2023/04/19 Council Agenda Packet

L.EVERETT City Council Agenda Item Cover Sheet Project title: An ORDINANCE Relating to Multifamily Tax Exemptions, AMENDING Chapter 3.78 of the Everett Municipal Code . Council Bill # interoffice use CB 2304 — 27 Agenda dates requested: Dates requested for council action Briefing 4/19/2023 Proposed action 4/26/2023 Consent Action Ordinance 5/3/2023 Public hearing 5/3/2023 X Yes No Budget amendment: Yes X No PowerPoint presentation: X Yes No Attachments: Ordinance Housing Development Incentives Report (See CB 2304-26 supporting documents) Department(s) involved: Planning Contact person: Becky McCrary Phone number: X7133 Email: Initialed b ramccrary everettwa.gov Department head Administration Council President Project: Housing Development Incentives Program (HDIP) — Multifamily Tax Exemption . Partner/Supplier : N/A Location: All Mixed Urban (MU), Business (B), and Urban Residential (UR-4) zones Preceding action: Housing Development Incentives Program WA State Department of Commerce Grant approval Fund: N/A Fiscal summary statement: No direct cost to the city; consultant support was funded through a grant. Changes to the MFTE program will impact the city's revenues and expenditures in several ways, with a generally net positive effect. See Chapter 6.0 of the report for more information. Project summary statement: To implement several actions in the city's housing action plan ("Rethink Housing"), the city secured a grant from the Dept. of Commerce for housing action plan implementation. The work program included a study and report on housing incentives currently in use by the city and potential new ones. This ordinance implements recommendations from Rethink Housing, the Housing Development Incentive Program report, and state MFTE guidance. Multifamily Tax Exemption (MFTE) is a state program (RCW 84.14) available to local governments to incentivize housing, and affordable housing, in urban centers by exempting property tax on improvements related to multifamily housing construction for 8 years, or 12/20 years with income -qualified affordable units set aside for the exemption period. The proposed changes expand, clarify, and tailor the program to support production of market rate and dedicated affordable housing consistent with recent state legislation (SB 5287). The ordinance would: • Expand the area eligible for the tax exemption. Instead of a series of areas identified on maps, the area would include all Mixed Urban (MU), Business (B), and Urban Residential (UR-4) zones. • Increase the minimum project size for new construction from 8 to 16 units. • Standardize income and rent thresholds for a 12-year exemption across the whole city (currently they are different in different parts of the city). • Add a twelve-year extension option for projects at the end of a 12 year exemption. • Add a 20-year exemption option for developments with permanent affordable units or affordable ownership units. • Require relocation assistance when affordability requirements expire. • Require market studies and displacement mitigation in some cases. • Updates to application and approval processes, reporting, and monitoring. The full analysis and recommendation are presented in the Housing Development Incentive Program report (see chapters 2.0, 6.0, and attachment 6.1) Recommendation (exact action requested of Council): An ORDINANCE Relating to Multifamily Tax Exemptions, AMENDING Chapter 3.78 of the Everett Municipal Code.