Title: Director, Department of Community
& Economic Development
Date:
ATTEST/AUTHENTICATED:
Name: Kristina Greuu
Title: City Clerk
APPROVED AS TO FORM:
Name: Cindy Corsilles
Title: Assistant City Attorney
Page 3 of 3
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TO:
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
Planning and Community Development Committee
FROM: Derek Speck, Economic Development Administrator
Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: October 26, 2021
SUBJECT: Multi -Family Property Tax Exemption Program
ISSUE
Discussion on potential updates to the Multi -Family Property Tax Exemption program.
BACKGROUND
Revised Code of Washington (RCW) 84.14 allows municipalities planning under the Growth
Management Act to provide a property tax exemption to qualifying residential developments
within their cities. The Multi -Family Tax Exemption (MFTE) reduces the property taxes owed on
a development by exempting the value of the multi -family residential improvements' over a
specific period. In theory, an MFTE program stimulates the creation or rehabilitation of multi-
family housing. The housing can be rental or owner -occupied and market -rate or affordable.
Overview of State Law Requirements
As outlined in RCW 84.14.007, the purpose of the MFTE is:
...[T]he purpose of this chapter to encourage increased residential opportunities, including
affordable housing opportunities, in cities that are required to plan or choose to plan under the
growth management act within urban centers where the governing authority of the affected city
has found there is insufficient housing opportunities, including affordable housing opportunities.
It is further the purpose of this chapter to stimulate the construction of new multifamily housing
and the rehabilitation of existing vacant and underutilized buildings for multifamily housing in
urban centers having insufficient housing opportunities that will increase and improve residential
opportunities, including affordable housing opportunities, within these urban centers.
RCW 84.14 allows municipalities to create MFTE programs for up to 8, 12 and/or 20 years,
subject to certain requirements.
• Market Rate: A municipality can create an MFTE program that allows for a project to have
a property tax exemption for up to eight years if the project does not include affordability
requirements. The project could be rental or owner -occupied.
• Twelve Year Affordability: A municipality can create an MFTE program that allows for a
project to have a property tax exemption for up to 12 years if it meets certain affordability
requirements. To be eligible for the 12 -year exemption a project must commit that at
least 20 percent of the units in the project be affordable to low- and moderate -income
households (if rental) or moderate -income households (if owner -occupied).
'The land is still subject to being assessed property taxes as is space used for commercial activities.
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INFORMATIONAL MEMO
Page 2
• Twenty Year Affordability: A municipality can create an MFTE program that allows for a
project to have a property tax exemption for up to 20 years if it meets certain
requirements. To be eligible for the 20 -year exemption, a project must commit that at
least 20% of the units will be made available for affordable homeownership, with a local
government or non-profit overseeing long term compliance with affordability restrictions.
The zoning where the units are constructed must allow a minimum density of at least 25
units per acre.
Around 50 cities and one county in the State have in place or have had in place a MFTE
program. Most of these cities are located along the 1-5 corridor between Olympia and Marysville.
Since cities provide additional requirements on their MFTE programs, which may vary by city.
For example, the City of Woodinville requires that a building be built to LEED standards in order
to get the MFTE; the City of Newcastle requires a public or cultural use for the building; and the
City of Yakima requires that there be an investment of least $25,000 in each unit constructed.
Several cities, such as Seattle, require that all MFTE projects have an affordability component
and do not offer the 8 -year exemption option for market rate units.
Tukwila's MFTE Program
In 2014 the City adopted an MFTE program for a portion of the Southcenter District. It is the
portion of the Transit Oriented Development District in the Tukwila Urban Center (Southcenter
District) that is west of the Green River (see attached map).
At the time, the City's goal of adopting an MFTE program for the Southcenter District was to
encourage the development of new multi -family housing to help fulfill the City's vision for the
neighborhood and meet the City's regional growth targets for new housing units. Because of the
lack of new housing development in that District for many years, staff recommended the
incentive as a temporary way to show the private sector that the market rents for new housing
was significantly higher than the comparable rents in the adjacent neighborhoods which
reflected older housing stock. The incentive also made multi -family housing financially feasible
for the developer, especially given the market demand for other types of land uses.
The City's MFTE program provided for both an 8- and 12 -year exemption period2. In order to be
eligible for the MFTE, a project was required to meet additional City criteria, which included:
1. The units must be in the residential targeted areas (see attached map)
2. The units must be within a residential or mixed-use structure containing at least four
dwelling units.
3. The units must have an average size of at least 500 square feet per unit.
4. A minimum of 15 percent of the units must be at least 900 square feet in area and
contain at least two bedrooms.
5. The units must be designed and used for permanent residential occupancy.
6. Each unit must have its own private bathroom and private kitchen. Projects that utilize
common kitchens and/or common bathrooms are not eligible.
Because the City's goal was to provide a temporary incentive to stimulate the private
development without becoming a long-term subsidy, the City's Southcenter District MFTE
program included a limited application period which sunset at the end of 2017. After that the City
no longer accepted MFTE applications.
The following projects utilized the MFTE program within the Southcenter District.
The 20 -year exemption was not permitted under State law at the time.
INFORMATIONAL MEMO
Page 3
1. AirMark Apartments (2018 MFTE Effective Date, 8 -Year Exemption).
AirMark Apartments is a mixed use, 19 story building located along Andover Park East.
The project features 371 market rate apartments and the Hotel Interurban. Only the
residential portion of the project is eligible for the MFTE. The land (entire parcel) and
hotel portion of the building is still subject to property taxes.
2. Marvelle Southcenter (2021 MFTE Effective Date, 8 -Year Exemption)
Marvelle Southcenter is active senior housing at the corner of Baker Blvd and Andover
Park East.
3. Holden at Southcenter (2022 MFTE Effective Date, 8 -Year Exemption)
Holden at Southcenter includes five floors of assisted living units and one floor of
memory care units. Only the assisted living units qualified for the MFTE.
Note: All projects submitted their MFTE applications to the City prior to the end of 2017 and
were completed within the required time period.
DISCUSSION
The Housing Element of the City's Comprehensive Plan mentions multi -family property tax
exemptions as a potential strategy to achieve Tukwila's housing goals. The incentive was also
included as a potential strategy in the Transit -Oriented Development Housing Strategies Action
Plan adopted by the Council in September 2021. Additionally, two developers have approached
the City requesting the MFTE for their potential projects.
Southcenter District Project
One of the developers is proposing to construct market -rate, multi -family apartments for all ages
within the City's current Residential Targeted Area in the Southcenter District. The developer
plans to rent the units at market rate and is requesting that the project be eligible for the 8 -year
exemption.
When the City adopted the Southcenter Plan it laid out a vision to transform the Southcenter
District from a retail district to a mixed-use district with retail, dining, office, and residential units.
While the MFTE incentive helped attract three residential developments, they are all based on
very specialized business models such as healthcare, age restrictions, and federally approved
foreign financing. At this time, the Southcenter District still lacks an all ages, multi -family project
that is traditionally financed3. Additionally, residential projects in the Southcenter District struggle
with identifying comparable rents and proof of market demand which adds risk and makes
residential projects harder to finance. Staff believes that obtaining an all -ages, traditionally
financed residential project(s) in the Southcenter District can be a catalyst to attract more
housing development in the District, especially for workers and others not served by the current
housing.
The developer has indicated they have found a site they would like to purchase but need to
know if the MFTE will be reinstated before they can move ahead.
Tukwila International Blvd Neighborhood Project
3 While the Airmark Apartments is an all ages multi -family project, it relied heavily on EB -5 (foreign) investment to be financially
feasible plus shared efficiencies with Hotel Interurban.
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INFORMATIONAL MEMO
Page 4
The other developer proposes to construct 100 units of affordable, owner -occupied housing
within the Tukwila International Blvd neighborhood. The developer has indicated that the MFTE
is needed in order to secure financing from the US Department of Housing and Urban
Development. Owner -occupied multi -family housing is very rare in Tukwila. In addition to
making the project more financially feasible, the MFTE would enable the developer to make the
units more affordable for the households living in the units. The developer has requested the 20 -
year exemption.
The developer has indicated they need to know if their project is eligible for the MFTE during the
first quarter of 2022; otherwise, it will delay their financing and next steps for the project
Comprehensive Considerations
In addition to the two areas mentioned above, Tukwila may want to consider an MFTE in other
areas of the City. For example, the Transit Oriented Development Housing Strategies Plan
adopted by the City Council in September discussed the possibility of adoption of an MFTE
program near the Tukwila International Boulevard light rail station. Additionally, an MFTE
program could be created near the Sounder commuter train station near West Valley Hwy as a
way to encourage more housing near the station or other areas of the City to encourage
renovation or preservation of existing housing. The City also can include other criteria such as
greater affordability, dislocation protections, design standards, etc. Those criteria do not need to
be the same in all Residential Targeted Areas.
Economic Development staff recommends the City be thoughtful when considering expansions
of tax exemptions because the City will incur costs in order to provide public services to the new
developments and the exemptions can cause increased taxes on other property taxpayers.
Recommended Next Steps
Given the potential complexity of a city-wide MFTE program and the time sensitivity of two
developments that appear to meet City goals (additional housing in the Southcenter District and
affordable, owner -occupied multi -family housing), staff proposes a three-step approach to
studying and possibility updating the MFTE program. It's important to note that the first two
steps are not limited to just the two developments mentioned and other developments could
qualify under the program.
Step 1, December 2021, Southcenter District
Amend the City's current MFTE program to accept applications through 2022. This amendment
would retain the current program boundaries and other criteria. Staff proposes adding one
additional criteria to require that the housing utilizing the MFTE must be available to people of
all ages. This would go through the Council process starting in November, with possible final
action in December.
Step 2, First Quarter of 2022, Tukwila International Blvd
Amend the City's MFTE program to create a second and new Residential Targeted Area along
Tukwila International Blvd (TIB) with eligibility criteria allowing owner occupied, affordable
housing. At this step, rental apartments would not be included in the program due to more
complex considerations such as affordability limits, boundaries of eligible areas, design criteria,
redevelopment criteria, displacement risk, market necessity, and other issues. This provision
allows the City to expand owner -occupied, affordable housing opportunities in the City and new
development along TIB.
INFORMATIONAL MEMO
Page 5
Step 3, 2022, Comprehensive
Conduct a more comprehensive review to consider expansions of the MFTE program. This
review would include multi -family rental housing, other geographic areas, housekeeping items,
and other considerations and criteria such as:
1. Where would the City like to see more multi -family housing (rental and/or ownership)?
2. Where would the City like to see renovation of multi -family housing?
3. Where would the City like to see preservation of existing affordable housing?
4. What levels of affordability would the City like?
5. What levels of affordability are feasible given the value of the incentive, other financing,
and development costs?
6. How would the MFTE prioritize multi -family housing as a land use compared to other
land uses in that area.
7. Is the MFTE necessary and/or sufficient as an incentive?
8. What project design standards should be included (e.g. structured parking, public
amenities, etc.)?
9. What are the financial implications to the City, Tukwila School District, and other taxing
districts?
10. How will the City manage and monitor ongoing affordability requirements and reports?
FINANCIAL IMPACT
Steps 1 and 2 outlined above would have minimal financial impacts to the City primarily
because they are small relative to the amount of development already in the City
Step 3 could be significant in terms of demands on city services, reallocation of property tax to
other taxpayers, etc. depending on the specifics of the program. Depending on the scope, staff
may want to hire a consultant to analyze the incentive's market necessity, effectiveness, and
effect on City finances.
RECOMMENDATION
Discussion only. If the Committee supports the three-step process outlined above, staff will
return to the Committee on November 15 with a draft ordinance addressing the Southcenter
District and again in January with an ordinance to address Tukwila International Blvd.
ATTACHMENTS
• Map of Southcenter District Residential Targeted Area.
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a)
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c
c
m
City of Tukwila
Multi -Family Property Tax Exemption
Residential Targeted Area
Target Parcels
ZoningCode
TUC-TOD Zone
Figure A
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