A RESOLUTION authorizing the Housing Director to enter into a contract between the City of Seattle and Arts& Lofts, LLC, outlining the terms and conditions of the conditional certificate of acceptance of tax exemption for property at 809 Hiawatha Place South in Seattle, Washington, as provided for in Seattle's Multifamily Housing Property Tax Exemption Ordinance, Chapter 5.72 SMC.

WHEREAS, Arts & Lofts, LLC, has submitted a completed application as required by Chapter 5.72 SMC for a multifamily residential project at 809 Hiawatha Place South; and

WHEREAS, the Director of the Office of Housing has determined the proposed project complies with the provisions of SMC 5.72.040 and, in accordance with SMC 5.72.060(A), has approved the application for the proposed project, NOW THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE:

Section The Director of Housing is authorized to enter into a contract with Arts & Lofts, LLC, or its heirs, successors and assigns in title to the property legally described as follows:

The north 260 feet of Lots 3 through 14, inclusive, Block 3, Rainier Boulevard Addition to the City of Seattle, according to the plat thereof recorded in Volume 9 of Plats, page 59, in King County, Washington,

in substantially the form attached as Exhibit A.

Section 2. The Director of Housing is authorized to make technical corrections to the legal description in Section 1 above and in Exhibit A attached hereto consistent with any lot boundary adjustment or short plat with respect to the subject property approved by the Department of Design, Construction, and Land Use subsequent to the adoption of this Resolution.

Section 3. All actions taken prior to and consistent with this Resolution are hereby ratified and confirmed.

Adopted by the City Council the _____ day of _____________, 2000, and signed by me in open session in authentication of its adoption this _____ day of ________________, 2000.

________________________________________

President __________ of the City Council

Filed by me this ______ day of _________________, 2000.

________________________________________

City Clerk

(Seal)

SLG: js

March 2, 2000

RES00-03r1.doc

(Ver. 1 )

Exhibit A

MULTIFAMILY HOUSING LIMITED PROPERTY TAX EXEMPTION AGREEMENT

THIS AGREEMENT made on the date signed below between Arts & Lofts, LLC, a Washington corporation, hereinafter referred to as the "Applicant," and The City of Seattle, Washington, a municipal corporation hereinafter referred to as "City."

WITNESSETH:

WHEREAS, the Applicant has applied for a limited property tax exemption as provided for in Chapter 84.14 RCW and Chapter 5.72 SMC for multifamily residential housing in the 23rd and Jackson Residential Target Area; and

WHEREAS, the Applicant has submitted to the City preliminary site plans and floor plans for new multifamily residential housing to be constructed on property situated at 809 Hiawatha Place South and described more specifically as follows:

The north 260 feet of Lots 3 through 14, inclusive, Block 3, Rainier Boulevard Addition to the City of Seattle, according to the plat thereof recorded in Volume 9 of Plats, page 59, in King County, Washington,

hereinafter referred to as the "Property;" and

WHEREAS, the City has determined that certain improvements to be constructed on the property will, if completed as proposed, satisfy the requirements for a Final Certificate of Tax Exemption;

NOW, THEREFORE, in consideration of the mutual promises herein, City and Applicant do mutually agree as follows:

1. Agreement Conditioned upon Ownership of Property

The terms of this Agreement shall be binding upon the parties only on the condition that title to the Property is acquired by Applicant, its successors or assigns, generally as provided in that Contract for Sale of Land between the City of Seattle and Icon Architecture,Ltd., authorized by City of Seattle Ordinance No. 119629 and dated November 1, 1999.

2. Conditional Certificate of Acceptance of Tax Exemption.

City agrees, upon execution of this Agreement following approval by the City Council, and filing of a declaration of condominium containing provisions as required by this Agreement, to issue a Conditional Certificate of Acceptance of Tax Exemption, which conditional certificate shall expire three (3) years from the date of approval of this Agreement by the Council unless extended by the Director of the Office of Housing ("Director") as provided in SMC 5.72.070.

3. Agreement to record declaration of covenants

Prior to creation of a condominium on the property pursuant to RCW 64.34.200, applicant shall include in the declaration of condominium information clearly disclosing that the declarant of the condominium is seeking or has obtained a Certificate of Tax Exemption under Chapter 5.72 SMC. In addition, the declaration of condominium (hereinafter, "Declaration") shall clearly identify which units are designated as affordable for purposes of compliance with Chapter 5.72 SMC, describe the requirements contained in SMC 5.72.040(J) as amplified by this Agreement and such other provisions as needed to assure continued compliance with this Agreement, including but not limited to the right of first refusal. This portion of the declaration of condominium shall be approved in advance by the Director. The portions of the declaration of condominium required above shall be amended only with the consent of the Director, which consent shall not be unreasonably withheld.

4. Agreement to construct improvements.

a. The Applicant agrees to construct on the Property a mixeduse structure containing multifamily residential housing, substantially as described in the site plans, floor plans, and elevations attached hereto as Exhibit A, subject to such modifications thereto as may be required to comply with applicable codes and ordinances, including any required design review process; provided, that in no event shall such construction provide fewer than four new multifamily residential units for permanent residential occupancy in each building receiving the exemption, nor shall such permanent residential housing comprise less than fifty percent of the space within a residential or mixed-use structure constructed pursuant to this Agreement.

b. The Applicant agrees to comply with all applicable zoning requirements, land use regulations, and building and housing code requirements contained in SMC Titles 22, 23, and 25 at the time of new construction, rehabilitation or conversion, and further agrees that approval of this Agreement by the City Council, its execution by the Director, or issuance of a Condition Certificate of Acceptance of Tax Exemption by the City pursuant to Chapter 5.72 SMC in no way constitutes approval of proposed improvements on the Property with respect to applicable provisions of SMC Titles 22, 23, and 25 or obligates the City to approve proposed improvements.

c. The Applicant agrees that the improvements will be completed within three years from the date of approval of this Agreement by the Council, unless extended by the Director for cause as provided in SMC 5.72.070.

5. Agreement to provide affordable housing.

a. The Applicant agrees that at least twenty-five percent (25%) of the units developed on the Property shall be sold or rented to person(s) with household annual income, at the time of each purchaser's or tenant's initial occupancy, no greater than 80 percent of the annual median income for the metropolitan statistical area that includes Seattle, as most recently estimated by the United States Department of Housing and Urban Development, as adjusted for household size. The method for calculating the applicable income limits shall be as determined by the Director by rule.

b. Applicant has initially identified the units so designated on Exhibit B attached hereto as affordable. Each unit designated as affordable on Exhibit B shall be subject to conditions and restriction set forth for affordable units in this Agreement and the Declaration required in Section 2. Applicant shall make good faith efforts to sell affordable units to eligible purchasers and shall not sell an affordable unit to a purchaser who is not eligible. For the purposes of this Agreement, a sale shall be held to have occurred when the instrument transferring title to the residential unit is recorded.

Nothing herein shall preclude the initial identification in the Declaration of more than 25% of the units as affordable housing, in which case amendments to the Declaration removing the affordable designation from one or more units shall be allowable so long as at least 25% of the units remain designated as affordable and continue to meet the requirements for affordable housing of Chapter 5.72 SMC and this Agreement.

c. The City hereby assigns to Applicant the right of first refusal required in SMC Section 5.72.040.J., exercisable in the event an owner of an affordable unit other than the Applicant receives a bona fide offer to buy the property from a purchaser whose household income exceeds the affordability limits in subsection 5.72.020(A). Applicant shall have the right to purchase the property on substantially the same terms as such bona fide offer. Applicant agrees to exercise its right of first refusal where necessary to assure that at least 25% of exempt units continue to be affordable for the life of the exemption. Applicant may further assign this right of first refusal, with the written consent of City, to the Homeowner's Association as provided in the Declaration.

d. As part of the purchase and sale agreement for any unit exempted from taxation under Chapter 5.72 SMC, Applicant and any subsequent owner shall require a statement from the purchaser acknowledging the potential tax liability if the property ceases to be eligible for exemption under Chapter 5.72 SMC. Applicant and any subsequent owner shall include in or attached to the purchase and sale agreement for any unit designated as affordable pursuant to this Agreement a written right of first refusal as provided in SMC Section 5.72.040(J).

e. The Applicant shall be responsible for verifying the income of households occupying affordable units, no later than the date of initial occupancy. Following the initial sale of any affordable unit, the owner shall be responsible for verification of the income of any tenant or subsequent purchaser.

(1) For purposes of this Agreement, the definition of income shall be adjusted gross income as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 for individual Federal annual income tax purposes.

(2) The Applicant or the Applicant's agent shall inform prospective purchasers of affordable units the applicable definition of income at the time they are provided with a form of purchase and sale agreement. The Applicant or any subsequent unit owner shall advise prospective tenants of affordable units of the applicable definition of income at the time they are provided with an application for tenancy.

(3) For purposes of this Agreement, household annual income of prospective purchasers or tenants shall be calculated by projecting the income anticipated to be received over the twelve-month period following the date of initial occupancy, based on the prevailing rate of income of each person at the time of income verification, which shall be no more than six months prior to the date of initial occupancy.

(4) Documentation of purchaser income eligibility for affordable units shall be obtained by the Applicant or the Applicant's agent and maintained on file for audit or inspection for one calendar year following closing of the sale of the affordable unit. Documentation of tenant income eligibility for any affordable units that are initially rented shall be obtained by the Applicant or the Applicant's agent and maintained on file for audit or inspection through the term of the tenancy and for one calendar year thereafter. Documentation of tenant income eligibility for any affordable units that are rented following sale to an eligible household shall be obtained by the owner or owner's agent and placed on file with Applicant or at such location as shall be designated in the Declaration required in Section 2 of this Agreement, and shall be maintained on file for audit or inspection through the term of the tenancy, and for one calendar year thereafter. Documentation shall include, at a minimum, an application signed by the prospective tenant declaring monthly or annual income, and certifying that the information thereon is correct, and evidence of current income.

f. Any affordable unit may be rented to an income-eligible household in the event no eligible purchaser is identified following a marketing period of not less than 90 days. Applicant shall comply with all applicable fair housing and nondiscrimination laws, ordinances and regulations.

g. Applicant and any successor in ownership shall rent affordable units only pursuant to a form lease or rental agreement. Lessor shall provide a copy of the form of lease currently in use to the City promptly upon any request by the City. The form lease or rental agreement shall comply with all applicable laws; shall not include any provisions prohibited by applicable laws or regulations; shall prohibit subletting or assignment of the lease without the express written approval of the owner, which approval shall not be granted by the owner if the result would be any violation of the rent or occupancy restrictions herein; and shall state that information about the occupancy requirements pursuant to SMC Chapter 5.72 is available from the Office of Housing.

6. Requirement to Replace Housing [RESERVED]

7. Requirements for Final Certificate of Tax Exemption.

The Applicant 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 Office of Housing the following:

a. A statement of expenditures made with respect to each exempt multifamily housing unit and the total expenditures made with respect to the entire property;

b. A description of the completed work and a statement of qualification for the exemption;

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

d. Sales price or rent (or offering price or rent, as applicable) for each exempt housing unit;

e. Information on the applicant's compliance with the affordability requirements in SMC 5.72.040 and this Agreement for ownership projects, which shall include the following :

(1) Identification of all affordable units, whether sold or held for sale by eligible households;

(2) Sales prices (or offering prices, as applicable) for all affordable units;

(3) A copy of the application form used to determine eligibility of prospective purchasers for purchase of affordable units; and

(4) A copy of the form of purchase and sale agreement to be used for affordable units.

f. In the event the improvements eligible for tax exemption are initially offered for rent rather than for sale, information on the applicant's compliance with the affordability requirements in SMC 5.72.040 and this Agreement for rental projects, which shall include the following:

(1) Identification of all affordable units, whether rented or held for rent by eligible households;

(2) Rents (or offering rents, as applicable) for all affordable units;

(3) A copy of the application form used for tenancy of affordable units; and

(4) A copy of the form of lease or rental agreement to be used for affordable units.

8. Agreement to Issue Final Certificate.

The City agrees to file a Final Certificate of Tax Exemption with the King County Assessor, if the Applicant has successfully completed the improvements in accordance with the terms of this Agreement, has filed the materials described in Paragraph 5 above, has paid to the City a fee in the amount of $150.00 to cover the Assessor's administrative costs, and has met all other requirements as provided in Chapter 5.72 SMC.

9. Annual Certification.

The Applicant agrees, within 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 ten (10) years, to file a declaration, sworn under penalty of perjury with respect to the accuracy of the information provided therein, with the City's Office of Housing indicating the following:

a. A statement of occupancy and vacancy of each exempt multifamily unit during the previous year; and a schedule of rents as of the anniversary date for any rental units.

b. A certification that the property has not changed use since the date of filing of the Final Certificate of Tax Exemption, and continues to be in compliance with this Agreement and the requirements of SMC Chapter 5.72;

c. A description of any improvements or changes to the property made after the filing of the Final Certificate or last declaration, as applicable; and

d. Information sufficient to demonstrate compliance with the affordability requirements of SMC 5.72.040(g) and this Agreement, which shall include the following:

(1) For each affordable unit initially occupied or with a change of occupancy during the previous year, the date of each new owner or tenant's initial occupancy, the household size and income of each occupant household at initial occupancy, and the sales price or rent at initial occupancy.

(2) For any affordable units with turnover during the previous calendar year, the date on which any occupancy was terminated, and the time during which the unit remained vacant.

The Applicant shall make provision, through the Declaration required in Section 2 of this Agreement, to assure that either (1) Applicant will continue to be responsible for annual certifications, or (2) the condominium homeowners association will assume the responsibility and authority to file annual certifications as successor to Applicant, and, further, that each homeowner receiving the tax exemption is obligated to provide such information to the Applicant or successor entity as is needed for the preparation and filing of annual certifications with the City.

10. No violations for duration of exemption.

For the duration of the exemption granted under SMC 5.72, the Property shall have no violations of applicable zoning requirements, land use regulations, and building and housing code requirements contained in SMC Titles 22, 23, and 25 for which the Department of Design, Construction and Land Use or its functional successor shall have issued a notice of violation or citation that is not resolved by a certificate of compliance, certificate of release, or withdrawal within the time period for compliance provided in such notice of violation or citation and any extension of the time period for compliance granted by the administrative head of such department.

11. Notification of transfer of interest or change in use.

Applicant agrees, on behalf of itself and any successors and assigns in ownership, to notify the Director promptly of any transfer of Applicant's ownership interest in the Property or in the improvements made to the Property under this Agreement. Applicant further agrees to notify the Director and the King County Assessor within 60 days of any change of any or all of the permanent multi-family housing developed on the Property to another use. Such change in use may result in cancellation of the tax exemption and imposition of additional taxes, interest and penalty pursuant to State law.

12. Cancellation of Exemption Appeal.

The City reserves the right to cancel the Final Certificate of Tax Exemption if at any time the property no longer complies with the terms of this Agreement or with the requirements of Chapter 5.72 SMC, or for any other reason no longer qualifies for an exemption. If the exemption is canceled for non-compliance an additional tax will be imposed that includes: (a) the difference between the tax paid and the tax that would have been owed if it had included the value of the nonqualifying improvements dated back to the date that the improvements became nonqualifying; (b) a penalty of 20% of the difference; (c) interest at the statutory rate on the tax 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 Chapter 5.72 SMC. Upon determining that a tax exemption shall be canceled, the Director, on behalf of the City Council, shall notify the property owner by certified mail, return receipt requested. The property owner may appeal the determination in accordance with SMC 5.72.110 (C).

13. Amendments.

No modification of the Agreement shall be made unless mutually agreed upon by the parties in writing.

14. Binding Effect.

The provisions, covenants, and conditions contained in this Agreement are binding upon the parties hereto and their legal heirs, representatives, successors, assigns, and subsidiaries.

15. Recording of Agreement.

The Director shall cause to be recorded, or require Applicant to record, in the real property records of the King County Department of Records and Elections, this Agreement and any other documents as will identify such terms and conditions of eligibility of exemption as the Director deems appropriate for recording, including requirements under this chapter relating to affordability.

16. Audits and Inspection of Records.

The Applicant understands that the City has the right to audit or review appropriate records to assure compliance with this Agreement and Chapter 5.72 SMC and to perform evaluations of the effectiveness of the program, and agrees to make appropriate records available for review or audit upon seven days' written notice by the City.

17. Notices.

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 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.

APPLICANT:

__________________________________

__________________________________

__________________________________

__________________________________

Phone: _________ Fax: ________

Attn.: ________________

CITY: City of Seattle

Office of Housing

618 Second Avenue, 8th Floor

Seattle, Washington 98104

Phone: (206) 684-0351 Fax: (206) 233-7117

Attention: Director

18. Severability.

In the event that any term or clause of this Agreement conflicts with applicable law, such conflict shall not affect other terms of this Agreement which can be given effect without

the conflicting terms or clause, and to this end, the terms of the Agreement are declared to be severable.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates indicated below.

THE CITY OF SEATTLE APPLICANT

Office of Housing Arts & Lofts, LLC

_______________ _______________

Date Date

By:_______________ By:_____________________

Cynthia A. Parker, Director [Name and title]

STATE OF WASHINGTON )

) ss.

COUNTY OF KING )

On this day of , 2000, personally appeared before me Cynthia A. Parker, to me known to be Director of the Office of Housing of The City of Seattle, the municipal corporation that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said municipal corporation for the uses and purposes therein mentioned and on oath stated that she was authorized to execute said instrument and that the seal affixed, if any, is the corporate seal of said municipal corporation.

WITNESS my hand and official seal the date and year first above written.

____________________________________ Print name:_____________________

NOTARY PUBLIC in and for the State of Washington, residing at

My Commission expires ___________

STATE OF WASHINGTON )

) ss.

COUNTY OF K I N G )

On this day of , 2000, personally appeared before me ____________________, to me known to be the

of Arts & Lofts, LLC, the corporation that executed the within and foregoing instrument and acknowledged said instrument to be the free and voluntary act and deed of said party, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument.

In witness whereof I have hereunto set my hand and affixed my official seal the day and year first above written.

_______________________________________

Print name:_________________________

NOTARY PUBLIC in and for the State of Washington, residing at ______________________

My Commission expires ____________________

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