023-16 - Ordinance - New Chapter 3.48 Multifamily Property Tax ExemptionORDINANCE NO. 023-16
AN ORDINANCE OF THE CITY OF PORT ORCHARD, WASHINGTON, CREATING PORT
ORCHARD MUNICIPAL CODE CHAPTER 3.48, MULTIFAMILY PROPERTY TAX
EXEMPTION; PROVIDING FOR SEVERABILITY; AND SETTING AN EFFECTIVE DATE.
WHEREAS, Chapter 84.14 RCW provides limited exemptions from ad valorem property
taxation for multifamily housing in designated residential targeted areas within urban centers,
to encourage increased residential opportunities through new construction or rehabilitation of
existing vacant and underutilized buildings for multifamily housing, including affordable housing
units; and
WHEREAS, the residential targeted area for the multifamily property tax exemption is
within an urban center as defined by Chapter 84.14 RCW and as designated in the City's
Comprehensive Plan; and
WHEREAS, the residential targeted area lacks sufficient available, desirable, and
convenient residential housing, including affordable housing, to meet the needs of the public
who would be likely to live in the urban center if affordable, desirable, attractive, and livable
residences were available; and
WHEREAS, the City desires to encourage additional housing, including affordable
housing units, and to encourage the redevelopment and revitalization of distressed
neighborhoods in the residential targeted area; and
WHEREAS, on July 1, 2016, the City published a Notice of Public Hearing as a legal
advertisement in the Port Orchard Independent; and
WHEREAS, on July 12, 2016, the City Council conducted a public hearing and considered
all testimony; now, therefore,
THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, DO ORDAIN AS
FOLLOWS:
SECTION 1. The City Council adopts all of the "Whereas" sections of this Ordinance as
findings in support of this Ordinance.
SECTION 2. Port Orchard Municipal Code (POMC) Chapter 3.48 is adopted as follows:
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Chapter 3.48
MULTIFAMILY PROPERTY TAX EXEMPTION
Sections:
3.48.010 PURPOSE.
3.48.020 DEFINITIONS.
3.48.030 RESIDENTIAL TARGET AREAS-CRITERIA-DESIGNATION.
3.48.040 TERMS OF THE TAX EXEMPTION.
3.48.050 PROJECT ELIGIBILITY.
3.48.060 APPLICATION PROCEDURE.
3.48.070 APPLICATION REVIEW-ISSUANCE OF CONDITIONAL
CERTIFICATE—DENIAL-APPEAL.
3.48.080 EXTENSION OF CONDITIONAL CERTIFICATE.
3.48.090 APPLICATION FOR FINAL CERTIFICATE.
3.48.100 ISSUANCE OF FINAL CERTIFICATE.
3.48.110 ANNUAL COMPLIANCE REVIEW-REPORTING.
3.48.120 CANCELLATION OF TAX EXEMPTION.
3.48.130 CONFLICT OF PROVISIONS.
3.48.010 PURPOSE.
As provided for in Chapter 84.14 RCW, the purpose of this chapter is to provide limited
exemptions from ad valorem property taxation for multifamily housing in designated
residential targeted areas to:
(1) Encourage increased residential opportunities, including affordable housing units,
within areas of the City designated by the City Council as residential targeted areas;
and/or
(2) Stimulate new construction or rehabilitation of existing vacant and underutilized
buildings for multifamily housing in designated residential targeted areas to increase
and improve housing opportunities, including affordable housing; and
(3) Accomplish the planning goals required under the Growth Management Act,
Chapter 36.70A RCW as implemented by the City's comprehensive plan.
3.48.020 DEFINITIONS.
When used in this chapter, the following terms shall have the following meanings,
unless the context indicates otherwise:
(1) "Affordable housing" means the definition provided for in RCW 84.14.010.
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(2) "Department" means the City Department of Community Development.
(3) "Director" means the Director of the Department of Community Development, or
designee.
(4) "High-cost area" means the definition provided for in RCW 84.14.010.
(5) "Household" means the definition provided for in RCW 84.14.010.
(6) "Low-income household" means the definition provided for in RCW 84.14.010.
(7) "Moderate-income household" means the definition provided for in RCW
84.14.010.
(8) "Multifamily housing" (for the purposes of this section) means a building having ten
(10) or more dwelling units not designed or used as transient accommodations and not
including hotels and motels. Multifamily units may result from new construction or
rehabilitated or conversion of vacant, underutilized, or substandard buildings to
multifamily housing.
(9) "Owner" means the definition provided for in RCW 84.14.010.
(10) "Permanent residential occupancy" means the definition provided for in RCW
84.14.010.
(11) "Rehabilitation improvements" means the definition provided for in RCW
84.14.010.
(12) "Residential targeted area" means the definition provided for in RCW 84.14.010
and the area(s) that have been so designated by the City Council pursuant to this
chapter.
(13) "Substantial compliance" means the definition provided for in RCW 84.14.010.
(14) "Urban center" means the definition provided for in RCW 84.14.010.
3.48.030 RESIDENTIAL TARGET AREAS-CRITERIA—DESIGNATION.
(1) Following notice and public hearing as prescribed in RCW 84.14.040 of the City
Council's intention of designating a residential target area, the City Council may, in its
sole discretion, designate one or more residential targeted areas. Each residential target
area must meet the following criteria, as determined by the City Council:
(a) The area is within an urban center;
(b) The area lacks sufficient available, desirable, and convenient residential housing,
including affordable housing, to meet the needs of the public who would be likely to
live in the urban center if affordable, desirable, attractive, and livable residences
were available; and
(c) Providing additional housing opportunities, including affordable housing, in the
area will assist in achieving one or more of the purposes of this chapter.
(2) In designating a residential targeted area, the City Council may also consider other
factors including, but not limited to:
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(a) Additional housing, including affordable housing units, in the residential targeted
area will attract and maintain an increase in the number of permanent residents;
(b) An increased permanent residential population in the residential targeted area
will help to achieve the planning goals mandated by the Growth Management Act
under Chapter 36.70A RCW, as implemented through the City's current and future
comprehensive plans;
(c) Encouraging additional housing in the residential targeted area is consistent with
public transportation plans; or
(d) Additional housing may contribute to revitalization of a distressed neighborhood
or area within the City.
(3) At any time the City Council may, by resolution, and in its sole discretion, amend or
rescind the designation of a residential targeted area pursuant to the same procedural
requirements as set forth in this chapter for original designation.
(4) The following areas are designated as residential targeted areas under this chapter,
as shown on the map labeled Figure 1: Alternative 1:
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Figure 1: Alternative 1
(5) If a part of any legal lot is within a designated residential targeted area then the
entire lot shall be deemed to lie within such residential targeted area. Property located
outside of, but adjacent to, the described areas is not designated as residential targeted
areas.
3.48.040 TERMS OF THE TAX EXEMPTION.
(1) Duration of Exemption. The value of new housing construction, conversion, and
rehabilitation improvements qualifying under this chapter is exempt from ad valorem
property taxation, as follows:
(a) For eight (8) successive years beginning January 1st of the year immediately
following the calendar year of issuance of the certificate; or
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(b) For twelve (12) successive years beginning January 1st of the year immediately
following the calendar year of issuance of the certificate, if the property otherwise
qualifies for the exemption under this chapter and meets the conditions in this
subsection (l)(b). For the property to qualify for the twelve (12) year exemption
under this subsection, the applicant must commit to renting or selling at least
twenty (20) percent of the multifamily housing units as affordable housing units to
low- and moderate-income households, and the property must satisfy that
commitment and any additional affordability and income eligibility conditions
adopted by the City under this chapter. In the case of projects intended exclusively
for owner occupancy, the minimum requirement of this subsection may be
satisfied solely through housing affordable to moderate-income households.
(i) If calculations for the minimum twenty (20) percent of the multifamily
housing units required under this subsection result in a fraction, then the
minimum number of multifamily housing units for affordable housing shall be
rounded up to the next whole number.
(ii) In projects granted 12-year exemptions, housing units identified for
households with low, affordable, or moderate annual income shall continue to
be made available to low, affordable, or moderate households for the length
of the exemption period.
(iii) The mix and configuration of housing units (e.g., studio, one-bedroom,
two-bedroom) used to meet the requirement for affordable units under this
subsection shall be substantially proportional to the mix and configuration of
the total housing units in the project.
(iv) When a project includes more than one building with multifamily housing
units, all of the affordable housing units required in this subsection must not
be located in the same building.
(2) Limits on Exemption. The exemption does not apply:
(a) To the value of land or to the value of non-housing-related improvements not
qualifying under this chapter.
(b) In the case of rehabilitation of existing buildings, to the value of
improvements constructed prior to submission of the completed application
required under this chapter.
(c) To increases in assessed valuation made by the Kitsap County Assessor on
non-qualifying portions of building or other improvements and value of land nor to
increases made by lawful order of a County board of equalization, the Department
of Revenue, or Kitsap County, to a class of property throughout the County or
specific area of the County to achieve the uniformity of assessment or appraisal
required by law.
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(3) Conclusion of Exemption. At the conclusion of the exemption period, the new or
rehabilitated housing cost shall be considered as new construction for the purposes of
Chapter 84.55 RCW.
3.48.050 PROJECT ELIGIBILITY.
A proposed multifamily housing project must meet all of the following requirements for
consideration for a property tax exemption:
(1) Location. The project must be located within a residential targeted area as defined
in POMC 3.48.030.
(2) Tenant Displacement Prohibited. The project must not displace existing residential
tenants of structures that are proposed for redevelopment. If the property proposed to
be rehabilitated is not vacant, an applicant shall provide each existing tenant housing of
comparable size, quality, and price and a reasonable opportunity to relocate.
(3) Noncompliance with Building Codes. Existing dwelling units proposed for
rehabilitation must fail to comply with one or more standards of the applicable state or
City building codes.
(4) Size of Project. The new, converted, or rehabilitated multiple-unit housing must
provide for a minimum of fifty (50) percent of the space for permanent residential
occupancy. The project, whether new, converted, or rehabilitated multiple-unit housing,
must include at least ten (10) units of multifamily housing within a residential structure
or as part of an urban development. In the case of existing multifamily housing that is
occupied or which has not been vacant for twelve (12) months or more, the multifamily
housing project must also provide for a minimum of four (4) additional multifamily units
for a total project of at least ten (10) units including the four (4) additional units. Existing
multifamily housing that has been vacant for twelve (12) months or more does not have
to provide additional units.
(5) Proposed Completion Date. New construction of multifamily housing and
rehabilitation improvements must be completed within three (3) years from the date of
approval of the application.
(6) Compliance with Guidelines and Standards. The project must be designed to
comply with the City's comprehensive plan, building, housing, and zoning codes, and
any other applicable regulations. The project must also comply with any other standards
and guidelines adopted by the City Council for the residential targeted area.
3.48.060 APPLICATION PROCEDURE.
A property owner who wishes to propose a project for a tax exemption shall complete
the following procedures:
(1) The exemption application provided by the City shall be completed and filed with
the Department prior to issuance of a building permit for the project. The completed
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application shall be accompanied by the application fee as authorized by RCW 84.14.080
and as set forth in the City's current fee resolution.
(2) The exemption application shall contain and require such information as deemed
necessary by the Director, including:
(a) A brief written description of the project, including timing and construction
schedule, setting forth the grounds for the exemption.
(b) Floor and site plans of the proposed project, which may be revised by the
owner, provided such revisions are made and presented to the Director prior to the
City's final action on the exemption application.
(c) For rehabilitation projects, the applicant shall provide a report prepared by a
registered architect identifying property noncompliance with current building
codes. This report shall identify specific code violations and must include
supporting data that satisfactorily explains and proves the presence of a violation.
Supporting data must include a narrative and such graphic materials as needed to
support this application. Graphic materials may include, but are not limited to,
building plans, building details, and photographs.
(d) If applying for a 12-year exemption, it shall include information describing
how the applicant will comply with the affordability requirements set forth in
POMC 3.48.040(l)(b).
(e) A statement from the owner acknowledging the potential tax liability when the
project ceases to be eligible under this chapter.
(f) An affidavit signed by the owner stating the occupancy record of the property
for a period of twelve (12) months prior to filing the application.
(g) Verification of the correctness of the information submitted by the owner's
signature and affirmation made under penalty of perjury under the laws of the
State of Washington.
3.48.070 APPLICATION REVIEW-ISSUANCE OF CONDITIONAL CERTIFICATE-DENIAL—
APPEAL.
(1) Director's Decision. The Director may certify as eligible an application which is
determined to comply with all applicable requirements of this chapter. A decision to
approve or deny an application shall be made within ninety (90) calendar days of receipt
of a complete application.
(2) Approval of Application—Contract Required. If an application is approved, the
applicant shall enter into a contract with the City, regarding the terms and conditions of
implementation of the project, and pursuant to the following:
(a) The contract shall be subject to approval by the City Council, in the form of a
resolution, regarding the terms and conditions of the project and eligibility for
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exemption under this chapter. This contract shall be a covenant running with the
land and shall be binding on the assigns, heirs, and successors of the applicant.
(b) For any development project including owner-occupied units, the contract with
the City shall also require that an owners association organized under RCW
64.34.300 be formed for all owner-occupied units within the development, for at
least the length of the exemption period granted, to 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 for each of the individual homeowners pursuant to POMC
3.48.110.
(c) Amendment of Contract. Within three (3) years of the date from the City
Council's approval of the contract, an owner may request an amendment(s) to the
contract by submitting a request in writing to the Director. The fee for an
amendment is as set forth in the City's current fee resolution. The Director shall
have authority to approve minor changes to the contract that are reasonably within
the scope and intent of the contract approved by the City Council, as solely
determined by the Director. Amendments that are not reasonably within the scope
and intent of the approved contract, as solely determined by the Director, shall be
submitted to the City Council for review and approval. The date for expiration of the
conditional certificate shall not be extended by contract amendment unless all the
conditions for extension set forth in POMC 3.48.080 are met.
(3) Issuance of Conditional Certificate. Upon City Council approval of the contract
required under subsection (2) above, the Director shall issue a conditional certificate of
acceptance of tax exemption. The conditional certificate shall expire three (3) years
from the date of City Council approval unless an extension is granted as provided in this
chapter.
(4) Denial of Application. If an application is denied, the Director shall state in writing
the reasons for denial and shall send notice to the applicant at the applicant's last
known address within ten (10) calendar days of issuance of the denial.
(5) Appeal. Per RCW 84.14.070, an applicant may appeal a denial to the City Council
within thirty (30) calendar days of receipt of the denial by filing a complete appeal
application and fee, as set forth in the City's current fee resolution, with the Director.
The appeal before the City Council will be based on the record made before the
Director. The Director's decision shall be upheld unless the applicant can show that
there is no substantial evidence on the record to support the Director's decision. The
City Council's decision on appeal will be final.
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3.48.080 EXTENSION OF CONDITIONAL CERTIFICATE.
(1) Extension. The conditional certificate and time for completion of the project may
be extended by the Director for a period not to exceed a total of twenty-four (24)
consecutive months. To obtain an extension, the applicant must submit a written
request with a fee, as set forth in the City's current fee resolution, stating the grounds
for the extension. An extension may be granted if the Director determines that:
(a) The anticipated failure to complete construction or rehabilitation within the
required time period is due to circumstances beyond the control of the owner;
provided that financial hardship, regardless of the cause or reason, shall not be
considered by the Director as a circumstance beyond the control of the owner in
order to grant an extension;
(b) The owner has been acting and could reasonably be expected to continue to
act in good faith and with due diligence; and
(c) All the conditions of the original contract (and as amended) between the
applicant and the City will be satisfied upon completion of the project.
(2) Denial of Extension. If an extension is denied, the Director shall state in writing the
reason for denial and shall send notice to the applicant's last known address within ten
(10) calendar days of issuance of the denial.
(3) Appeal. An applicant may appeal the denial of an extension to the Hearing
Examiner within fourteen (14) calendar days of receipt of the denial by filing a complete
appeal application and appeal fee with the Director. The appeal before the Hearing
Examiner shall be processed as a closed record hearing. No appeal to the City Council is
provided from the Hearing Examiner's decision.
3.48.090 APPLICATION FOR FINAL CERTIFICATE.
Upon completion of the improvements agreed upon in the contract between the
applicant and the City and upon issuance of a temporary or permanent certificate of
occupancy, the applicant may request a final certificate of tax exemption by filing with
the Director such information as the Director may deem necessary or useful to evaluate
the eligibility for the final certificate, including the following:
(1) A statement of expenditures made with respect to each multifamily housing unit
and the total expenditures made with respect to the entire property;
(2) A description of the completed work and a statement of qualification for the
exemption;
(3) The total monthly rent or total sale amount of each multifamily housing unit rented
or sold to date;
(4) A statement that the work was completed within the required three (3) year period
or any authorized extension;
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(5) If a 12-year exemption, information on the applicant's compliance with the
affordability requirements of this chapter; and
(6) Any additional information requested by the City pursuant to meeting any reporting
requirements under Chapter 84.14 RCW.
3.48.100 ISSUANCE OF FINAL CERTIFICATE.
(1) Director's Decision. Within thirty (30) calendar days of receipt of all materials
required for a final certificate, the Director shall determine whether the specific
improvements satisfy the requirements of the contract, application, and this chapter.
(2) Granting of Final Certificate. If the Director determines that the project has been
completed in accordance with this chapter and the contract between the applicant and
the City, and has been completed within the authorized time period, the City shall,
within ten (10) calendar days of the expiration of the thirty (30) day review period
above, file a final certificate of tax exemption with the Kitsap County Assessor. The
Director is authorized to cause to be recorded, at the owner's expense, in the real
property records of the Kitsap County Department of Records, the contract with the
City, as amended if applicable, and such other document(s) as will identify such terms
and conditions of eligibility for exemption under this chapter as the Director deems
appropriate for recording, including requirements under this chapter relating to
affordability of units.
(3) Denial of Final Certificate. The Director shall notify the applicant in writing that a
final certificate will not be filed if the Director determines that:
(a) The improvements were not completed within the authorized time period;
(b) The improvements were not completed in accordance with the contract
between the applicant and the City; or
(c) The owner's property is otherwise not qualified under this chapter.
(4) Appeal. An applicant may appeal a denial of a final certificate to the Hearing
Examiner within fourteen (14) calendar days of issuance of the denial of a final
certificate by filing a complete appeal application and appeal fee with the Director. The
appeal before the Hearing Examiner shall be processed as a closed record hearing. No
appeal to the City Council is provided from the Hearing Examiner's decision.
3.48.110 ANNUAL COMPLIANCE REVIEW—REPORTING.
(1) Within thirty (30) calendar days after the first anniversary of the date of filing the
final certificate of tax exemption and each year for the tax exemption period, the
property owner shall be required to file a notarized declaration with the Director
indicating the following:
(a) A statement of occupancy and vacancy of the multifamily units during the
previous twelve (12) months;
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(b) A certification by the owner that the property has not changed use and
continues to be in compliance with the contract with the City and the applicable
requirements of this chapter;
(c) A description of changes or improvements to the property made after the
City's issuance of the final 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) If granted a 12-year exemption, 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; and
(h) Any additional information requested by the City pursuant to meeting any
reporting requirements under Chapter 84.14 RCW.
(2) City staff may also conduct on-site verification of the declaration and reporting
required under this section. Failure to submit the annual declaration and report may
result in cancellation of the tax exemption pursuant to this chapter and shall result in a
review of the exemption per RCW 84.14.110.
(3) If the city issues final tax exemption certificates pursuant to this chapter, the
Director shall submit the report required by RCW 84.14.100 to the state Department of
Commerce by December 31st of each year.
3.48.120 CANCELLATION OF TAX EXEMPTION.
(1) The Director may cancel a tax exemption on a property if he/she determines any of
the following:
(a) The owner is not complying with the terms of the contract or this chapter;
(b) The use of the property is changed or will be changed to a use that is other than
residential;
(c)The project violates applicable zoning requirements, land use regulations,
building, or fire code requirements; or
(d) The owner fails to submit the annual declaration and report specified in POMC
3.48.110.
(2) If the owner intends to convert the multifamily housing to another use, the owner
shall notify the Director and the Kitsap County Assessor in writing within sixty (60)
calendar days of the change in use.
(3) Cancellation may occur in conjunction with the annual review or at any such time
noncompliance has been determined.
Ordinance No. 023-16
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(4) Upon cancellation of the tax exemption, additional taxes, interest, and penalties
shall be imposed on the property, and a priority lien may be placed on the land,
pursuant to state law.
(5) Notice of Cancellation. Upon determining that a tax exemption is to be canceled,
pursuant to RCW 84.14.110(2), the Director shall notify the owner by mail, return
receipt requested.
(6) Appeal of Cancellation. The owner may appeal the determination of cancellation to
the Hearing Examiner by filing a notice of appeal and appeal fee with the City Clerk
within thirty (30) calendar days of the date of the notice of cancellation, specifying the
factual and legal basis for the appeal. The appeal shall be heard by the Hearing Examiner
as a closed record hearing. No appeal to the City Council is provided from the Hearing
Examiner's decision.
3.48.130 CONFLICT OF PROVISIONS.
If any provision of this chapter is in legal conflict with the provisions of Chapter 84.14
RCW, as currently adopted or hereafter amended, the provisions of Chapter 84.14 RCW
shall apply as if set forth in this chapter.
SECTION 3. If any section, sentence, clause or phrase of this ordinance should be held
to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or
unconstitutionality shall not affect the validity of constitutionality of any other section,
sentence, clause or phrase of this ordinance.
SECTION 4. This ordinance shall be in full force and effect 5 days after publication. A
summary of this Ordinance may be published in lieu of the entire ordinance, as authorized by
State Law.
PASSED by the City Council of the City of Port Orchard, APPROVED by the Mayor and
attested by the City Clerk in authentication of such passage this 26th day of July 2016.
Robert Putaansuu, Mayor
ATTEST:
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Brandy Rinearson, CMC, City Clerk
Ordinance No. 023-16
Page 14 of 14
APPROVED AS TO FORM: Sponsored by:
aron Cates, City Attorney Bek Ashby, Councilmember
PUBLISHED: August 5, 2016
EFFECTIVE DATE: August 10, 2016
NOTICE OF CITY OF PORT ORCHARD
ORDINANCE
The following is a summary of an Ordinance approved by the Port Orchard City Council at their regular Council
meeting held July 26th, 2016.
ORDINANCE NO. 023-16
AN ORDINANCE OF THE CITY OF PORT ORCHARD, WASHINGTON, CREATING PORT
ORCHARD MUNICIPAL CODE CHAPTER 3.48, MULTIFAMILY PROPERTY TAX
EXEMPTION; PROVIDING FOR SEVERABILITY; AND SETTING AN EFFECTIVE DATE.
Copies of Ordinance No. 023-16 are available for review at the office of the City Clerk of the City of Port Orchard.
Upon written request a statement of the full text of the Ordinance will be mailed to any interested person without
charge. Thirty days after publication, copies of Ordinance No. 023-16 will be provided at a nominal charge.
City of Port Orchard
Brandy Rinearson
City Clerk
Published: Friday, August 5th, 2016