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Multifamily Property Tax
Exemption Amendments - 2022
ORDINANCE NO. 5447
AN ORDINANCE of the City Council of the City of
Bremerton, Washington, amending certain provisions of Chapter
3.78 of the Bremerton Municipal Code related to the terms and
eligibility requirements, eliminating the eight (8) year exemption,
and changing the project eligibility requirements for the twelve (12)
year exemption to provide housing affordable to low income
households and relocation assistance, and adding a twenty (20) year
exemption for permanent affordable housing, and adding process for
exemption extensions.
WHEREAS, exemptions from ad valorem property taxes for multifamily housing
encourage increased residential opportunities within designated residential targeted areas,
stimulate new construction and rehabilitation of existing buildings, assist in directing future
population growth and helps to achieve development densities which are more conducive to
transit use in designated residential targeted areas; and
WHEREAS, on October 4, 2006, the City Council of the City of Bremerton,
Washington, passed Ordinance No. 4968 adopting Chapter 3.78 of the Bremerton Municipal
Code (“BMC”) establishing exemptions from ad valorem property taxation for new multifamily
housing in designated residential targeted areas of the City and established a residential targeted
area for the Multifamily Tax Exemption (MFTE) within the Downtown Regional Center; and
WHEREAS, the City Council and State Legislature have frequently amended and
updated the requirements and eligibility relating to multifamily tax exemptions and added
additional target areas that align with the City’s Comprehensive Plan growth centers; and
WHEREAS, on May 3, 2021, the State Legislature passed E2SSB 5287 amending
Chapter 84.14 RCW relating to multifamily tax exemptions; and
WHEREAS, the City Council desires the Multifamily Tax Exemption program to
focus solely on affordable housing; and
WHEREAS, the proposed revisions eliminate the eight (8) year exemption,
remove the moderate income allowance for the twelve (12) year exemption, amend the definition
of low-income housing, amend language relating to tenant displacement, add a twenty (20) year
exemption, and make other related changes, in order to focus the Multifamily Tax Exemption
program on the low income households; and
WHEREAS, the proposed revisions to the requirements for the multifamily
property tax exemption are allowed per Chapter 84.14 RCW; and
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WHEREAS, on March 3, 2022, the public was notified by a legal advertisement
in the Kitsap Sun of the opportunity to make comment and participate in the public hearing by
the City Council; and
WHEREAS, in recent years the City has experienced growth and revitalization of
market rate housing, however new affordable housing development has not followed the same
growth trend; and
WHEREAS, on March 16, 2022, the City Council conducted a public hearing and
considered all testimony; NOW THEREFORE;
THE CITY COUNCIL OF THE CITY OF BREMERTON, WASHINGTON, DOES
HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Recitals. The recitals set forth above are hereby adopted and
incorporated as set forth herein in full.
SECTION 2. BMC 3.78.010 Amended. Section 3.78.010 of the Bremerton
Municipal Code entitled “Purpose" is hereby amended to read as follows:
3.78.010 PURPOSE
As provided for in Chapter 84.14 RCW, the purpose of this chapter is to provide limited
exemptions from ad valorem property taxation for multifamily housing in designated residential
targeted areas to:
(a) Encourage increased affordable residential opportunities, including affordable
housing units, within areas of the City designated by the City Council as residential targeted
areas; and/or
(b) Stimulate new construction or rehabilitation of existing vacant and underutilized
buildings for multifamily housing in designated residential targeted areas to increase and
improve housing opportunities, including affordable housing; and
(c) Assist in directing future population growth to designated residential targeted areas,
thereby reducing development pressure on single-family residential neighborhoods; and
(d) Achieve development densities which are more conducive to transit use in
designated residential targeted areas.
SECTION 3. BMC 3.78.020 Amended. Section 3.78.020 of the Bremerton
Municipal Code entitled “Definitions" is hereby amended to read as follows:
3.78.020 DEFINITIONS.
When used in this chapter, the following terms shall have the following meanings, unless
the context indicates otherwise:
(a) "Affordable housing" means residential housing that is rented by a person or
household whose monthly housing costs, including utilities other than telephone, do not exceed
thirty (30) percent of the household’s monthly income. For the purposes of housing intended for
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owner occupancy, "affordable housing" means residential housing that is within the means of
low- or moderate-income households.
(b) "Building codes" means the City and state building and fire codes as set forth in
Chapters 17.04, 18.02 and 18.03 BMC.
(c) "City" means the City of Bremerton.
(d) "Department" means the City Department of Community Development.
(e) "Director" means the Director of the Department of Community Development, or
designee.
(f) "High-cost area" means a county where the third quarter median house price for the
previous year as reported by the Washington Center for Real Estate Research at Washington
State University is equal to or greater than one hundred thirty (130) percent of the statewide
median house price published during the same time period.
(f) "Household" means a single person, family, or unrelated persons living together.
(g) "Low-income household" means a single person, family, or unrelated persons living
together whose adjusted income is at or below eighty (80) sixty (60) percent of the median
family income adjusted for family size, for the county where the project is located, as reported by
the United States Department of Housing and Urban Development. For cities located in high-cost
areas, "low-income household" means a household that has an income at or below one hundred
(100) percent of the median family income, adjusted for family size, for the county where the
project is located.
(i) "Moderate-income household" means a single person, family, or unrelated persons
living together whose adjusted income is more than eighty (80) percent but is at or below one
hundred fifteen (115) percent of the median family income adjusted for family size, for the
county where the project is located, as reported by the United States Department of Housing and
Urban Development. For cities located in high-cost areas, "moderate-income household" means a
household that has an income that is more than one hundred (100) percent, but at or below one
hundred fifty (150) percent, of the median family income adjusted for family size, for the county
where the project is located.
(h) "Multifamily housing" means a building having ten (10) or more dwelling units not
designed or used as transient accommodations and not including hotels and motels. Multifamily
units may result from new construction or rehabilitated or conversion of vacant, underutilized, or
substandard buildings to multifamily housing.
(i) "Multifamily property tax exemption" means an exemption from ad valorem
property taxation for multifamily housing.
(j) "Owner" means the property owner of record.
(k) "Permanent residential occupancy" means multiunit housing that provides either
rental or owner occupancy on a nontransient basis. This includes owner-occupied or rental
accommodation that is leased for a period of at least one (1) month. This excludes hotels and
motels that predominantly offer rental accommodation on a daily or weekly basis.
(m) "Rehabilitation improvements" means modifications to existing structures that are
vacant for twelve (12) months or longer that are made to achieve a condition of substantial
compliance with existing building, fire, and zoning codes, or modification to existing occupied
structures which increase the number of multifamily housing units.
(n) "Residential targeted area," also "residential target area," means the geographic area
located within the areas set forth in Figures 3.78(a) through 3.78(g).
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(o) "Substantial compliance" means compliance with all local building, fire and zoning
code requirements, which are typically required for rehabilitation as opposed to new
construction.
SECTION 4. BMC 3.78.040 Amended. Section 3.78.040 of the Bremerton
Municipal Code entitled “Terms of the Tax Exemption" is hereby amended to read as follows:
3.78.040 TERMS OF THE TAX EXEMPTION.
(a) Duration of Exemption. The value of new housing construction, conversion, and
rehabilitation improvements qualifying under this chapter is exempt from ad valorem property
taxation, as follows:
(1) For properties for which applications for certificates of tax exemption
eligibility are submitted under this chapter before July 22, 2007, the value is exempt for ten (10)
successive years beginning January 1st of the year immediately following the calendar year of
issuance of the certificate; and
(2) For properties for which applications for certificates of tax exemption
eligibility are submitted under this chapter on or after July 22, 2007, the value is exempt:
(i) For eight (8) successive years beginning January 1st of the year
immediately following the calendar year of issuance of the certificate; or
(ii) For twelve (12) successive years beginning January 1st of the year
immediately following the calendar year of issuance of the certificate, if the property otherwise
qualifies for the exemption under this chapter and meets the conditions in this subsection
(a)(2)(ii). For the property to qualify for the twelve (12) year exemption under this subsection,
the applicant must commit to renting or selling at least twenty (20) percent of the multifamily
housing units as affordable housing units to low- and moderate-income households, and the
property must satisfy that commitment and any additional affordability and income eligibility
conditions adopted by the local government under this chapter. In the case of projects intended
exclusively for owner occupancy, the minimum requirement of this subsection (a)(2)(ii) may be
satisfied solely through housing affordable to moderate-income households.
(1) For twelve (12) successive years beginning January 1st of the year
immediately following the calendar year of issuance of the certificate, if the property otherwise
qualifies for the exemption under this chapter and meets the conditions in this subsection (a)(1).
For the property to qualify for the twelve (12) year exemption under this subsection, the
applicant must commit to renting or selling at least twenty (20) percent of the multifamily
housing units as affordable housing units to low-income households, and the property must
satisfy that commitment and any additional affordability and income eligibility conditions
adopted by the local government under this chapter.
(i) Low-income household units shall be dispersed throughout the
development and be apportioned among all unit types (ie. studio, single bedroom, double
bedroom etc.) based on the number of each unit type to the extent feasible.
(2) For twenty (20) successive years beginning January 1st of the year
immediately following the calendar year of issuance of the certificate, if the property otherwise
qualifies for the exemption under this chapter and meets the conditions in this subsection BMC
3.78.040(a)(2). To qualify for the exemption under this subsection, the applicant must commit to
renting at least 20 percent of the dwelling units as affordable to low-income households for a
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Exemption Amendments - 2022
term of at least 99 years, and the property must satisfy that commitment and all required
affordability and income eligibility conditions adopted by the City under this chapter. The
applicant shall record a covenant or deed restriction that ensures the continuing rental of units
subject to these affordability requirements consistent with the conditions in this subsection
3.78.040(a)(2) for a period of no less than 99 years. The covenant or deed restriction must also
address criteria and policies to maintain public benefit if the property is converted to a use other
than which continues to provide for permanently affordable low-income housing consistent with
this subsection 3.78.040(a)(2);
(i) Low-income household units shall be dispersed throughout the
development and be apportioned among all unit types (ie. studio, single bedroom, double
bedroom etc.) based on the number of each unit type to the extent feasible.
(b) Limits on Exemption. The exemption does not apply:
(1) To the value of land or to the value of nonhousing-related improvements not
qualifying under this chapter.
(2) In the case of rehabilitation of existing buildings, to the value of
improvements constructed prior to submission of the completed application required under this
chapter.
(3) To increases in assessed valuation made by the Kitsap County Assessor on
non-qualifying portions of building or other improvements and value of land nor to increases
made by lawful order of a County board of equalization, the Department of Revenue, or Kitsap
County, to a class of property throughout the County or specific area of the County to achieve
the uniformity of assessment or appraisal required by law.
(c) Conclusion of Exemption. At the conclusion of the exemption period, the new or
rehabilitated housing cost shall be considered as new construction for the purposes of Chapter
84.55 RCW.
SECTION 5. BMC 3.78.050 Amended. Section 3.78.050 of the Bremerton
Municipal Code entitled “Project Eligibility" is hereby amended to read as follows:
3.78.050 PROJECT ELIGIBILITY.
A proposed multifamily housing project must meet the following requirements for
consideration for a property tax exemption:
(a) Location. The project must be located within a residential targeted area as defined
in BMC 3.78.020 and as set forth in Figures 3.78(a) through 3.78(g).
(b) Tenant Displacement Prohibited. The project must not displace existing
residential tenants of structures that are proposed for redevelopment. If the property proposed to
be rehabilitated is not vacant, an applicant shall provide each existing tenant housing of
comparable size, quality, and price and a reasonable opportunity to relocate.
(1) General Notification. The applicant shall provide each displaced
household at least 12-month’s moving notice, unless mutually agreed otherwise by household
and applicant.
(2) Relocation Assistance. Low Income Households shall be provided the
following:
(i) Assistance in securing housing of comparable size, quality, and price
which meets the Housing and Urban Development’s Uniform Physical Condition Standards or a
similar standard acceptable to the City, and
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(ii) First and last month expenses at the new housing location as defined
above, and moving and relocating expenses as defined by the Department of Transportation
Fixed Residential Moving Costs Schedule.
(c) Noncompliance with Building Codes. Existing dwelling units proposed for
rehabilitation must fail to comply with one or more standards of the applicable State or City
building codes.
(d) Size of Project. The new, converted, or rehabilitated multiple-unit housing must
provide for a minimum of fifty (50) percent of the space for permanent residential occupancy.
The project, whether new, converted, or rehabilitated multiple-unit housing, must include at least
ten (10) units of multifamily housing within a residential structure or as part of an urban
development. In the case of existing multifamily housing that is occupied or which has not been
vacant for twelve (12) months or more, the multifamily housing project must also provide for a
minimum of four (4) additional multifamily units for a total project of at least ten (10) units
including the four (4) additional units. Existing multifamily housing that has been vacant for
twelve (12) months or more does not have to provide additional units.
(e) Proposed Completion Date. New construction of multifamily housing and
rehabilitation improvements must be completed within three (3) years from the date of approval
of the application.
(f) Compliance with Guidelines and Standards. The project must be designed to comply
with the City’s Comprehensive Plan, building, housing, and zoning codes, and any other
applicable regulations. The project must also comply with any other standards and guidelines
adopted by the City Council for the residential targeted area.
SECTION 6. BMC 3.78.070 Amended. Section 3.78.070 of the Bremerton
Municipal Code entitled “Application for Conditional Certificate" is hereby amended to read as
follows:
3.78.070 APPLICATION FOR CONDITIONAL CERTIFICATE.
The Director may certify as eligible an application which is determined to comply with
the requirements of this chapter. A decision to approve or deny an application shall be made
within ninety (90) calendar days of receipt of a complete application.
(a) Application. The Director may approve the application if he/she finds that:
(1) A minimum of ten (10) new units are being constructed or in the case of
occupied rehabilitation or conversion within twelve (12) months of occupancy, a minimum of
four (4) additional multifamily units for a total project of at least ten (10) units including the four
(4) additional multifamily units are being developed.
(2) The proposed project is or will be, at the time of completion, in conformance
with all applicable local plans and regulations.
(3) The owner has complied with all standards and guidelines adopted by the
City under this chapter.
(4) The site is located in the residential targeted area.
(5) If applicable, theThe proposed multiunit housing project meets the
affordable housing requirements as described in BMC 3.78.040.
(b) Approval of Application. If an application is approved, the applicant shall enter into
a contract with the City, regarding the terms and conditions of implementation of the project, and
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the Director shall issue a conditional certificate of acceptance of tax exemption. The conditional
certificate shall expire three (3) years from the date of approval unless an extension is granted as
provided in this chapter.
(c) Denial of Application. If an application is denied, the Director shall state in writing
the reasons for denial and shall send notice to the applicant at the applicant’s last known address
within ten (10) calendar days of the denial.
(d) Appeal. Per RCW 84.14.070, an applicant may appeal a denial to the City Council
within thirty (30) calendar days of receipt of the denial by filing a complete appeal application
and fee with the Director. The appeal before the City Council will be based on the record made
before the Director. The Director’s decision will be upheld unless the applicant can show that
there is no substantial evidence on the record to support the Director’s decision. The City
Council’s decision on appeal will be final.
SECTION 7. BMC 3.78.110 Amended. Section 3.78.110 of the Bremerton
Municipal Code entitled “Annual Compliance Review" is hereby amended to read as follows:
3.78.110 ANNUAL COMPLIANCE REVIEW.
(a) Within thirty (30) calendar days after the first anniversary of the date of filing the
final certificate of tax exemption and each year for the tax exemption period, the property owner
shall be required to file a notarized declaration with the Director indicating the following:
(1) A statement of occupancy and vacancy of the multifamily units during the
previous twelve (12) months;
(2) A certification by the owner that the property has not changed use and, if
applicable, that the property has been in compliance with the affordable housing requirements as
described in RCW84.14.020 since the date of the certificate approved by the City;
(3) A description of changes or improvements constructed after issuance of the
certificate of tax exemption; and
(4) Any information needed by the City to file its report pursuant to subsection
(b) of this section and any additional information requested by the City in regards to the units
receiving a tax exemption.
(b) The City shall report annually consistent with requirements as described in RCW
84.14.100 by December 31st of each year, beginning in 2007, to the Washington State
Department of Commerce Community, Trade, and Economic Development. The report must
include the following information, or as otherwise required per RCW 84.14:
(1) The number of tax exemption certificates granted;
(2) The total number and type of units produced or to be produced;
(3) The number, size, and type of units produced or to be produced meeting
affordable housing requirements;
(4) The actual development cost of each unit produced;
(5) The total monthly rent or total sale amount of each unit produced;
(6) The annual household income and household size for each of the affordable
units receiving a tax exemption and a summary of these figures for the City
(7) The value of the tax exemption for each project receiving a tax exemption
and the total value of tax exemptions granted.
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(c) City staff may also conduct on-site verification of the declaration. Failure to submit
the annual declaration shall result in a review of the exemption per RCW 84.14.110.
SECTION 8. BMC 3.78.140 Added. Section 3.78.140 of the Bremerton
Municipal Code entitled “Extension of Tax Exemption" is hereby added to read as follows:
3.78.140 EXTENSION OF TAX EXEMPTION.
Pursuant to RCW 84.14.020(6), the Administrator may approve an extended exemption
of the project that qualified for, satisfied the conditions of, and utilized the exemption as
provided in BMC 3.78.040(a)(1) from ad valorem property taxation for up to a total of twelve
(12) successive years beginning January 1 of the year immediately following the calendar year
that the original exemption expires.
(a) The owner of property applying for extended exemption under this subsection shall
submit an application to the Administrator on a form established by the Administrator. The
owner shall verify the correctness of the information contained in the application by his/her
signature and affirmation made under penalty of perjury under the laws of the State of
Washington. The application shall contain such information as the Administrator may deem
necessary or useful, which at a minimum shall include:
(1) A statement from the owner acknowledging the potential tax liability when
the property ceases to be eligible for exemption, equivalent to BMC 3.78.060, and
(2) Information required for the Final Exemption Certificate pursuant to
subsections BMC 3.78.100, and
(3) Information required for the annual report pursuant to BMC 3.78.110.
(b) Deadline: The extension application shall be submitted to the Administrator no later
than August 31 of the year of the original exemption expires.
SECTION 9. Figure 3.78(e) of Chapter 3.78 of the Bremerton Municipal Code
entitled “Eastside Employment Center Target Area,” and shown in Exhibit A is hereby repealed
and replaced with Exhibit B, entitled “Eastside Village Center Target Area.”
SECTION 10. Severability. If any one or more sections, subsections, or
sentences of this ordinance are held to be unconstitutional or invalid, such decision shall not
affect the validity of the remaining portion of this ordinance and the same shall remain in full
force and effect.
SECTION 11. Effective Date. This ordinance shall take effect and be in force on
July 1, 2022.
PASSED by the City Council the___________ day of ____________________, 2022.
_________________________________
MICHAEL GOODNOW, Council President
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Approved this ________ day of ________________________, 2022.
_________________________________
GREG WHEELER, Mayor
ATTEST: APPROVED AS TO FORM:
__________________________________ ________________________________
City Clerk KYLIE J. FINNELL, City Attorney
PUBLISHED the ________ day of ______________________, 2022.
EFFECTIVE the ________ day of ______________________, 2022.
ORDINANCE NO. ____________
R:\Legal\Legal\Ordinances\Community Development\2022.03.01 Ordinance - 3.78 MFTE.docx
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HOMERRJONESFigure 3.78(e)Eastside Village Center Target AreaPlease See Details of the Zone for Allowed Locations of Multifamily Housing
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