14.08.064 Sewer connection incentive fund – SCIP Phase II.
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Sewer Connection Incentive Program Phase II (SCIP II) funds shall be spent only for the purposes authorized in subsection A of this section, in conformity with the eligibility criteria set forth in subsection B of this section, subject to the priorities set pursuant to subsection C of this section, and subject to the deferral criteria set forth in subsection D of this section. For purposes of this section, “existing single-family residential property” shall mean the property on which a conforming single-family residence is situated as of the effective date of the ordinance codified in this section.
A. Authorized Expenditures. Moneys in the sewer connection incentive fund established in VMC 14.08.061 shall be spent only for the following purposes under the Sewer Connection Incentive Program Phase II (SCIP II):
1. To finance a system development charge imposed by VMC 14.04.235 upon an existing single-family residential property or a property that uses 50 EDUs of sewer capacity or less.
2. To finance city sewer main line fees for city-extended sewers outstanding pursuant to VMC 14.04.280(E) for an existing single-family residential property or property that uses 50 EDUs of sewer capacity or less, subject to the following limitations and conditions:
a. In the case of main line fees for the city’s sewer line construction costs related to the 60th Street sewer and the Northgate sewer, such funds may be spent to pay any costs of main line fees for sewer line construction for such projects in excess of $3,424.
b. In the case of main line fees for city-extended sewer projects constructed after the effective date of the amendatory ordinance codified in this chapter, and notwithstanding the provisions of VMC 14.04.280(B), there shall be a maximum guaranteed main line fee assessed for single-family residences accepted into SCIP Phase II based on the sewer construction costs for a single-family residential lot with a nominal 75-foot frontage served by a standard eight-inch sewer, installed at a typical depth of nine feet, in residential street paving. The fee maximum calculation shall be made by the director or designate using latest cost factors.
c. In the event any main line fee for a single-family residential property accepted into SCIP Phase II calculated pursuant to VMC 14.04.280(E) exceeds the main line fee calculated pursuant to subsections (A)(2)(a) or (A)(2)(b) of this section, the excess main line fee shall become a lien on the property which shall become due and payable upon final approval for any further short platting or subdivision of the property. Any financing contracts executed after January 1, 2013, under SCIP II associated with the original parcel (prior to development) shall be paid in full prior to final plat approval.
d. The maximum guaranteed main line fee as calculated in subsection (A)(2)(b) of this section will be available to a single-family residence up to two years after the project’s public sewer is available for connection. After two years the main line fee will be raised to the actual per lot cost or the guaranteed main line fee for that year in which connection is being sought, whichever is less.
e. Payment of the sewer main line fee is not allowed unless the appropriate applications and permits are also completed for connection of the parcel to the public sewer.
f. Properties, other than single-family residential, that use 50 EDUs of sewer capacity or less shall be required to pay the actual sewer main fee for the SCIP II associated with that parcel and shall not be eligible for the maximum guaranteed main line fee as calculated in subsection (A)(2)(b) of this section.
3. To finance payment of any sewer reimbursement contract outstanding under VMC 14.04.285.
4. To finance the actual costs to any owner of an existing single-family residential property or a property that uses 50 EDUs of sewer capacity or less to connect the property to a city sewer lateral and to pay for the costs of abandonment of the septic system for the property as documented by an invoice from a licensed plumber.
5. To finance the costs of payment deferrals of system development charges, main line fees, and sewer reimbursement contracts, and actual on-site sewer connection and septic decommissioning costs for the owner/occupants of existing single-family residences who are found to be economically disadvantaged, subject to the deferral criteria and standards set forth in subsection D of this section.
B. Eligibility for SCIP II. Payments and waivers as set forth in subsection A of this section shall be made only subject to the following eligibility criteria:
1. The property is an existing single-family residential property.
2. The property is a property that uses 50 EDUs of sewer capacity or less.
3. The property is on a septic or other on-site sewage disposal system and is not connected to sewer or a substandard connection is being corrected.
4. The property has sewer available as defined by VMC 14.08.015 whether constructed by the city or by a developer.
5. The applicant for financial assistance is the owner of the property.
6. The applicant enters into an agreement with the city that the applicant will connect to the city sewer within 180 days of execution of the agreement and that the use of the septic tank or other on-site sewage disposal system will immediately cease upon connection of the property to sewer and that such on-site system will immediately be properly treated and terminated.
7. The applicant pays all application and permit fees pursuant to VMC 14.08.020.
8. The applicant enters into loan and security agreements with the city providing for repayment and financing of the SCIP II funds expended for the property and for any excess main line fees calculated pursuant to subsection (A)(2)(c) of this section. Such agreements shall provide that the applicant at any time may elect to pay the debt in full together with accrued interest. For contracts executed after November 1, 2012, repayment shall be due upon sale or transfer of the benefited property, and shall be paid prior to final plat approval if the property is subdivided.
C. Prioritization Criteria. The director or designate shall develop administrative criteria for prioritizing selection of projects and applications for assistance under SCIP II taking into consideration:
1. Projected risks to water resources.
2. Viability of existing septic systems in an area or particular property.
3. Coordination with roadway and other utility projects.
4. Total cost of connection.
5. Other available resources for sewer construction and connections.
D. Deferrals.
1. Eligibility. An economically disadvantaged applicant for SCIP II funds under this section may defer repayment installments for sums advanced from the sewer connection incentive fund pursuant to this section up to 80 percent of the amount of the applicant’s equity value in the existing residential property which is benefited by such sewer connection incentive fund monies, and collection of installments for repayment of such funds may be deferred, upon application to the director of financial and management services for a deferral certificate; provided, that the director or his or her designate finds all of the following:
a. The applicant has, at the time of application, an ownership interest in the existing residential property which is subject to repayment for the allowable costs set forth in subsection A of this section;
b. The applicant resides in such residence and the property is used for residential use only;
c. The applicant is economically disadvantaged as defined by this section.
d. Each certificate shall be for no longer period than one year, with provision for annual reviews of continued eligibility; and provided further, that no deferral certificate period so granted shall extend beyond the term of the loan and security agreements entered into by the applicant for repayment and financing of SCIP II funds.
2. Definitions. As used in this section, except where the context clearly indicates a different meaning:
“Applicant” means a person who applies to defer repayment of installments of funds from the sewer connection incentive fund which benefit the applicant’s existing single-family residence by filing an application for a certificate of deferral as provided by this section. When two or more individuals of a household file or seek to file a certificate of deferral, they may determine between them as to who the applicant shall be.
“Combined disposable income” means the disposable income of the person applying for the deferral, plus the disposable income of their spouse, and the disposable income of each co-tenant occupying the residence for the calendar year, less amounts paid by the person claiming the exemption or their spouse during the calendar year for:
a. Drugs supplied by prescription of a medical practitioner authorized by the laws of this state or another jurisdiction to issue prescriptions; and
b. The treatment or care of either person received in the home or in a nursing home.
“Co-tenant” means a person who resides with the applicant for the deferral and who has an ownership interest in the residence.
“Disposable income” means adjusted gross income as defined in the federal Internal Revenue Code, as amended prior to January 1, 1989, or such subsequent date as the director of financial and management services or designate may provide by rule consistent with the purpose of this subsection, plus all of the following items to the extent they are not included in or have been deducted from adjusted gross income:
a. Capital gains, other than nonrecognized gain on the sale of a principal residence under Section 1034 of the federal Internal Revenue Code, or gain excluded from income under Section 121 of the federal Internal Revenue Code to the extent it is reinvested in a new principal residence;
b. Amounts deducted for loss;
c. Amounts deducted for depreciation;
d. Pension and annuity receipts;
e. Military pay and benefits other than attendant-care and medical-aid payments;
f. Veterans benefits other than attendant-care and medical-aid payments;
g. Federal Social Security Act and railroad retirement benefits;
h. Dividend receipts; and
i. Interest received on state and municipal bonds.
“Economically disadvantaged” means at the time of application the applicant’s combined disposable income shall not exceed 80 percent of the area median income adjusted for family size as determined by the Department of Housing and Urban Development (HUD). An applicant is presumed to be economically disadvantaged if their entire income and that of their spouse and any co-tenant is derived from benefits under the federal Social Security Act.
“Equity value” means the amount by which the fair market value of a residence as determined from the records of the county assessor exceeds the total amount of any liens or other obligations against the property.
“Ownership interest” means a property interest in an existing single-family residence under a recorded deed or under a contract of purchase, recorded mortgage, recorded deed of trust or recorded lease by which the applicant is responsible under penalty of forfeiture, foreclosure or default for payment of real property taxes and/or local improvement district assessments. The term shall also include a share ownership in a cooperative housing association, corporation or partnership if the applicant can establish that their share represents the specific unit or portion of such structure in which the applicant resides.
3. Security Provisions. The director of financial and management services or designate shall not issue such a deferral certificate, however, unless the applicant and their spouse and co-tenant, if any, has signed a contract with the city providing that:
a. Unpaid interest on any deferred payments shall accrue and be added annually to the unpaid principal balance. The deferred payments together with any unpaid interest shall bear the same rate of interest as under the payment agreement.
b. The city shall have a lien on the benefited property in an amount equal to the amount paid from the sewer connection incentive fund, plus interest at the same rate of interest as under the payment agreement, computed to the date the payment is made;
c. The applicant shall have and keep in force fire and casualty insurance on the benefited property in sufficient amount to protect the interest of the city in the property; provided, if the applicant fails to keep such insurance in force, the amount deferred shall not exceed 100 percent of the applicant’s equity in the land or lot only;
d. The obligations deferred pursuant to this section shall become due and payable in full, including principal and accrued interest, upon the earliest of the following dates:
1. Upon the sale of property which is the subject of the deferral;
2. Upon the death of the applicant with an outstanding deferred certificate except a surviving spouse who is qualified under this chapter may elect to continue the deferral and who agrees that the deferral lien shall then be payable by that spouse or co-tenant as provided in this section.
3. Upon the condemnation of property with a deferral lien upon it by a public or private body exercising eminent domain power, except as otherwise provided in RCW 84.60.070 for properties subject to a lien for taxes.
4. At such time as the applicant ceases to reside permanently in the residential property upon which the deferral certificate has been granted; provided, that a spouse or co-tenant may apply for the continuance of the deferral.
5. Upon the failure of any eligibility criteria or condition set forth in subsection A of this section.
e. If any obligations deferred pursuant to this section are not paid in full (including principal and interest) within 30 days of the occurrence of any of the events listed in subsection (D)(3)(d) of this section, the entire remaining amount of the debt shall become due and payable and the city may begin foreclosure upon the entire remaining debt.
f. No deferral period shall be granted or shall extend beyond the end of the loan term of the original payment agreement.
g. The applicant to whom a deferral certificate is granted at any time may elect to pay the debt in full together with accrued interest.
h. Filing of Contract and Certificate. Each contract and deferral certificate executed pursuant to this section shall be filed by the city with the county auditor.
i. Rules. The director of financial and management services, with assistance of the city attorney, shall adopt reasonable rules and forms for administration of the deferral program consistent with this section. (Ord. M-4359 § 2, 2021; Ord. M-4082 § 8, 2014; Ord. M-4022 § 34, 2012; Ord. M-3386, 1998)