City of Bellingham Municipal Code

17.82.030 - TAX EXEMPTIONS FOR MULTI-FAMILY HOUSING IN TARGETED RESIDENTIAL AREAS

A. Intent. Limited exemptions from ad valorem property taxation for multi-family housing in Urban Centers are intended to:

1. Provide economic incentives enabling increased residential housing choices and opportunities, including affordable housing opportunities, within Urban Centers designated by the City Council as Targeted Residential Areas.

2. Stimulate new construction or rehabilitation of existing vacant and underutilized buildings for multi-family housing in Targeted Residential Areas to increase and improve housing opportunities, including affordable housing;

3. Assist in directing future population growth to designated urban centers with existing available infrastructure thereby reducing development pressure on neighborhoods lacking infrastructure capacities; and

4. Achieve development densities which are more conducive to transit use in designated Urban Centers.

1. For eight successive years beginning January 1st of the year immediately following the calendar year of issuance of the certificate; or

2. For twelve 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 Chapter 84.14 RCW and meets the conditions in this subsection B.2. For the property to qualify for the twelve-year exemption under this subsection, the applicant must commit to renting or selling at least 20% of the multi-unit housing units as affordable housing units as set forth below:

a. Owner occupancy. In the case of projects intended exclusively for owner occupancy, the minimum requirement of this subsection B.2 may be satisfied solely through housing affordable to moderate-income households during the authorized exemption period.

b. Rental occupancy. In the case of projects intended for rental occupancy, the minimum requirement of this subsection B.2 must be satisfied based on affordability requirements outlined in BMC 17.82.030 D. 9.

1. Location. The project must be located within a Targeted Residential Area, as designated in BMC 17.82.020 C. 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 a residential targeted area.

2. Tenant Displacement Prohibited. The project must not displace existing residential tenants of structures that are proposed for redevelopment. Existing dwelling units proposed for rehabilitation must have been unoccupied for a minimum of 12 months prior to submission of an application and must have one or more violations of the City’s Local Housing Standard. Applications for new construction cannot be submitted for vacant property upon which an occupied residential rental structure previously stood unless a minimum of 12 months has elapsed from the time of most recent occupancy.

3. Size. The project must include at least four units of multi-family housing within a residential structure or as part of a mixed-use development. A minimum of four new units must be constructed or at least four additional multi-family units must be added to existing occupied multi-family housing. Existing multi-family housing that has been vacant for 12 months or more does not have to provide additional units so long as the project provides at least four units of new, converted, or rehabilitated multi-family housing.

4. Permanent Residential Housing. At least 50 percent of the space designated for multi-family housing must be provided for permanent residential occupancy, as defined in BMC 17.82.010 E.

5. Affordable Housing. If applicable, the proposed multi-unit housing project meets the affordable housing requirements as described in BMC 17.82.030 B.2.

6. Proposed Completion Date. New construction multi-unit housing and rehabilitation improvements must be scheduled to be completed within three years from the date of approval of the application.

7. Compliance with Guidelines and Standards. The project shall be designed to comply with the City’s comprehensive plan, building, housing, and zoning codes, and any other applicable regulations in effect at the time the application is approved. Rehabilitation and conversion improvements must comply with the City’s Local Housing Standard. New construction must comply with the City's Local Housing Standard. New construction must comply with the current Building Code adopted by the City. The project must also comply with any other standards and guidelines adopted by the City Council for the Targeted Residential Area in which the project will be developed.

8. Historic Resource Protection.

a. Applications for new construction that require the demolition of structures listed in the Local, State or National Register, or identified as contributing to an historic district in the City's historic resource inventory are not eligible for the multi-family tax exemption.

b. Applications for new construction on a vacant property upon which previously stood a structure that was listed in the Local, State or National Register, or was identified as contributing to an historic district in a City historic resource inventory are not eligible for the multi-family tax exemption unless a minimum of five years has lapsed between the date of demolition and application for the multi-family tax exemption.

c. The requirement of subsections 8 a. and b. may be waived if demolition is authorized by either the City's Historic Preservation Commission for structures on the Local Register or the Director for structures identified as contributing to an historic district in the City's historic resource inventory or on the State or National Register. The demolition waiver determination shall be based on the criteria in BMC 17.90.060 D. 2. and 3.

9. Affordable Housing. Projects intended for tental occupancy seeking a twelve year tax exemption pursuant to BMC 17.82.030 B. 2. shall provide 20% of the multi-unit housing as follows:

a. At least 10% of the units shall be available to households whose adjusted income is at or below 50% of the median family income adjusted for family size for Whatcom County.

b. The balance of affordable housing required not met by subsection 9.a. above shall be available to households whose adjusted income is at or below 80% of median family income adjusted for family size for Whatcom County.

1. File with the City’s Planning and Community Development Department the required application along with any required fees as determined by Council resolution. An additional fee, as determined by Council resolution, may be required to cover the Whatcom County Assessor’s administrative costs. If the application shall result in a denial by the City, the City will retain that portion of the fee attributable to its own administrative costs and refund the balance to the applicant.

2. A complete application shall include:

a. A completed City of Bellingham application form setting forth the project’s eligibility for the exemption;
b. Preliminary floor and site plans and elevations of the proposed project and narrative or other description of the scope of work to be performed;
c. A statement acknowledging the potential tax liability when the project ceases to be eligible under this chapter; and

d. Verification by oath or affirmation of the information submitted.

1. Approval. If an application is conditionally approved, the applicant shall enter into a contract with the City regarding the terms and conditions of the project. The Director shall issue a Conditional Certificate of Acceptance of Tax Exemption. The Conditional Certificate expires three years from the date of approval unless an extension is granted as provided in this chapter.

2. Denial. 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 days of the denial. An applicant may appeal a denial to the City Council within 30 days of receipt of notice. On appeal, the Director’s decision will 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.

1. The anticipated failure to complete construction or rehabilitation within the required time period is due to circumstances beyond the control of the owner;

2. The owner has been acting and could reasonably be expected to continue to act in good faith and with due diligence;

3. The project will comply with the City’s comprehensive plan, building, housing, and zoning codes, and any other applicable regulations in effect at the time the extension of the Conditional Certificate is granted; and

4. All the conditions of the original contract between the applicant and the City will be satisfied upon completion of the project.

1. A statement of expenditures made with respect to each multi-family housing unit and the total expenditures made with respect to the entire property;

2. A description of the completed work with evidence of final City inspection of all work completed and a statement of qualification for the exemption;

3. A statement that the work was completed within the required three-year period or any authorized extension; and

4. If applicable, a statement that the project meets the affordable housing requirements as described in BMC 17.82.030 B.2.

1. Denial and appeal. 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;

c. If applicable, the affordable housing requirements as described in BMC 17.82.030 B.2 were not met; or

d. The owner’s property is otherwise not qualified under this chapter.

1. A statement of occupancy and vacancy of the multi-family units during the previous year;

2. A certification that the property continues to be in compliance with the contract with the City, including any affordable housing requirements;

a. The total monthly rent or total sale amount of each unit produced;

b. 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

c. Any additional information requested by the City in regards to the units receiving a tax exemption.

1. The number of tax exemption certificates granted;

2. The total number and type of units produced or to be produced;

3. The number and type of units produced or to be produced meeting affordable housing requirements;

4. The actual development cost of each unit produced;

5. The total monthly rent or total sale amount of each unit produced;

6. 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 for the city; and

7. The value of the tax exemption for each project receiving a tax exemption and the total value of tax exemptions granted.

1. Effect of Cancellation. If a tax exemption is canceled due to a change in use or other noncompliance, the Whatcom County Assessor may impose an additional tax on the property, together with interest and penalty, and a priority lien may be placed on the land, pursuant to State legislative provisions.