Multifamily Housing Tax Exemption Program Summary of Program Camas City Council July 21, 2014

Multifamily Housing Tax Exemption Program Established by the State Legislature in 1995 and amended in 2007. Provides for an 8 year or 12 year tax exemption for the approved value of qualifying newly constructed or rehabbed residential units.

Intent of Program Encourage increased residential opportunities within urban centers; 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; Assist in directing future population growth to designated urban centers, thereby reducing development pressure on single-family residential neighborhoods; and Achieve development densities which are more conducive to transit use in designated urban centers. Encourage new construction or rehabilitation of owner-occupied multi-family housing where identified as desirable; and Encourage affordable housing.

Requirements The property must be located within an urban center and designated as a residential target area by the City. Three potential residential target areas include: Downtown NW 6th Avenue Corridor NE 3rd Avenue

Downtown Residential Target Area

NW 6th Avenue Residential Target Area NW Drake NW 7th Avenue NWIVY NW 6th Avenue

NE 3rd Avenue Residential Target Area NE 3rd Loop NE Sumner

Multifamily Housing Tax Exemption Program Requirements- Continued The property must meet City adopted guidelines and standards. The new, converted, or rehabilitated multiple-unit housing must provide for a minimum of fifty percent of the space for residential occupancy. This excludes hotels and motels that offer accommodations on a daily or weekly basis. Property to be rehabilitated must fail to comply with one or more building code standards.

Program Requirements- Continued At least four new multifamily units must be constructed. An exception exists where existing multifamily has been vacant for twelve or more months. The applicant must enter an agreement with the City to implement the development and must comply with additional conditions contained in that agreement. The development must be within a city-determined urban center in an area that lacks sufficient housing.

Program Requirements- Continued The project must not displace any existing residential tenants from the property proposed for development. An eight year exemption is available for multi-family improvements made available at market rates. A twelve year exemption is available if 20% or more of the multi-family units are affordable housing for low and moderate income households. The project must be completed with a period of three years from the date a conditional certificate of tax exemption is issued. Project must comply with all building codes, zoning and other applicable regulations.

FAQ’s What is an “urban center”? An “urban center” is a compact identifiable district where urban residents may obtain a variety of products and services. An urban center must contain: Several existing or previous, or both , business establishments that may include but are not limited to shops, offices, banks, restaurants, governmental agencies; Adequate public facilities including streets, sidewalks, lighting, transit, domestic water, and sanitary sewer systems; and A mixture of uses and activities that may include housing, recreation, and cultural activities in association with either commercial or office, or both ,use.

FAQ’s Continued What is required to establish a new residentially targeted area? The area must be an “urban center” as determined by the City. The area must lack sufficient available, desirable, and convenient residential housing, including affordable housing, to meet the needs of the public who would be likely there, if the affordable, desirable, attractive and livable places to live were available. The providing of additional housing, including affordable housing, in the area, as determined by the governing authority, will assist in achieving one or more of the stated purposes of RCW84.14.007. Adoption of a Resolution of intention for each proposed residentially targeted and setting forth a hearing date time and location of a hearing. Publish Notice of a hearing once a week for two consecutive weeks. After adoption of a residential targeted area, the City must adopt and implement Standards. RCW84.14.040

FAQ’s Continued Does the MF tax credit apply only to improvements or to land value as well?   The exemption is only for the value of the new housing construction and the exemption is only from the ad valorem property taxation (RCW 84.14.020).  The exemption does not include the value of the land or non-housing-related improvements.   -Can we use HUD rental rates to qualify for low income (12 year exemption)?    RCW 84.14.010 defines “Low-income household” as a single person, family, or unrelated persons living together whose adjusted income is at or below eighty percent of the median family income adjusted for family size, for the county where the project is located, as reported to HUD.  For the property to qualify for the 12-year exemption, the applicant must commit to renting or selling at least twenty percent of the multifamily units as affordable housing units to low and moderate-income household, and the property must satisfy that commitment and any additional commitment adopted by the local government.  If the project is exclusively for owner occupancy, the minimum requirement for the 12 year exemption may be satisfied solely through housing affordable to moderate-income households (115% adjusted median family income for the county as reported to HUD). 

Next Step If Council would like to move forward in considering one or more residentially targeted areas Staff can prepare an appropriate resolution of intention to designate each area and bring forward to Council for consideration and adoption.