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Home My WebLink About23-094 - CRP/AR Prose Southcenter Owner, LLC - Multi-Family Residential Property Tax Exemption AgreementFINAL, April 11, 2023 23-094 Council Approval N/A MULTI -FAMILY RESIDENTIAL PROPERTY TAX EXEMPTION AGREEMENT ("Agreement") BY AND BETWEEN CITY OF TUKWILA AND CRP/AR PROSE SOUTHCENTER OWNER, LLC THIS AGREEMENT ("Agreement") is entered into this 19th day of May 2023, by and between the City of Tukwila, Washington (the "City"), a non -charter, optional code city organized under the laws of the State of Washington, and CRP/AR Prose Southcenter Owner, L.L.C, a Delaware limited liability company (the "Property Owner"). WHEREAS, the City desires to encourage increased residential opportunities and to stimulate the construction of new multi -family housing within a portion of the City's Tukwila Urban Center - Transit Oriented Development (TUC-TOD) zoning district; and WHEREAS, Chapter 84.14 RCW permits cities to designate a residential targeted area for certain property tax exemptions; and WHEREAS, on December 1, 2014, the Tukwila City Council adopted City Council Ordinance No. 2462 (as amended by Ordinance Nos. 2538 and 2665 and as codified in chapter 3.90 of the Tukwila Municipal Code ("TMC")), enacting a limited property tax exemption for eligible multi- family development projects within the City's designated residential target area, located within the Tukwila Urban Center - Transit Oriented Development (TUC-TOD) zoning district; and WHEREAS, the Property Owner owns a parcel located at 0223100040 ("the Property") within the residential targeted area; and WHEREAS, the Property Owner is constructing a residential all ages housing project on the Property that will include multi -family residential units (the "Project"); and WHEREAS, in connection with the Project, the Property Owner has submitted a complete application for the City's multi -family tax exemption in accordance with Chapter 3.90 TMC; and WHEREAS, the City has determined that the Project meets the eligibility criteria for issuance of a Conditional Certificate of Acceptance of Tax Exemption ("Conditional Certificate") for the multi -family tax exemption ("MFTE"); and WHEREAS, TMC 3.90.070(A) requires the Property Owner to enter into an agreement with the City regarding the terms and conditions of the Project and eligibility for the multi -family tax exemption prior to issuance of a Conditional Certificate; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties, the City and the Property Owner mutually agree as follows: Prose Southcenter, MFTE Agreement FINAL, April 11, 2023 Section 1: Definitions Unless otherwise specified in this document, the terms in this Agreement shall be interpreted consistent with the definitions contained in Tukwila Municipal Code ("TMC") Section 3.90.020. Section 2: Property Owner's Obligations A. The Property Owner will construct on the Property a residential project substantially consistent with the plans depicted in the attached Exhibit A, which is incorporated herein by this reference. Construction shall be considered substantially consistent for the purposes of this Agreement if, at a minimum, construction of the Project meets the following requirements consistent with TMC 3.90.050: i. The residential units must be located within the residential targeted area, as defined in TMC 3.90.030; ii. The residential units must have an average size of at least five hundred (500) square feet per unit; iii. A minimum of a least four dwelling units shall be constructed in either a mixed use or residential building; iv. A minimum of fifteen percent (15%) of the residential units must be at least nine hundred (900) square feet and contain at least two bedrooms; v. To promote workforce housing, the residential units must be designed and used for permanent residential occupancy made available to residents of all ages; vi. Each residential unit must have its own private bathroom and a private kitchen. Units that utilize common kitchens or shared bathrooms are not eligible for the multi -family residential property tax exemption; and vii. The Project shall comply with all applicable zoning requirements, land use regulations, environmental requirements, building codes and fire code requirements, as outlined in the Chapter 3.90 TMC and state law. B. Construction of the residential units must be completed and receive a City -issued certificate of occupancy within three (3) years from the date of issuance of the Conditional Certificate by the City, or within authorized extension limits. C. After completion of construction of the Project and issuance of a permanent certificate of occupancy for the residential units, but before expiration of the Conditional Certificate, Property Owner shall request Final Certificate and file with the City's Economic Development Administrator ("Administrator") the following supporting information: i. A statement of expenditures made with respect to each multi -family housing unit, including phasing if applicable, and of the total expenditures made with respect to the entire Property; ii. A description of the completed work and a statement of qualifications for the exemption; iii. A statement that the work was completed in the timeframe outlined in Section 2.B of this Agreement, or within the time limit of any approved extension granted pursuant to TMC 3.90.080; and Prose Southcenter, MFTE Agreement FINAL, April 11, 2023 iv. Information that the Administrator deems necessary and useful in order to evaluate the Property's eligibility for the Final Certificate. Section 3: City Obligations A. The City will issue a Conditional Certificate for the Project within 45 days of mutual execution of this Agreement. The Conditional Certificate shall expire three (3) years from the date of issuance unless an extension is granted under Chapter 3.90 TMC. B. Within thirty (30) days of receipt of all materials set forth in Section 2.C.i-iv of this Agreement and a request from Property Owner for a Final Certificate, the Administrator shall determine whether the completed Project is: consistent with the Property Owner's application, consistent this Agreement, and qualified for limited exemption under Chapter 84.14 RCW, in addition to which specific improvements completed meet the requirements of this chapter and the required findings of RCW 84.14.060. If the Administrator determines that the Projected completed meets said requirements, the requirements of Chapter 3.90 TMC, and the required findings of RCW 84.14.060, the Administrator shall file a Final Certificate with the King County Department of Assessments. The Final Certificate must be filed with the King County Assessor no later than 40 days after the City's receipt of all materials required for the Final Certificate under TMC 3.90.090(A). C. The King County Department of Assessments shall be responsible for determining the allocation of the Property's assessed value to be attributed to the multi -family portion of the Project. Section 4: Property Owner's Annual Reporting Requirements and Record Keeping A. Within thirty (30) days of each anniversary of the filing date of the Final Certificate and for each year of the tax exemption period, the Property Owner shall submit to the Administrator a notarized declaration containing the following: i. A statement identifying the total number of occupied and vacant multi -family units during the previous year, including the occupancy rate for the previous year; ii. A certification that the property has not changed use since the date of filing of the Final Certificate and continues to be in compliance with this Agreement, Chapter 3.90 TMC, and Chapter 84.14 RCW; iii. A description of any improvements or changes to the property made after the filing of the Final Certificate or after the last declaration, as applicable; iv. The value of tax exemption for the Project; and v. Any other information with respect to the units receiving a tax exemption necessary for the City to comply with any reporting requirements by the State of Washington and/or King County. B. The Property Owner shall maintain records supporting all information provided to the City and shall make such records available for inspection upon request by the City. Additionally, the Property Owner shall permit the City to enter and inspect the multi -family units, upon Prose Southcenter, MFTE Agreement FINAL, April 11, 2023 prior notice, to ensure the continued compliance with applicable zoning requirements, land use regulations, building codes, fire codes, and housing codes as required by the TMC and state law. C. Failure to submit the annual declaration as required by Section 4.A of this Agreement, or to maintain adequate records, may result in cancellation of the tax exemption in accordance with Section 8 herein. Section 5: Conversion of Residential Units If the Property Owner converts any of the multi -family residential housing units subject to this Agreement to another use, the Property Owner shall notify the King County Department of Assessment and the Administrator within sixty (60) days of such change in use. Upon such change in use, the tax exemption shall be cancelled pursuant to Section 8 herein. Section 6: Ownership Transfer If Property Owner transfers its entire legal interest in the Property, or in the improvements made to the Property subject to this Agreement, Property Owner shall assign its rights, interests, and obligations under this Agreement to the succeeding owner. Property Owner shall then notify the City of said transfer and assignment within thirty (30) days. Failure to notify the City of said transfer or assignment, as required by this section, shall constitute grounds to terminate this Agreement by the City pursuant to Section 9 herein. Section 7: Duration of Exemption The value of the improvements qualifying under this Agreement will be exempt from ad valorem property tax for eight (8) years beginning January 1 of the year immediately following the calendar year of issuance of the Final Certificate. Section 8: Cancellation by City The City will cancel the Final Certificate for any property or individual unit that no longer complies with any of the terms and conditions of this Agreement or with the requirements of Chapter 3.90 TMC. Cancellation of the Final Certificate will subject the Property Owner (or any future property owner) to additional taxes, interest and penalties as further described in Chapter 84.14 RCW and TMC 3.90.100.H. Upon determining that a tax exemption shall be cancelled, the Administrator shall notify the Property Owner of said cancellation by certified mail, return receipt requested. The Property Owner may appeal the cancellation determination as specified in TMC 3.90.100.H within 30 days of the date of notice of cancellation. Section 9: General Provisions A. Termination i. Automatic Termination. This Agreement shall automatically terminate upon the expiration of the eight-year tax exemption, as outlined in Section 7 herein. Prose Southcenter, MFTE Agreement FINAL, April 11, 2023 ii. Termination by City. The City may terminate this Agreement at any time under any of the following circumstances: 1. The Property Owner obtained the property tax exemption under deceit or false pretenses, including providing incorrect or inadequate information to the City regarding the intended use of the building on the property; 2. The Project no longer complies with the requirements of Chapter 3.90 TMC; or 3. The Final Certificate is cancelled pursuant to Section 8 herein; and 4. Property Owner fails to substantially comply with the terms of this Agreement. iii. Termination by Property Owner. The Property Owner may terminate its rights and obligations under this Agreement by providing 30 days' written notice to the City. iv. Termination Effect on Final Certificate. If this Agreement is terminated for any reason, the City shall automatically cancel any Final Certificate that may have been issued to the Property Owner for the Project. Cancellation of the Final Certificate will subject the Property Owner (or any future property owner) to additional taxes, interest and penalties as further described in Chapter 84.14 RCW and TMC 3.90.100.H. The Property Owner may appeal the cancellation determination as specified in TMC 3.90.100.H within 30 days of the date of notice of cancellation. B. Potential Tax Liability. The Property Owner acknowledges and agrees that, regardless of the reason therefor, termination of this Agreement may subject Property Owner to potential tax liabilities and penalties under state law. C. King County Assessment Fee. King County Assessment charges a fee for the review and processing of MFTE application requests. The Property Owner shall either pay this fee directly to King County or reimburse the City for payment of this fee. D. Governing Law and Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of Washington. Venue for any action arising under this Agreement shall lie in King County Superior Court. E. Compliance with Tukwila Municipal Code. The Property Owner shall ensure that the site and Project comply with all applicable sections of the Tukwila Municipal Code, including, but not limited to, the zoning code, sign code, building code, fire code, and public works standards. If the event of conflict between this Agreement and any provision of the Tukwila Municipal Code, the more stringent requirement shall govern. Additionally, this Agreement shall not be interpreted to prevent the City from enforcing any provisions of the Tukwila Municipal Code as currently written or amended. Nor shall the Agreement preclude the Property Owner from pursuing any administrative appeals or rights permitted under applicable provisions of the Tukwila Municipal Code. F. Assignability. Except as allowed in Section 6 of this Agreement, neither party may assign its rights, interests, or obligations under this Agreement. G. Recording. Upon execution of this Agreement by both parties, the Property Owner shall record this Agreement with the King County Recorder's Office and provide a copy of the recorded document to the City. Prose Southcenter, MFTE Agreement FINAL, April 11, 2023 H. Indemnification The Property Owner shall indemnify, defend, and hold harmless the Cityits officers, officials, employees, and volunteers from any and all claims, injuries, damages, losses or suits arising out of or resulting from the of the Property Owner in performance of this Agreement. I. Attorney Fees. In the event a lawsuit is filed regarding the subject matter of this Agreement, the prevailing party shall be entitled to payment of attorneys' fee by the other party. J. No Third -Party Beneficiaries. This Agreement is for the benefit of the Parties hereto only and is not intended to benefit any other person or entity, and no person or entity not a signatory to this Agreement shall have any third -party beneficiary or other rights whatsoever under this Agreement. No other person or entity not a Party to this Agreement may enforce the terms and provisions of this Agreement. K. Severability. The provisions of this Agreement are separate and severable. The invaiidity of any clause, sentence, paragraph, subdivision, section, or portion or the invalidity of the application thereof to any person or circumstance, shall not affect the validity of the remainder of this Agreement, or the validity of its application to other persons or circumstances. L. Amendment to Agreement; Effect of Agreement on Future Actions. This Agreement may be amended by mutual consent of all of the parties, provided that any such amendments are in writing. M. Notices. Unless otherwise specified in this Agreement, notices, demands, and correspondence between the City and Property Owner shall be deemed sufficiently given if dispatched by pre -paid first-class mail to the addresses of the parties as designated in this Section. The parties hereto may, from time to time, advise the other of new addresses for such notices, demands or correspondence. To Property Owner: 1900 N Northlake Way, Suite 237 Seattle, WA 98103 With a Copy To: Dentons US LLP Attn: Toni Weinstein Email: tmni.vveinstein@dentons.corn 2000 McKinney Avenue Suite 1900 Dallas, TX 75201-1858 Prose Southcenter, MFTE Agreement FINAL, April 11, 2023 To City: City ofTukwila Office of the City Clerk 62OO5outhCeDte[Blvd Tukwila, WA 98188 With aCopy To: City OfTukwila Office of Economic Development 6Z003nuthceDte[Blvd Tukwila, WA 98188 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the dates set forth below: CITY OF TUKWILA DocuSigned by: Allan Ekberg, Mayor APPROVED AS TO FORM: By FT: ATTEST: Oty Clerk 5/19/2023 1 4:03 PM PDT e City Attorney Prose Southcenter, MFTE Agreement CRP/AR Prose Southcenter Owner, L.L.C., a Delaware limited liability company By: CRP/AR Prose 8outhcenterVenture, L.L.C. a Delaware limited liability company, Its sole member By: Prose Southcenter Alliance, LLC, a Delaware limited liability company, its administrative member By Jeremiah Jolicoeur, Member FINAL, April 11, 2023 Prose Southcenter, MFTE Agreement LEVEL 1 # OF RESIDENTIAL UNITS 0 RESIDENTIAL UNIT TOTAL SQ FT 0 RESIDENTIAL AMENITY SQ FT 4,447 RESIDENTIAL CIRCULATION 870 RESIDENTJAL TOTAL SQ FT 5,317 J L- JL , L BAKER BLVD URBALO ARCHITECTURE un*Am|womAL 1938 Fairview ,m6-2m-0nz PROSE SOUTHCENTER 500 BAKER BLVD., TUKWILA, WA 98188 LEVEL 1 l"=60''0" 5/9/2023 9:07:00 AM LOMON ` 1 1 LEVEL 2 # OF RESIDENTIAL UNITS 0 RESIDENTIAL UNIT TOTAL SQ FT 0 RESIDENTIAL AMENITY SQ FT 2,618 RESIDENTIAL CIRCULATION 870 RESIDENTIAL TOTAL SQ FT 3,488 \ ~ ° _ _ r || L ~° / � ~� r / / URBALO ARCHITECTURE upmxw|numxL 1938 Fairview Avenue East Am,. Seattle, WA 98102 ,m^-25rom2 PROSE SOUTHCENTER 500 BAKER BLVD., TUKWILA, WA 98188 LEVEL 2 1"=6O1 -O" 5/9/2023 9:07:01 AM LEVEL 3 # OF RESIDENTIAL UNITS 57 RESIDENTIAL UNIT TOTAL SQ FT 45,489 RESIDENTIAL AMENITY SQ FT 15,242 RESIDENTIAL CIRCULATION 5,376 RESIDENTIAL TOTAL SQ FT 66,107 N URBALP' ARCHITECTURE URBANIRURAL 1938 Fairview Avenue fast wnnoo Seattle, WA 98102 Info@urbatarchitecture.com www.urbalarchitecture.com 7 206-257-0972 PROSE SOUTHCENTER 500 BAKER BLVD., TUKWILA, WA 98188 LEVEL 3 1" = 601-0" 5/9/2023 9:07:04 AM LEVEL 4 # OF RESIDENTIAL UNITS 57 RESIDENTIAL UNIT TOTAL SQ FT 45,948 RESIDENTIAL AMENITY SQ FT 54 RESIDENTIAL CIRCULATION & SERVICE SQ FT 4,916 RESIDENTIAL TOTAL SQ FT 50,918 URBAL" ARCHITECTURE URBANIRURAL 1938 Fairview Avenue East sum see Seattle, WA98102 info@urbalarchitecture.com www.urbalarchitecture.com T 206-287-0972 PROSE SOUTHCENTER 500 BAKER BLVD,, TUKWILA, WA 98188 LEVEL 4 1" = 60'-0" 5/9/2023 9:07:08 AM LEVEL 5 # OF RESIDENTIAL UNITS 57 RESIDENTIAL UNIT TOTAL SQ FT 45,948 RESIDENTIAL AMENITY SQ FT 54 RESIDENTIAL CIRCULATION & SERVICE SQ FT 4,916 RESIDENTIAL TOTAL SQ FT 50,918 URBAL ° ARCHITECTURE URBANIRURAL 1938 Fairview Avenue East.u, ,00 Seattle, WA98102 Into@urbalarchitecture.com www.urbalarchitecture.com 7 206-257-0972 PROSE SOUTHCENTER 500 BAKER BLVD., TUKWILA, WA 98188 LEVEL 5 1" = 60'-0" 5/9/2023 9:07:12 AM LEVEL 6 # OF RESIDENTIAL UNITS 57 RESIDENTIAL UNIT TOTAL SQ FT 45,948 RESIDENTIAL AMENITY SQ FT 54 RESIDENTIAL CIRCULATION & SERVICE SQ FT 4,916 RESIDENTIAL TOTAL SQ FT 50,918 URBALA9 ARCHITECTURE URBANIRURAL 1938 Fairview Avenue East was loo Seattle, WA 98102 into@urbalarchitecture.com www.urbalarchltecture.com i 206-257-0972 PROSE SOUTHCENTER 500 BAKER BLVD., TUKWILA, WA 98188 LEVEL 6 1" = 60'-0" 5/9/2023 9:07:16 AM LEVEL 7 # OF RESIDENTIAL UNITS 57 RESIDENTIAL UNIT TOTAL SQ FT 45,948 RESIDENTIAL AMENITY SQ FT 54 RESIDENTIAL CIRCULATION & SERVICE SQ FT 4,916 RESIDENTIAL TOTAL SQ FT 50,918 N URL3ALO ARCHITECTURE URBANIRURAL 1938 Fairview Avenue East wm,00 Seattle, WA 98102 Inro@urbaiarchitecture.com www.urbalarchitecture.com T 206-257-0972 PROSE SOUTHCENTER 500 BAKER BLVD., TUKWILA, WA 98188 LEVEL 7 1" = 60'-0" 5/9/2023 9:07:20 AM