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