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HomeMy WebLinkAbout2768 Eliminating Interest on System Development Charges (SDC) for Water and Sewer Connections on Deferrals for Low Income HousingOrdinance No. 2768 AN ORDINANCE OF THE CITY OF PORT TOWNSEND AMENDING CHAPTER 13.03, SYSTEM DEVELOPMENT CHARGES FOR WATER AND SEWER CONNECTIONS, BY ELIMINATING INTEREST CHARGES IN SECTION 13.03.110, SYSTEM DEVELOPMENT CHARGE, ON DEFERRALS FOR LOW- INCOME HOUSING WHEREAS, the City Council determines that it is appropriate to eliminate the interest charge on deferrals of System Development Charge (SDC) for low income applicants in order to encourage low-income applicants to defer payment of SDC charges, thereby reducing the upfront costs of new housing. NOW, THEREFORE, the City Council of the City of Port Townsend ordains as follows: SECTION 1. Section 13.03.110, System Development Charge Deferrals for Low- Income Housing, modified by Ordinances 2734 and 2736, is hereby amended to read as follows (underline new text, strikeout deleted text): 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 or multifamily residential applicants, as defined in this section. SDC deferrals shall be available on a first-come, first-served basis, funded by a real property lien receivable recorded in the applicable utility records. B. Definitions. The following definitions shall apply to the administration of this section: 1. "Low-income" means the dwelling shall be owned and occupied by a person or persons who meet any of the following qualifications: (a) the applicant receives Supplemental Security Income pursuant to 42 USC Sections 1381 through 1383, as now or hereafter amended; or (b) the applicant receives Supplemental Security Disability Income pursuant to federal law, and is able to establish that current annualized household income from all sources does not exceed the sum of $18,000 per year; or (c) the applicant is eligible for and receives a federal, state or private disability pension, and is able to establish that current annualized income from all sources does not exceed the sum of $18,000 per year; or (d) the applicant has a total current annualized income from all sources of 100 percent or less of poverty level based upon total household size using poverty level calculations established by the state of Washington for Jefferson County or by the federal government if state calculations are not available. To establish qualifications under this section, the applicant shall provide the city finance director with a current statement of eligibility for SSI, SSDI, or such disability pension or proof of disability, which proof shall not be more than three months old. Applicants shall, under oath or penalty of perjury, verify such information and provide such other information or data as deemed appropriate, on forms and in the manner determined by the city finance director. Applicants shall be required to meet the qualifications under this section until the city is reimbursed as provided in this section, or until the city determines the applicant no longer meets the qualifications under this section and interest begins accruing on the deferred SDC as provided in this section. Periodically, as determined by the city finance director, but not less than annually, applicants shall provide information, on forms and in the manner determined by the city finance director, to allow the city to determine that the applicant meets the qualifications under this section. The city finance director shall notify the applicant if it is determined that the applicant has not meet the qualifications under this section, and the date (as determined by the city finance director when the applicant did not meet the qualifications) that interest begins accruing on the deferred SDC as provided in this section, and the date the deferred SDC must be paid under this section.. 2. "Private or public nonprofit organizations" means nonprofit 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(c)(3) corporation. For an entity to qualify as a private or public nonprofit 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 nonprofit organizations shall assure that the project development includes "sweat 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 nonprofit organizations. C. SDC Deferral Requests - Qualified Applicants. Upon the approval of the city manager, collection of system development charges under the provisions of this chapter to serve single-family or multifamily residences may be deferred at the request of a private or public nonprofit 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 manager. 2 Ord. 2768 D. All SDC deferrals granted shall be recorded as a real property lien receivable in the applicable utility fund records until such time as the SDC deferral has been repaid to the city. E. Repayment of SDC Deferrals. All SDC amounts deferred for low-income single-family or multifamily housing applicants pursuant to this section shall be reimbursed to the city's SDC deferral account in the applicable utility upon the sale of the property, or upon city determination that the applicant no longer meets the qualifications under this section, as provided in this section. 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. Deferred SDCs shall likewise be repaid to the city upon first mortgage payoff or 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, the seller shall reimburse the city in the full amount of deferred SDCs. If the applicant does not meet the qualifications under this section as determined by the city finance director, then no later than three (3) years from the date determined by the city finance director that the applicant did not meet the qualifications under this section, the applicant shall reimburse the city in the full amount of deferred SDCs, plus simple 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 ye~ ...... *~"'- ~o '-~o'~ *^ ,ha ~. ...... , .... ,~ ..... · ..... ,~ 'stems, dat ............................. ; ...................... s5 from the e determined by the City that the applicant did not meet the qualifications under this section computed annually on unpaid balances. Default interest rate shall be twelve (12) percent simple interest. 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. G. Annual Maximum SDC Deferrals. The maximum amount of SDC deferrals that may be granted per year is limited to $15,000 in total. (Ord. 2734 § 1, 2000). SECTION 2. Severability. If any provision of this ordinance or its application to any person or circumstance is held invalid, the remainder of the 3 Ord. 2768 ordinance, or the application of the provision to other persons or circumstances is not affected. This ordinance shall take effect and be in force five days after the date of its publication in the manner provided by law. Adopted by the City Council of the City of Port Townsend, Washington, at a regular meeting thereof, held this 4th day of June, 2001. (Geoff Masci, Mayor Attest: Approved as to Form: P~am K~olacy, C~~ly Cler~k' John P. Watts, City Attorney 4 Ord. 2768