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Ordinance No. 23-05 CITY OF TIGARD, OREGON TIGARD CITY COUNCIL ORDINANCE NO. 23-05- AN ORDINANCE TO AMEND TIGARD MUNICIPAL CODE CHAPTER 3.24 TO EXTEND EXEMPTIONS FROM CERTAIN SYSTEM DEVELOPMENT CHARGES FOR ACCESSORY DWELLING UNITS AND CLARIFY LANGUAGE RELATED TO AFFORDABLE HOUSING, AND TO AMEND TIGARD MUNICIPAL CODE CHAPTER 3.90 TO EXTEND EXEMPTIONS FROM CONS'1RUCTION EXCISE TAX FOR ACCESSORY DWELLING UNITS AND MIDDT F HOUSING WHEREAS,there is an identified need for affordable housing in the City of Tigard;and WHEREAS, on March 6, 2018, the Tigard City Council adopted amendments to Chapter 3.24 of the Tigard Municipal Code to provide an exemption from system development charges for regulated affordable housing; and WHEREAS, on June 18, 2019, the Tigard City Council adopted an Affordable Housing Plan that includes a strategy to reduce or exempt Tigard system development charges for certain desired classes of housing;and WHEREAS, a key recommendation of that plan is an exemption from city system development charges for certain desired classes of housing;and WHEREAS, on July 9, 2019, the Tigard City Council adopted amendments to Chapter 3.24 of the Tigard Municipal Code to provide an exemption from system development charges for accessory dwelling units,with a sunset date of July 31,2023;and WHEREAS, on November 5, 2019, the Tigard City Council adopted Chapter 3.90, implementing a construction excise tax of one percent;and WHEREAS, the adopted Chapter 3.90 included a full exemption from construction excise tax for accessory dwelling units and a partial exemption for qualified middle housing,with a sunset date of July 31,2023;and WHEREAS, Goal 10 of the City of Tigard's Comprehensive Plan is to "provide opportunities to develop a variety of housing types that meet the needs, preferences, and financial capabilities of Tigard's present and future residents";and WHEREAS, the Council desires to encourage the construction of small accessory dwelling units as one part of a strategy to provide housing choices for Tigard residents in accordance with the city's Comprehensive Plan; and WHEREAS, most developers of accessory dwelling units are homeowners who must privately finance their construction through personal loans;and WHEREAS, an exemption from Tigard SDCs removes a financial barrier to the development of accessory dwelling units for these homeowners;and ORDINANCE No.23-0 5 Page 1 WHEREAS, qualification for an exemption requires that the accessory dwelling unit be utilized for housing rather than short-term rental;and WHEREAS,the exemption is time-limited and allows the city to re-examine the policy after three years. WHEREAS, the Council desires to continue to develop a sustainable affordable housing program to ensure an adequate supply of housing for all of Tigard's residents;and NOW,THEREFORE,THE CITY OF TIGARD ORDAINS AS FOLLOWS: SECTION 1: Chapter 3.24 of the Tigard Municipal Code is amended to read as shown on the attached Exhibit A(additional language is underlined and deleted text is shown in strikethrough). SECTION 2: Chapter 3.90 of the Tigard Municipal Code is amended to read as shown on the attached Exhibit B (additional language is underlined and deleted text is shown in strikethrough). SECTION 3: This ordinance shall be effective 30 days after its passage by the council, signature by the mayor,and posting by the city recorder. PASSED: By 77ZGv'6�1 vote of all council members present after being read by number and title only, s '4-day of 94"4.1 ,2023 Carol A. Kruger,City Recorder APPROVED: By Tigard City Council this o-G 744day of GLN.G ,2023. C14‘22A- - Heidi Lueb,Mayor Approved as to form: City Attorney Date ORDINANCE No. 23- 0 5 Page 2 Exhibit A 3.24.030 Definitions. For purposes of this chapter, the following definitions apply: "Accessory dwelling unit (ADU)" means a second or third residential dwelling unit on the same lot as a primary residential dwelling unit, either attached to or detached from the primary unit, and with separate facilities for sleeping, cooking, and sanitation ---e -- -a • • -- - - --- - --- - -- -- - 1', - I •, "Administrator" means the person, or persons, appointed by the city to manage and implement the SDC program or portions thereof. "Applicant" means the person who applies for a land use decision or building permit. "Building official" means the person, or designee, certified by the state and designated as such to administer the state building codes for the city. "Building permit" means the permit issued by a building official, as required by the State of Oregon Structural Specialty Code Section 105.1 or the Oregon Residential Specialty Code Section 105.1. In addition, "building permit" means a manufactured home installation permit issued by the building official, relating to the placement of manufactured homes in the city. "Capital improvements" mean facilities, real property, or assets used for the following: 1. Water: supply, treatment, or distribution; 2. Sanitary sewer: wastewater collection, transmission, treatment, or disposal; 3. Stormwater: water quality or quantity management, drainage, or flood control; 4. Parks: active or passive parks, open space, or recreational trails; or 5. Transportation. "City" means the City of Tigard, Oregon. "Condition of development approval" means any requirement imposed on an applicant by the city or county as part of a land use decision or building permit approval. "County" means Washington County, Oregon. "Credit" means the amount by which an applicant may be able to reduce an SDC as provided in this chapter. Exhibit A "Development" means a building or other land construction, including a physical change in the use of a structure or land, in a manner which increases the demand on or creates the need for new or enlarged capital improvements. "Duplex" means two attached single family residential dwelling units on a single lot. "Improvement fee" means the SDC for costs associated with capital improvements to be constructed. a single lot. "Over-capacity" means that portion of a capital improvement that is built larger or with greater capacity than is necessary to serve the development or to mitigate for system impacts attributable to the development. "Previous use" means the most intensive use conducted at the subject property within the past 18 months prior to the date of application for a building permit, or land use decision if no building permit is required. Where the subject property was used simultaneously for several different uses (mixed-use) then all of the specific use categories will be considered for purposes of this chapter. Where the previous use was composed of a primary use with one or more ancillary uses that supported the primary use and were owned and operated in common, the primary use will be deemed to be the sole previous use of the subject property for purposes of this chapter. "Project list" means the list adopted by the city pursuant to Section 3.24.060. "Proposed use" means the use proposed by the applicant for the subject property. Where the applicant proposes several different uses (mixed-use) then all of the specific use categories will be considered for purposes of this chapter. Where the proposed use is composed of a primary use with one or more ancillary uses that support the primary proposed use and are owned and operated in common, the primary use will be deemed to be the sole proposed use of the subject property for purposes of this chapter. "Qualified public improvement" means any capital improvement that increases the capacity of the city's system and is: 1. Required as a condition of development approval; 2. Identified as a need and included on the project list; and 3. Not located on or contiguous to the subject property; or 4. Located contiguous to or in whole or in part on the subject property and, in the opinion of the administrator, is required to be built larger or with greater capacity (over-capacity) than is necessary to serve the development of the subject property Exhibit A or to mitigate for system impacts attributable to the development of the subject property. There is a rebuttable presumption that improvements built to the city's minimum standards are required to serve the development and to mitigate for system impacts attributable to the development. "Regulated affordable housing" means housing that: is made affordable through public subsidies or statutory regulationsthat restrict or limit resident income levels or rents. To 1. Is rented or sold to households earning 80% or less of the median family income as defined annually by Housing and Urban Development(HUD) for the Portland-Vancouver Metropolitan Statistical Area (MSA); and 24. Is subject to Have a local, state, or federal compliance agreement=of contract, restrictive covenant, or similar instrument that guarantees that the housing will continue to be rented or sold to qualifying households for a minimum of 20 years from the date of occupancy. 2. Be affordable to households at or below 80% median family income as defined ''" - -- - • - - -- - (MSA); and date of occupancy. "Reimbursement fee" means the SDC for costs associated with capital improvements already constructed, or under construction when the fee is established, for which the city determines that capacity exists. "Residential dwelling unit" means a building or a portion of a building consisting of one or more rooms that includes sleeping, cooking, and plumbing facilities and are arranged and designed as permanent living quarters for one family or household. "SDC Administrative Procedures Guide" means the administrative rules adopted by the city for the implementation of this chapter. "Short-term rental" means rental of a residential dwelling unit, or any portion thereof, to overnight guests for fewer than 30 consecutive days. "Single family dwelling unit" means one detached residential dwelling unit, or one half of a duplex, or one row house. "Temporary water use" means a water service connection to the city water system for limited periods of time or duration that has minimal, if any, permanent impact on system Exhibit A capacity, such as service to temporary buildings, temporary irrigation systems, or special events. 3.24.080 Payment. A. SDCs are calculated and are due and payable as follows: 1. Calculation. SDCs are calculated based on the fees in effect at the time of submittal of the complete building or plumbing permit application to which the fees relate. If a building or plumbing permit is not required and a land use decision is required, SDCs are calculated based on the fees in effect at the time of submittal of the complete land use application to which the fees relate. 2. Due and Payable. Water SDCs are due and payable upon purchase of a water meter. All other SDCs are due and payable prior to final inspection or the issuance of an occupancy permit, whichever is the city's final action, on upon issuance of the building or plumbing permit to which the fees relate. If a building or plumbing permit is not required and a land use decision is required, all other SDCs are due and payable upon issuance of the land use decision to which the fees relate. B. The city may not issue a required building permit or allow a connection to the city's systems until all applicable SDCs have been paid in full; deferral has been approved pursuant to subsection D; exemption has been granted pursuant to Section 3.24.100; or installment payment arrangements have been made pursuant to Section 3.24.090. C. If development commences or a connection is made to the city's water, sanitary sewer, or stormwater systems without the required building permit or land use approval, all applicable SDCs will be immediately due and payable. D. Notwithstanding subsection A.2 of this section, the applicant may request deferral of payment of transportation or park SDCs to occupancy. The request must be made in writing to the administrator prior to the issuance of the building permit or, if no building •• - e, - - - --• - - - - - -- - - • ' - _ -- - ' - • - - -- - - e •° - - •• a"- e' - •_ ' - - - - - - - _ .. 3.24.100 Exemptions. The following types of development are exempt from payment of SDCs: A. Structures and uses existing on or before the effective date of the resolution that sets the amount of an SDC, except for connections to the city's water or sanitary sewer systems made after such date. Exhibit A B. Additions to a residential single family dwelling units that does not constitute the addition of a dwelling unit, as defined by the building code,adopted pursuant to TMC C. Alterations, additions, replacements or changes in use that do not increase the development's use of a capital improvement. D. Regulated affordable housing, from city transportation and park SDCs only. Up to one non-regulated dwelling unit may be included under these provisions, provided the development includes a minimum of 20 qualifying regulated dwelling units and the non-regulated unit is for the exclusive use of a full-time, on-site manager supporting the operations of the regulated affordable housing program. E. Temporary water use, from city water SDCs only. F. Accessory dwelling units of 1,000 square feet or less that comply with TMC 3.24.180, from city transportation and park SDCs only. 3.24.180 Exemption for Accessory Dwelling Units. A. An ADU receiving an exemption pursuant to TMC 3.24.100.F may not be used as a short-term rental for a period of 10 years following approval of final inspection of the building permit for the ADU. A restrictive covenant must be recorded and submitted to the city prior to building permit issuance. B. TMC 3.24.100.F is repealed on July 31, 2023 2027. Restrictive covenants recorded prior to this date will remain in full force and effect. Exhibit B 3.90.020 Definitions. As used in this chapter, unless the context requires otherwise: "Accessory dwelling unit(ADU)"means a second or third dwelling unit on the same lot as a primary dwelling unit, either attached to or detached from the primary unit, and with separate facilities for sleeping, cooking, and sanitation in accordance with the building code adopted pursuant to TMC 14.04. "Building official" means the building official for the City of Tigard, or designee. "City" means the City of Tigard, Oregon. "City manager" means the city manager for the City of Tigard, or designee. "Commercial" means any structure designed or intended to be used, or actually used, for occupancy for other than residential purposes and includes structures otherwise categorized or described as industrial. "Construct" or "construction" means erecting, constructing, enlarging, altering, repairing, improving, or converting any building or structure for which the issuance of a building permit is required pursuant to the provisions of Oregon law. "Improvement" means any improvements to real property resulting in a new structure, additional square footage added to an existing structure, or additional living space to an existing structure. "Median family income" means median family income by household size as defined annually by the Housing and Urban Development (HUD) for the Portland-Vancouver Metropolitan Statistical Area (MSA). "Net revenue" means revenues remaining after refunds and the administrative fees described in Section 3.90.080.A are deducted from the total construction excise tax collected. "Residential" means any structure designed or intended to be used, or actually used, for occupancy for residential purposes including any residential structure, dwelling, or dwelling unit. "Value of improvement" means the total value of the improvement as determined by the construction permit(s) or building permit(s) for the improvement, regardless of the number of separate permits issued. The city building official will calculate the total value in accordance with OAR 918-050-0100, Statewide Fee Methodologies for Residential and Commercial Permits, or as otherwise provided by law. Exhibit B 3.90.050 Exemptions. A. Notwithstanding TMC 3.90.030, the following are exempt from payment of the CET: 1. Residential housing units, including detached housing, that are subject to a deed restriction or other mechanism acceptable to the city ensuring that the unit(s) are affordable under guidelines established by the United States Department of Housing and Urban Development, to households that earn no more than 80% of the median household income for a period of at least 20 years following the date of issuance of the building permit on which the improvement value is based and that remain affordable. For purposes of the initial determination of eligibility for this exemption, the city will use the median family income for the year prior to the date of issuance of the permit on which the improvement value is based. Continuing affordability will be determined based on the median family income for the prior calendar year. 2. Accessory dwelling units of 1,000 square feet or less. This exemption is repealed automatically on July 31, 2023 2027, after which date the full CET value will be assessed. 3. Construction or improvements having a total improvement value of less than $50,000.00. 4. Construction or improvements to a residential structure that was partially or completely destroyed by unintentional means, such as fire or act of nature, where such construction or improvement results in a net increase of living area of 10% or less over the living area of the destroyed structure. 5. Cottage clusters, courtyard units, and quads, as defined by Chapters 18.30 and 18.200 of the Tigard Community Development Code (20-19), from 75% of the CET. The remaining 25% is due and payable as provided in Section 3.90.030.C. This exemption is repealed automatically on July 31, 23 2027, after which date the full CET value will be assessed. 6. Public and private school improvements. 7. Public improvements as defined in ORS 279A.010. 8. Public or private hospital improvements. 9. Improvements to religious facilities primarily used for worship or education associated with worship. 10. Long-term care facilities, as defined in ORS 442.015, operated by a not-for- profit corporation. Exhibit B 11. Residential care facilities, as defined in ORS 443.400, operated by a not-for- profit corporation. 12. Continuing care retirement communities, as defined in ORS 101.020, operated by a not-for-profit corporation. 13. Any improvements required to be exempted from this CET by state law. B. The city may require any person seeking an exemption to demonstrate that the improvement is eligible for an exemption and to establish all necessary facts to support the exemption.