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Home My WebLink AboutPCD 2023-07-17 Item 1C - Resolution - Intent Regarding Multi-Family Property Tax Exemption (MFTE) ProgramTO: 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: July 11, 2023 SUBJECT: Multi -Family Property Tax Exemption (MFTE) ISSUE This item is intended to enable the Council to adopt a Resolution of Intent to consider designating the Southcenter area as a residential targeted area for purposes of a multi -family property tax exemption. BACKGROUND In 2014 the City adopted a multi -family property tax exemption program and designated a portion of the Tukwila Urban Center's Transit Oriented Development district as the eligible area (a "residential targeted area"). In 2017 and 2021 the City amended the program to extend the application period and add additional criteria. The application period expired on December 31, 2022 and no applications are currently pending. On February 6, 2023 the Planning and Community Development Committee (PCD) reviewed the Economic Development Division's 2023 workplan and requested to expedite discussion on the City's efforts related to the multi -family property tax exemption program (MFTE). In response to PCD's request, on April 17, 2023 staff provided a report that described the State's requirements for cities to enact MFTE programs and included a discussion of potential costs, benefits, considerations, and criteria of such a program. The Committee asked staff to develop amendments to the Tukwila Municipal Code (TMC) to implement the MFTE for Tukwila South and consider including other portions of the Tukwila Urban Center in the simplest way possible to reduce the amount of staff time needed for the amendments. This staff report is intended to provide an overview of the revisions that would need to be made to the TMC and the process for making those revisions. DISCUSSION If the Council would like to include Tukwila South in the MFTE program, staff recommends the following revisions to the TMC. (1) Residential Targeted Area: The current residential targeted area would need to be amended to include the area covered by the Tukwila South Overlay zone and staff would recommend also including all of the area covered by the Tukwila Urban Center (TUC) zone. Staff believes including the remainder of the TUC is important because State law requires the residential targeted area to be within an "urban center," as determined by the governing authority (City Council). RCW 84.14.010 defines an urban center as "a 31 INFORMATIONAL MEMO Page 2 compact, identifiable district where urban residents may obtain a variety of products and services. An urban center must contain: a. Several existing or previous, or both, business establishments that may include but are not limited to shops, offices, banks, restaurants, governmental agencies; b. Adequate public facilities including streets, sidewalks, lighting, transit, domestic water, and sanitary sewer systems; and c. A mixture of uses and activities that may include housing, recreation, and cultural activities in association with either commercial or office, or both, use." Including the entire TUC in the residential targeted area increases Tukwila's South's ability to qualify as an urban center. (2) Application Period: Staff recommends extending the application period to December 31, 2028. (3) Limit on Number of Eligible Units: Because a property tax exemption would, for eight or twelve years, either shift property taxes to other taxpayers or would attract development without increasing tax revenues, the City may want to be limit the number of units that would qualify. Previously, the City's way to manage that risk was to set a time limit on the application period, effectively a sunset clause. Staff recommends continuing the sunset clause but adding an additional protection of a specific limit (or cap) on the number of eligible units at 800. (4) Building Permit Application Deadline: Our process to apply for the MFTE is fairly easy and relatively low cost to the developers. Because of that, if we limit the number of units that qualify for the exemption, we could receive applications from developers who don't have viable projects which would block other qualified developers from applying. To address this, we recommend requiring applicants to submit a complete building permit application within 18 months of receiving their "Conditional Certificate of Acceptance of Tax Exemption". (5) Housekeeping: The State law has changed from when Tukwila first adopted the MFTE and this would be an appropriate time to revise our TMC to match current state law. If the Council would like to revise the residential targeted area staff recommends the Council approve the attached Resolution of Intent, which would provide public notice of the Council's intention to consider designating the proposed residential targeted area. If the Council approves the Resolution of Intent, staff will prepare a report for the hearing with proposed changes to the TMC. FINANCIAL IMPACT No financial impact at this time because this item is only setting a public hearing. RECOMMENDATION The Council is being asked to approve the resolution and consider this item at the July 24, 2023 Committee of the Whole meeting and subsequent Special Meeting that same night. ATTACHMENTS Draft resolution with Exhibit A — Proposed Southcenter Residential Targeted Area 32 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, STATING THE CITY'S INTENT TO CONSIDER DESIGNATING A RESIDENTIAL TARGETED AREA FOR THE PURPOSE OF ESTABLISHING A MULTI -FAMILY PROPERTY TAX EXEMPTION PROGRAM, AND SETTING THE TIME FOR A PUBLIC HEARING TO CONSIDER THE DESIGNATION OF THE AREA. WHEREAS, chapter 84.14 of the Revised Code of Washington (RCW) provides for exemption from ad valorem property taxation for eligible improvements associated with qualified multiple -unit housing in urban centers; and WHEREAS, in order to establish a multi -family property tax exemption program, the City must designate one or more residential targeted areas within which qualified projects may apply for tax exemption; and WHEREAS, the King County Countywide Planning Policies (KCCPP), developed pursuant to the Washington State Growth Management Act, have established standards for cities to plan for their share of regional growth and affordable housing; and WHEREAS, the Southcenter area currently lacks sufficient available, desirable, and convenient residential housing available to all ages, including affordable housing, to meet the needs of the public who would be likely to live and work in the area, if affordable, desirable, attractive, and livable places were available; and WHEREAS, the Southcenter area includes the Tukwila South Overlay zone, which has capacity for new development, and the Tukwila Urban Center zone, which is one of the region's designated urban growth centers and has access to high capacity transit; and WHEREAS, the City intends to assist in achieving its residential growth targets and goals in the City's Housing and Urban Center Element of the City's Comprehensive Plan by encouraging new multi -family housing in the Southcenter area; and WHEREAS, on December 1, 2014, the City Council adopted Ordinance No. 2462, which established a multi -family property tax exemption program and designated a residential targeted area that covered the portion of the Tukwila Urban Center's Transit Oriented Development district that lies west of the Green River; and CC:\Legislative Development\Multi-Family Property Tax Exemption Program 7-11-23 Derek Speck: Review by Andy Youn Page 1 of 2 33 WHEREAS, the City desires to expand the boundaries of the residential targeted area to include all of the Tukwila Urban Center zone and the Tukwila South Overlay zone, hereafter collectively referred to as the "Southcenter residential targeted area," for the purposes of establishing a multi -family property tax exemption program per chapter 84.14 RCW; and WHEREAS, RCW 84.14.040(2) states that a governing authority may adopt a resolution of intention to designate an area described in the resolution; and WHEREAS, in accord with RCW 84.14.040(2), the resolution must state the time and place of a hearing to be held by the governing authority to consider the designation of the area; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. The City of Tukwila intends to consider designating the area within the boundaries of the Tukwila Urban Center zone and the Tukwila South Overlay zone, as shown on maps attached hereto and incorporated herein by reference as Exhibit A, as the Southcenter residential targeted area for the purposes of establishing a multi -family property tax exemption program per chapter 84.14 RCW. Section 2. A public hearing to consider designating the Southcenter residential targeted area will be held ata Committee of the Whole meeting of the City Council on August 14, 2023. The meeting will be held at 7:00 p.m. in the Council Chambers at 6200 Southcenter Boulevard, Tukwila, Washington. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Special Meeting thereof this day of , 2023. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC Mohamed Abdi City Clerk Acting Council President APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Resolution Number: Office of the City Attorney Attachment: Exhibit A — Maps of Proposed Southcenter Residential Targeted Area CC:\Legislative Development\Multi-Family Property Tax Exemption Program 7-11-23 Derek Speck: Review by Andy Youn 34 Page 2 of 2 Ren Southcenter Residential Targeted Area — TUC Portion I. =111 law Mir ZVI' 5. Jr i NW NW Om s y arl 11' 7t 1- �11l1 k 11k� G to • d -7ff r r r . 1,1,hwt+ Anti. -¶.',flay f,u ruc-w( uc. ■ 1 �l. f TUC -WP r Alt o 7/6/2023, 2:40:05 PM I Parcels 0 City Limits -- 1 Overlay Areas TUC -RC Tukwila Urban Center- Regional Center TUC -CC Tukwila Urban Center - Commercial Corridor TUC -WP Tukwila Urban Center - Workplace Zoning 11.. TUC-TOD Tukwila Urban Center -Transit Oriented Development TUC -P Tukwila Urban Center- Pond 1:18,056 0 0.13 0.25 0.5 mi 0 0.23 0.45 City of Tukwila, King County, King County 0.9 km City of Tukwila 35 Southcenter Residential Targeted Area — TSO Portion 1111}J1111 I__ I Ii7TVITI1 I, -_ ILII 11 1 �11f111FIS1b 11Fllii :'ll- FP•Til NY1 Il TUC -P �. — uc-wP iIrw rF :11�! :.xa�firar!- 11 Lit new Inn. in 41111ii ; : ��■ ';i lin • r TUC -WP NeRfloy or Fart YNri7f:J ,eke 11'1111ll1111,. ami.:, i f. 1 wigwag Icon .2 • eI tib- En zpoiwlA �r - LT1ap/Zi} r vnllry FI••grr {;011trTnina P4rie \-\ 7/6/2023, 2:44:48 PM Parcels 0 City Limits L..] Overlay Areas Zoning TUC -P Tukwila Urban Center- Pond TUC -CC Tukwila Urban Center - Commercial Corridor TUC -WP Tukwila Urban Center - Workplace 36 1:18,056 0 0.13 0.25 0.5 mi 0 0.23 0.45 City of Tukwila, King County, King County 0.9 km City of Tukwila