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A. Intent. Limited eight-, 10- or 12-year exemptions from ad valorem property taxation for multi-family housing in urban centers are intended to:
1. Encourage increased residential opportunities within urban centers designated by the city council as residential target areas;
2. Stimulate new construction or rehabilitation of existing vacant and underutilized buildings for multi-family housing in residential target areas to increase and improve housing opportunities;
3. Assist in directing future population growth to designated urban centers, thereby reducing development pressure on single-family residential neighborhoods;
4. Achieve development densities which are more conducive to transit use in designated urban centers;
5. Encourage new construction or rehabilitation of owner-occupied multi-family housing where identified as desirable; and
6. Encourage income-based housing.
B. Duration of Exemption. The value of improvements qualifying under this chapter will be exempt from ad valorem property taxation for: (1) eight successive years where all applicable criteria herein are met under subsection (8)(a) or (b), or (2) 10 successive years if all applicable criteria herein are met, or (3) 12 successive years if all applicable criteria herein are met. In all cases the duration of exemption shall be measured beginning January 1st of the year immediately following the calendar year after issuance of the final certificate of tax exemption.
C. Limits on Exemption. The exemption does not apply to the value of land or the value of improvements not qualifying under this chapter, nor does the exemption apply to increases in assessed valuation of land and nonqualifying improvements. In the case of rehabilitation of existing buildings, the exemption does not include the value of improvements constructed prior to submission of the completed application required under this chapter.
D. Project Eligibility. A proposed project must meet the following requirements for consideration for a property tax exemption:
1. Location. The project must be located within a residential target area, as designated in VMC 3.22.030.
2. Tenant Displacement Prohibited. Property proposed to be rehabilitated must be vacant at least 12 months before submitting an application and fail to comply with one or more standards of the applicable state or local building or housing codes on or after July 23, 1995.
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 VMC 3.22.020.
5. Proposed Completion Date. New construction multi-family housing and rehabilitation improvements must be scheduled to be completed within three 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 in effect at the time the application is approved. Rehabilitation and conversion improvements must comply with all applicable housing codes. New construction must comply with the International Building Code. The project must also comply with any other standards and guidelines adopted by the city council for the residential target area in which the project will be developed.
7. Owner Occupancy. Projects within a residential target area that are developed for owner occupancy shall include an agreement or other guarantee acceptable to the director ensuring that some or all of the units within the project are used for purposes of owner occupancy.
8. Options under the Program. To be eligible for the eight-year tax exemption option under this chapter, the applicant may choose between the market-rate option and the income-based option.
a. Under the eight-year market-rate exemption option, applicants shall enter into a development agreement with the city specifying requirements such as:
i. Public art consistent with the city’s adopted arts, culture and heritage plan and subject to review by the Vancouver cultural commission;
ii. Additional structured parking in excess of at least 10 percent of the minimum required parking spaces;
iii. Significantly enhanced infrastructure (e.g., public plazas of at least 1,000 square feet and permanently accessible to the public, wider sidewalks that provide enhanced amenities for pedestrians such as benches, landscaping and/or public art, undergrounding utilities) not otherwise required by development standards, and homeownership component;
iv. The documented cost of such features shall collectively be no less than 25 percent of the estimated tax benefit over the abatement period and shall be completed, inspected and verified as to value prior to a certificate of occupancy being issued.
b. To be eligible for the eight-year income-based exemption option under this chapter, applicants must commit to renting or selling at least 20 percent of units as income-based housing to households with annual incomes at or below 100 percent of area median income.
9. To be eligible for the 10-year tax exemption, applicants must commit to renting or selling at least 20 percent of units as income-based housing to households with annual incomes at or below 80 percent of area median income.
10. To be eligible for the 12-year tax exemption under this chapter, applicants must commit to renting or selling at least 20 percent of units as income-based housing to households with annual incomes at or below 60 percent of area median income.
11. Table 1 below summarizes the income-based requirements for each exemption option.
No income-based requirement with development agreement under market-rate option; or minimum of 20% of units rented or owned will be as income-based housing to households at/below 100% of area median income
Minimum of 20% of units rented or owned will be as income-based housing to households at/below 80% of area median income
Minimum of 20% of units rented or owned will be as income-based housing to households at/below 60% of area median income
E. Application Procedure. A property owner who wishes to propose a project for a tax exemption shall complete the following procedures:
1. File with the city’s community development department the required application and the required fees. The initial application fee to the city shall consist of a base fee of $300.00, plus $50.00 per multi-family unit, up to a maximum total fee to the city of $1,000. An additional $100.00 fee to cover the Clark County assessor’s administrative costs shall also be paid to the city. If the city denies the application, 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 Vancouver multi-family limited tax exemption application form setting forth the grounds for the exemption;
b. Preliminary floor and site plans of the proposed project;
c. Detailed list of unit size, number of bedrooms and bathrooms and projected rent or sales price;
d. A statement acknowledging the potential tax liability when the project ceases to be eligible under this chapter;
e. Verification by oath or affirmation of the information submitted;
f. A detailed project budget, financing plan and operating projection; and
g. For rehabilitation projects, the applicant shall also submit an affidavit that existing dwelling units have been unoccupied for a period of 12 months prior to filing the application and shall secure from the city verification of property noncompliance with the city’s minimum housing code.
F. Application Review. City staff will review the application to determine eligibility based on subsection D of this section and evaluate the effect of the deferred tax proceeds.
G. Issuance of Conditional Certificate. The director may certify as eligible an applicant who is determined to comply with the requirements of this chapter. A decision to approve or deny an application shall be made within 90 days of receipt of a complete application.
1. Approval. If an application is approved, the applicant shall enter into a contract with the city, subject to approval by the city council in a form of a resolution, regarding the terms and conditions of the project. Upon council approval of the contract, the director shall issue a conditional certificate of acceptance of tax exemption. The conditional certificate shall expire three years from the date of approval unless an extension is granted as provided in this chapter.
2. Denial. If an applicant 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 10 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.
H. Extension of Conditional Certificate. The conditional certificate may be extended by the director for a period not to exceed 24 consecutive months except as provided below. The applicant must submit a written request stating the grounds for the extension, accompanied by a $100.00 processing fee. An extension may be granted if the director determines that:
1. The anticipated failure to complete construction or rehabilitation within the required time period is due to circumstances beyond the control of the applicant;
2. The applicant has been acting and could reasonably be expected to continue to act in good faith and with due diligence; and
3. All the conditions of the original contract between the applicant and the city will be satisfied upon completion of the project.
4. An additional 12-month extension may be granted where each of the following criteria are met:
a. The request for the extension is for a later phase of a development subject to a development agreement; and
b. The conditional certificate was granted prior to February 2015; and
c. Ownership of the property has been transferred subsequent to the granting of the conditional certificate.
I. Application for Final Certificate.
1. 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. The applicant must file with the city’s community development services department the following:
a. A statement of expenditures made with respect to each multi-family housing unit and the total expenditures made with respect to the entire property;
b. A description of the completed work and a statement that the rehabilitation improvements or new construction on the owner’s property qualify the property for limited exemption;
c. If applicable, a statement that the project meets the income-based housing requirements as described in RCW 84.14.020; and
d. A statement that the work was completed within the required three-year period plus any authorized extension.
2. Within 30 days of receipt of all materials required for a final certificate, the director shall determine which specific improvements satisfy the requirements, whether the work was completed, and the rent and income limits of the units are consistent with the application and the contract approved by the city and is qualified for a limited tax exemption under this chapter.
J. Issuance of Final Certificate.
1. Review and Approval. If, after reviewing the application for final certificate, the director determines that the project has been completed in accordance with the contract between the applicant and the city and has been completed within the authorized time period, the city shall, within 10 days, file a final certificate of tax exemption with the Clark County assessor.
2. Denial. 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 owner’s application or the contract between the applicant and the city; including if applicable as income-based housing requirements; or
c. The owner’s property is otherwise not qualified under this chapter.
3. Appeal. Within 14 days of receipt of the director’s denial of a final certificate, the applicant may file an appeal with the city council. 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.
K. Annual Compliance Review. Thirty days after the first anniversary of the date of filing the final certificate of tax exemption and each year thereafter, for the duration of the tax exemption, the owner of the rehabilitated or newly constructed property shall file a notarized declaration with the director that includes the following:
1. A statement identifying the total number of occupied and vacant multi-family units receiving a property tax exemption;
2. A certification that the property continues to be in compliance with the contract with the city including any provisions related to income-based housing; and
3. A description of any improvements or changes to the property constructed after the issuance of the certificate of tax exemption;
4. The total monthly rent or total sale amount for each unit;
5. For exemptions granted under the income-based housing provisions of this chapter, 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; and
6. For exemptions granted under the income-based housing provisions of this chapter, documentation showing that 20 percent of the units were rented or sold as income-based housing to low or moderate income households. The property owner must maintain records supporting this declaration and those records and the multi-family units are subject to inspection by the city. Failure to submit the annual declaration or maintain adequate records may result in the tax exemption being canceled.
L. Annual Report. By December 31st of each year the city has any outstanding limited multi-family tax exemptions the city shall submit a report to the state providing the information required by Chapter 84.14 RCW.
M. Annual Monitoring. A review of the rent rolls is required annually including unit number, unit size (bedrooms/bathrooms), household size, rent, and utilities. City staff will conduct on-site reviews of tenant files randomly. There is a $500.00 annual monitoring fee.
N. Cancellation of Tax Exemption. If the director determines the owner is not complying with the terms of the contract, the tax exemption will be canceled. This cancellation may occur in conjunction with the annual review or at any other time when noncompliance has been determined. If the owner intends to convert the multi-family housing to another use or otherwise discontinues compliance with this chapter, the owner must notify the director and the Clark County assessor within 60 days of the change in use.
1. Effect of Cancellation. If a tax exemption is canceled due to a change in use or other noncompliance, the Clark County assessor may impose an additional tax on the property, together with the interest and penalty, and a priority lien may be placed on the land, pursuant to Chapter 84.14 RCW.
2. Notice and Appeal. Upon determining that a tax exemption is to be canceled, the director shall notify the property owner by certified mail. The property owner may appeal the determination by filing a notice of appeal with the city clerk within 30 days, specifying the factual and legal basis for the appeal. The city council will conduct a hearing at which all affected parties may be heard and all competent evidence received. The city council will affirm, modify, or repeal the decision to cancel the exemption based on the evidence received. An aggrieved party may appeal the city council’s decision to the Clark County superior court. (Ord. M-4332 § 4, 2021; Ord. M-4225 Exhibit A, 2018; Ord. M-4186 § 2, 2016; Ord. M-3987 § 1, 2011; Ord. M-3355, 1998; Ord. M-3314, 1997)