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A. Intent. Limited exemptions from ad valorem property taxation for multifamily housing are intended to:

1. Encourage increased residential opportunities within the residential target area as designated by the City Council;

2. Increase the number of affordable residential housing units within the residential target area as designated by the City Council;

3. Stimulate new construction or rehabilitation of existing vacant and underutilized buildings for multifamily housing in the residential targeted area to increase and improve housing opportunities;

4. Assist in directing future population growth in the designated urban center, thereby reducing development pressure on single-family residential neighborhoods; and

5. Achieve development densities that are more conducive to transit use in the designated urban center.

B. Duration of Exemption. The value of new construction, conversion, and rehabilitation improvements qualifying under this chapter is exempt from ad valorem property taxation for either eight or 12 successive years, in accordance with RCW 84.14.020, beginning January 1st of the year immediately following the calendar year after issuance of the final certificate of tax exemption.

1. A project qualifies for an eight-year exemption if it meets all of the eligibility requirements described in SMC 3.50.070 and if the owner records a covenant running with the land requiring at least 10 percent of the multifamily housing units to be affordable to low-income households as defined in this chapter. For projects with less than 10 units, a minimum of one unit shall be affordable to low-income households. In the case of projects intended exclusively for owner occupancy, 50 percent of the housing units shall be affordable to low-income households.

2. A project qualifies for a 12-year exemption if it meets all of the eligibility requirements described in SMC 3.50.070 and if the owner records a covenant running with the land requiring at least 25 percent of the multifamily housing units to be affordable to low-income households or requiring 10 percent of the multifamily housing units to be affordable to low-income households and 10 percent of the multifamily housing units to be affordable to very low-income households as defined in this chapter. For projects with less than 10 units, a minimum of two units shall be affordable to low-income households. In the case of projects intended exclusively for owner occupancy, 100 percent of the housing units shall be affordable to low-income households.

3. The mix of unit types provided to qualify for an exemption, as described by the number of bedrooms, shall be the same as or similar to the mix of unit types for the entire structure in order to qualify for either of the above exemptions.

C. Limits on Exemption. The exemption does not apply to the value of the land or to the value of improvements not qualifying under this chapter, nor does the exemption apply to increases in assessed valuation of land or 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. End of Exemption. At the conclusion of the exemption period, any new housing costs shall be considered as new construction for the purposes of Chapter 84.55 RCW. (Ord. 2366, 2019; Ord. 2454, 2022)