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076-21 - Resolution - Multifamily Property Tax Exemption with Cedar Cove LLCRESOLUTION NO. 076-21 A RESOLUTION OF THE CITY OF PORT ORCHARD, WASHINGTON, TO AUTHORIZE THE ACCEPTANCE OF A MULTIFAMILY PROPERTY TAX EXEMPTION AGREEMENT BETWEEN CEDAR COVE, LLC. AND THE CITY RELATING TO THE TERMS AND CONDITIONS OF THE SUBJECT MULTIFAMILY HOUSING PROJECT AND ITS ELIGIBILITY FOR THE 12-YEAR PROPERTY TAX EXEMPTION PROVIDED BY CHAPTER 3.48 OF THE PORT ORCHARD MUNICIPAL CODE. WHEREAS, the Port Orchard Municipal Code (POMC), Chapter 3.48, provides a multifamily property tax exemption pursuant to the requirements of that chapter; and WHEREAS, POMC 3.48.060 provides that, to be eligible for the multifamily property tax exemption, the subject project must meet the following requirements: (1) the project must be located within a residential targeted area as defined in POMC 3.48.040; (2) the project must not displace existing tenants; (3) existing dwelling units proposed for rehabilitation must fail to comply with one or more standards of the applicable state or city building codes; (4) the new, converted, or rehabilitated multiple -unit housing must provide for a minimum of 50 percent of the space for permanent residential occupancy and must include at least 10 units of multifamily housing; (5) new construction of multifamily housing and rehabilitation improvements must be completed within three years from the date of approval of the application; and (6) the project must be designed to comply with the city's comprehensive plan, building, housing, and zoning codes, and any other applicable regulations, standards or guidelines; and WHEREAS, POMC 3.48.080 requires that, if the Director of the Department of Community Development approves an application for the multifamily property tax exemption, the applicant must enter into an agreement with the City regarding the terms and conditions of the implementation of the project; and WHEREAS, the multifamily property tax exemption agreement must be approved by the Port Orchard City Council, in the form of a resolution, regarding the terms and conditions of the project and eligibility for exemption under Chapter 3.48 POMC; and WHEREAS, the City received an application for multifamily property tax exemption from Disney and Associates, Inc. (subsequently the application was amended to reference Cedar Cove, LLC.), pertaining to a project titled Cedar Cove Commercial (the "subject project") (previously referred to as Plisko Apartments) under the "Type 1: Affordable Housing with Transit Access" residential targeted area; and WHEREAS, the Director of the Department of Community Development has determined that the subject project meets the eligibility requirements set forth in POMC 3.48.060; has approved the application for the 12-year Type 1 tax exemption; and recommends approval of the attached Multifamily Housing Limited Property Tax Exemption Agreement as accurately setting forth the terms and conditions of the subject project and eligibility for exemption under Chapter 3.48 POMC; and Resolution No. 076-21 Page 2 of 10 WHEREAS, the Port Orchard City Council has determined to approve the attached Multifamily Housing Limited Property Tax Exemption Agreement; now, therefore, THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: 1. Recitals. The recitals set forth above are hereby incorporated by reference as if set forth in full herein. Authorization forSignature. The City of Port Orchard hereby authorizes the Mayor to accept and sign the attached Multifamily Housing Limited Property Tax Exemption Agreement. PASSED by the City Council of the City of Port Orchard, SIGNED by the Mayor Pro-Tem and attested by the City Clerk in authentication of such passage this 9t" day of November 2021. ATTES Brandy Rinearson, MMC, City Clerk Ashby, Mayor Pro- o4•.�poR�r; s �°?•AZ - CITY OF PORT ORCHARD MULTIFAMILY HOUSING LIMITED PROPERTY TAX EXEMPTION AGREEMENT THIS AGREEMENT is entered into this tL day of 00V gr,I+ , 2W-J, by and between Cedar Cove, 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 order to 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 mufti -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: PARCEL A THAT PORTION OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER, SECTION 25, TOWNSHIP 24 NORTH, RANGE 1 EAST, IN KITSAP COUNTY, DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE WEST HALF OF SAID SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER; THENCE NORTH 360 FEET; THENCE WEST 305 FEET THENCE SOUTH 360 FEET; THENCE EAST 305 FEET TO THE POINT OF BEGINNING; EXCEPT STATE HIGHWAY NO. 16 (FORMERLY STATE HIGHWAY NO. 14); AND EXCEPT PLISKO LANE; TOGETHER WITH THAT PORTION OF VACATED COUNTY ROAD WHICH ATTACHES BY OPERATION OF LAW. EXCEPT THAT PORTION CONVEYED UNDER AUDITOR'S FILE NO. 9402180200, DESCRIBED AS FOLLOWS: THAT PORTION OF THE 1460825v1366922-0021 1480311.1- 366922 -0021 SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER, SECTION 25, TOWNSHIP 24 NORTH, RANGE 1 EAST, W.M., IN KITSAP COUNTY, WASHINGTON. Pierce County Tax Assessor Parcel No. 252401-3-042-2002 located at 1601 Plisko Lane 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: 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 substantially as described in the most recent site plans, floor plans, and elevations on file with the City as of the date of administrative approval of this Agreement. 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 complete application for a building permit is received. 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; 1460825v1366922-0021 1480311.1- 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 57-unit project: Building Total Units 20% of Units and Mix Median Family Income South Building 23 5 1 BR 17 3 At or below 65 percent AMI 2 BR 3 1 At or below 75 percent AMI 3 BR 3 1 At or below 80 percent AMI West Building 34 7 1 BR 25 5 At or below 65 percent AMI 2 BR 9 2 At or below 75 percent AMI Grand Total 57 12 7. This unit count and mix may change, but will still be required to comply with Chapter 3.48 POMC with regard to the percentage and affordability 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: 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; 1460825v1366922-0021 1480311.1- 366922 -0021 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; 1460825v1366922-0021 1480311.1- 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 1460825v1366922-0021 1480311.1- 366922 -0021 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 (1) the difference between the tax paid and the tax that would have been paid if it had included the value of the non -qualifying improvements, dated back to the date that the improvements became non - qualifying; (2) a penalty of 20% of the difference calculated under paragraph (a) of this paragraph; and (3) 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. No modifications of this Agreement shall be made unless mutually agreed upon by the parties in writing. 18. 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. 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. 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, when actually received by facsimile transmission, 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. 1460825v1366922-0021 1480311.1- 366922 -0021 CITY: Department of Community Development City of Port Orchard 216 Prospect Street Port Orchard, WA 98366 Attn: Director OWNER: Ceadar Cove, LLC Attn: Robert Disney 5706 Bethel Road SE, #100 Port Orchard WA 98367 21. 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. 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. 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 Nick Bond, Director Dept. of Community Development Noah Crocker Finance Director Attest: 1460825v1366922-0021 1480311.1- 366922 -0021 PROPERTY OWNERS By: 4�� (0 & Its: ■ Brandy Rinearson, CIVIC, City Clerk Approved as to Form: Charlotte A. Archer, City Attorney NOTARY BLOCK FOR CEDAR COVE, LLC STATE OF WASHINGTON ) ss. COUNTY OF ) certify that I know or have satisfactory evidence that 'Qa1x'f a- S +40LL 'JQO�%t"l is the person who appeared before me, and Said person acknowledged that (he/she)'signed this instrument, on oath stated that (he/she) was authorized to execute the instrument and acknowledged it as the 0w,rNe ,6 of Cedar Cove, LLC to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument. Dated: W 1\ la\ 20at i NOTARY N, PUBLIC z� P �4Irlit iWAS�,,�;.,�. 1460825A 366922-0021 1480311.1- 366922 -0021 ,,\,- VNkv (pri'it or type name) NOTARY PUBLIC in and for the State of Washington, residing at: My Commission expires: a�a7+a pia 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/she) 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: 020-7 A- N-1 5-,20' :p i un ZZ �N.4 Oi 1/ �'WA S ri �N 1460825v1366922-0021 1480311.1- 366922 -0021 l-) (print or type name) NOTARY PUBLIC in and for the State of W shington, residi at: My Commission expires: 1� 1460825v1366922-0021 1480311.1- 366922 -0021