Form revised February 6, 2008

 

FISCAL NOTE FOR NON-CAPITAL PROJECTS

 

Department:

Contact Person/Phone:

DOF Analyst/Phone:

Office of Housing

Amy Gray 4-0232

Kathryn Ewing 3-9580

 

Legislation Title:

A RESOLUTION authorizing the Director of Housing to enter into a Multifamily Housing Limited Property Tax Exemption Agreement between the City of Seattle and 809 Hiawatha Place, LLC for new multifamily owner-occupied housing to be constructed as part of a mixed-use project on property situated at 809 Hiawatha Place South, Seattle, Washington, under Seattle’s Multifamily Housing Property Tax Exemption Program, Chapter 5.73 SMC.

 

 

·        Summary of the Legislation:  The proposed Resolution authorizes the Director of the Office of Housing (OH) to enter into a Multifamily Housing Limited Property Tax Exemption Agreement (“Agreement”) for new multifamily owner-occupied housing to be constructed at 809 Hiawatha Place South, Seattle.  The value of the new multifamily owner-occupied units that are affordable units will be exempt from taxation for up to 12 successive years so long as the owner and its successors comply with the requirements of the Agreement and SMC Chapter 5.73, including the requirement that at least 20% of the units are affordable units for the duration of the tax exemption period.

 

·        Background:  (Include brief description of the purpose and context of legislation and include record of previous legislation and funding history, if applicable):

The City Council passed Ordinance 122730 on June 30, 2008, amending SMC Chapter 5.73, the Multifamily Housing Property Tax Exemption Program, hereafter referred to as the “Seattle Homes Within Reach” Program.  One of the amendments to SMC Chapter 5.73 allows owners whose first building permit under SMC Chapter 22 for an eligible project was issued between July 22, 2007 (the effective date of amendments to RCW Chapter 84.14) and the effective date of Ordinance 122730 (August 6, 2008) to apply or reapply for tax exemption anytime prior to the completion of construction of the project.  809 Hiawatha Place, LLC (“Applicant”) previously applied for tax exemption under SMC Chapter 5.73.  The Applicant received its first building permit on February 19, 2008 and construction of the project is not completed.  The Applicant has reapplied for tax exemption under SMC Chapter 5.73 as amended by Ordinance 122730.

 

After the Director of OH approves an application for limited tax exemption for multifamily housing under SMC Chapter 5.73, the applicant must enter into a contract approved by Resolution of the City Council to receive the exemption.  This Resolution allows the Director of OH to enter into a Multifamily Housing Limited Property Tax Exemption Agreement with the Applicant.

 

The 809 Hiawatha Place, LLC project will provide 94 owner-occupied housing units for individuals and small families in a mixed-use facility.  The project will contain 94 units: 26 one-bedroom units, 60 two-bedroom units,  and 8 three-bedroom units.   The developer is required to deliver 51% of the units to families at 80% of median income at initial sales (52 units).  Of these, the developer is required to sell 20 to families at 80% of median income as restricted by covenant for a period of 30 years.  These 20 units are expected to be the units exempted from property taxes.  For a four-person household, 80% of median income would be $65,120.

 

Assuming that all of the units in the 809 Hiawatha Place, LLC project are affordable units, the value of the exemption from property taxes for the multifamily housing improvements for the first year of the exemption are estimated to be $257,457, of which $87,941 is Seattle’s portion.  If this project continues to qualify for the tax exemption for the duration of the twelve-year period, the property tax exemption amount (which is shifted to other unit owners) will increase at a maximum of 1% each year for the twelve years.  The amount of the tax exemption is estimated by multiplying the value of the residential improvements by the property tax rate effective at the time of application.  The tax responsibilities are shifted to other taxpayers as follows:  the City portion to other City taxpayers; the County portion to other County taxpayers; and the State portion to other State taxpayers.  The City portion shifted to City taxpayers for the first year of exemption for the 809 Hiawatha Place, LLC project is estimated to add $0.33 to the tax bill for the average assess-valued home of $451,363.

 

·        Please check one of the following:

 

__X     This legislation does not have any financial implications.  (Stop here and delete the remainder of this document prior to saving and printing.)