019-20 - Resolution - Multifamily Property Tax Exemption Agreement with Sedgwick Ventures, LLCRESOLUTTON NO. 019-20
A RESOLUTION OF THE CITY OF PORT ORCHARD, WASHINGTON, TO AUTHORIZE
THE ACCEPTANCE OF A MULTIFAMILY PROPERTY TAX EXEMPTION AGREEMENT
BETWEEN SEDGWICK VENTURES, LLC AND THE CITY RETATING TO THE TERMS
AND CONDITIONS OF THE SUBJECT MUTTIFAMITY HOUSING PROJECT AND ITS
ELIGIBILITY FOR THE 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
WHEREAT POMC 3.48.050 provides that, to be eligible for the multifamily property tax
exemption, the subject project must meet the following requirements: (L) the project must be
located within a residential targeted area as defined in POMC 3.48.030; (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; (a) 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
WHEREAT POMC 3.48.070 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
Sedgwick Ventures, LLC, pertaining to a project titled Sedgwick Multifamily (the "subject project");
and
WHEREAS, the Director of the Department of Community Development has determined
that the subject project meets the eligibility requirements set forth in POMC 3.48.050; has approved
the application for 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. 019-20
Page 2 of 7
WHEREAS, the Port Orchard City Council has determined to approve the attached
Multifamily Housing Limited Property Tax Exemption AgreemenU now, therefore,
THE CITY COUNCIL OF THE CITY OF PORT ORCHARD, WASHINGTON, HEREBY RESOLVES AS
FOILOWS:
1. Recitals. The recitals set forth above are hereby incorporated by reference as if set
forth in full herein.
2. Authorization for Sianature. 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 and attested
by the City Clerk in authentication of such passage this 26 day of May 2020.
Robert Putaansuu, Mayor
Brandy Rinearson, MMC,City Clerk
.$\ti't#{l#'16'
tl-b,uAr*i?'- c(tl =
';#'ffi;u*-R's
CITY OF PORT ORCHARD
M ULTI FAM I LY HOUSING LI M ITED PROPERTY TAX EXEMPTION AG REEM ENT
THIS AGREEMENT is entered into this 26th day of May 202O, by and between Sedgwick
Ventures, 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"l.
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 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 residentialtargeted area; and
WHEREAS, the Owner has submitted to the City a complete application form for no fewer
than ten (1) units of new multifamily housing within a residential structure or as part of an urban
development;
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:
A poRTroN oF THE NW u4 OF THE NW 1/4 OF SECTTON 12,
TOWNSHIP 23 N., RANGE 1 E., W.M. CITY OF PORT ORCHARD, KITSAP
COUNTY, WASHINGTON
Pierce County Tax Assessor Parcel Nos. 122301-053-2006, L223OL-
063-2204, L230L-O64-2003, located at 2000 SE Sedgwick Rd. in the
City of Port Orchard
WHEREAS, the City has determined that the improvement swill, 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:
7. 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 an EIGHT year limited property tax exemption.
7. 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;
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. lf applicable, that the project meets the affordable housing requirements as
described in RCW 84.L4.O20.
8. The City agrees, conditioned on the Owne/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 year 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 eight years,
as applicable, to file a notarized declaration with the City's Department of Community Development
stating 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 continues to be in compliance with this
Agreement; and
c. A description of changed or improvements constructed after issuance of the
certificate of tax exemption.
d. 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.
e. Any information needed by the City to file its annual report pursuant to Port
Orchard Municipal Code (POMC) 3.48.1-10 and any additional information requested bythe City in
regards to the units receiving a tax exemption.
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.
LL lf 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.
t2. 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 Owners Association of a
condominium complex once such association is established which shall be responsible for all
reporting requirements required herein on behalf of the owners of individual condominium units, if
applicable.
L4. 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. lf 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 20o/o 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 KMC. Applicant acknowledges
that, pursuant to RCW 84.L4.ILO, 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 84.1"4.11"0
provides that any such lien may be foreclosed in the manner provided by law for foreclosure of liens
for delinquent real property taxes.
15. Nothing in this Agreement shall permit or be interpreted to permit either party to
violate any provision of Chapter 84.L4 RCW or POMC Chapter 3.48.
L6. No modifications of this Agreement shall be made unless mutually agreed upon by
the parties in writing.
L7. 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.LIO. 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.
L8. 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.
19. 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.
CITY Department of Com munity Development
Crty of Port Orchard
216 Prospect Street
Port Orchar4 WA98366
Attn: Dircctor
OWNER:
20. ln the event tfrat any term or clause of this lgreement conflicts with applicabte law,
such conflict shall not affect other terms of thls Agreement which can be given effect wlthout the
conflictingterm ordause. and tothis en4thetermsof thlsAgreement are dec{ared to be severable.
21" Thls Agreement shall be a ovenant running with the land and strall be bhrding on
the assigns, heirs and successors ofthe Owner.
N WffNffs WHEREOF the parties hereto have executed this Agreement as of the day and
year fi rst above written.
ctw PORTORCHARD PROPERTY OWNERS
Robert
//"U.h- Fed
Nick 8ond, Dlrector
Dept. of Community Development
11)-p7
By;
Its:
By:
Its:
//,^/ D/n,/^-/
l il llt,
rtr1'
itP L_t $4
Noah Crocker
Finance Olreclor
Attest:
$H,At
CityClerk
as to Form:
A. Archer, City Attorney