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019-23 - Family Legacy Development, LLC - ContractPORT ORCHARD CITY OF Agreement Rec Fee $ 216 50 03/13/2023 02 04 PPS P,jul Andrews, KitsaF Co Auditor Name and Mailing Address City of Port Orchard -Clerk's Office 216 Prospect Street Port Orchard, WA 98366 The Recorder is required to use only the information you provide on this cover sheet to index the document. Type or print legibly. 202303130126 Page: 1 of 14 Document Title(s): C019-23 Multifamily Housing Limited Property Tax Exemption Agreement Auditor's File Number of Document (s) Referenced: Grantor(s) person(s) that conveys, sells or grants interest in property: City of Port Orchard Grantee(s) person that buys, receives or to whom conveyance of property is made: Family Legacy Development, LLC Abbreviated Legal Description: • Quarter, Quarter, Section, Township, Range (and Government lot # if applicable); OR • Plat/Condo Name, lot or unit number, building or block number; OR • Short Plat, Large Lot number, lot number and auditor file number SW QUARTER OF THE NW QUARTER, SECTION 1, TOWNSHIP 23 NORTH, RANGE 1 EAST, AFN 8009020109 Assessor's 14 digit Tax Parcel Number: 012301-2-078-2000 04/25/14 Contract No. 019-23 CITY OF PORT ORCHARD MULTIFAMILY HOUSING LIMITED PROPERTY TAX EXEMPTION AGREEMENT THIS AGREEMENT is entered into this 26 day of January 2023, by and between Family Legacy Development, LLC, a Washington limited liability company (hereinafter referred to as the "Owner"), and the City of Port Orchard, a municipal corporation of the State of Washington (hereinafter referred to as the "City"). WITNESSETH: WHEREAS, the City has an interest in stimulating new construction or rehabilitation of multi- family housing in Residential Target Areas in orderto reduce development pressure on single-family residential neighborhoods, to increase and improve housing opportunities, and to encourage development densities supportive of transit use; and WHEREAS, the City has, pursuant to the authority granted to it by Chapter 84.14 RCW, designated various Residential Target Areas for the provision of a limited property tax exemption for new multi -family residential housing; and WHEREAS, the City has, through Chapter 3.48 Port Orchard Municipal code (POMC), enacted a program whereby property owners may qualify for a Final Certificate of Tax Exemption which certifies to the Kitsap County Assessor that the owner is eligible to receive a limited property tax exemption; and WHEREAS, the Owner is interested in receiving the multiple family property tax exemption for new multifamily residential housing units in a residential targeted area; and WHEREAS, the Owner has submitted to the City a complete application form for no fewer than ten (10) units of new multifamily housing within a residential structure or as part of an urban development; and WHEREAS, the Owner has submitted to the City preliminary site plans and floor plans for multi -family residential housing more particularly described in Exhibit A which is attached hereto and incorporated by reference herein (the "Project") to be constructed on said property (the "Site") legally described as: LOT C OF SHORT PLAT NO. 2364 AS RECORDED UNDER AUDITOR'S FILE NO. 8009020109, RECORDS OF KITSAP COUNTY, WASHINGTON; BEING A PORTION OF SOUTHWEST QUARTER OF THE NORTHWEST QUARTER, SECTION 1, TOWNSHIP 23 NORTH, RANGE 1 EAST, W.M., KITSAP COUNTY, WASHINGTON.>—TOGETHER WITH THAT PORTION PER SUPERIOR COURT CAUSE NO.20-2-01545-18, DESCRIBED AS FOLLOWS: THE SOUTH 10 ACRES OF SOUTHWEST QUARTER OF THE NORTHWEST QUARTER, SECTION 1, TOWNSHIP 23 NORTH, RANGE 1 EAST, W.M., KITSAP COUNTY, WASHINGTON; EXCEPT THE WEST 271.77 FEET; EXCEPT ANY Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 1 1752137.3 - 366922 -0021 PORTION LYING EAST OF THE WEST 535.77 FEET; EXCEPT SHORT PLAT NO. 2384 RECORDED UNDER AUDITOR'S FILE NO. 8009020109. Kitsap County Tax Assessor Parcel No. 012301-2-078-2000 located at 1695 SE Salmonberry Road in the City of Port Orchard WHEREAS, the City has determined that the improvements will, if completed as proposed, satisfy the requirements of for a Final Certificate of Tax Exemption; NOW, THEREFORE, the City and the Owner do mutually agree as follows: 1. The City agrees to issue the Owner a Conditional Certificate of Acceptance of Tax Exemption. 2. The Owner agrees to construct on the Site multi -family residential housing generally as described in the site plans, floor plans, and elevations on file (22-980 and 22-981) with the City as of the date of administrative approval of this Agreement. Provided however, that the building permits (22-980 and 22-981) as approved by the City will establish the final configuration of the development which may differ from the site plan and other earlier submittals. 3. The Project must comply with all applicable zoning requirements, land use requirements, design review requirements and all building, fire, and housing code requirements contained in the Port Orchard Municipal Code (herein referred to as the "POMC") at the time a fully complete application for a building permit is submitted to the City. 4. The new multiple -unit housing must provide for a minimum of fifty (50) percent of the space for permanent residential occupancy. The Project must include at least ten (10) units of multifamily housing within a residential structure or as part of an urban development. 5. The Owner agrees to complete construction of the agreed upon improvements within three years from the date the City issues the Conditional Certificate of Acceptance of Tax Exemption, or within any extension thereof granted by the City. 6. The Owner is requesting a twelve-year limited property tax exemption. Therefore,, the Owner by this Agreement commits to renting or selling at least twenty percent (20%) of the multifamily housing units constructed on the site as housing units affordable for low or moderate - income households as defined by Section 3.48.040 (1) (c) POMC as follows: A. A minimum of 20 percent of all residential units in the development shall be rented for at least 10 percent below fair market rent for 12 years, to tenants whose household annual income is: At or below 40 percent of median family income, for housing units in congregate residences or small efficiency dwelling units; Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 2 1752137.3 - 366922 -0021 ii. At or below 65 percent of median family income for one -bedroom units; iii. At or below 75 percent of median family income for two -bedroom units; and iv. At or below 80 percent of median family income for three -bedroom and larger units. B. If calculations for the minimum 20 percent of the residential units required under this section result in a fraction, then the minimum number of residential units required to meet the affordable housing requirement shall be rounded up to the next whole number. C. At the time of this Agreement, the Owner is proposing the following unit mix for this 24-unit project: Building Studio 1-Bedroom 2-Bedroom 3-Bedroom Total Units 1 — - - - 12 - 12 2 - 12 - - 12 TOTAL UNITS (includes - 12 12 - 24 affordable) Affordability Studio 3-Bedroom Total 1-Bedroom 2-Bedroom Requirements (40% MFI) (65% MFI) (75% MFI) (80% MFI) Required Affordable Units Required Affordable - 3 3 - 6 Units by Type 7. This unit count and mix may change but will still be required to comply with Chapter 3.48 POIVIC with regard to the percentage, affordability and location of units. The Owner agrees, upon completion of the improvements and upon issuance by the City of a temporary or permanent certificate of occupancy, to file with the City's Department of Community Development the following: Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 3 1752137.3 - 366922 -0021 a. A statement of expenditures made with respect to each multi -family housing unit and the total expenditures made with request to the entire site; b. A description of the completed work and a statement of qualification for the exemption; and C. A statement that the work was completed within the required three (3) year period or any authorized extension. d. If applicable, that the project meets the affordable housing requirements as described in RCW 84.14.020. 8. The City agrees, conditioned on the Owner's successful completion of the improvements in accordance with the terms of this Agreement and on the Owner's filing of the materials described in the preceding paragraph, to file an eight or twelve year (as applicable) Final Certificate of Tax Exemption with the Kitsap County Assessor. 9. The Owner agrees, within thirty (30) days following the first anniversary of the City's filing of the Final Certificate of Tax Exemption and each year thereafter for a period of twelve years to file a notarized and sworn declaration with the City's Department of Community Development stating all of the following: a. A statement of occupancy and vacancy of the multi -family units during the previous twelve (12) months; b. A certification that the property has not changed use and continues to be in compliance with this Agreement and with Chapter 3.48 POMC; and C. A description of changes or improvements constructed after issuance of the certificate of tax exemption; d. The total monthly rent of each multifamily housing unit rented or the total sale amount of each unit sold during the 12 months ending with the anniversary date; e. A breakdown of the number, type, and specific multifamily housing units rented or sold during the 12 months ending with the anniversary date; f. Information demonstrating the owner's compliance with the affordability requirements of this chapter, including, but not limited to, the income of each renter household at the time of initial occupancy or the income of each purchaser of owner -occupied units at the time of purchase; g. The value of the tax exemption for the project; Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 4 1752137.3 - 366922 -0021 h. A statement of the income of each renter household at the time of initial occupancy and the income of each initial purchaser of owner -occupied units at the time of purchase for each of the units receiving a tax exemption and a summary of these figures; i. Any information needed by the City to file its annual report pursuant to Port Orchard Municipal Code (POMC) 3.48.120 and any additional information requested by the City in regards to the units receiving a tax exemption.; and j. Any additional information requested by the city pursuant to meeting any reporting requirements under Chapter 84.14 RCW. 10. The Parties acknowledge that the units are to be used an occupied for multifamily residential use. The Parties further acknowledge that the certificate of occupancy issued by the City is for multi -family residential units. The Owner acknowledges and agrees that the units shall be used primarily for residential occupancy and any business activities shall only be incidental and ancillary to the residential occupancy. 11. If the Owner converts to another use any of the new multi -family residential housing units constructed under this Agreement, the Owner shall notify the Kitsap County Assessor and the City's Department of Community Development within sixty (60) days of such change in use. 12. The Owner agrees to notify the City promptly of any transfer of Owner's ownership interest in the Site or in the improvements made to the Site under this Agreement. 13. For purposes of this Agreement, "Owner" shall mean the Property Owner if the development is comprised of rental units or shall mean the Owners Association of a condominium complex (if the development contains any ownership units) once such association is established. The Owner shall be responsible for all reporting requirements required herein on behalf of the owners of individual condominium units, if applicable. 14. If the Project includes any owner -occupied units, the Owner is required to form an Owner's Association to be organized under RCW 64.34.300 for all owner -occupied units within the development. Such organization shall remain operational and in effect until at least the length of the exemption period has expired and the final report is filed with the City. This Owner's Association shall assume the responsibility for collecting from all individual unit owners the information and documents required to complete the annual reporting requirements and for filing the required annual report with the city pursuant to Section 9 of this Agreement and Chapter 3.48 POMC. 15. The City reserves the right to cancel the Final Certificate of Tax Exemption should the Owner, its successors and assigns, fail to comply with any of the terms and conditions of this Agreement. If the exemption is cancelled for non-compliance, Owner acknowledges that state law requires that an additional real property tax is imposed in the amount of (A) the difference between the tax paid and the tax that would have been paid if it had included the value of the non -qualifying Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 5 1752137.3 - 366922 -0021 improvements, dated back to the date that the improvements became non -qualifying; (B) a penalty of 20% of the difference calculated under paragraph (A) of this paragraph; and (C) interest at the statutory rate on delinquent property taxes and penalties, calculated from the date the tax would have been due without penalty if the improvements had been assessed without regard to the exemptions provided by Chapter 84.14 RCW and POMC Chapter 3.48 POMC. Applicant acknowledges that, pursuant to RCW 84.14.110, any additional tax owed, together with interest and penalty, becomes a lien on that portion of the Property on which the Project is constructed and attaches at the time the portion of the Property is removed from multifamily use or the amenities no longer meet applicable requirements, and that the lien has priority to and must be fully paid and satisfied before a recognizance, mortgage, judgment, debt, obligation, or responsibility to or with which the Property may become charged or liable. Applicant further acknowledges that RCW 84.14.110 provides that any such lien may be foreclosed in the manner provided by law for foreclosure of liens for delinquent real property taxes. 16. Nothing in this Agreement shall permit or be interpreted to permit either Party to violate any provision of Chapter 84.14 RCW or POMC Chapter 3.48. 17. Modification. No modifications of this Agreement shall be made unless mutually agreed upon by the Parties in writing. 18. Acknowledgement of Tax Liability. The Owner acknowledges its awareness of the potential tax liability involved if and when the property ceases to be eligible for the incentive provided pursuant to this Agreement. Such liability may include additional real property tax, penalties and interest imposed pursuant to RCW 84.14.110. The Owner further acknowledges its awareness and understanding of the process implemented by the Kitsap County Assessor's Office for the appraisal and assessment of property taxes. The Owner agrees that the City is not responsible for the property value assessment imposed by Kitsap County at any time during the exemption period. 19. City's Right to Audit. The Owner acknowledges and agrees that the City has the right to audit or review appropriate records to assure compliance with this Agreement and POMC Chapter 3.48 and to perform evaluations of the effectiveness of the Multifamily Tax Exemption program. The Owner agrees to make appropriate records available for review or audit upon seven days' written notice by the City. 20. Notices. All notices to be given pursuant to this Agreement shall be in writing and shall be deemed given when hand -delivered within normal business hours, on the day of delivery when sent via overnight delivery with a common carrier, or two business days after having been mailed, postage prepaid, to the Parties hereto at the addresses set forth below, or to such other place as a Party may from time to time designate in writing. CITY: Department of Community Development Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 6 1752137.3 - 366922 -0021 City of Port Orchard 216 Prospect Street Port Orchard, WA 98366 Attn: Director OWNER: Family Legacy Development, LLC Attn: Steve Novotny 7809 Pacific Ave Tacoma, WA 98408 21. Severability. In the event that any term or clause of this Agreement conflicts with applicable law, such conflict shall not affect other terms of this Agreement which can be given effect without the conflicting term or clause, and to this end, the terms of this Agreement are declared to be severable. 22. Recording. This Agreement shall be recorded at the Owner's expense and shall be a covenant running with the land and shall be binding on the assigns, heirs, and successors of the Owner. 23. Applicable Law, Resolution of Disputes, and Attorneys' Fees. Jurisdiction of any resulting litigation shall be filed in Kitsap County Superior Court, Kitsap County, Washington. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. The non -prevailing Party in any action brought to enforce this Agreement shall pay the other Parties' expenses and reasonable attorney's fees. IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day and year first above written. CITY OF PORT ORCHARD Robert Putaansuu, Mayor 7 ee_ O )---)C� Ck. Nick Bond, Director Dept. of Community Development PROPERTY OWNERS By: 6;we 1 V 01( E) Its. By: Its: Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 7 1752137.3 - 366922 -0021 DocuSign Envelope ID: 336D1D95-E6D1-44EB-A7F6-92F39DE744AA City of Port Orchard 216 Prospect Street Port Orchard, WA 98366 Attn: Director OWNER: Family Legacy Development, LLC Attn: Steve Novotny 7809 Pacific Ave Tacoma, WA 98408 21. Severability. In the event that any term or clause of this Agreement conflicts with applicable law, such conflict shall not affect other terms of this Agreement which can be given effect without the conflicting term or clause, and to this end, the terms of this Agreement are declared to be severable. 22. Recording. This Agreement shall be recorded at the Owner's expense and shall be a covenant running with the land and shall be binding on the assigns, heirs, and successors of the Owner. 23. Applicable Law, Resolution of Disputes, and Attorneys' Fees. Jurisdiction of any resulting litigation shall be filed in Kitsap County Superior Court, Kitsap County, Washington. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington. The non -prevailing Party in any action brought to enforce this Agreement shall pay the other Parties' expenses and reasonable attorney's fees. IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the day and year first above written. CITY OF PORT ORCHARD Robert Putaansuu, Mayor Docu SJiggnned by: [_( Nick Bond, Director Dept. of Community Development PROPERTY OWNERS By:'Y Its: fvlc, r'r!LAbA-t_ By: Its: Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 7 1752137.3 - 366922 -0021 Noah Crocker Finance Director Attest: Brandy Wallace, CIVIC, Cit Clerk Approved as to Form: t aI-Ar' Charlotte A. Archer, City Attorney Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 8 1752137.3-366922-0021 DocuSign Envelope ID: 336D1D95-E6D1-44EB-A7F6-92F39DE744AA Noah Crocker Crocker Finance Director Attest: Brandy Wallace, CIVIC, City Clerk Approved as to Form: FDoouS� Char, otte A. Archer, City Attorney Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 8 1752137.3 - 366922 -0021 NOTARY BLOCK FOR FAMILY LEGACY DEVELOPMENT, LLC STATE OF WASHINGTON ss. COUNTY OFF } I certify that I know or have satisfactory evidence that is the person who appeared before me, and said person acknowledged that (he/she) signe this instrument, on opph stated that (W.5he) was authorized to execute the instrument and acknowledged it as the Q t of Family Legacy Development, LLC to be the free and voluntary act of such pa r Jhe uses and purposes mentioned in the instrument. Dated: ��lvt� r 30 20 �t"IlEiq Y DFBQ��ifJi NO toTARY PUBUG c/ 1 rr ��rrrr+ .\ j#(print,poylype name} NOTARY PUBLIC in and for the State of Washington, residing at: Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 9 1752137.3 - 366922 -0021 Yarr,� My Commission expires: NOTARY BLOCK FOR CITY OF PORT ORCHARD STATE OF WASHINGTON ) ) ss. COUNTY OF KITSAP ) I certify that I know or have satisfactory evidence that Robert Putaansuu is the person who appeared before me, and said person acknowledged that (he/she) signed this instrument, on oath stated that he was authorized to execute the instrument and acknowledged it as the Mayor of Port Orchard to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: - I 2-0 ►►►►s►ui+rrr� Z M.'(J �'0�01ARy w woe Or �iryJO eNurt!►?a�•�t���`� Multifamily Housing Limited Property Tax Exemption Agreement Family Legacy Development, LLC Page 10 1752137.3 - 366922 -0021 (print or type name) NOTARY PUBLIC in and for the State of Washingto , residing at: My Commission expires: J Exhibit A Plans deemed not to meet minimum recording requirements for Exhibit A. To obtain a copy of the Exhibit A contact the City of Port Orchard Department of Community Development for file LU22-Tax Exemption-03 - Salmonberry Apartments.