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HomeMy WebLinkAbout2667 System Development Charge Deferrals for Low Income HousingOrdinance No. 2667 AN ORDINANCE OF THE CITY OF PORT TOWNSEND AMENDING CHAPTER 13.03, SYSTEM DEVELOPMENT CHARGES FOR WATER AND SEWER CONNECTIONS, OF THE PORT TOWNSEND MUNICIPAL CODE, ADDING A NEW SECTION 13.03.110, SYSTEM DEVELOPMENT CHARGE DEFERRALS FOR LOW INCOME HOUSING, TO ENABLE THE CITY TO DEFER PAYMENT OF SYSTEM DEVELOPMENT CHARGES FOR QUALIFIED LOW INCOME SINGLE FAMILY HOUSING PROJECTS SECTION 1. FINDINGS 1. The Jefferson County Housing Authority, Community Action Council, and the Habitat for Humanity organization have requested the waiver or deferral of water and wastewater System Development Charges (SDCs) for low income single family housing construction projects; and 2. RCW 35.92.380 enables cities to waive or delay collection of "tap-in charges, connection fees, or hookup fees for low income persons, or class[es] of low income persons, to connect to lines or pipes used by the city or town to provide utility service .... , This statute requires that such waivers or delays "shall be pursuant to a program established by ordinance." However, because the charges authorized by RCW 35.92.380 (and other provisions of Washington law), including SDCs, are intended to ensure that new development pays its share of the costs of the existing system, and mitigate additional impacts upon the system, the City Council finds that it is necessary and appropriate that general fund revenues be utili?ed to pay these fees during periods of deferral or waiver. This strategy avoids shifting these costs to the City's existing rate payers and future property developers; and 3. The Washington constitution prohibits the lending or gifting of public funds for private benefit. However, if the proposed purpose is the support of the "poor and infn'm,' the use of public funds does not mn afoul of this provision. The term "poor and infirm" has received broad treatment by the courts and the Washington Attorney General's Office, enabling the deferral of SDC payments as contemplated by this Ordinance; and 4. During the process of drafting and adopting the 1996 Comprehensive Plan, citizen work groups, the Planning Commission, and the City Council focussed upon the identified need to provide enhanced opportunities for the development of affordable housing in Port Townsend. The City adopted a number of strategies to accomplish this goal, including but not limited to: upzoning many parts of the City to allow multiple family housing; allowing attached duplexes, tri-plexes and four-plexes in single family neighborhoods; allowing accessory dwelling units in all residential neighborhoods; adopting new, clear development and permit processing standards; establishing mixed use zones; establishing density and development incentives in the planned unit development code, etc. The housing chapter (Ch. V) of the 1996 Comprehensive Plan states policy objectives for providing and encouraging the development of affordable housing. Among these, Policy 2.2.1 recommends that the City offer incentives to developers and home builders who provide housing for low and moderate income households, including "... waivers of impact fees and system development charges .... "The "Affordable Housing Strategy," page V-8, recommends "... reducing or exempting fees for low-income housing guaranteed to remain affordable for the long term;" and 5. The Council finds that to waive or defer SDCs, it is necessary to establish a fund or account from city general fund revenues, with a transfer of public money into the appropriate fund or account within a fund designated for deposit of SDCs, to offset the impacts of the development upon the City's water and wastewater systems. This Ordinance allows the Council to adopt, concurrently with the annual City budget and at such other times as the Council deems appropriate, a designated amount of general fund revenues to be available for SDC deferrals in the upcoming year, and a defined percentage of SDCs which may be deferred for qualified applicants. It is the Council's intent that all agencies mad organizations which will be seeking SDC deferrals during the subsequent year propose the funding for this purpose during the annual budget process, and that deferrals shall be available on a "first come, first served" basis; and 6. The Jefferson County Housing Authority and other non-profit organizations which may benefit from the program established by this Ordinance have assured the City Council that they are prepared to assist the City in applying for grant funds to minimize the impact of this program upon the City's general fund, and to provide sufficient revenues to fund an SDC Deferral Fund/Account. The City Council finds that under the existing circumstances of limited public revenues, the ongoing success of this program may depend upon the availability of grant funds for this purpose. The City Council strongly encourages the assistance of potentially benefiting agencies and organizations to assist the City in exploring and applying for all available grant funds; and 7. Because single family homes in private ownership could be sold in a market rate sale to persons who do not meet the definition of "low income" individuals, the City Council chooses, in its discretion, not to waive the SDCs or make an outright grant to qualified applicants. SDC deferrals enabled through this Ordinance will be secured by a lien on the property, with a "due on sale" clause if the home is sold to persons not meeting the definition of "Iow income" individuals as provided in this Ordinance; and 8. The City Council recognizes that in February, 1997, the Jefferson County Housing Authority and Community Action Council requested that the City consider a program to waive or defer SDCs for qualified single families who participated in the "Self Help Housing" program. The initial Self Help Housing program has been successfully completed, and several home owners may qualify for deferred SDCs under the provisions of this ordinance. Given the fact that this request was previously brought to the City Council for consideration, and that several home owners who participated in the Self Help Housing program may qualify for deferred SDCs under the terms of this Ordinance, in its legislative discretion, the City Council finds that it is appropriate and equitable that this ordinance shall apply retroactively to January 1, 1998. In making this finding, the City Council further finds that the retroactive application of this -2- ord. No. 2667 Ordinance is remedial in nature and will not impair contractual or vested rights of any persons or organizations; and 9. The City Council's Finance Committee has held several public meetings regarding this Ordinance and unanimously recommends that the City Council adopt this Ordinance, establishing an SDC deferral program and an appropriate city fund to aid with implementation. The Committee's recommendation is that this program initially serve families and individuals in single family home projects having the greatest financial need for relief from SDCs, both to recognize the greatest identified need in establishing this public subsidy, and in recognition of the limited public funds available to carry this program forward. Therefore, the Committee recommends that the Council approve eligibility criteria of families at 50% of Jefferson County median income, and that the program be available only to single-family housing built by non-profit corporations or public agencies. The City Council hereby accepts and adopts the recommendations of the Finance Committee; and 10. On November 2, 1998, the City Council held a properly noticed public hearing to hear public testimony and comment on this Ordinance and the Ordinance proposing to amend the 1998 Budget to implement the low income SDC deferral program. Based upon the deliberations of the Finance Committee and full Council; based upon policy direction from the City's 1996 Comprehensive Plan; and based upon the public testimony and comment, the City Council hereby finds that adoption of this Ordinance is in the best interest of the community and will facilitate addressing Port Townsend's needs for low income housing opportunities, NOW, THEREFORE, the City Council of the City of Port Townsend does ordain as follows: SECTION 2. Chapter 13.03, System Development Charges for Water and Sewer Connections, is hereby amended, adding a new Section 13.03.110, System Development Charge Deferrals for Low Income Housing, of the Port Townsend Municipal Code, to read as follows: 13.03.110 System Development Charge Deferrals for Low Income Housing. A. Program established. In accordance with policy direction from the Port Townsend Comprehensive Plan, the city may allow deferral of payment of system development charges (SDCs) for low income single family residential applicants, as defined in this section. SDC deferrals shall be available on a first-come, first-served basis, funded by general fund revenues appropriated annually through the city's budget process. B. Definitions. The following definitions shall apply to the administration of this section: 1. "Low income" shall mean: Individuals or families with a gross income less than 50% of the median income for worldng families in Jefferson County. -3- Ord. No. 2667 2. uPrivate or public non-profit organizations" means non-profit corporations, municipal corporations, and other organizations formally established for the charitable purpose of providing low income or affordable housing, recognized under the United States Internal Revenue Code as qualified recipients of tax deductible charitable contributions, including but not limited to organizations having received approval from the Internal Revenue Service of such status upon the filing of all forms as required for recognition as a 501(e)O) coqxnafien. For an entity to qualify as a private or public non- profit organization under the provisions of this section, upon making a written request for SDC deferral, the entity shall provide sufficient proof of such status, including such documentation as the city council may deem necessary. To qualify for SDC deferrals, all private or public non-profit organizations shall assure that the project development includes Usweat equity," defined as labor contributed by the prospective homeowner and/or volunteer labor contributed through community donation. For purposes of this section, municipal public housing authorities established pursuant to Washington law shall be considered public non-profit organizations. C. SDC deferral requests; Qualified applicants. Upon the approval of the city council, the collection of system development charges under the provisions of this chapter to serve single family residences may be deferred at the request of a private or public non-profit organization which is developing or constructing low income single family housing units for low income individuals or families. Except as provided in Section 3 of Ordinance No. 2667 (enabling the retroactive application of this Section to January 1, 1998), to qualify for such deferral, SDC deferral requests shall be made in writing to the city council at least thirty days prior to the levy of the SDC. Such requests may be granted within the discretion of the city council, and only at such times as the city has established and funded an SDC deferral fund as described in this section. The city council shall approve such requests by resolution, adopted at regularly scheduled city council meetings. D. SDC deferral fund or account; City Council determination. In order to approve SDC deferral requests, the city council shall establish, on an annual basis through adoption of the city budget, an SDC deferral fund or account, funded by general fund revenues and not from funds received from payment of SDCs or other water or wastewater rates (other than taxes assessed thereon). On an annual basis, and at such other times as the city council deems appropriate, upon consideration of the number of potential requests for Iow income single family SDC deferrals, the city council may determine by resolution or ordinance the appropriate amount available for SDC deferrals. Based upon this consideration, the city council may determine that a given percentage of the total SDC amounts may be subject to deferral. Upon the city council making its determination regarding the total amount and percentage of SDCs subject to deferral, SDC deferrals shall be available on a ~first come, first served" basis. Upon the city council's approval of SDC deferral requests, the SDCs shall be paid into the appropriate fund or account as established by the city finance director, designated for deposit of SDCs, from general fund revenues. -4- Ord. No. 2667 E. Repayment of SDC deferrals. All SDC amounts deferred for low income single family housing applicants pursuant to this section shall be reimbursed to the city's SDC deferral fund or account upon the sale of the property to any purchaser who is not a qualified low income person or family or a private or public non-profit organization expressly established for the provision of low income housing. Repayment of deferred SDCs shall be secured with a real estate security instrument as approved by the city attorney. Such instrument shall be senior to all other security instruments securing loans on the property, unless the city council determines that the city receives adequate security for repayment from a junior security instrument. All such security instruments shall contain a "due on sale" clause, requiring reimbursement of deferred SDCs to the city upon the sale of the property to any purchaser who is not a qualified low income person or family or a private or public non-profit organization expressly established for the provision of low income housing. Deferred SDCs shall likewise be repaid to the city upon any refinancing of loans secured by senior real property security instruments. F. Amount of reimbursement to the city. Upon the sale of the property to any purchaser who is not a low income person or family or a private or public non-profit organization expressly established for the provision of low income or affordable housing, prior to transfer of the property to the purchaser, the seller shall reimburse the city in the full amount of deferred SDCs, plus interest thereon at a rate commensurate with the annual one year U.S. Treasury notes and bonds, adjusted for constant maturities, as published in the Federal Reserve Bulletin or otherwise available from the Federal Reserve Bank, from the year connection is made to the city water and wastewater systems, computed annually on unpaid balances. Interest calculated pursuant to this section shall not be compounded. Alternatively, at the option of the seller, the reimbursement to the city may be at the then-existing SDC rates for comparable development on properties within Port Townsend for connection to the city's water and wastewater systems; provided, that if at such time the city has repealed its SDC program, reimbursement shall be made to the city in the original amount of the deferred SDC, plus interest thereon as described in this subsection; provided further, that in no circumstances shall the reimbursement to the City be less than the amount of the SDC originally deferred. SECTION 3. Reimbursement of SDCs paid by Qualified Applicants. Qualified applicants who have paid water and wastewater SDCs af~ January 1, 1998 may apply to the City Council for, and receive a reimbursement of SDCs paid in such amounts as the City Council shall establish by resolution; provided, however, in order to receive a reimbursement, all such applicants shall fully comply with all provisions of this Ordinance. All requests for SDC reimbursements shall be made in writing to the City Council within 30 days from the date of adoption of this Ordinance. Any requests made thereafter shall not be considered. SECTION 4. Severability. If any provision of this Ordinance or its application to any person or circumstance is held invalid, the remainder of the Ordinance, or the application of the provision to other persons or circumstances is not affected. -5- Ord. No. 2667 SECTION 5. Effective Date; Retroactive Effect. This Ordinance shall take effect and be in force five days after thc date of its publication in thc manner provided by law; provided, however, that this Ordinance shall be retroactive to January 1, 1998, enabling qualified applicants who have paid system development charges since January 1, 1998 to apply to the City Council for reimbursement from the SDC Deferral Fund or account, to the extent approved by the City Council, and contingent upon the availability of funds for this purpose. Read for the first, second, and third times and adopted by the City Council of the Ci. ty of Port Townsend, Washington, at a regular meeting thereof, held this 3 day 1998. Julie/V~ulloch, Mayor Attest: Pam Kolacy, Ci~ ' Approved as ~ Form:~ ~ ",City Attorney 11/03/98 [PTMC 13.03.110]tlm\ord\1303-110.doc -6- Ord. No. 2667