City Council Regular Meeting AgendaPuyallup City Council Chambers333 S Meridian, Puyallup 98371

Tuesday, November 19, 20196:30 PM

PLEDGE OF ALLEGIANCE

ROLL CALL

APPROVAL OF AGENDA

1. CONSIDERATION OF MINUTES

1.a Minutes of September 17, 2019 September 17, 2019 Draft Minutes

2. PRESENTATIONS AND PROCLAMATIONS

2.a Presentation: Recognition of Puyallup Kiwanis Club and Foundation

2.b Presentation: Strategic Planning efforts in City Clerk's Office

CITIZEN COMMENTS

3. CONSENT AGENDA

3.a Authorize the City Manager to finalize and execute the annual contracts pertaining to cityemployee healthcare plans

3.b Accept a donation of a specialized mountain bike to the Police DepartmentDonation Agreement

3.c Acceptance of Change Orders #1 (removal of an unidentified underground storage tank)and Change Order #2 (sampling, testing, and analysis of contaminated soils) at theHorsely House Demolition Project

3.d Approve accounts payable, payroll and electronic fund transfers of $7,340,347.05Warrant Register Cover Sheets

4. ORDINANCES

4.a Second reading of an ordinance amending Puyallup Municipal Code Section 21.04(Environmental Policy)Ordinance

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4.b Second reading of an ordinance amending Puyallup Municipal Code (PMC) 5.04.018relating to business license requirementsOrdinance

4.c Second reading of an ordinance determining and fixing the amount of funds to be raisedby regular property taxes for 2020.2020 Tax Levy Ordinance

4.d Second reading of an ordinance on the proposed City of Puyallup 2020 BudgetOrdinanceExhibit A - Summary by FundExhibit B - Preliminary to Final Details

4.e First reading of an ordinance pertaining to quarterly budget adjustments to the 2019BudgetOrdinanceBudget Adjustment Summary - Exhibit ABudget Adjustment Details - Exhibit B

4.f First reading of an ordinance amending Puyallup Municipal Code Section 14.26.080,"Protests to fees and charges" pertaining to Storm or Wastewater system developmentchargesOrdinance

4.g First reading of an ordinance updating land use codes (Puyallup Municipal Code Titles14, 19 and 20) relating to Puyallup Housing ChoicesCover Memo - Housing ChoicesOrdinance

5. RESOLUTIONS

5.a Resolution to develop regulations for a City Transfer of Development Rights programPuyallup TDR Program ReportResolution: TDR Program FrameworkPowerPoint Presentation

CITY MANAGER'S REPORT

COUNCIL REPORTS

MAYOR'S REPORT

EXECUTIVE SESSION

ADJOURNMENT

The City Council Chambers is wheelchair accessible. Those needing assistance with hearing devicesshould contact the City Clerk's Office (253-841-5480) the Friday preceding the meeting. 2

City Council Agenda Item Report

Submitted by: Mary WinterSubmitting Department: City Clerk's OfficeMeeting Date: 11/19/2019

Subject:Minutes of September 17, 2019

Presenter:

Recommendation:Approve the September 17, 2019 minutes.

Background:

Council Direction:

Fiscal Impacts:

ATTACHMENTSSeptember 17, 2019 Draft Minutes

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City of Puyallup

City Council Study Session September 17, 2019

COUNCILMEMBERS PRESENT: Mayor Palmer, Deputy Mayor Swanson, Councilmember Door, Councilmember Farris, Councilmember Jacobsen, Councilmember Kastama, and Councilmember Johnson APPROVAL OF THE AGENDA Council Action: A motion was made by Deputy Mayor Swanson and seconded by Councilmember Johnson to approve the agenda. The motion passed 7-0. AGENDA ITEMS City Electronic Permit System – Informational Status Presentation Development Services Director Tom Utterback outlined pertinent information relative to the City’s current Eden Permit System. He elaborated on the functions of the planning, engineering, building and fire prevention divisions, all users of the City’s permit system. He cited several reasons justifying the need for an update and discussed multiple ways in which a new permit system would improve departmental functions and customer service. Mr. Utterback outlined the efforts made in the Request for Proposals (RFP) process and the narrowing of focus from twelve to three vendors. He reviewed the vendors (CityView, Accela, and PALS+), discussed the pros/cons of each system and if the software was compatible with other city systems. He cited reasons for and noted an overall preference for the CityView Permit System Software. Mr. Utterback reviewed the budgetary impacts of the installation of the new permit system with an anticipated one-time start-up cost ($540,700) and annual license fee ($38,000 plus Consumer Price Index (CPI) increases. He recommended the addition of a consultant for the installation of the software ($75,000 one-time fee) and the addition of a new full-time employee (FTE) ($125,000 per year). He reviewed the roll of the new FTE who would be classified as a Customer Service Supervisor. City Engineer Hans Hunger, Assistant City Engineer Ken Cook, Information Technology Project Manager Amit Makharia, and Mr. Utterback responded to a variety of questions relating to the project. Councilmembers voiced their thoughts and concerns regarding the system upgrade. The council was supportive of including the upgrade and the addition of a consultant and FTE into the proposed 2020 budget. Councilmembers stressed the importance for a smooth transition to the new system and for the upgrade to provide measurable, tangible improvements.

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City Council Minutes September 17, 2019

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City Entrance Signs Senior Engineer Scott Tkach shared examples of three distinct city welcome sign designs for the council’s consideration. He reviewed the installation criteria, size, and associated costs for each sign. He further discussed the advantages/challenges of the proposed sites, outlined the three phases of the project and sought council’s preference on sign type, cost, year(s) of implementation and interest in sponsorship. The three locations are SR512/Meridian (current sign is damaged); West Pioneer/Washington State University (WSU); and East Main city limits. Mr. Tkach also discussed project funding, noting a $40,000 set-aside in the 2019 budget and a WSU component of $15,000. He suggested the use of local sponsorship and city staff to help offset costs and recommended the selection of one design overall for the three sites. He identified the replacement of the damaged sign at SR512 as a top priority. Mr. Tkach responded to several questions relating to sponsorship; alternate sign locations and including volunteers in sign design and construction. Councilmembers each voiced their thoughts and ideas regarding the welcome signs. Of importance to council was the need to work with and acknowledge WSU; the entrance sign at 9th /94th and SR512 to acknowledge South Hill as part of the city, and community ownership. Several councilmembers voiced a preference for Option 2 (tri-pillar design) and all agreed on the need for sign uniformity. There was overall support of the program and acknowledgement of the need to fix the broken sign; however, a difference in opinion on the sponsorship aspect added to an unwillingness to commit at this time. There was support for a suggestion by Councilmember Kastama to include the Arts and Culture Commission in the design phase. Additionally, council expressed a preference for staff to research and provide additional information regarding the issue of sponsorship. ADJOURNMENT 8:46 p.m.

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City Council Agenda Item Report

Submitted by: Sarah HarrisSubmitting Department: Meeting Date: 11/19/2019

Subject:Presentation: Recognition of Puyallup Kiwanis Club and Foundation

Presenter:Mike Boisture and Tom Bowman, Kiwanis Representatives

Recommendation:Accept a donation from the Puyallup Kiwanis Club and Foundation in the amounts of $5,000for the Puyallup Valley Sports Complex Field Conversion Project and $30,000 for theChildren's Area of the Puyallup Public Library and amend the budget as appropriate.

Background:Kiwanis Foundation $5,000 donation to the Puyallup Valley Sport Complex Field ConversionProject:

The City applied for and received grant funding of $736,135 through the state RecreationConservation Office to complete the conversion of the outfield of Field #3, at the PuyallupValley Sports Complex, to synthetic turf. For our grant application, we sought communitydonations to help serve as matching funds and to show the communities interest andcommitment to the project. The City received extra points on their application because ofpledges of donations from community groups in support of the project. The KiwanisFoundation graciously donated $5,000 to this project and their support was an integral part ofour grant application.

Thank you Kiwanis Foundation for your generous donation and for your continued support ofthe City’s Parks & Recreation Department and the youth of our community.

Kiwanis Foundation $30,000 donation to the Children's Area of the Puyallup Public Library :

The children’s area of the library was in need of some renovations and revisioning to suit theneeds of today’s library users and to attract non-users. The Puyallup Kiwanis Foundation hasgenerously funded the majority of the redo of the downstairs children’s zone which includesan area for active, imaginative play, new murals, artwork, chairs, tables and more. The newsection which isn’t quite yet finished has already begun to be used heavily. Door count for

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2019 has increased by almost 30 percent—much of which can be attributed to the new areafor kids and their families to enjoy. Without the Kiwanis funding, it would not have beenpossible to convert this area into the wonderful and imaginative destination that it is today.

Council Direction:

Fiscal Impacts:

ATTACHMENTS

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City Council Agenda Item Report

Submitted by: Mary WinterSubmitting Department: City Clerk's OfficeMeeting Date: 11/19/2019

Subject:Presentation: Strategic Planning efforts in City Clerk's Office

Presenter:Mary Winter, City Clerk

Recommendation:Receive a brief informational presentation relating to creation of a Strategic Plan for the CityClerk's Office.

Background:

Council Direction:

Fiscal Impacts:

ATTACHMENTS

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City Council Agenda Item Report

Submitted by: Katie OrtegaSubmitting Department: Human ResourcesMeeting Date: 11/19/2019

Subject:Authorize the City Manager to finalize and execute the annual contracts pertaining to cityemployee healthcare plans

Presenter:Katie Ortega, Human Resources Director

Recommendation:

Authorize the City Manager to finalize negotiations and execute contracts for the 2020Calendar Year in a form as approved by the City Attorney for the following:

1. A) Medical and prescription drug third-party administrative services performed byHealthcare Management Administrators, Inc. (HMA) in an amount not to exceed$190,000, including a contingency; and claims to be paid by HMA consistent withbenefit plans reflected in the budget; and

2. B) Brokerage services and benefits plan management performed by USI InsuranceServices in an amount not to exceed $45,000; consistent with benefit plans reflected inthe budget; and

3. C) Dental third-party administrative services performed by Washington Dental Service(WDS) in an amount not to exceed $55,000, including a contingency; and claims to bepaid through WDS consistent with benefit plans reflected in the budget; and

4. D) Vision third-party administrative services performed by Vision Service Plan (VSP)in an amount not to exceed $30,000, including a contingency; and claims to be paidthrough VSP consistent with benefit plans reflected in the budget; and

5. E) Excess insurance coverage (stop loss) premium for the City's self-insured medicaland prescription drug programs in 2019 by Munich RE Stop Loss, Inc. in an amount notto exceed $900,000, including contingency; and

6. F) Excess insurance for workers compensation performed by Midwest EmployersCasualty Company (MECC) in an amount not to exceed $70,000, includingcontingency; and claims to be paid through the City's third party administrator,consistent with workers compensation information reflected in the budget.

Background:

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The above-listed contracts expire on December 31, 2019. With Council approval, contractnegotiations for the above-listed services will be finalized following the November 19thCouncil meeting. By returning the signed agreement to HMA by November 27th, 2019, theCity saves $0.20 per employee per month (PEPM) in 2020. The City's 2020 RecommendedBudget includes appropriations sufficient to cover the anticipated costs. These agreements arepresented to Council on an annual basis. Per State law, the City may not eliminate stop lossinsurance without prior approval from the State Risk Manager and funding to the full actuarialliability.

Council Direction:

Fiscal Impacts:

ATTACHMENTS

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City Council Agenda Item Report

Submitted by: McKenzi KentSubmitting Department: Police DepartmentMeeting Date: 11/19/2019

Subject:Accept a donation of a specialized mountain bike to the Police Department

Presenter:Scott Engle, Chief of Police

Recommendation:Accept a donation of a specialized police mountain bike to the Puyallup Police Department

Background:Terry Lee, a Puyallup resident and U.S. Military veteran, wishes to donate a specializedPolice Mountain Bike to the Puyallup Police Department (PPD). Mr. Lee volunteered forthree years in the Volunteer in Police Service program (VIPS) program and attended the PPDCitizen’s Academy in 2016.

This donation will enable the police department to outfit and increase the Bike Patrol with oneadditional bicycle officer.

Council Direction:N/A

Fiscal Impacts:

ATTACHMENTSDonation Agreement

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City Council Agenda Item Report

Submitted by: Michelle GehringSubmitting Department: EngineeringMeeting Date: 11/19/2019

Subject:Acceptance of Change Orders #1 (removal of an unidentified underground storage tank) andChange Order #2 (sampling, testing, and analysis of contaminated soils) at the Horsely HouseDemolition Project

Presenter:Hans Hunger, City Engineer

Recommendation:Authorize the City Manager to execute Change Order #1 in the amount of $451,175.59 (thisincludes retainage) and Change Order #2 for $12,454.52 (including retainage) to SkyCorp,LTD. for the Horsely House Demolition Project and amend the budget as appropriate, ifnecessary.

Background:The Horsely House Demolition Project is a small works project that Sky Corp, LTD, throughthe MRSC bidding process, was selected to be the prime contractor. This project was awardedby Council at the February 26th, 2019 Council meeting in the amount of $29,013.00. Theoriginal scope of work included the mobilization, cleanup, and demobilization; demolition;waste haul and waste recycling. This is a City owned home and is part of Dead Man's Pondproperty, located at 1515 23rd SW in Puyallup.

Work on this project began August 12th, 2019. The same day, during the foundation removal,an underground storage tank was discovered. The contractor was asked to remove the tankresulting in Change Order #1. Fuel oil had run down the side of a basement wall and hadseeped into the homes foundation. Samples were pulled to determine how many fuel particlesper million could be confirmed as contaminated. There were samples taken and tested onAugust 15th, September 5th, and September 18th. The excavation of the contaminated soiltook place between September 3rd and September 13th. Change Order #2 is for the cost of thesampling, testing, and analysis of the soil.

The soil at this time no longer shows signs of contamination. While the original cost of thisproject was the $29,013.00 for the house demolition, the contaminated soil was an unforeseenevent that needed to be handled quickly and efficiently. The resulting cost of the ChangeOrders total is $463,630.11

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Council Direction:

Fiscal Impacts:Change Order 1: $451,175.59 + Change Order 2: $12,454.52 = $463,630.11. This will befunded from the Stormwater Capital Improvement Fund.

ATTACHMENTS

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City Council Agenda Item Report

Submitted by: Tulika MakhariaSubmitting Department: FinanceMeeting Date: 11/19/2019

Subject:Approve accounts payable, payroll and electronic fund transfers of $7,340,347.05

Presenter:Barbara Lopez, Finance Director

Recommendation:

Background:

Council Direction:

Fiscal Impacts:

ATTACHMENTSWarrant Register Cover Sheets

15

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19

City Council Agenda Item Report

Submitted by: Tom UtterbackSubmitting Department: Development Services Meeting Date: 11/19/2019

Subject:Second reading of an ordinance amending Puyallup Municipal Code Section 21.04(Environmental Policy)

Presenter:Tom Utterback, Director of Development Services

Recommendation:Approve second reading of an ordinance amending Puyallup Municipal Code Section 21.04(Environmental Policy)

Background:On 11/12/19, City Council unanimously approved first reading of this ordinance.

Background: PMC Sec. 21.04 contains procedures for the City's required implementation ofthe State Environmental Policy Act (SEPA) review process. SEPA review is required of mostproposed land use actions, including many private/public development projects. In order forthe City to impose impact mitigation under SEPA review, that mitigation must be based uponadopted SEPA policies - such as technical standards for particular impact areas. PMC21.04.210 contains a list of policy and technical documents (e.g. traffic manuals,infrastructure standards) which, per State law, provide these adopted policies (aka"substantive authority") under which the City may impose reasonable SEPA mitigation.

Periodically, City staff reviews and updates the list of documents cited within that codesection to reflect most-current sources. In a recent review, it was identified that two additionalnational traffic-related technical manuals (i.e. the American Association of State Highway &Transportation Officials (AASHTO) Guide for Design of Pavement Structures and theAASHTO Mechanistic-Empirical Pavement Design Guide) are warranted to include in thatlist. AASHTO is a leading national organization which maintains many technicalspecifications for transportation systems; several other AASHTO manuals are alreadycodified in this SEPA section and the addition of these two new documents will further helpunderpin the City's ability to adequately address potential traffic impacts in our project-specific environmental review work.

Council Direction:20

Fiscal Impacts:n/a

ATTACHMENTSOrdinance

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Ordinance No.____Amendments to Chapter 21.04 PMC

Page 1 of 6

ORDINANCE NO. __________

AN ORDINANCE OF THE CITY OF PUYALLUP pertaining toamendments to Puyallup Municipal Code Section 21.04.210

WHEREAS, Puyallup Municipal Code Section 21.04 contains procedures for the City’s implementation of the State Environmental Policy Act (SEPA); and,

WHEREAS, Puyallup Municipal Code Section 21.04.210 contains those adopted policies and technical documents which provide “substantive authority” for the City’s potential imposition of impact mitigation in case-by-case local environmental review; and,

WHEREAS, periodically City staff reviews the source document citations in PMC Section 21.04.210 to determine if any amendments are warranted to ensure that said list is current and represents all applicable technical specifications. In recent review, staff identified two additional technical documents issued by the American Association of State Highway & Transportation Officials (AASHTO), which is a leading nationwide organization in maintaining specifications for streets and highways. Specifically, those documents are the AASHTO Guide for Design of Pavement Structures and the AASHTO Mechanistic-Empirical Design Guide; and,

WHEREAS, City staff recommends that Sec. 21.04.210(4) be amended to include the two above-cited AASHTO documents so as to provide further technical basis for the City’s ability to reasonably address, under SEPA, transportation impacts associated with our ongoing environmental review process; and,

WHEREAS, the proposed code amendments were submitted to the State Department of Commerce under the required local amendment review process, which has been satisfactorily completed; and

WHEREAS, the City Council finds that the proposed amendments would further the City’s ability to adequately implement State SEPA statutes and perform appropriate, quality environmental review of local land use actions subject to SEPA; and,

NOW, THEREFORE, the City Council of the City of Puyallup, Washington, ordains as follows:

Section 1. Puyallup Municipal Code. Section 21.04.210 is amended as set out in the attached Exhibit “A” and hereby made a part of this Ordinance as if set out herein in its entirety.

Section 2. Severability. All sections in this ordinance are hereby deemed severable. Any section found invalid or unconstitutional by a court of law with jurisdiction shall not be deemed to invalidate or find unconstitutional other sections in this ordinance.

Section 3. Corrections. The City Clerk and the codifiers of this ordinance are authorized to make necessary corrections to this ordinance including, but not limited to, the correction of scrivener’s/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto.

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Ordinance No.____Amendments to Chapter 21.04 PMC

Page 2 of 6

Section 4. Effective Date. This ordinance shall become effective five days after publication in the official newspaper of the City of Puyallup.

DATED this ____ day of ________, 2019.

__________________________________Mayor

APPROVED AS TO FORM:

_________________________________Joseph N. Beck, City Attorney

ATTEST:

__________________________________Mary Winter, City Clerk

PUBLISHED: _______, __, 2019 – Tacoma News Tribune

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Ordinance No.____Amendments to Chapter 21.04 PMC

Page 3 of 6

PMC SEC. 21.04.210(4), SUBSTANTIVE AUTHORITY

(4) The city designates and adopts the following policies as the basis for the city’s exercise of

authority pursuant to this section:

(a) The city shall use all practicable means, consistent with other essential considerations of state policy, to improve and coordinate plans, functions, programs, and resources to the end that the state and its citizens may:

(i) Fulfill the responsibilities of each generation as trustee of the environment for succeeding generations;

(ii) Assure for all people of Washington safe, healthful, productive, and aesthetically and culturally pleasing surroundings;

(iii) Attain the widest range of beneficial uses of the environment without degradation, risk to health or safety, or other undesirable and unintended consequences;

(iv) Preserve important historic, cultural, and natural aspects of our national heritage;

(v) Maintain, wherever possible, an environment which supports diversity and variety of individual choice;

(vi) Achieve a balance between population and resource use which will permit high standards of living and a wide sharing of life’s amenities; and

(vii) Enhance the quality of renewable resources and approach the maximum attainable recycling of depletable resources.

(b) The city recognizes that each person has a fundamental and inalienable right to a healthful environment and that each person has a responsibility to contribute to the preservation and enhancement of the environment.

(c) The city’s substantive SEPA authority to condition or deny projects, proposals or connected actions shall be exercised on the basis of the regulations, plans, studies, reports, or codes identified in subsection (4)(d) of this section, each of such items being adopted and/or reaffirmed by this reference.

(d) The city formally designates the following regulations, plans, studies, reports or codes, as presently constituted or as amended, updated, supplemented, or revised, except where specifically excluded, as possible basis for the exercise of authority pursuant to the State Environmental Policy Act of 1971 as amended:

Exhibit A

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Ordinance No.____Amendments to Chapter 21.04 PMC

Page 4 of 6

(i) City of Puyallup Municipal Code;

(ii) City of Puyallup comprehensive plan;

(iii) City of Puyallup six-year street transportation improvement plan as amended and updated;

(iv) City of Puyallup capital improvements plan;

(v) City of Puyallup comprehensive storm drainage plan;

(vi) City of Puyallup sanitary sewer system comprehensive plan and subsequent area studies, including but not limited to the City of Puyallup East Valley Service Area Analysis and the City of Puyallup Options for Providing Service, Southwest Area Study;

(vii) City of Puyallup comprehensive water system plan;

(viii) City of Puyallup shoreline management master plan;

(ix) City of Puyallup comprehensive parks, recreation and open space plan;

(x) City of Puyallup Street Development and Engineering Standards;

(xi) Institute of Transportation Engineers, Trip Generation;

(xii) Stormwater Management Manual for Western Washington, Washington State Department of Ecology;

(xiii) Not used;

(xiv) Code of the Pierce County Board of Health;

(xv) Pierce County River Improvement Puyallup River Basin Comprehensive Flood Control Management Plan;

(xvi) Washington State Shoreline Management Act of 1971, and all subsequent amendments;

(xvii) American Association of State Highway and Transportation Officials (“AASHTO”) Guide for the Planning, Design, and Operation of Pedestrian Facilities, current edition, and the AASHTO Guide for the Development of Bicycle Facilities, current edition;

(xviii) Flood Insurance Study for the City of Puyallup, with accompanying flood insurance maps, August 15, 1980, or as amended and adopted;

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Ordinance No.____Amendments to Chapter 21.04 PMC

Page 5 of 6

(xix) Washington State Department of Ecology Criteria for Sewage Works Design, current edition;

(xx) Manual on Uniform Traffic Control Devices (MUTCD) with Washington State Modifications, current edition;

(xxi) AASHTO Policy on Geometric Design of Highways and Streets (“Green Book”), current edition;

(xxii) Washington State Department of Transportation Design Manual, current edition;

(xxiii) Highway Capacity Manual Special Report 209, current edition;

(xxiv) Trip Generation Manual, ITE, 7th Edition or current edition with city-approved modifications;

(xxv) Traffic Access and Impact Studies for Site Development, ITE;

(xxvi) Traffic Engineering Handbook, ITE, current edition;

(xxvii) Washington State Department of Transportation Standard Plans, current edition;

(xxviii) Manual for Traffic Signal Design, ITE, Second Edition;

(xxix) Parks Impact Fee Study, current updated version;

(xxx) Rate Study for Impact Fees for Roads, current updated version;

(xxxi) The Washington State Department of Transportation Standard Specifications for Road, Bridge, and Municipal Construction, current edition;

(xxxii) AASHTO Guide for Design of Pavement Structures, current edition;

(xxxiii) AASHTO Mechanistic-Empirical Pavement Design Guide, current edition;

(xxxivi) Water, Sewer, and Storm and Surface Water System Development Charges Study, current updated version; and

(xxxviii) City of Puyallup planning documents not specifically listed above but referenced in the environmental analysis of the city’s comprehensive plan.

(e) It is the city’s policy to protect its residents and businesses from the long-term consequences of successive incremental negative environmental impacts associated with a specific proposal or its connected action(s). Accordingly, the city may condition or deny proposals in order to mitigate or prevent such long-term impacts.

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Ordinance No.____Amendments to Chapter 21.04 PMC

Page 6 of 6

(f) Unusual circumstances related to a site, a proposal, or a connected action, as well as probable significant adverse environmental impacts not capable of adequate mitigation using the foregoing provisions, may be cause for denial of a proposal or development of site-specific or project-specific SEPA mitigation.

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City Council Agenda Item Report

Submitted by: Barbara LopezSubmitting Department: FinanceMeeting Date: 11/19/2019

Subject:Second reading of an ordinance amending Puyallup Municipal Code (PMC) 5.04.018 relatingto business license requirements

Presenter:Joe Beck, City Attorney

Recommendation:Approve second reading of an ordinance amending PMC section 5.04.018 (Business LicenseThreshold)

Background:On October 2, 2018, required provisions of the model business license ordinance wereadopted by Council. Those provisions included an exemption from all licensing requirementsfor any business with annual gross income of $12,000 or less. In hindsight, this provision hadthe unintended consequence of making it more difficult for the City to track and regulatethose businesses exempt from licensing. Specific challenges include:-- Enforcing the chronic nuisance code, which provides the City with tools to address certainnuisance activities on properties that would constitute "engaging in business" under PuyallupMunicipal Code, which would require a person to register and obtain a business license.-- Inspecting businesses as it relates to code enforcement, including fire inspections andregulations.-- Monitoring the type of businesses and sewer discharge as it relates to the sewer treatmentplant.-- Monitoring the nature of the businesses operating in Puyallup and tracking whether abusiness has grown to the point that their gross income exceeds $12,000.

The WA State Department of Revenue - Business Licensing Services has recommended thatthe City eliminate the exemption from all licensing requirements and instead, switch torequiring the license at a $0 fee. This will allow the City to better track the licensees andupdate any other endorsement information for accounts that fall under the threshold. Thischange would allow for a business license to be issued at no cost to businesses with grossincome of $12,000 or less, which is consistent with other cities.

Council Direction:

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Fiscal Impacts:None

ATTACHMENTSOrdinance

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1

ORDINANCE NO. ________

AN ORDINANCE OF THE CITY OF PUYALLUP AMENDING SECTION 5.04.018 OF THE PUYALLUP MUNICIPAL CODE PERTAINING TO BUSINESS LICENSE REQUIREMENTS.

WHEREAS, the City of Puyallup was required to adopt the model business license

ordinance under RCW Chapter 35.93 which provisions were adopted on October 2, 2018 under Puyallup Ordinance 3178; and

WHEREAS, Ordinance 3178 added PMC Section 5.04.018 which provided an exemption from all licensing requirements for any business with an annual value of products, gross proceeds of sales, or gross income of the business in the city is equal to or less than $12,000; and

WHEREAS, the Washington State Department of Revenue Business Licensing

Services has suggested that the City make certain adjustments including a recommendation that the City revise PMC Section 5.04.018 to be more in line with other cities and the recommendations of Department of Revenue; and

WHEREAS, PMC Section 5.04.018 as originally enacted unwittingly allowed

many businesses to avoid obtaining a business license which had the unintended consequence of exempting certain businesses from licensing requirements and making it more difficult for the City to track and regulate certain businesses, and

WHEREAS, the City recently passed Ordinance 3189 thereby adopting a new

chronic nuisance code which provides the City with tools to address certain nuisance activities on properties at which any activity takes place that would constitute “engaging in business” under PMC 5.04.015, such as would require a person to register and obtain a business license; and

WHEREAS, in order to most effectively enforce City nuisance code, including the

recently enacted chronic nuisance ordinance, and in order to follow Department of Revenue recommendations, the City needs to adjust PMC 5.04.018 to require all businesses meeting the definition of “engaging in business” under PMC 5.04.015 to obtain a business license; and

WHEREAS, this may be accomplished by providing a license for no fee to

businesses that are under a certain annual income threshold;

NOW THEREFORE, the City Council of the City of Puyallup do ordain as follows:

Section 1. Enactment. Puyallup Municipal Code Section 5.04.018 is hereby amended to read as follow:

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2

5.04.018 Business license threshold. (1) Threshold Exemption. To the extent set forth in this section, the following persons and businesses shall be exempt from the registration, license and/or license fee requirements as outlined in this chapter:

(a) Any person or business whose annual value of products, gross proceeds of sales, or gross income of the business in the city is equal to or less than $12,000 shall be exempt from the general business license fee requirements in this chapter and shall therefore be subject to an effective license fee of $0.00. All other requirements and provisions of this Chapter shall apply including the requirement to obtain and renew the general business license and/or any otherwise required license. The fee exemption does not apply to regulatory license requirements or activities that require a specialized permit.

Section 2. Publication. A summary of this ordinance shall be published as

required by law.

Section 3. Severability - Construction. (1) If a section, subsection, paragraph, sentence, clause, or phrase of this Ordinance

is declared unconstitutional or invalid for any reason by any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance.

(2) If the provisions of this ordinance are found to be inconsistent with the other provisions of the Puyallup Municipal Code, this Ordinance is deemed to control.

Section 4. Corrections. The City Clerk or City Attorney are authorized to make

necessary corrections to this ordinance including, but not limited to, the correction of scrivener’s/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto.

Section 5. Effective Date. This ordinance shall become effective on January 1, 2020.

Passed and approved by City Council of the City of Puyallup at regularly scheduled open public meeting on the day of , 2019. John Palmer Mayor

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3

Approved as to form: Attest: Joseph N. Beck Mary Winter City Attorney City Clerk Published: Effective: January 1, 2020

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City Council Agenda Item Report

Submitted by: Erin ThompsonSubmitting Department: FinanceMeeting Date: 11/19/2019

Subject:Second reading of an ordinance determining and fixing the amount of funds to be raised byregular property taxes for 2020.

Presenter:Barbara Lopez, Finance Director

Recommendation:

Approve second reading of an ordinance determining and fixing the amount of funds to beraised by regular property taxes for 2020.

Background:The City Council is required to annually determine and fix by ordinance the amount of fundsto be raised through property taxes by November 30 of each year. Before passing theordinance, the City must hold a public hearing on revenue sources for the following year’sexpense budget, and such hearing must include consideration of possible increases in propertytax revenues.

In addition, state law requires that the City adopt a separate resolution that sets forth propertytax revenues in terms of dollars and percentage.

The proposed property tax levy ordinance levies property taxes for the City's general fund.The estimated levy amount is $9,240,167, which equals the amount of the City's levy lastyear, i.e., $8,968,415, plus a 1% increase, plus the addition of new construction, any increasein the value of state-assessed property and the refund fund levy.

The County's preliminary estimates show that the maximum amount the City can lawfullylevy is $12,483,641. The proposed property tax levy ordinance sets the general expenditureamount well below the maximum level.

The City Council received the 2020 Preliminary Budget, which included a recommended 1%increase in the property tax levy. The total additional revenue from the 1% increase is$89,684.00.

Council Direction: 33

Fiscal Impacts:

ATTACHMENTS2020 Tax Levy Ordinance

34

ORDINANCE NO. __________

AN ORDINANCE OF THE CITY OF PUYALLUP, WASHINGTONdetermining and fixing the amount of funds to be raised by regular propertytaxes for the year 2020 for general city expenditures.

Whereas, pursuant to RCW 35A.33.010, the City Council is required to determine and fix by ordinance the amount to be raised by ad valorem taxes; and

Whereas, the City Council and the City Manager of the City of Puyallup considered the City’s total anticipated financial requirements for the ensuing fiscal year; and

Whereas, pursuant to RCW 84.55.120, the City of Puyallup held a public hearing on revenue sources for the City’s following year’s current expense budget, and such hearing included consideration of possible increases in property tax revenues;

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF PUYALLUPHEREBY ORDAINS AS FOLLOWS:

Section 1. 2020 Property Tax Levy Amounts. The following amounts are determinedand fixed as the amounts of funds to be raised by regular property taxes for the fiscal year 2020 for general City expenditures:

The regular property tax levy in 2019 for the fiscal year 2020 in the City ofPuyallup shall be equal to the 2018 property tax levy for fiscal year 2019, or$8,968,415 plus 1% or $89,684 plus an additional dollar amount resulting from the addition of new construction, increases in assessed value due to construction of electric generation wind turbine facilities classified as personal property, improvements to property and any increase in the value of state-assessed property, any annexations that have occurred and refunds made. Current estimates including those adjustments indicate a total regular property tax levy amount of $9,240,167;

Section 2. Direction to City Clerk. Upon adoption, the City Clerk shall certify andforward a copy of this ordinance to the Pierce County Council and County Assessor for Pierce County, Washington.

Section 3. Severability - Construction. If a section, subsection, paragraph, sentence,clause, or phrase of this ordinance is declared unconstitutional or invalid for any reason by any court of competent jurisdiction; such decision shall not affect the validity of the remaining portions of this ordinance unless the purpose of this ordinance is substantially destroyed. If the provisions of this ordinance are found to be inconsistent with other provisions of the Puyallup Municipal Code, this ordinance is deemed to control.

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Section 4. Corrections. The City Clerk and the codifiers of this ordinance are authorized to make necessary corrections to this ordinance including, but not limited to, the correction of scrivener’s/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto.

Section 5. Effective date. This ordinance shall take effect in full force five (5) daysafter is passage, approval and publication according to law.

PASSED at an open public meeting by the City Council of the City of Puyallup on the19th day of November, 2019.

__________________________________John PalmerMayor

Approved as to form: Attest:

_________________________________ __________________________________Joseph N. Beck Mary WinterCity Attorney City Clerk

Published: __________________________Effective Date: ______________________

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City Council Agenda Item Report

Submitted by: Erin ThompsonSubmitting Department: FinanceMeeting Date: 11/19/2019

Subject:Second reading of an ordinance on the proposed City of Puyallup 2020 Budget

Presenter:Barbara Lopez, Finance Director

Recommendation:Approve second reading of an ordinance approving the City of Puyallup 2020 budget.

Background:Council has received the Preliminary 2020 Budget and held budget study sessions on October8, 9 and 10.

Council has provided direction to the City Manager at the budget study sessions and theordinance includes adjustments based on Council feedback along with a few other technicaladjustments. The differences between the preliminary budget and the current proposal areincluded in the summary presented in Exhibit A of the ordinance and the effects of eachchange are detailed in Exhibit B of the ordinance.

These changes are in response to Council feedback:1. $2,500 allocated to maintain the City’s Bee City designation2. $55,000 allocated for a new City entrance sign3. $5,000 allocated toward recycling education and awareness4. $10,000 allocated for wrap art for City traffic signal cabinets5. $2,500 allocated for Puyallup Area Aging in Community Committee6. $1,181,000 of Tier 3 funds allocated to the Safe Routes to School project 7th Ave SE7. $339,000 of REET funds allocated to the Safe Routes to School project 7th Ave SE8. Increase of $254,800 allocated for LTAC Recommendations9. Increase of $4,280 allocated for Community Funding Advisory CommitteeRecommendations

Other technical adjustments include changes to the Water Fund to correct two Water capitalprojects as presented to Council on October 10, 2019. The net effect was an increase of$697,000 in Water Fund capital project spending.

Council Direction:37

Fiscal Impacts:

ATTACHMENTSOrdinanceExhibit A - Summary by FundExhibit B - Preliminary to Final Details

38

ORDINANCE NO. __________

AN ORDINANCE OF THE CITY OF PUYALLUP, WASHINGTON, adopting the budget of the City of Puyallup in its final form and content for the fiscal year ending December 31, 2020.

Whereas, pursuant to RCW 35A.33.075, the City Council shall adopt the final budget of the City in its final form and content after making such adjustments and changes as it deems necessary or proper and after determining the allowance in each item, department, classification and fund; and

Whereas, prior to adoption of the final budget, the City Council held preliminary budget hearings and a final budget hearing as required by law; and

Whereas, the City Council finds that the proposed appropriations are limited to the total estimated revenues contained in the preliminary budget including the amount to be raised by ad valorem taxes and the unencumbered fund balances estimated to be available at the close of the current fiscal year; and

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF PUYALLUP HEREBY ORDAINS AS FOLLOWS:

Section 1. The final budget of the City of Puyallup for the fiscal year ending December 31, 2020, which is identified as the City of Puyallup, Washington, 2020 Budget, is adopted and incorporated herein by this reference.

Section 2. A summary of the final budget totals of estimated revenues andappropriations for each separate fund and the aggregate totals for all such funds combined is set forth in Appendix A of this ordinance, with detailed changes from the 2020 City Manager’s Recommended Budget as listed in Appendix B of this ordinance.

Section 3. The budget includes a 2.5% COLA as applied to the 2020 salary schedule for non-represented employees.

Section 4. The 2020-2025 Capital Facilities Plan for the City of Puyallup is herebyadopted and incorporated as part of the City’s 2020 budget.

Section 5. If a section, subsection, paragraph, sentence, clause, or phrase of thisordinance is declared unconstitutional or invalid for any reason by any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance unless the whole purpose and intent of this ordinance is destroyed. If the provisions of this ordinance are found to be inconsistent with the other provisions of the Puyallup Municipal Code, this ordinance is deemed to control.

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Section 6. The City Clerk and the codifiers of this ordinance are authorized to make necessary corrections to this ordinance including, but not limited to, the correction of scrivener’s/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto.

Section 7. The City Clerk shall transmit a complete copy of the final budget as adopted tothe State Auditor, and to the Association of Washington Cities.

Section 8. This ordinance shall take effect and be in full force five (5) days after itspassage, approval and publication in accordance with law.

PASSED at an open public meeting by the City Council of the City of Puyallup on the______day of ___________, 2019.

___________________________________

John PalmerMayor

Approved as to form: Attest:

________________________________ ___________________________________Joseph N. Beck Mary WinterCity Attorney City Clerk

Published:Effective Date:

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2020 Budget Summary by FundExhibit A

Fund Name

Projected Beginning

Cash Revenues Expenditures Ending CashChange in

Cash Balance

General Fund 7,890,820 49,660,330 52,393,246 5,157,904 (2,732,916)Budget Stability Reserves Fund 20,628 3,000,450 3,000,000 21,078 450Donations To Puyallup 64,643 9,160 35,000 38,803 (25,840)LEOFF I Retiree Benefits Fund 822,894 651,470 560,344 914,020 91,126Radio Replacement Fund 335,539 104,260 63,000 376,799 41,260Firemen'S Pension Fund 1,097,735 138,670 172,000 1,064,405 (33,330)

Special Revenue FundsSeizure And Forfeiture Fund 69,929 32,860 102,167 622 (69,307)Motel Tax Fund 407,224 1,348,550 841,081 914,693 507,469Trial Court Improvement Fund 5,955 22,070 20,000 8,025 2,070Lift Grant Fund 1,460,201 1,007,050 1,000,000 1,467,251 7,050First 1/4% REET 627,071 902,110 1,069,500 459,681 (167,390)Second 1/4% REET 631,992 902,120 1,069,500 464,612 (167,380)

Debt Service FundsVoted Debt Service 6,269 0 0 6,269 0Non Voted Debt Service 220,286 3,985,270 3,980,340 225,216 4,930

Capital Projects FundsArterial Street 719,033 11,176,593 11,330,675 564,951 (154,082)Parks Capital Projects Fund 207,859 1,008,490 585,453 630,896 423,037Facility Projects Fund 1,833,350 1,130 0 1,834,480 1,130

Enterprise FundsSanitation 301,118 433,630 538,364 196,384 (104,734)Water Fund 588,888 9,109,741 9,072,882 625,747 36,859Sewer Fund 712,911 17,251,063 16,374,363 1,589,611 876,700Storm & Surface Water Utility 2,626,688 8,526,212 9,907,338 1,245,562 (1,381,126)Pavilion Fund 121,532 278,330 358,939 40,923 (80,609)

Internal Service FundsEquipment Rental 1,537,590 2,904,520 2,604,541 1,837,569 299,979Insurance Fund 1,392,589 2,187,640 2,159,438 1,420,791 28,202Info Tech And Communications 921,771 4,812,130 5,429,012 304,889 (616,882)Healthcare Insurance Fund 4,350,006 8,094,340 8,528,182 3,916,164 (433,842)Facility Maintenance Fund 68,511 2,521,200 2,497,303 92,408 23,897

Total All Funds 29,043,032 130,069,389 133,692,668 25,419,753 (3,623,279)

Total Budget: 130,069,389 133,692,668 Less Transfers (26,817,693) (26,817,693) Less Internal Service Charges (10,528,260) (10,528,260) Net Budget 92,723,436 96,346,715

*The Net Budget removes all double counting from Internal Services and Transfers, reflecting the true revenues and expenditures.

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2020 Budget Summary by FundExhibit B

Fund NameProjected

Beginning Cash Revenues Expenditures Ending CashChange in

Cash BalanceGeneral Fund 7,890,820 49,660,330 51,132,966 6,418,184 (1,472,636)

Increase Trnsfr to Budget Stability (Tier 3) 1,181,000 (1,181,000) (1,181,000) New City Entrance Sign 55,000 (55,000) (55,000) Wrap Art on City Traffic Signal Cabinets 10,000 (10,000) (10,000) Recycling Education & Awareness 5,000 (5,000) (5,000) Maintain Bee City Designation 2,500 (2,500) (2,500) Inc for Community Requests Recommendations 4,280 (4,280) (4,280) Puyallup Area Aging in Community Committee 2,500 (2,500) (2,500)

Subtotal General Fund 7,890,820 49,660,330 52,393,246 5,157,904 (2,732,916) Budget Stability Reserves 20,628 1,819,450 1,819,000 21,078 450

Increase Trnsfr from General Fund (Tier 3) 1,181,000 1,181,000 Trnsfr to SRTS 7th Ave SE Capital Proj 1,181,000 (1,181,000)

Subtotal Budget Stability Reserves 20,628 3,000,450 3,000,000 21,078 450 Donations To Puyallup 64,643 9,160 35,000 38,803 (25,840) Leoff I Retiree Benefits Fund 822,894 651,470 560,344 914,020 91,126 Radio Replacement Fund 335,539 104,260 63,000 376,799 41,260 Firemen's Pension Fund 1,097,735 138,670 172,000 1,064,405 (33,330) Total General Funds 10,232,259 53,564,340 56,223,590 7,573,009 (2,659,250)

Special Revenue FundsSeizure And Forfeiture Fund 69,929 32,860 102,167 622 (69,307) Motel Tax Fund 407,224 1,348,550 586,281 1,169,493 762,269

Increase for LTAC Recommendations 254,800 (254,800) (254,800) Subtotal Motel Tax Fund 407,224 1,348,550 841,081 914,693 507,469 Trial Court Improvement Fund 5,955 22,070 20,000 8,025 2,070 Lift Grant Fund 1,460,201 1,007,050 1,000,000 1,467,251 7,050 First 1/4% Reet 627,071 902,110 900,000 629,181 2,110

Trnsfr to SRTS 7th Ave SE Capital Proj 169,500 (169,500) (169,500) Subtotal First 1/4% REET Fund 627,071 902,110 1,069,500 459,681 (167,390) Second 1/4% Reet 631,992 902,120 900,000 634,112 2,120

Trnsfr to SRTS 7th Ave SE Capital Proj 169,500 (169,500) (169,500) Subtotal Second 1/4% REET Fund 631,992 902,120 1,069,500 464,612 (167,380) Total Special Revenue Funds 3,202,372 4,214,760 4,102,248 3,314,884 112,512

Debt Service FundsVoted Debt Service 6,269 - - 6,269 - Non Voted Debt Service 220,286 3,985,270 3,980,340 225,216 4,930 Total Debt Service Funds 226,555 3,985,270 3,980,340 231,485 4,930

Capital Projects FundsStreet Fund 719,033 9,656,593 9,810,675 564,951 (154,082)

New Safe Routes to School-7th Ave SE Proj 1,520,000 1,520,000 Subtotal Street Fund 719,033 11,176,593 11,330,675 564,951 (154,082) Parks Capital Projects Fund 207,859 1,008,490 585,453 630,896 423,037 Facility Projects Fund 1,833,350 1,130 - 1,834,480 1,130 Total Capital Projects Funds 2,760,242 12,186,213 11,916,128 3,030,327 270,085

Enterprise FundsSanitation 301,118 433,630 538,364 196,384 (104,734) Water Fund 588,888 8,412,741 7,678,882 1,322,747 733,859

Capital Project Correction* 697,000 1,394,000 (697,000) (697,000) Subtotal Water Fund 588,888 9,109,741 9,072,882 625,747 36,859 Sewer Fund 712,911 17,251,063 16,374,363 1,589,611 876,700 Stormwater Fund 2,626,688 8,526,212 9,907,338 1,245,562 (1,381,126) Pavilion Fund 121,532 278,330 358,939 40,923 (80,609) Total Enterprise Funds 4,351,137 35,598,976 36,251,886 3,698,227 (652,910)

Internal Service FundsEquipment Rental 1,537,590 2,904,520 2,604,541 1,837,569 299,979 Insurance Fund 1,392,589 2,187,640 2,159,438 1,420,791 28,202 Info Tech And Communications 921,771 4,812,130 5,429,012 304,889 (616,882) Healthcare Insurance Fund 4,350,006 8,094,340 8,528,182 3,916,164 (433,842) Facility Maintenance Fund 68,511 2,521,200 2,497,303 92,408 23,897 Total Internal Service Funds 8,270,467 20,519,830 21,218,476 7,571,821 (698,646)

Total All Funds 29,043,032 130,069,389 133,692,668 25,419,753 (3,623,279) Total Budget: 130,069,389 133,692,668Less Transfers (26,817,693) (26,817,693)Less Internal Service Charges (10,528,260) (10,528,260)Net Budget 92,723,436 96,346,715

The Net Budget removes all double counting from Internal Services and Transfers, reflecting the true revenues and expenditures

*Move 26th ST NW Project to 2021 and move Manorwood Phase 1 to 2020 as presented to Council 10/10/19

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City Council Agenda Item Report

Submitted by: Erin ThompsonSubmitting Department: FinanceMeeting Date: 11/19/2019

Subject:First reading of an ordinance pertaining to quarterly budget adjustments to the 2019 Budget

Presenter:Barbara Lopez, Finance Director

Recommendation:Approve first reading of an ordinance amending the 2019 Budget.

Background:This third amendment reflects changes that have occurred since City Council adoption of the2019 Budget via Ordinance No. 3181, and the amendments adopted in Ordinance No. 3190and Ordinance No. 3196.

Adjustments previously approved by Council action include: Federal grant STP funding inthe amount of $614,000 and $111,000 City match from REET for Shaw Rd-12th to 23rdcapital project, and the WW Fair Contract to include $60,057 in Police Overtime for new gatesafety to be paid by the Fair.

Adjustments between capital projects include a transfer of $258,000 from Aging EquipmentReplacement to the WPCP Flood Protection project, a transfer of $90,182 from Water SystemImprovements to Manorwood Phase 1 Main Replacement, a transfer of $50,000 from theRecreation Center Building Exterior to the Rainier Woods Park Restrooms, and a transfer of$13,724 from IT IFAS Upgrade to the IT Security Strategic Plan.

A technical adjustment was made to reverse a previous budget adjustment and restore$375,000 of LIFT Grant funding to 9th Ave SW; Meridian to 5th ST SW.

The remaining recommended adjustment is an increase of $678,000 in funding to Phase 3 ofShaw Rd; 23rd to Manorwood. This includes a $430,000 transfer from REET and $248,000from the Arterial Streets fund balance. A portion of the Shaw Road Phase 3 work at theintersection of 23rd Ave. SE was identified as necessary mitigation during SEPA for PioneerCrossing private development. The required mitigation is widening the south bound leg of theintersection and re-striping, along with installing a flashing yellow arrow left turn movement.

Council Direction:43

Fiscal Impacts:

ATTACHMENTSOrdinanceBudget Adjustment Summary - Exhibit ABudget Adjustment Details - Exhibit B

44

ORDINANCE NO. __________

AN ORDINANCE of the City of Puyallup, Washington, relating to municipal finance, amending the 2019 budget adopted by Ordinance No. 3181, and amended by Ordinance No. 3190 and Ordinance No. 3196, and authorizing certain expenditures in the amounts specified in this ordinance to conform with previous direction provided by the City Council

Whereas, the City Council is authorized to amend the City’s budget within the limitations set forth in RCW 35A.33.120; and

Whereas, the City Council finds that current revenue and expenditure reports for the City differ from forecasts used to create the 2019 Budget enacted by Ordinance No. 3181 and amended by Ordinance No. 3190 and Ordinance No. 3196; and

Whereas, the City Council finds that such differences justify certain adjustments regarding obligations incurred and expenditures of revenues for the 2019budget; and

Whereas, the City Council finds that any increases, decreases, revocations or recalls set forth herein are in the best interests of the City;

NOW THEREFORE, THE CITY COUNCIL FOR THE CITY OF PUYALLUP ORDAINS AS FOLLOWS:

Section 1. Findings. Each and every of the findings expressed in the recitals to this ordinance are hereby adopted and incorporated herein.

Section 2. Amendments to 2019 Budget. The 2019 Budget, originally approved by Ordinance No.3181, passed on November 27, 2018 and amended by Ordinance No. 3190, passed on May 14, 2019, and amended by Ordinance No. 3196, passed on September 24th, 2019, is amended as summarized in Exhibit A reflecting detailed changes itemized in Exhibit B:

a. Authorized FTE Adjustment

No FTE Adjustments made with this ordinance.

Section 3. Ratification and Confirmation. All acts taken by City officers and staff prior to the enactment of this ordinance that are consistent with and in furtherance of the purpose or intent of this ordinance are hereby ratified and confirmed by the City Council.

Section 4. Severability – Construction. If a section, subsection, paragraph, sentence, clause or phrase of this ordinance is declared unconstitutional or invalid for any reason by any

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Ordinance ______2019 Budget Amendment No. 1

Page 2

court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. If the provisions of this ordinance are found to be inconsistent with other provisions of the Puyallup Municipal Code, this ordinance deems control.

Section 5. Effective Date. This ordinance shall take effect and be in full force, five (5) days after its passage, approval and publication according to law.

PASSED at an open public meeting by the City Council for the City of Puyallup on the

__________ day of ____________________, 2019.

___________________________John PalmerMayor

Approved as to form: Attest:

_________________________________ ______________________________Joseph N. Beck Mary WinterCity Attorney City Clerk

Published: ____________________________

Effective:______________________________

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Exhibit A - Budget Adjustment Summary for 2019 Final AdjustmentsFund Description Begin Revenues Trfs In Expenses Trfs Out End

0 60,057 0 60,057 0 0General Fund0 0 0 0 375,000 -375,000LIFT Grant Fund0 0 0 0 270,500 -270,5001/4% R E Excise0 0 0 0 270,500 -270,5002ND 1/4% R E Excise0 0 0 0 0 -248,000Street Fund Operations0 614,000 916,000 1,778,000 0 0Street Projects0 0 0 0 0 0Capital Improvement Projects0 0 0 0 0 0Water Projects0 0 0 0 0 0Sewer Projects0 0 0 0 0 0IT Projects

0 674,057 916,000 1,838,057 916,000 -1,164,000Grand Total

Tuesday, November 5, 2019 Page 1 of 1

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Exhibit B - Budget Adjustment Details for 2019 Final AdjustmentsFund Description Approval Date Begin Revenues Trfs In Expenses Trfs Out End

General FundsGeneral Fund

ApprovedWW Fair Contract - Patrol OT for Gate Services 0 60,057 0 0 0 020190910WW Fair Contract - Patrol OT for Gate Services 0 0 0 60,057 0 020190910

0 60,057 0 60,057 0 0Total General Fund

0 60,057 0 60,057 0 0Total General Funds

Special Revenue FundsLIFT Grant Fund

Technical AdjustmentLIFT to 9th Ave SW; Meridian to 5th ST SW 0 0 0 0 375,000 -375,000Pending

0 0 0 0 375,000 -375,000Total LIFT Grant Fund

1/4% R E ExciseApprovedREET for Shaw Rd 12th to 23rd 0 0 0 0 55,500 -55,50020190924

Recommended ChangeREET for Shaw Rd; 23rd to Manorwood 0 0 0 0 215,000 -215,000Pending

0 0 0 0 270,500 -270,500Total 1/4% R E Excise

2ND 1/4% R E ExciseApprovedREET for Shaw Rd 12th to 23rd 0 0 0 0 55,500 -55,50020190924

Recommended ChangeREET for Shaw Rd; 23rd to Manorwood 0 0 0 0 215,000 -215,000Pending

0 0 0 0 270,500 -270,500Total 2ND 1/4% R E Excise

0 0 0 0 916,000 -916,000Total Special Revenue Funds

Tuesday, November 5, 2019 Page 1 of 3

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Fund Description Approval Date Begin Revenues Trfs In Expenses Trfs Out End

Capital Project FundsStreet Fund Operations

Recommended ChangeStreet Fund Bal to Shaw Rd; 23rd to Manorwood 0 0 0 0 0 -248,000Pending

0 0 0 0 0 -248,000Total Street Fund Operations

Street ProjectsApprovedREET for Shaw Rd 12th to 23rd 0 0 111,000 0 0 020190924REET and Grant for Shaw Rd 12th to 23rd 0 0 0 725,000 0 020190924Shaw Rd 12th to 23rd - Federal Grant STP Funds 0 614,000 0 0 0 020190924

Technical AdjustmentLIFT to 9th Ave SW; Meridian to 5th ST SW 0 0 375,000 375,000 0 0Pending

Recommended ChangeREET for Shaw Rd; 23rd to Manorwood 0 0 430,000 0 0 0PendingREET & Street Fund Bal for Shaw Rd; 23rd-Manorwood 0 0 0 678,000 0 0Pending

0 614,000 916,000 1,778,000 0 0Total Street Projects

Capital Improvement ProjectsProject TransfersFrom Rec Center Building Exterior 0 0 0 -50,000 0 0PendingTo Rainier Woods Park Restrooms 0 0 0 50,000 0 0Pending

0 0 0 0 0 0Total Capital Improvement Projects

0 614,000 916,000 1,778,000 0 -248,000Total Capital Project Funds

Enterprise FundsWater Projects

Project TransfersFrom Water System Improvements 0 0 0 -90,182 0 0PendingTo Manorwood Phase 1 - Main Replacement 0 0 0 90,182 0 0Pending

0 0 0 0 0 0Total Water Projects

Tuesday, November 5, 2019 Page 2 of 3

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Fund Description Approval Date Begin Revenues Trfs In Expenses Trfs Out End

Sewer ProjectsProject TransfersFrom Aging Equipment Replacement 0 0 0 -258,000 0 0PendingTo WPCP Flood Protection Project 0 0 0 258,000 0 0Pending

0 0 0 0 0 0Total Sewer Projects

0 0 0 0 0 0Total Enterprise Funds

Internal Service FundsIT Projects

Project TransfersTo Security Strategic Plan 0 0 0 13,724 0 0PendingFrom IFAS Upgrade 0 0 0 -13,724 0 0Pending

0 0 0 0 0 0Total IT Projects

0 0 0 0 0 0Total Internal Service Funds

0 674,057 916,000 1,838,057 916,000 -1,164,000Grand Total

Tuesday, November 5, 2019 Page 3 of 3

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City Council Agenda Item Report

Submitted by: Joe BeckSubmitting Department: Legal Meeting Date: 11/19/2019

Subject:First reading of an ordinance amending Puyallup Municipal Code Section 14.26.080,"Protests to fees and charges" pertaining to Storm or Wastewater system development charges

Presenter:Joseph Beck, City Attorney

Recommendation:Conduct first reading of an ordinance amending Puyallup Municipal Code Section 14.26.080,"Protests to fees and charges."

Background:The current provisions of Puyallup Municipal Code (PMC) Chapter 14.26 provides thatappeals of storm and wastewater system development charges (SDCs) are directed to the CityCouncil. However, every other appeal of this type is designated by City Code to be heard bythe City’s Hearing Examiner. Recently on several occasions the City Council has voted torefer appeals of Storm and Wastewater SDCs to the Puyallup Hearing Examiner. This codeamendment will permanently direct future appeals of Storm and Waste Water SDCs to thePuyallup Hearing Examiner and bring this code provision into conformance with othersections of City Code.

Council Direction:

Fiscal Impacts:Minimal fiscal impacts would be expected due to this code update. The City has had two ofthese hearings over the last 4 years at a cost of approximately $1,000 for both hearingscombined.

ATTACHMENTSOrdinance

51

Page | 1

ORDINANCE NO. ________

AN ORDINANCE OF THE CITY OF PUYALLUPAMENDING SECTION 14.26.080 OF THE PUYALLUP MUNICIPAL CODE PERTAINING TO APPEALS OF SYSTEM DEVELOPMENT CHARGES.

WHEREAS, the City of Puyallup has established Storm and Surface Water System Development Charges (SDCs) under PMC Chapter 14.26; and

WHEREAS, SDCs are calculated and determined by the Public Works Directorbased on rates adopted by City Council and from time to time customers wish to appeal the imposition of System Development Charges; and

WHEREAS, the current provisions of Chapter 14.26 call for such appeals to be made to the City Council; and

WHEREAS, every other appeal of this type is designated by City Code to be heard by the City’s Hearing Examiner; and

WHEREAS, recently on several occasions the City Council has voted to refer appeals of Storm and Waste Water SDCs to the Puyallup Hearing Examiner; and

WHEREAS, the City Council finds that it is appropriate to amend City Code to direct appeals of Storm and Waste Water SDCs to the Puyallup Hearing Examiner in order to bring these appeals into conformance with similar appeals in other sections of City Code.

NOW THEREFORE, the City Council of the City of Puyallup do ordain as follows:

Section 1. Ordinance 2593 § 1 and PMC Section 14.26.080 “Protests to fees and charges” is hereby amended to read as follows:

(1) If any customer is dissatisfied with a fee or charge imposed in this chapter, the customer may file a written protest with the public works director setting forth their objections provided such protest is filed within 15 calendar days of the assessment of the fee or charge.

(2) Upon receipt of any such protest, the public works director or a designee shall, within 15 calendar days, make a determination in writing as to the correctness of the fee or charge. The director’s determination shall be limited to considering whether the fee is correctly calculated. Any adjustment proposed by the director for any other purpose must be approved by city council.

(3) If the customer is dissatisfied with the director’s determination, the customer may appeal to the Puyallup Hearing Examiner pursuant to the provisions of PMC 2.54 provided such appeal is filed within 10 calendar days of receipt of the

52

Page | 2

public works department’s decision. Any decision of City Council regarding any adjustment made or denied pursuant to subsection (2) of this section shall not be appealable except as may be allowed under state law.

Section 2. The City Clerk and the codifiers of this ordinance are authorized to make necessary corrections to this ordinance including, but not limited to, the correction of scrivener’s/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto.

Section 3. A summary of this ordinance shall be published as required by law.

Section 4. This Ordinance shall take effect and be in force five (5) days after final passage and publication, as provided by law.

Passed and approved by City Council of the City of Puyallup at regularly scheduled open public meeting on the day of , 2019.

John PalmerMayor

Approved as to form: Attest:

Joseph N. Beck Mary WinterCity Attorney City Clerk

Published:

Effective:

53

City Council Agenda Item Report

Submitted by: Chris BealeSubmitting Department: Development Services Meeting Date: 11/19/2019

Subject:First reading of an ordinance updating land use codes (Puyallup Municipal Code Titles 14, 19and 20) relating to Puyallup Housing Choices

Presenter:Chris Beale, Senior Planner

Recommendation:

Approve first reading of an ordinance related to housing code standards and procedures.

Background:At the February 05, 2019 study session and March 26, 2019 regular meeting, City Councilreviewed a package of land use code amendments (aka "Housing Choices") which had beenrecommended by the Planning Commission to address a variety of housing-related items,including zoning standards, system development charges, and impact fees. At the March 26,2019 session, City Council provided direction on those proposed amendments, including thedeletion of Commission recommendations related to "tiny homes" and revised duplex-triplexstandards.

As outlined in the attached cover memo, staff is now forwarding the balance of theamendments reviewed on March 26th for first reading consideration at the November 19,2019 City Council meeting. This "first batch" of draft amendments (which only represents thefirst half of the total Planning Commission recommendations, per Council request) deals withaccessory dwelling units (ADUs) standards/fees, certain RS-zone property developmentstandards, and other miscellaneous revisions.

Council Direction:

Fiscal Impacts:

ATTACHMENTSCover Memo - Housing ChoicesOrdinance

54

City of Puyallup Development Services Planning Division

333 S Meridian, Puyallup, WA 98371 (253) 864-4165 Fax (253) 840-6678

To: City Council From: Development Services - Planning Division staff Subject: Housing Choices Code amendments Date of meeting: November 19, 2019

At the November 19, 2019 meeting, City Council will review a package of code amendments which were recommended by the Planning Commission addressing housing, zoning, system development charges and impact fees. Areas addressed in the ordinance:

1. Sewer and water System Development Charges (SDCs, also known as “utility hook up charges”) reductions for accessory dwelling units. The reduction would cut the fee assessed by half the normal rate for a single family home

2. Amendments related to accessory dwelling units (ADUs), namely changes to code related to how detached ADUs are permitted, streamlining size allowances, and improving exterior siding material requirements

3. Changes to the development standards table for all RS (single family) zones, including flexibility standards for lot dimensions, minimum density requirements for RS-04 and RS-06 zone districts, setback standards and floor area ratio standards

4. Reductions to Park, School and Traffic impact fees assessed for ADUs. Fee reductions equal the maximum amount of reduction allowed (80%) as a method of incentivizing ADU construction and more closely aligning the fee with actual impacts

5. Re-authorization of the Cottage Housing Ordinance (previous time-limited pilot

ordinance sunset)

6. Reorganization of detached accessory building code for clarity of administration

7. Amendments to setbacks for accessory structures

8. Other code clean up in various zoning code sections

Per PMC 20.91.010 any action amending Title 20 of the municipal code shall be principally based upon the consistency of such amendment with the goals, objectives and policies of the comprehensive plan. Staff has not identified inconsistencies and recommends City Council adopt the code as proposed; more detailed staff analysis is available and was presented to the Planning Commission in making a recommendation on the proposed amendments. If you have any questions, please contact Chris Beale, Senior Planner at 253 841.5418 or at cbeale@ci.puyallup.wa.us.

55

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 1 of 19

ORDINANCE NO. __________

AN ORDINANCE OF THE CITY OF PUYALLUP amending

Chapters 14.02, 14.10, 20.15, 20.20, 20.21, 20.25, 20.35, 20.55, and

21.20 and adding section 19.06.055 and 20.20.029 of the Puyallup

Municipal Code, thereby addressing amendments related to zoning,

utility charges and impact fees.

WHEREAS, The Planning Commission reviewed the referenced code amendments

(except sections 14.02.040, 14.10.010, 21.20.120, 21.20.130 and 21.20.140) over multiple work

sessions held between 2016 and 2018; and,

WHEREAS, the city’s SEPA Responsible Official has reviewed applicable

environmental checklist submitted for the non-project action and determined the changes to the

municipal code to be non-significant, issuing a SEPA DNS Threshold Determination on

December 19, 2018, finalized without appeal on January 14, 2019; and,

WHEREAS, the Planning Commission held a properly noticed public hearing on

December 12, 2018 on proposed code amendments; and,

WHEREAS, after deliberations the Planning Commission made an approval

recommendation 5-1 to City Council on December 12, 2018 to adopt the subject amendments;

and,

WHEREAS, the City Council studied the subject amendments on February 05, 2019,

and March 26, 2019, providing staff policy direction regarding the proposed amendments; and,

WHEREAS, the City Council finds that changes are needed to address improved access

to various housing types, address on-going customer and citizen inquires, improve affordability of

housing and promote compatible residential infill housing, consistent with the city

Comprehensive Plan, through the municipal code; and

WHEREAS, the City Council finds that the amendments are needed to better implement

the policies of and are principally consistent with the adopted Comprehensive Plan; and

WHEREAS, the City Council finds that proposed amendments are needed to the city’s

municipal code in order to protect and improve the general welfare of the public through the

creation of options in the zoning code for various housing types and affordability meant to serve a

broad section of the city’s population; and

WHEREAS, the changes in this ordinance are in the best interests of the City as a whole;

and,

NOW, THEREFORE, the City Council of the City of Puyallup, Washington, ordains as

follows:

Section 1. Amendment. Puyallup Municipal Code Section 14.02.040 is hereby amended to read

as follows:

56

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 2 of 19

14.02.040 System development charges.

System development charges include pro rata shares of the costs of existing and planned

facilities. Revenues from system development charges minimize the impact to existing customers

to construct new facilities required to accommodate growth. System development charges are

stated in terms of a cost per ERU (equivalent residential unit) and are specified in the 2010 Water,

Sewer, and Storm and Surface Water System Development Charges Study. Each new connection

to the water system shall pay a system development charge calculated by multiplying the SDC

rate ($/ERU) as specified in the most recent budget adopted by the city council by the number of

ERUs as shown on the following schedule:

SDC ERU Schedule

Water Customer Description No. of ERUs

Single-family dwelling 1

Accessory dwelling units 0.50

Duplex/apartment:

First unit 1

Each additional unit 0.75

Mobile home subdivision, pad 1

Recreational vehicle park, each space 0.63

Motel/hotel, each unit 0.63

Hospital, rest home, each 6 beds 1

Commercial/industrial:

First 15 fixture unit weights 1

Each additional fixture unit weight 0.067

Section 2. Amendment. Puyallup Municipal Code Section 14.10.010 is hereby amended to read

as follows

14.10.010 Schedule of system development charges and connection charges.

(1) System development charges include pro rata shares of the costs of existing and planned

facilities. Revenues from system development charges minimize the impact to existing customers

to construct new facilities required to accommodate growth. System development charges are

57

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 3 of 19

stated in terms of cost per ERU (equivalent residential unit) and are specified in the 2010 Water,

Sewer, and Storm and Surface Water System Development Charges Study. Each new connection

to the sewer system shall pay a system development charge calculated by multiplying the SDC

rate ($/ERU) as specified in the most recent budget adopted by the city council by the number of

ERUs as shown on the following schedule:

SDC ERU Schedule

Water Customer Description No. of ERUs

Single-family dwelling 1

Accessory dwelling unit 0.50

Duplex/apartment:

First unit 1

Each additional unit 0.75

Mobile home subdivision, pad 1

Recreational vehicle park, each space 0.63

Motel/hotel, each unit 0.63

Hospital, rest home, each 6 beds 1

Commercial/industrial:

First 15 fixture unit weights 1

Each additional fixture unit weight 0.067

The fixture unit weight shall be calculated from the “Drainage Systems” chapter of the Uniform

Plumbing Code

Section 3. AmendmentAdoption. Puyallup Municipal Code Section 19.06.055, is hereby

established to read as follows:

19.06.055 Lot segregations .

Lots which were combined previously shall not be re-segregated or otherwise re-subdivided

without filing application under the provisions of PMC title 19. Except that lots which are

combined “for tax purposes only” through the Pierce County Assessor-Treasurer’s Office may be

re-segregated through process and forms available through the Assessor’s Office only.

Section 4. Amendment. Puyallup Municipal Code Section 20.15.005, “Acre, Gross” and “Acre,

Net” is hereby amended to read as follows:

58

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 4 of 19

“Acre, gross” means 43,560 square feet of land area, including public/ or private streets., Or road

easements and critical areas and associated buffers.

Section 5. Amendment. Puyallup Municipal Code Section 20.15.005, “Acre, Net” is hereby

amended to read as follows:

“Acre, net” means 43,560 square feet of land area, not including public/ or private streets, or road

easements or critical areas and associated buffers.

Section 6 . Amendment. Puyallup Municipal Code Sections 20.20.010 (11) are hereby

amended to read as follows:

. . .

(11) One accessory dwelling unit on each lot subject to the following standards and criteria:

(a) The property is zoned RS-04, RS-06, RS-08, RS-10 or RS-35 and meets the minimum

lot area requirements for a single-family dwelling unit in the applicable zone district; and

(b) Any attached accessory dwelling unit shall not exceed 900 square feet of floor area or

40 percent of the floor area of the primary dwelling, whichever is less, nor have more

than two bedrooms; and

(c) A detached accessory dwelling unit shall not exceed 650 square feet, if located in a

new structure, or 900 square feet, if a conversion of an existing structure, or 40 percent of

the floor area of the new or existing primary structure, whichever is less. Additionally,

the detached unit shall not have more than one bedrooms, nor be located on more than

one floor; and

(d c) An attached accessory dwelling unit may be created either through internal

conversion of a portion of the primary structure or through construction of an addition to

the primary structure. An addition to an existing home wherein the addition contains

component parts of an accessory dwelling unit but the addition would not result in a

separately walled off dwelling, with separate exterior entrance to the unit, shall not

constitute an attached accessory unit and shall be considered an addition to the existing

home only; and

(e) Upon submittal and approval of a detached accessory dwelling unit permit (pursuant

to the approval criteria and appeal procedures established by Chapter 20.81 PMC), an

accessory dwelling unit may be located in a detached structure; and

(f d) Any additional entrance resulting from the creation of an integrated attached

accessory dwelling unit may not face the same side of the lot facing the street or the same

side of the building the primary dwelling unit front door faces so as to appear as a duplex

only if such entrance is adequately and appropriately screened in a manner that does not

substantially detract from the single-family appearance of the primary dwelling; and

59

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 5 of 19

(g e ) Utilities for the accessory dwelling unit shall be metered jointly with the primary

dwelling unit; and

(h f ) Roof pitches, siding and windows of any new structure constructed to house the

accessory dwelling unit shall be similar to and complementary to the principal dwelling

unit structure The scale, bulk, architectural style and location on the lot of all detached

accessory dwelling units shall be compatible with the established character of the

neighborhood. Plywood and other similar sheet siding materials, such as T1-11 siding,

shall not be used. and

(I g ) Either the primary dwelling unit or the accessory dwelling unit shall be physically

occupied by at least one property owner of record during the life of the accessory

dwelling unit. Owners shall sign an affidavit which attests to their residency for at least

six months of every year. This affidavit shall be binding upon the owner or successive

owners during the life of the accessory dwelling unit; and

(j h ) Accessory dwelling units shall not be subdivided or otherwise segregated in

ownership from the primary dwelling unit; and

(k i ) Nonconforming accessory dwelling units existing prior to the enactment of these

requirements may be found to be legal if the property owner applies for an inspection

permit prior to June 30, 1996, and brings the unit up to minimum housing code standards.

After July 1, 1996, owners of illegal accessory dwelling units shall be in violation of the

provisions of this title and subject to the enforcement provisions of Chapter 20.95 PMC.

All owners of illegal accessory dwelling units shall also be required to either legalize the

unit or remove it.

. . .

Section 7. Amendment. Puyallup Municipal Code Section 20.20.020 is hereby amended to read

as follows:

20.20.020 Property development standards – RS zones.

The following table (Table 20.20.020) sets forth the required development standards applicable to

properties located in the RS zones, unless otherwise established by approval of a planned

development. Unless otherwise indicated, the standards listed in this section represent number of

feet:

60

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 6 of 19

Property Development Standards – RS Zones

RS-35 RS-10 RS-08 RS-06 RS-04

(1) Minimum lot area per building

site in square feet 35,000 10,000 8,000 6,000 4,000

(2) Minimum/Maximum

development density in dwelling

units per gross acre

No

minimum

- 1.0

No

minimum

- 4.0

No

minimum -

5.0 4.0 - 6.0 6.0 - 8.0

(3) Minimum lot width 125* 75 50’* 60 40’* 50 40’* 40’*

(4) Minimum lot depth 150 100 -0- 90 -0- 90 -0- 80 -0-

(5) Minimum front yard setback 35 25 20 15 15

(6) Minimum rear yard setback 35 25 20 20 15

For rear yard setbacks for accessory structures, see PMC 20.20.040 (4)

(7) Minimum interior side yard

setback

15

Refer to

20.20.025

5’

Refer to

20.20.025 5’

5’

(8) Minimum street side yard

setback 25 15 15 15 10

(9) Maximum building height

single-family houses 36 36 36 36 28

(10) Maximum building height all

structures other than single-

family houses 28 28 28 28 25

(11) Maximum lot coverage – 40% 45% 45% 50%

(12) Minimum street frontage 30 20 20 20 15

(13) Maximum floor area ratio – 0.45:1 0.4 55:1 0. 4 55:1 0.5 6:1

Refer to 20.20.028

*PMC 20.20.020(3): Per PMC 19.12.060(2)(b), corner lots shall be 10 feet wider than the

minimum required lot widths shown herein

61

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 7 of 19

Section 8. Amendment. Puyallup Municipal Code Section 20.20.025 is hereby amended to read

as follows:

20.20.025 Interior side yard setback.

(1) The minimum interior side yard setback shall be five feet in RS-10 and RS-08; provided, that

the combined total of both side yard setbacks for any lot shall equal at least 16 feet in the RS-10

and RS-08 zones, as applied to each structure individually. The combined setbacks shall be

applied to all structures collectively if the detached accessory structure is located forward of a

line extending from the rear wall of the primary structure to the side lot line.

(2) The minimum interior side yard setback shall be five feet in RS-06 and RS-04 zones, except

that, subject to the performance standards in PMC 20.20.040(12), the dwelling unit may be placed

on one interior side property line with a zero setback, and the dwelling unit setback on the other

interior side property line shall be a minimum of 10 feet on the other interior side property line,

excluding the connecting elements such as fences, walls and trellises. No buildings or structures

shall be placed on the exterior boundary of such zero-lot line development.

(3) Interior side yard setbacks for lots in any RS zone that abut access and utility tract(s) and/or

the access portion of a new panhandle lot shall be a minimum of two (2) feet. No access portion

of a panhandle lot, public alley or access and utility tract(s) shall be considered a ‘street’ when

applying street side yard setbacks.

Section 9. New Section. Puyallup Municipal Code Section 20.20.029 is hereby added to read as

follows:

20.20.029 Minimum and maximum density limits in RS zones

(1) Maximum density shall be calculated upon creation of new lots only. Given that permitted or

conditionally permitted housing types govern the development of lots in RS zones, density shall

not be applied to proposals for housing types as listed as permitted (conditionally or outright)

regardless of dwelling unit quantity relative to lot size. Accessory dwelling units also do not

count toward maximum density calculations in RS zones.

(2) Deviations from the minimum lot density requirements, where required, shall only be

permitted through the standards outlined in PMC 20.86.010 (3). Such deviations shall be

permitted through an Administrative Adjustment Permit.

(3) Lots not served by, or required to connect to, sanitary sewer shall not be required to comply

with the minimum lot density requirement.

Section 10. Amendment. Puyallup Municipal Code Sections 20.20.040 (4), (5), (6), and (12) is

hereby amended to read as follows:

…

(4) Detached Accessory Buildings

(a) In all RS zones except in the RS-35 zone, or in any RS zone on lots greater than four acres in size, there shall be no more than one detached accessory building greater than 200 square feet in

62

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 8 of 19

size per lot. On any lot zoned RS-04, RS-06, RS-08, or RS-10, where the subject property exceeds four acres in size, no more than a total of two detached accessory structures over 200 square feet

may be permitted. For the purposes of this section only, one freestanding carport may be allowed

in addition to all permitted detached accessory building in all RS zone districts, subject to the 50

percent size restriction outlined in subsection (4)(f) of this section.

(b) In no case shall a detached accessory building be considered attached and therefore part of a

primary building if such structural attachment is the form of a breezeway, carport, enclosed

hallway, fence, trellis, tunnel, arch, or any other architectural embellishments. An attached

accessory structure1 is a structure built as an integral part of the primary building footprint with a

shared common wall/roof with the primary structure.

(e) Small Lot Accessory Building Exemptions. For any lot 8,000 square feet or less, a one-story

detached accessory building may disregard rear and interior side yard setback requirements if

such accessory building is no more than 600 square feet in floor area, is located in the rear 30

percent of the lot or further than 75 feet from the front lot line and is no closer than 12 feet from

the centerline of an adjacent alley. Any sized lot with access on a public alley may disregard

setback requirements from said alley subject to the conditions listed above pertaining to building

size, length, and location. In no event shall an accessory building under the small lot exemptions

listed herein have a height greater than 12 feet.

(d) For any RS-zoned lot, a one-story detached accessory building may disregard rear and interior

side yard setbacks if such accessory building is no more than 200 square feet in floor area

(e) Accessory buildings that exceed the building size, area, length and location standards noted

above shall comply with all required yard setbacks.

(f) No accessory building shall be larger than 50 percent of the ground floor area of the primary

structure on any lot. The measurement shall be determined by comparing the primary structure’s

footprint (including all attached accessory structures, such as an attached garage) to the detached

accessory structure’s footprint. The detached accessory structure may include upper floor square

footage so long as the footprint of the detached accessory building is no larger than the 50 percent

maximum defined herein. Upper floor detached accessory dwelling unit maximum size shall be

dictated by the size limits defined in PMC 20.20.010(9)(c) and shall be measured separately from

the size limits for detached accessory buildings as defined herein.

(g) Upon submittal and approval of an administrative conditional use permit pursuant to Chapter

20.81 PMC, an agricultural-related detached accessory structure (related to an ongoing

agricultural use) or any detached accessory structure on a lot greater than one acre may be larger

than 50 percent of the ground floor area of the lot’s primary structure. However, in no event shall

the proposed square footage of such agricultural-related accessory structure or detached accessory

structure on lots greater than one acre exceed 80 percent of the ground floor area of the lot’s

primary structure

Detached Accessory Buildings, quantity permitted. In no case shall a detached accessory

building be considered attached and therefore part of a primary building if such structural

attachment is the form of a breezeway, carport, enclosed hallway, fence, trellis, tunnel, arch, or

any other architectural embellishments. An attached accessory structure 1 is a structure built as an

63

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 9 of 19

integral part of the primary building footprint with a shared common wall/roof with the primary

structure.

(a) On any lot zoned RS-04, RS-06, RS-08, or RS-10, where the subject property is less than

or equal to four (4) acres in size, there shall be permitted:

(i) No more than one (1) detached accessory building greater than 200 square feet in size

per lot; and,

(ii) No more than one (1) unenclosed detached carport per lot. There shall be no size limit

to such carports; and,

(iii) Detached accessory buildings 200 square feet or smaller. There shall be no limit on

the number of such buildings per lot.

(b) On any lot zoned RS-04, RS-06, RS-08, or RS-10, where the subject property exceeds

four (4) acres in size there shall be permitted:

(i) A maximum of two (2) detached accessory structures over 200 square feet in size per

lot; and,

(ii) Unenclosed detached carports of any size. There shall be no limit on the number of

carports per lot.

(iii) Detached accessory buildings 200 square feet or smaller. There shall be no limit on

the number of such buildings per lot.

(c) On any lot zoned RS-35, there shall be permitted:

(i) Detached accessory structures over 200 square feet in size per lot. There shall be no

limit on the number of such buildings per lot.; and,

(ii) Unenclosed detached carports of any size. There shall be no limit on the number of

carports per lot.

(iii) Detached accessory buildings 200 square feet or smaller. There shall be no limit on

the number of such buildings per lot.

(5) Detached Accessory Buildings, Size Limits.

(a) On any RS lot zoned lot, where the subject property is less than or equal to one (1) acre in

size, each detached accessory building (excluding unenclosed carports) shall adhere to the

following size and height limitations:

(i) No footprint of the detached accessory building may be larger than 50 percent of the

footprint of the primary structure on each lot. For the purposes of this section, accessory

structures, such as an attached garage, which is attached to a dwelling unit, shall be

considered part of the overall primary structure footprint for the purposes of calculating

the 50 percent size ratio allowance

64

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 10 of 19

(b) On any RS lot zoned lot, where the subject property exceeds one (1) acre in size, or on

any RS zoned lot of any size containing a permitted or on-going agricultural use, each

detached accessory building (excluding unenclosed carports) shall adhere to the following

size limitations:

(i) No footprint of any one detached accessory building may be larger than 80 percent of

the footprint of the primary structure on each lot. For the purposes of this section,

accessory structures, such as an attached garage, which is attached to a dwelling unit,

shall be considered part of the overall primary structure footprint for the purposes of

calculating the 80 percent size ratio allowance.

(6) (5) Yard Projections. Every required front, rear and side yard shall be open and unobstructed

from the ground to the sky unless otherwise provided:

(a) Fences and walls as specified and limited under this section may project into said front,

rear and side yards.

(b) Cornices, sills, eaves projections, fireplace bump-outs and awnings without enclosing

walls or screening may project into a required yard but not more than two feet, provided:

(i) The width of any required interior side yard is not reduced to less than two feet,

six inches (2’-6”); and

(ii) Any yard abutting a street or alley is not reduced to less than five feet.

(c) Open, unenclosed decks not covered by a roof may project into any required yard, providing

however, that said decks are constructed at grade elevation, or in no event, exceed 30 inches

above adjoining grade

(d) Front porches, covered or uncovered, steps, staircases, and ADA accessibility ramps may

project into any required yard setback without restriction.

(e) For any RS-zoned lot, all attached or detached accessory buildings, including those buildings

200 square feet or less, shall observe the following:

(i) Any required front yard setback for the applicable zone district; and,

(ii) A minimum five (5) foot rear and interior side yard setback; and,

(iii) A minimum five (5) foot separation between all accessory buildings, and between

accessory buildings and primary/accessory dwelling units; and,

(iv) Any accessory building with access from a public alley shall also be setback 5’ from the

property line coinciding with the alley boundary line adjoining the property line.

…

(12) Driveway Setback in RS-04 and RS-06 Zones. A driveway located in front of a garage

accessed through the front yard in the RS-04 and RS-06 zones shall not be less than 20 feet in

length as measured from the garage to the right-of-way line Reserved.

…

65

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 11 of 19

Section 11. Amendment. Puyallup Municipal Code Section Chapter 20.21 title is hereby

amended to read as follows:

Chapter 20.21

INNOVATIVE HOUSING DEMONSTRATION PROGRAM1

COTTAGE HOUSING ORDINANCE

Section 12. Amendment. Puyallup Municipal Code Section 20.21.005 is hereby amended to

read as follows:

20.21.005 Purpose, iIntent, and goals.

(1) Purpose. The purpose of this demonstration program is to allow development of a limited

number of projects that demonstrate a housing choice not currently available in Puyallup’s

neighborhoods, in support of comprehensive plan goals including Land Use Goals IV, VI, VII

and VIII and Housing Goal I. The city will use this demonstration program to allow for

construction of demonstration projects to evaluate innovative housing in Puyallup. A decision on

whether to adopt a permanent innovative housing ordinance will be made upon completion of the

construction of the demonstration projects.

(21) Intent. The provisions of this chapter are available as alternatives to the development of

typical detached single-family homes. This chapter governs all innovative housing demonstration

cottage housing developments. In the event of a conflict between the standards in this chapter and

other zoning and development standards in the Puyallup Municipal Code, this chapter shall

control. The intent of the innovative housing development regulations is to:

(a) Support the growth management goal of more efficient use of urban residential land;

(b) Support development of diverse housing in accordance with the comprehensive plan;

(c) Increase the variety of housing types available for smaller households;

(d) Provide opportunities for small, detached dwelling units within existing neighborhoods;

and

(e) Provide opportunities for creative, diverse and high quality infill development that is

compatible with existing neighborhoods.

(32) Goals. The goals of the innovative housing demonstration program cottage housing

allowance ordinance and standards are to:

(a) Increase housing supply and the choice of housing styles available in the community in

accordance with the comprehensive plan;

(b) Provide for development of housing that responds to changing demographics and

smaller-sized households;

(c) Support the efficient use of land and higher density infill in developed areas;

66

Ordinance No.____

Various Amendments to Titles 14, 19, 20 and 21 PMC

Page 12 of 19

(d) Promote greater choice by encouraging smaller and more diverse home sizes and mixes

of income levels;

(e) Promote high quality design; and

(f) Allow flexibility in site and design standards while promoting infill projects compatible

with existing single-family developments.

Section 13. Amendment.Repealed Puyallup Municipal Code Section 20.21.010 is hereby

removed as follows:

20.21.010 Selection and review process.

The city shall use the following process to review and select innovative housing demonstration

projects.

(1) Request for Proposals. The development services department shall draft a notice of call for

proposals. The notice shall be published in a newspaper of general circulation, posted on the

city’s website, and sent to other entities that the city deems appropriate. There will be an initial

180-day submittal period during which proposals may be submitted to the city.

(2) Pre-Proposal Meeting. Potential applicants are required to schedule a pre-proposal meeting

with city staff, prior to submitting a formal proposal, to review with the applicant the

requirements for stormwater, roads, open space, parking, home design, and other project

elements.

(3) Proposal Requirements. Following the pre-proposal meeting, the applicant shall submit a

complete proposal to development services department, which includes the following:

(a) A completed application form, as provided by the city;

(b) A conceptual site plan of the proposed development;

(c) Conceptual drawings of the proposed innovative houses, including building footprints,

elevations, and floor plans;

(d) A description of how the proposed development minimizes adverse impacts to the

surrounding neighborhood, which may include factors that were considered during site

layout and building selection to enhance the neighborhood and minimize adverse impacts

to the surrounding community;

(e) A description of how the proposed development complies with all selection criteria and

development standards for an innovative housing demonstration project as described in this

chapter;

(f) General information about the site including the number of allowed and proposed

dwelling units, parking, open space, building heights, pervious and impervious surface, and

low impact development design elements;

(g) Photographs of the site and adjacent properties; and

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(h) Any additional information or material deemed necessary by city staff at the pre-

proposal meeting.

(4) Innovative Housing Committee. Upon receiving all proposal materials required by subsection

(3) of this section, the innovative housing committee (“committee”) shall convene to review all

submitted proposals. The committee will be comprised of the following members, or as otherwise

appointed by the development services director or designee:

(a) Planning commissioner, as appointed by the planning commission chair;

(b) Design review board member who resides within Puyallup city limits, as appointed by

the design review board chair;

(c) Planning director or designee;

(d) Engineering services manager or designee; and

(e) One citizen, who resides within Puyallup city limits, as appointed by the mayor and

confirmed by the city council.

(5) Proposal Selection Process. Evaluation of the proposals by the committee shall be based on

the following selection criteria:

(a) Demonstration that the project has been designed to enhance and minimize adverse

impacts to the surrounding community;

(b) Demonstration that the project impacts are substantially equivalent to or less than the

adverse impacts expected to be associated with development of conventional housing on

the subject property, in regards to parking, building height, building bulk, setbacks, lot

coverage, open spaces, screening and aesthetics;

(c) Demonstration that the project will result in a unique cottage style community that is

distinct from typical single-family developments in Puyallup. The development shall

incorporate a high level of quality and originality throughout the development including,

but not limited to, the following areas:

(i) Site design;

(ii) Architectural design;

(iii) Building materials;

(iv) Open space;

(v) Parking;

(vi) Landscaping; and

(vii) Low impact development design elements;

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(d) The proposal provides elements that contribute to a sense of community within the

development by including elements such as front entry porches, common open space and

common buildings;

(e) The structures proposed for the innovative housing development are diverse in

appearance, yet remain connected through use of architectural style, details, color and

materials;

(f) Examples of previous developments done by those involved in the project and

explanation of related experience; and

(g) Demonstration that the selected site for the innovative housing community supports

smart growth techniques by providing accessibility to commercial services, alternative

transportation modes and recreational opportunities.

(6) Selection of Proposal(s). All five members of the committee shall be present for a final

decision on selecting proposals. From the proposals submitted, the committee may select one

demonstration project that demonstrates exceptional design quality and consistency with the

selection criteria provided for in this chapter. If the committee does not select a project, the

timeline to submit proposals may be extended by the committee in 180-day increments up to a

total of three years. Extensions beyond this period require city council approval. The committee’s

decision in selecting a proposal for innovative housing development to advance to the formal

application phase shall be in writing and shall be the final decision of the city. Following the

annual evaluation of this program, outlined in subsection (9)(b) of this section, the council may

elect to allow up to two additional demonstration projects to be selected by the committee prior to

expiration of the demonstration program.

(7) Neighborhood Meeting. An applicant, whose proposal is selected as a demonstration

innovative housing development under this chapter, shall schedule and host a neighborhood

vicinity meeting prior to submitting a formal development application. The neighborhood

meeting shall comply with the terms and requirements in PMC 20.26.009, except that the

notification radius provision in PMC 20.26.009(4) shall be 400 feet.

(8) Permit Process.

(a) Once a proposal has been selected by the committee, the applicant shall have 90

calendar days to submit a formal application to development services. The applicant may

request in writing a maximum extension of 90 calendar days, subject to the approval of the

development services director or designee.

(b) A formal application shall include the following items:

(i) Narrative on how the project meets all innovative housing development standards

similar to the requirements of subsection (3) of this section;

(ii) A completed short plat application per Chapter 19.07 PMC (if applicable);

(iii) A completed preliminary plat application per Chapter 19.08 PMC (if applicable);

(iv) A completed preliminary site plan application per Chapter 20.89 PMC (if

applicable); and

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(v) An environmental checklist (if applicable).

(9) Sunset Clause and Program Evaluation.

(a) This chapter and the innovative housing demonstration program shall expire on

December 31, 2014. The innovative housing demonstration program may be extended by

the city council, adopted as a permanent code, or removed from code on or before the

foregoing expiration date. A complete development application and accompanying

materials, as provided for in this chapter, that is filed prior to the foregoing expiration date

by an applicant whose proposal is selected by the innovative housing committee, will be

considered vested under this chapter.

(b) This chapter and the innovative housing demonstration program shall be evaluated

annually by staff and the committee and a staff report forwarded to the planning

commission and city council documenting, describing, and evaluating the results of each

project and, if appropriate, making recommendations regarding substantive changes to the

Puyallup Municipal Code that can be supported by evidence gathered from the program

experience./

Section 14. Amendment. Puyallup Municipal Code Section 20.21.020 is hereby amended to

read as follows:

20.21.020 Applicable use zones.

The housing types described in this chapter may only be located in the following zones: RS-04,

RS-06, RS-08, RS-10, and RM-10 and CMX. No more than one demonstration project shall be

allowed within the RS-10 zone for the entire city.

Section 15. Repealed Puyallup Municipal Code Section 20.21.035 is hereby removed as

follows:

20.21.035 Permit process.

(1) Approval Process. All innovative housing developments shall be reviewed and processed

according to the procedural requirements of PMC 19.08.110 and 19.08.120, except that notice of

the public hearing required under PMC 19.08.110 shall also be sent by the applicant by first class

mail to all owners of property as shown on the last available county tax assessor’s roll within 400

feet from the exterior boundaries of the property to which the proposed application will apply.

Such notice shall be sent at least 10 days before the public hearing. A certified list of the mailing

shall be provided to the city development services director.

(2) Review Criteria. In addition to the criteria established for review of development proposals in

PMC 19.08.110 and 19.08.120, the applicant shall demonstrate that:

(a) The proposal is compatible with and is not larger in scale than surrounding development

with respect to size of units, building heights, roof forms, setbacks between adjacent

buildings and between buildings and perimeter property lines, number of parking spaces,

parking location and screening, access and lot coverage.

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(b) Any proposed modifications to provisions of this chapter are important to the success of

the proposal as an alternative housing project and are necessary to meet the intent of these

regulations.

Section 16. Amendment. Puyallup Municipal Code Section 20.25.040 is hereby amended to

read as follows:

20.25.040 Performance standards – RM zones.

The following special requirements and performance standards shall apply to properties located in

the RM zones:

. . .

(19) Outdoor Lighting. Building-mounted lighting shall be directed away from other residential

structures and/or windows as to not create direct illumination, shall be shielded as to avoid glare

from exposed bulbs off-site and shall use necessary means to avoid excessive light throw. Light

illumination shall not be cast beyond the premises and shall be limited to illumination of surfaces

intended for pedestrians or vehicles. Light fixtures shall include all necessary refractors within the

housing to direct lighting to areas intended to be illuminated. The director shall retain the right to

require a photometric plan to ensure compliance with these standards.

…

Section 17 . Amendment. Puyallup Municipal Code Section 20.35.035 (3)(C) is hereby

amended to read as follows:

. . .

(3) Outdoor Storage. Outdoor storage as defined in PMC 20.15.005, including merchandise

display, equipment and materials storage, and junk and scrap storage, when permitted in the ML

and MP zones shall comply with the following requirements:

(c) Improvement and Maintenance of Outdoor Storage Areas. All outdoor storage areas and

access to them shall be paved or otherwise surfaced and maintained so as to eliminate dust or

mud. All outdoor storage areas shall be graded and storm drainage facilities installed to collect

and dispose of all surface runoff in accordance with city requirements and the most recently

adopted version of the stormwater manual.

. . .

Section 18. Amendment. Puyallup Municipal Code Section 20.55.055 is hereby amended to

read as follows:

20.55.055 Improvement and maintenance of parking areas.

No parking area shall obtain access from an unpaved alley or street. All parking areas, including

parking spaces, access aisles, and driveways, shall be developed and maintained in the following

manner:

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(1) Off-street parking areas and pedestrian and vehicular access to them (including unimproved

alleys) shall be paved using permeable paving (asphalt, concrete, pavers) in accordance with city

standards, unless technical feasibility demonstrates infeasibility and other traditional forms of

detention/retention or direct discharge are alternatively permitted, as approved by the City

Engineer in accordance with city standards and the stormwater management manual most

recently adopted by the city. All paved areas and shall be so graded and drained as to dispose of

all surface water per the stormwater management standards most recently adopted by the city.

The design and improvement of parking areas shall prevent runoff water from draining across

public sidewalks or on to abutting properties. The public works director City Engineer shall

require oil separation facilities be included in the parking lot drainage system to prevent oil and

petroleum products from entering the municipal storm drainage system.

. . .

Section 19 . Amendment. Puyallup Municipal Code Section 21.20.120 is hereby amended to

read as follows:

21.20.120 Park impact fees.

(1) The impact fees for parks are hereby established as follows:

Type of Development and Size

of Development

Park Impact Fee Unit

Residential

Less than 500 sq. ft.

$1,560.05 Per residential dwelling unit.

Refer to 21.20.120 (2) for

accessory dwelling unit impact

fee.

Residential

500 – 999 sq. ft.

$2,313.53 Per residential dwelling unit.

Refer to 21.20.120 (2) for

accessory dwelling unit impact

fee.

Residential

1,000 – 1,999 sq. ft.

$3,291.31 Per residential dwelling unit

Residential

2,000 or more sq. ft.

$4,017.30 Per residential dwelling unit

Manufacturing* $0.87 Per square foot

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* This shall include all manufacturing uses as provided for in PMC 20.35.010 or similar

manufacturing uses

(2) Impact fees for accessory dwelling units (ADUs) shall be reduced by 80 percent; ADUs less

than 500 square feet in size shall pay $312.01 and ADUs between 500 and 900 square feet in size

shall pay $462.71.

Section 20 . Amendment. Puyallup Municipal Code Section 21.20.130 is hereby amended to

read as follows:

21.20.130 Street impact fees.

The impact fee schedule for streets shall be calculated using the formula contained within the rate

study for impact fees for roads prepared by Henderson, Young & Company, dated November 8,

2007, and shall be assessed at $4,500 per p.m. peak hour trip. Street impact fees for accessory

dwelling units shall pay $900; future amendments to the Street Impact Fee shall assess the

applicable impact fee at a rate reduced by 80 percent of the full fee assessed for single family

dwelling units.

Section 21 . Amendment. Puyallup Municipal Code Section 21.20.140 is hereby amended to

read as follows:

21.20.140 School impact fee.

There is hereby imposed a school impact fee of $3,005 for each dwelling unit; accessory dwelling

units shall be reduced by 80 percent, or $601.00 and shall be subject to annual price index

increases, as applied below to primary dwelling units. Effective January 1, 2011, and each

January 1st thereafter, said fee shall increase in an amount equal to the percentage increase in

Consumer Price Index for the Seattle/Tacoma/Bremerton Standard Metropolitan Statistical Area.

The most recently published index shall be used to adjust the fee obligation for the following year

and each year thereafter. Each year, the adjustment, if any, shall be administratively implemented

by the development services director or his designee. The timing for payment of the school

impact fee shall be in accordance with the provisions of PMC 21.20.020.

Section 22 . Severability. All sections in this ordinance are hereby deemed severable. Any

section found invalid or unconstitutional by a court of law with jurisdiction shall not be deemed

to invalidate or find unconstitutional other sections in this ordinance.

Section 23 . Corrections. The City Clerk and the codifiers of this ordinance are authorized to

make necessary corrections to this ordinance including, but not limited to, the correction of

scrivener’s/clerical errors, references, ordinance numbering, section/subsection numbers and any

references thereto.

Section 24 . Effective Date. This ordinance shall take effect and be in force five (5) days after its

passage, approval, and publication as provided by law.

Dated this day of 2019.

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John Palmer, Mayor

APPROVED AS TO FORM: ATTEST:

Joseph N. Beck, City Attorney Mary Winter, City Clerk

PUBLISHED: ____________, 2019 – Tacoma News Tribune

74

City Council Agenda Item Report

Submitted by: Katie BakerSubmitting Department: Development Services Meeting Date: 11/19/2019

Subject:Resolution to develop regulations for a City Transfer of Development Rights program

Presenter:Katie Baker, Senior Planner

Recommendation:Consider a resolution directing staff to develop regulations for a City Transfer ofDevelopment Rights program as a future Work Program item.

Background:Per City Council direction, Planning staff have been working with a consultant (Forterra) todevelop program recommendations for a possible Transfer of Development Rights (TDR)program and the viability of establishing an associated land conservation and localinfrastructure program (LCLIP). Council has previously received presentations and providedpolicy direction on this topic in February 2018 and February 2019. At this upcoming 11/19/19meeting, staff will provide a presentation on the final program recommendations and askCouncil to consider a resolution which would authorize the development of regulations toimplement said program. A TDR Program Report is attached which provides full analysis andrecommendations regarding the potential establishment of a City TDR and LCLIP program.

Council Direction:

Fiscal Impacts:No financial resources are being requested with this action. If the resolution is approved, Citystaff may return to Council seeking funding for a consultant to assist by developing the TDRregulations.

ATTACHMENTSPuyallup TDR Program ReportResolution: TDR Program FrameworkPowerPoint Presentation

75

Opportuni� es for Conserva� on and Infrastructure Financing in Puyallup:Recommendations and program framework

for using transfer of development rights and

LCLIP

October 25, 2019Prepared for the City of Puyallup by Forterra and ECONorthwest 76

PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 2TABLE OF CONTENTS

TABLE OF CONTENTSI. Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

II. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

III. About this report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

IV. Transfer of development rights program framework . . . . . . . . . . . . . . . 6

V. Land Conservation and Local Infrastructure Program (LCLIP) . . . . . . . . . . . 14

PHOTO: FORTERRA

PHOTO: FORTERRA

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 3I. CONTACT INFORMATION

I. CONTACT INFORMATIONNick Bratton and Morgan Shook prepared this report.

Forterra is dedicated to regional sustainability in all its dimensions — environmental, social and economic. Since 1989 Forterra has been at the forefront of landscape-scale conservation, restoration, and community-building efforts to help secure a positive future. For more information, visit www.forterra.org.

ECONorthwest specializes in economics, planning, and finance. Established in 1974, ECONorthwest has over three decades of experience helping clients make sound decisions based on rigorous economic, planning and financial analysis. For more information, visit www.econw.com.

For more information about this report, please contact:

Nick Bratton Forterra 901 5th Avenue Suite 2200 Seattle, WA 98164 206.905.6941 nbratton@forterra.org

Morgan Shook ECONorthwest 1200 6th Avenue Suite 615 Seattle, WA 98101 206.388.0082 shook@econw.com

PHOTO: FORTERRA

78

PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 4

II. EXECUTIVE SUMMARYThe City of Puyallup hired the consultant team of Forterra and ECONorthwest to evaluate opportunities for the city to use two market-based growth management tools as a means to help achieve its vision for the downtown and South Hill regional growth centers while also conserving resource land and generating new revenue for public improvements.

Transfer of development rights (TDR) is a voluntary program that incentivizes growth in areas where it is desired while permanently protecting farm and forest lands through private market real estate transactions. The Landscape Conservation and Local Infrastructure Program (LCLIP, RCW 39.108) is a state program that gives cities a financial incentive to use TDR by creating a new revenue source for cities to pay for infrastructure that supports growth connected to TDR use.

The primary findings suggest that although the market for large scale multifamily development has not yet emerged, demand may change as rents rise and growth pressure from other parts of the region reach Puyallup – particularly in conjunction with expanded transit service. The use of TDR is viable in some segments of the current market and will become a more attractive option if paired with other incentives

such as multi-family tax exemptions. The current mix of incentive choices for developers in certain zones could be reorganized to prioritize use of TDR, which in turn will lead to higher revenues if Puyallup chooses to participate in LCLIP.

If current growth trends continue, the city would generate approximately $5.1 million in revenue through LCLIP, while if the pace of growth accelerates the revenue could increase to $9.2 million. In all scenarios LCLIP is a viable choice for Puyallup and will provide additional resources to pay for improvements that the city wants to make. Implementation of TDR and LCLIP would entail adoption of development code amendments and an implementing ordinance.

The consultant team lays out the specific steps involved and recommends an administrative model to help the city operate a TDR program in an efficient and effective manner. Conditions are ripe at the present time for TDR and LCLIP to work and the consultant team recommends that the city adopt a TDR program in the near term, followed by LCLIP timed in conjunction with a launch project.

If current growth trends

continue, the city would

generate approximately $5.1

million in revenue through

LCLIP, while if the pace of

growth accelerates the revenue

could increase to $9.2 million.

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 5ABOUT THIS REPORT

ABOUT THIS REPORTThis report is divided into two parts that provide separate but related analyses of the feasibility of two market-based, growth management programs in which the City of Puyallup is eligible to participate. These are:

• Transfer of development rights (TDR), a volun-tary real estate tool that encourages new construc-tion in areas where growth is desired while perma-nently conserving farms and forests, and

• Landscape Conservation and Local Infrastruc-ture Program (LCLIP), a state-level program that gives cities access to new sources of revenue to pay for infrastructure that supports growth in exchange for agreeing to use transfer of development rights.

The TDR portion of the report examines policy questions and the mechanics of implementing this tool in a way that supports the city’s conservation and growth management objectives. Recommendations

include a program framework and revisions to existing incentive zoning that would make TDR successful in the Puyallup real estate market.

The LCLIP portion of the report gives an overview of how the program works in general, lays out scenarios for how Puyallup could apply the program, how much revenue it would generate, what the risks and tradeoffs entail, and a road map for adoption and implementation.

It is possible for a city to enact a TDR program without using LCLIP, however the added value that LCLIP creates makes the adoption of both a more attractive proposition. The recommendations in both parts, taken together, provide a strategy and pathway for the City of Puyallup to maximize the benefits of LCLIP.

PHOTO: FORTERRA

PHOTO: Forterra

PHOTO: Forterra

80

PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 6III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

1 TDR in Washington State is authorized by the Growth Management Act, RCW 36.70A.090: A comprehensive plan should provide for innovative land use management techniques, including, but not limited to, density bonuses, cluster housing, planned unit developments, and the transfer of development rights.

2 TDR is a flexible tool that can support a range of conservation values. While programs elsewhere may reflect a variety of priorities, Puyallup’s interests reflect resource land protection.

Transfer of development rights (TDR) is a mar-ket-based growth management and conservation tool that encourages growth in areas where communities want it while protecting resource lands where growth is not desirable.1 Through voluntary transactions, owners of farm and forest lands sell the right to build homes on their properties – in the form of “TDR credits” – to developers who use those credits to gain additional density or other value in urban projects.2 In exchange for selling development rights, landowners place TDR easements on their property, permanently protecting it from development while retaining all oth-er rights and uses. The graphic to the right illustrates the process:

TDR programs can differ in purpose and implemen-tation across jurisdictions, however they all need the same basic ingredients to work effectively. These include:• Clearly articulated conservation objectives,

• Clearly delineated areas where growth is desired, FIGURE 1: Transfer of development rights process

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 7III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

• Incentives to use the tool that are matched to local demand,

• A market mechanism for awarding development bonuses, and

• An administrative model.

This memorandum discusses options for each and presents recommendations for a program framework that is suited to Puyallup’s needs and reflects city feed-back on design and policy questions.

CONSERVATION PRIORITIES

In establishing a TDR program a city must identify those lands it wants to protect through use of the tool. These reflect the conservation priorities of the community and are called “sending areas,” or those properties from which landowners can sell develop-ment rights in the form of TDR credits. In discussion with staff and council, the consultant team recom-mended that the sending areas that Puyallup considers should not only meet goals for protecting lands close by, but should position the city for success in using LCLIP, which has certain requirements for sending area eligibility. To balance the interests of emphasiz-ing conservation of lands close to the city while also supporting the regional intent of LCLIP, the sending areas should include the following categories of land:

1. Agricultural-zoned land near Puyallup. This in-cludes farmland in close proximity to the city, such as properties in the Alderton-McMillin Community Plan area, farms in the Puyallup Valley, and local farms selling produce in the city. See recommenda-tions summary for additional detail.

2. Agricultural-zoned land across Pierce County. This includes agricultural resource land (ARL)

county-wide, not necessarily in close proximity to the city but farmland of long term commercial significance.

3. Forest-zoned land across Pierce County. This includes lands zoned for forestry, either fami-ly-owned or commercial timber, county-wide with no geographical priority.

4. Regional agricultural and forest-zoned land. This includes all resource lands of long-term commercial significance designated by Pierce, King, and Snohomish Counties for eligibility under the LCLIP statute, RCW 39.108.

The protection of these lands will reduce development pressures on farms and forests while also retaining other environmental and human health benefits. Local farms produce food for residents of the Puyallup Valley, they are an important component of the coun-ty’s economy, and they serve important environmental functions. Forest lands help to provide clean air and water, reduce flooding risk, and are a source of timber and other wood products. Even though these lands may be perceived as being “out there,” the benefits to the City of Puyallup from conserving them are imme-diate and tangible.

To reflect the different values of development rights across the landscape, the consultant team designed a matrix of exchange rates that define how much bonus a developer gains for buying a TDR credit. This matrix also reflects city conservation priorities and is covered in detail in the market mechanism section. Inclusion of regional resource lands is a requirement of the state statute governing the use of LCLIP and is intended to help realize the regional scale of the program.

Puyallup expressed an interest in exploring how TDR could conserve open space within the city. Examples

of this application of the tool exist elsewhere in the region, as Tacoma and Seattle both have provisions within their TDR programs for in-city protections. The conservation of open space inside cities is an im-portant goal, as access to parks and natural areas is part of what defines a community and makes it a great place to live. At the same time, the economic constraints of achieving this aim through TDR present challenges.

The city has a finite amount of capacity in which to place TDR credits through bonus density in new construction. If the city chooses to accept credits from sending areas in Pierce County and through the regional market, prices for those credits will tend to be lower and the program can award a smaller amount of bonus density for developers buying those credits. This means that for a fixed amount of development ca-pacity, the city would place more TDR credits, thereby conserving more land. If credits are more expensive, reflecting higher real estate prices within the city, the program would need to award more bonus density to make it economically attractive for developers to buy them. For a fixed amount of development capacity, the city would place fewer credits because each one would consume more bonus capacity than would a farm or forest credit. The end result would be less conserva-tion overall.

Another tradeoff would be competition among public priorities. If Puyallup has a finite amount of bonus de-velopment capacity, focusing conservation in different types of sending areas will yield different benefits. By prioritizing conservation of Pierce County resource lands (and making eligible other sending areas through the regional program), Puyallup could generate millions of dollars of new revenue for infrastructure investments – public improvements that will also en-hance the quality of life in the city (see LCLIP section ). Use of TDR for in-city conservation does not confer this benefit. Furthermore, revenues from LCLIP can

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 8III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

be used to acquire land for parks within the defined LCLIP boundary. In summation, designating sending areas as recommended would create a wider array of benefits for Puyallup beyond just the revenue aspect.

RECEIVING AREAS

The second major decision in TDR program design is deciding where the city wants to encourage growth. Places where developers can gain more value for projects by using TDR are called “receiving areas” and can be established by a variety of methods. Analysis of the market for growth in Puyallup showed a strong demand for single-family housing at present and con-tinuing in the near-term. As a market-based tool, TDR works best when connected to demand for growth. In Puyallup’s case, adding density to single-family neigh-borhoods is a choice that would need to be broached through a broader community conversation, and in the long term would not support the use of LCLIP. In con-sideration of these factors, as well as guidance from staff and council, the consultant team recommends the following areas as appropriate for using TDR:

1. Regional Growth Centers (development in multi-family and mixed used projects)

» Downtown/central business district

» South Hill

2. RM-10 zone (development in townhome projects)

3. RM-20 zone (development in multifamily projects)

4. Future expansions and zoning changes

» Annexations

» Area-wide rezones

The city’s vision encourages residential and commer-cial uses in the regional growth centers. This is a nat-ural place for additional density as these areas already have provisions for incentive zoning that can be adapt-ed to more effectively use TDR and are well-served by transit. In addition to designating these districts as receiving areas, the consultant team recommends other categories of receiving areas as well as specific policy and code changes to support TDR use.

The RM-10 zone currently sees high demand for moderately dense, multi-family housing – typically townhomes – and is projected to see continued growth. Owner-occupied housing is the predominant housing option in Puyallup and this will likely continue in the near future. A small amount of bonus density creates enough value to make TDR work in these zones and the consultant team sees this as an important compo-nent in the overall strategy for making TDR and LCLIP successful in Puyallup.

The RM-20 zone is intended for medium-density, multifamily residential uses. The amount of growth potential in this zone makes it a strong candidate for a receiving area. Similar to the RM-10 zone, the addi-tional value that development incentives would create should drive use of TDR in the near to medium term.

While not yet identified, it is likely that in the future the city will annex portions of its urban growth area or pursue area-wide rezones. If these changes involve upzones, creating additional value for developers through legislated density increases, they create an op-portunity to use TDR to gain a portion of the additional density established through the upzone. If and when the city pursues such land use changes, designating them as receiving sites would add another option for using TDR, further advancing city conservation and growth management objectives. In order to establish policy direction for these eventualities, the consultant

team recommends that the city adopt comprehensive plan language that makes future area-wide rezones and annexations TDR receiving areas.

INCENTIVES

In order to ensure that a TDR program is providing the kinds of bonuses for which there is demand, it is important to establish incentives that are appropriate to the type of growth Puyallup desires and which a market will support. Based on a market analysis and input from staff and council, the consultant team recommends the following types of incentives in each category of receiving area:• RM-10:

» Additional units

» Multifamily property tax exemption

• RM-20:

» Additional units

» Multifamily property tax exemption

• Regional growth centers:

» Additional floor area, expressed as density and building heights in the CBD, CBD-Core, UCX, RM-Core, LMX zones

» Multifamily property tax exemption

• Future receiving areas: to be determined

It is a common feature of successful TDR programs to offer bonus density in the form of additional units and floor area. A newer concept in Washington is to use TDR as a means for developers to access 8-year

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 9III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

multifamily tax exemptions (MFTE). Under this ap-proach, a developer would be granted access to MFTE on a project conditional upon using TDR. For example, if a large project (200 units) would save $500,000 annually on property tax exemption using MFTE, the developer might spend $200,000 on TDR to access the savings.

For future receiving areas it is impractical to define at present what the incentives would be, however for annexations and area-wide rezones of low to moderate densities, additional units is likely the appropriate choice to offer. For rezones at medium and high densities, the range of options is greater and should be evaluated at the time based on need, market factors, and developer outreach.

The consultant team also recommends changes to the CBD and MX zoning regulations to increase the certainty that Puyallup will reach its TDR placement objectives should it pursue LCLIP. In the existing code the number of incentives from which developers can choose to gain bonus density in the mixed-use zones is a broad menu of options. Beyond TDR, these include structured parking, residential use, affordable hous-ing, green roofs, solar power, and improved energy efficiency. Offering a wide range of choices reduces the likelihood that developers will use TDR. While all of the incentives currently offered provide public benefit, TDR is the only option that will directly drive new infrastructure revenue for the city through LCLIP. Therefore, in order to maximize the financial benefits of LCLIP, it is in the city’s interest to maximize the certainty of using TDR in new construction.

Reflecting input from council and staff, as well as in consideration of incentives that are available beyond the realm of additional density to support other public benefits, the consultant team recommends Puyallup reduces the incentive choices in all proposed receiving

areas to the following:• TDR

• Affordable housing

• Multifamily tax exemption

Other bonus choices currently offered either have ex-isting incentives available through other means, such as the federal solar tax credit, or are features that the city may wish developers to include regardless, such as residential uses or plazas. The city could shift these latter elements to design guidelines or development regulations. The incentive of additional density, espe-cially when coupled with a property tax exemption, is a valuable enticement for developers. The powerful motivation for using such incentives is a policy tool that cities can use to provide the greatest public bene-fits for residents. In this situation, affordable housing, additional revenue for infrastructure, and conserva-tion of resource lands meet pressing needs of the city and support Puyallup’s community vision.

The State of Washington provides authority for cities to grant limited-term property tax exemptions as an inducement to developers to construct multifam-ily housing. This tool, multifamily tax exemption (MFTE) is available in two forms: 12-year and 8-year. Under the 12-year option, projects receive a property tax abatement for a period of 12 years if they include a certain amount of units that are affordable at a defined level over that timeframe. Under the 8-year option, multifamily projects receive a similar abatement for a shorter duration and without any affordability requirement. Cities have the discretion to attach other conditions to the 8-year MFTE. This could include use of TDR.

The analysis of Puyallup’s real estate market shows that, by itself, bonus density through incentive zoning

does not generate a high enough return to justify use of TDR at present, although this may change in the future if rents and home prices increase. By contrast, the combination of 8-year MFTE with bonus density makes the use of TDR not only feasibly, but highly attractive. The market analysis suggests that TDR in Puyallup would be successful if applied in conjunction with 8-year MFTE. The consultant team recommends that the city adopt both, stipulating that use of TDR is a condition for projects to access the abatement of 8-year MFTE.

In conclusion, a TDR framework for the City of Puyal-lup would maximize utilization of the program by: • Offering the appropriate incentives in the areas

where it desires growth,

• Reducing the number of incentives to maximize public benefit and certainty of using TDR – along with provision of affordable housing,

• Calibrating those incentives to the real estate mar-ket and reflecting stated conservation priorities, and

• Adopting an 8-year MFTE program that includes use of TDR in order to access the tax savings.

MARKET MECHANISM

A real estate market attribute that TDR programs must account for is the difference in marginal value of additional development between sending areas and receiving areas. For example, a developer will make a bigger return on a large, single-family home on a 10-acre parcel in unincorporated Pierce County than on one additional apartment in a multifamily building in downtown Puyallup. In other words, the value of development potential in sending areas is typically greater than it is in receiving areas. In order to make

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 10III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

a TDR transaction financially viable for both parties, a market mechanism is necessary to normalize values across the landscape. In TDR programs this is called an exchange rate. An exchange rate defines how much bonus a developer gains for purchasing one TDR credit and it is expressed in terms of a ratio.

Using assumptions for TDR credit pricing based on Pierce County and regional transaction data, as well as a market analysis of real estate and development pro forma costs, the consultant team proposes the following exchange rates for the recommended Puyallup receiving areas:

Recommended TDR Exchange Rate TableReceiving Area

Bonus Awarded

Sending Areas Additional Development per Credit

Regional Growth Centers

Floor area (square feet)

Near-city farm 1,300 sfCountywide farm 1,100 sfCountywide forest 1,100 sf

Regional (King, Snohomish) 1,300 sfRM-20 Zone Dwelling units Near-city farm 1 unit

Countywide farm 1 unitCountywide forest 1 unit

Regional (King, Snohomish) 1 unitRM-10 Zone Dwelling units Near-city farm 2 units

Countywide farm 2 units

Countywide forest 2 unitsRegional (King, Snohomish) 2 units

At first glance there is not much variation in the exchange rates across different sending areas. How does this reflect the city’s conservation priorities of placing a greater emphasis on nearby farms, for example? The answer is in the wide range of prices that TDR credits take across the landscape. As market data show, prices for TDR credits in the Alderton-McMillin Community Plan area (farm land close to Puyallup) are relatively low in comparison to those elsewhere in the county and region. This is because Pierce County already incentivizes protection of farm land in this area by awarding landowners additional credits to sell than in other parts of the county. Credits elsewhere in Pierce, King, or Snohomish Counties all cost more. From a developer’s perspective, the cost per additional bonus increment will be lower if purchasing credits from farm lands near the city. While the numbers in this table may not appear to favor one category of sending area over another, the practical result will be to incentivize the protection of lands that reflect the city’s conservation priorities while retaining eligibility of all lands required for inclusion under LCLIP.

These exchange rates are calculated to make the use of TDR attractive to developers in receiving areas while providing enough value to sending area landowners to incentivize their participation in the program. They are also calibrated to the concurrent use of the 8-year MFTE program as a condition of using TDR. These exchange rates will not work for every conceivable development or every potential property, but they are calibrated to be financially viable for most situations. Exchange rates should not be static and if Puyallup pursues TDR/LCLIP, it should update them periodically to reflect changes in the market.

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 11III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

ADMINISTRATIVE MODEL

A program’s administrative model is the mechanism by which TDR transactions occur. It defines the city’s role in the process, which can vary from hands-on to light touch. An administrative model should make transactions simple for the buyer and the seller, as well as provide certainty and transparency on how the program works. The types of administrative model Forterra evaluated for Puyallup include simple buyer-seller, private market with public support, and public-private partnership. A brief overview of each follows.

Simple buyer-sellerUnder this model buyers and sellers of TDR credits find each other and negotiate private real estate deals to effect transactions. The city’s role is limited to recording the use of credits when applied to a project as part of the development permitting process.

Private market with public supportThis is a variation on the simple buyer-seller model with key differences. Elements that remain the same are that the buyers and sellers of credits negotiate private deals to transact TDR credits while the city processes and records the use of TDR credits. This model takes the city’s role further, however, by augmenting the resources available to support a private market. Foremost among these is providing program and market information to help participants understand how the program works, how to find each other, and what is involved in a transaction.

Public-private partnershipIn this model the city would retain responsibility for essential administrative tasks (processing and recording use of TDR credits) while a private partner would market the program, recruit users, and facilitate transactions. In this approach the city would retain responsibility for central administrative functions that

it already performs while the private partner would pursue deal-making that can be time-intensive and requires real estate expertise.

TDR bankThe consultant team did not explore the TDR bank option for Puyallup because Pierce County already operates one and creating another bank specific to the city would be duplicative. Choice of an administrative model is a policy decision based on the city’s level of interest in operating a TDR program. Based on feedback given by council, planning commission, and staff, the consultant team recommends the city pursue either the private market with public support approach or a public-private partnership. A primary consideration might be the amount of staff time and city resources that Puyallup wants to invest in program operations.

Regardless of the administrative model Puyallup chooses, Pierce County will be an important partner in the implementation of a TDR program. The county serves several key roles, including:

• Certifying TDR credits from sending areas,

• Operating the county’s TDR bank, which buys cred-its from landowners and sells them to developers, reducing uncertainty and transaction costs, and

• Tracking TDR use across the county and in other cities.

Puyallup would share program activity information with Pierce County, such as the use of TDR credits in new construction projects, and the two jurisdictions may wish to coordinate efforts in pursuing shared conservation objectives. Pierce County and Tacoma signed an interlocal agreement to establish the terms and conditions of cross-jurisdictional TDR credit

transfers. Should Puyallup adopt a TDR program, the county may wish to enter into a similar agreement with the city.

Puyallup can take a range of steps to achieve greater transparency, visibility, and usability for its TDR program. These are addressed as responses to questions from the perspective of program users.

How do prospective participants learn about the program?The city can:

• Create a page on its website dedicated to TDR that

» Explains the program and benefits to buyers and sellers, including a walk-through of the entire process for both sides of the transaction

» Links to the code chapter

» Shows maps of receiving areas

» Includes a FAQ section

» Lists staff contact information

» Has downloadable electronic application forms

• Reach out to prospective developers and inform them of the opportunity to use TDR in the city. This can take the form of phone calls, a develop-er workshop, a webinar that the city posts on its website, mailing program summaries, or partnering with industry groups (realtors, Master Builders Association, chamber of commerce, etc.)

• Pursue media coverage.

• Spread the word through community hubs like farmers markets and civic organizations.

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 12III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

What does a TDR credit get me?• As a result of the ECONorthwest market analysis

for this study, the city should adopt exchange rates to define what density bonus a developer gains for purchasing a TDR credit. This is information that should be included on the city TDR website program overview and FAQ.

How do buyers and sellers find each other?• As part of the TDR web page, the city can provide

resources for participants to connect. This can include contact information for the Pierce County TDR program administrator or private partners who can serve as sources for TDR credits.

What is a TDR credit worth?• This is a simple question with a complicated answer,

but for the purposes of encouraging program activity it is important to make market data publicly available. Each developer will calculate a willing-ness to pay that varies depending on individual project factors and each landowner will have a unique price expectation. To help provide context for price negotiations between parties, Pierce County can publish sales data of transactions. This should include general information about the send-ing site (number of credits sold, acreage, land type – i.e. farm, forest – and location), prices paid, and any special attributes of the transaction.

What does the city have to do? At minimum, the city’s responsibilities in administering the TDR program involve:

• Establishing a review process for the use of TDR credits in receiving area projects. This includes setting a point in the development process at which an applicant must furnish certified TDR credits (or a substitute, such as an option agreement), such as

at issuance of building permit or prior to certificate of occupancy.

• Tracking TDR credits used in receiving area proj-ects, sharing credit use with Pierce County so it can extinguish credits applied to new construction.

Additional responsibilities may include:

• Making an annual report to planning commission and city council on TDR program activity.

• Marketing the program, recruiting participants.

What are the steps in a transaction?This needs to be spelled out both in code and in program overview materials that the city publishes, including on its website. Some programs, like Snohomish County, have drafted visual flow charts to illustrate the process. The basic elements include:

For the buyer –

1. Developer holds pre-application meeting with city.

2. Developer and city discuss use of TDR and other incentive components as a way to achieve bonus density.

3. City calculates number of TDR credits developer needs to achieve desired project density based on exchange rate and other program elements.

4. Developer seeks TDR credit seller, negotiates a price, closes a transaction, and furnishes neces-sary documentation to city (this can be an option agreement or original TDR certificates, as the city prefers) at the established point in the develop-ment process.

What happens after the transaction?• The city tracks TDR credit use and communicates

program activity to Pierce County so the two juris-dictions can coordinate their respective sides of the process.

SUMMARY OF RECOMMENDATIONS

Based on analysis and city input, the consultant team recommends that the City of Puyallup incorporate the following elements into a transfer of development rights program, should it wish to proceed with adopting and implementing one:

Conservation priorities

• Puyallup should make all regional resource lands of long-term commercial significance eligible for development right transfers into the city’s receiv-ing areas. This includes lands zoned and designated for agriculture and forestry in Pierce, King, and Snohomish Counties. This will meet the criteria for using LCLIP.

• Recognizing that the city has specific priorities for conservation that are a subset of the eligible lands, Puyallup can incentivize protection of certain types of lands through calibration of its TDR exchange rate. These particular priorities include:

» Farm land in close proximity to the city, specifi-cally in the Alderton-McMillin and Mid-County Community Plan areas, farm land in the Puyal-lup watershed, and local farms that sell produce in the city.

» Farm land generally in Pierce County (Agricul-tural Resource Land) 87

PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 13III. TRANSFER OF DEVELOPMENT RIGHTS PROGRAM FRAMEWORK

» Forest land generally in Pierce County

Receiving areas

• Puyallup should designate specific zones within the downtown and South Hill Regional Growth Centers as receiving areas, within the parameters identified in the subsequent sections discussing LCLIP:

» CBD, CBD-Core, UCX, LMX, and RM-Core

» RM-20

» RM-10

» Future area-wide rezones or subarea plans

Incentives

Within the designated receiving areas, streamline the number of incentives available to achieve development bonus to two public benefits:

• Affordable housing

• TDR

This should be established through a prescriptive approach in which a project must provide both incentives to gain bonus density.

TDR incentives should take the form of additional density that is appropriate to the form of the receiving area project. For example, in the RM-10 and RM-20 zones the bonus is additional dwelling units, while in the CBD/core zones the bonus is additional floor area (expressed in square feet).

A third component, which complements the city’s

incentive zoning, is a multifamily tax exemption (MFTE). Puyallup should adopt an 8-year MFTE program in conjunction with TDR, structuring it so that use of TDR is a condition for projects to access the exemption.

Market mechanism

Puyallup should adopt exchange rates as proposed in the Exchange Rate Table on pg. 10. These values reflect the conservation priorities articulated by the city (see Conservation Priorities section). Puyallup should also plan for periodic reviews of the exchange rates as market conditions evolve. Updating them on a regular basis (every 3-5 years, for example) will make the TDR program function more effectively as the exchange rates will more closely reflect the market for growth as circumstances change over time. In respect of the city’s desire to minimize operational complexity of a TDR program, revisions to exchange rates should be made as administrative decisions under planning staff discretion, following the policy direction of city council.

Administrative model

Puyallup should operate a TDR program using either the private market with public support or public-private partnership model. Both of these achieve the city’s stated goals of administrative simplicity. Additional administrative recommendations include exploring an interlocal agreement with Pierce County and adopting the Commerce rule.

Interlocal agreement (ILA)

Pierce County currently has an ILA in place with Tacoma to establish the roles and responsibilities between the two jurisdictions for TDR credit transfers from the county into the city. Pierce County may wish

to negotiate a similar arrangement with Puyallup.

Commerce rule

The Washington Department of Commerce drafted a rule (WAC 365-198) defining terms and conditions for interlocal TDR credit transfers. Jurisdictions that adopt this rule by reference may conduct interlocal credit transfers without needing separate interlocal agreements. This introduces greater efficiency from an administrative standpoint and is advantageous for using TDR within a regional marketplace. Puyallup should adopt this rule as part of a TDR enacting ordinance.

TDR framework conclusions

Transfer of development rights is an innovative land use tool that helps to steer growth into areas where it’s desired and away from areas where it’s not. By itself, TDR doesn’t drive growth. It harnesses the demand for new development to create multiple public benefits for both urban and rural communities. The City of Puyallup expressed a desire to explore a simple, market-based approach to conserving lands important to the community while balancing other priorities. Adoption and implementation of an effective TDR program will give the city the option to pursue LCLIP, an infrastructure financing tool (described in the following section) that can help the city to grow with grace. Recommendations in this report lay out a path to streamlining the city’s existing incentive zoning structure that already includes TDR, making successful implementation of the tool a more likely outcome. Taken together, this set of recommendations will position Puyallup to have a functioning TDR program that will provide community benefits as the city gains greater access to regional transit and remains an attractive place to live in close proximity to major employment centers.

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 14IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)OVERVIEWPuyallup is eligible to use LCLIP, a state program (RCW 39.108) enacted in 2011 that creates a fi nancial incentive for cities to use TDR. LCLIP is the fi rst program of its kind in the nation and works on a regional scale, spanning Pierce, King, and Snohomish Counties. The goal of LCLIP is to give cities more resources to pay for infrastructure investments that support growth while also conserving resource lands. In exchange for agreeing to accept a specifi ed number of TDR credits, cities can retain a portion of the county’s share of property tax revenue on all new construction for a period of up to 25 years. The revenue must be spent on public improvements in the same areas where new construction uses TDR. The program is essentially a form of tax-increment fi nancing combined with transfer of development rights.

LCLIP involves only a portion of the incremental property taxes generated from new construction. This is not a new tax to residents or businesses, rather it is a temporary redistribution of existing tax revenues. The remaining portion of the property tax still accrues to the sponsoring city and to the jurisdictional county. Existing and incremental revenues fl owing from sales, business and occupation, and utility taxes still accrue to the city, as well as other capital restricted revenues. FIGURE 1 and FIGURE 2 illustrate how LCLIP works.

FIGURE 2: Assessed value over time

In order to implement LCLIP, a city needs to have a TDR program in place (or commit to creating a mechanism to use TDR) and must make a series of decisions about how it wants to use the tool. This section of the report identifi es what those decisions are, analyzes the choices, and makes recommendations for how Puyallup can optimize the program for greatest benefi t.

GEOGRAPHYThe fi rst question about LCLIP is where to use it. Under the statute, cities defi ne special districts where they want to use LCLIP. These districts have to meet

certain criteria. They must:

• be TDR receiving areas,

• include no more than 25% of the city’s assessed value, and

• be where the city will spend the collected revenue on public improvements.

The idea is that new construction and TDR use drive revenue, which is then spent on infrastructure to support the growth.

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 15IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

FIGURE 3: Tax revenue with and without LCLIP

The statute has a special name for these LCLIP districts: Local Improvement Project Areas, or LIPAs. In evaluating the zones and areas most likely to use TDR, resulting in the most revenue, and adhering to the program limitations, the consultant team identifi ed portions of the regional growth centers to defi ne as LIPAs including the following zones shown in FIGURE 4 on the following page.

From these zones, it is possible to create the following six LIPAs. These LIPAs contain the assessed value from the table shown in FIGURE 5 on the following page.

FIGURE 6 summarizes the assessed value by LIPA on the folllowing page.

USE OF REVENUES

Under the terms of LCLIP, cities can use revenues to pay for public improvements in the LCLIP district as follows:

• Street, road, bridge, and rail construction and maintenance;

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 16IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

• Storm water and drainage management systems;

• Water and sewer system construction and improve-ments;

• Sidewalks, streetlights, landscaping, and streets-caping;

• Parking, terminal, and dock facilities;

• Park and ride facilities of a transit authority and other facilities that support transit-oriented devel-opment;

• Park facilities, recreational areas, bicycle paths, and environmental remediation;

• Electric, gas, fi ber, and other utility infrastructures;

• Expenditures for facilities and improvements that support aff ordable housing as defi ned by WA law;

• Providing maintenance and security for common or public areas; and

• Historic preservation activities authorized under WA law.

LCLIP is diff erent from previous versions of TIF in Washington in that it provides more fl exibility on how the funds can be used. Specifi cally, LCLIP enables funding for more than just capital improvements and can support certain operational activities related to the maintenance and security of public areas.

TDR PLACEMENT SCENARIOS AND REVENUE

As part of the implementation of LCLIP, the Puget Sound Regional Council allocated the number of

FIGURE 4: Assessed value by zone (Source: Pierce

County Assessor, City of Puyallup Zoning)

FIGURE 5: Potential Local Improvement Project

Areas (LIPAs) within Puyallup city limits91

PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 17IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

eligible development rights available for transfer under the regional program (approximately 24,000) to the 35 cities that are eligible to use the tool. Each city received its own allocation of credits – a share of the regional total – that was scaled in proportion to its growth targets. The major metropolitan centers expecting considerable growth received the highest TDR credit allocations (Seattle, 3,440; Bellevue, 1,081; Tacoma, 1,843; and Everett, 1,491), while smaller cities expecting more modest growth (such as Mountlake Terrace and Covington with 92) received the fewest. Puyallup’s allocation is on the lower end of the range, at 364, refl ects its size, growth targets, and its two regional growth centers. The statute gives cities fl exibility in choosing to what degree they wish to participate in LCLIP: they can commit to accepting any number of credits from 20% to 100% of their allocation.

In Puyallup’s case, the city would commit to accepting anywhere between 73 and 364 TDR credits based on the growth projections that the consultant team modeled. The more credits the city commits to, the more revenue it earns, so there is a compelling fi nancial incentive to take all 364 if the demand in the real estate market is strong enough and the city’s TDR program mechanics are accurately designed to place them all. The market analysis for Puyallup shows strong enough demand to justify committing to all 364 credits. The main conclusion from the analysis is that LCLIP will succeed in Puyallup and can generate between $5.1 million and $9.2 million in new infrastructure funding (nominal year-of-expenditure dollars).

The consultant team evaluated two scenarios to project how many TDR credits the market would place and how much revenue the program would generate. These are:

• Status quo, in which recent historical growth trends are assumed to continue into the future, and

• Urban center, in which future demand for growth in Puyallup increases relative to the present market.

Status Quo – Current Market Absorption Scenario

• Sending area credit price assumption: $25,000

• Exchange Rate: 1 credit per 1,100 sf (with use of MFTE)

• Absorption: Averaging about 90 multifamily units a year (equivalent to 30 credits placed)

• Likelihood of reaching TDR placement goal of 364: 100% (market places 300 credits by year 10 of the program)

• LCLIP revenues:

» Net present value: $3.1 million (amount against which the city could bond today)

» Nominal: $5.2 million (amount the city would collect over 25 years)

Urban Center – Stronger Market Absorption Scenario

• Sending area credit price assumption: $25,000

• Exchange Rate: 1 credit per 1,100 sf (with use of MFTE)

• Absorption: Averaging about 120 multifamily units a year (equivalent to 40 credits placed)

FIGURE 6: Assessed value by LIPA (Source: Pierce

County Assessor, City of Puyallup Zoning)

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 18IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

• Likelihood of reaching TDR placement goal of 364: 100% (market places 400 credits by year 10 of the program)

• LCLIP revenues:

» Net present value: $5.5 million (amount against which the city could bond today)

» Nominal: $9.1 million (amount the city would collect over 25 years)

The amount of revenue LCLIP will generate is a function of two factors:

1. City TDR credit commitment. The more credits a city chooses to accept, the more revenue it will collect.

2. New construction activity. The greater the amount of new construction within the program period, the more revenue the city will collect.

The graph in FIGURE 7 illustrates this relationship, showing how diff erent levels of TDR placement and new construction aff ect LCLIP revenues.

LCLIP PERFORMANCE – CITY OBLIGATIONS

While LCLIP can run for a maximum of 25 years, the legislation requires participating cities to demonstrate performance on the use of credits within their designated districts. Cities using LCLIP must meet a series of performance thresholds tied to their commitment to use TDR. In order to meet these milestones either the private market should drive credit placement or, alternatively, cities may purchase the credits themselves to extend program revenues. These thresholds are as follows:

• Threshold #1: Placement of 25% of the specifi ed portion of TDR credits is required to start the reve-nue stream. This is not a time-based milestone, but rather a performance-based milestone.

• Threshold #2: Placement of 50% of the specifi ed portion of TDR credits is required by year 10 to extend it by 5 years.

• Threshold #3: Placement of 75% of the specifi ed portion of TDR credits is required by year 15 to extend it by fi ve years.

• Threshold #4: Placement of 100% of the specifi ed portion of TDR credits is required by year 20 to extend it by fi ve years to its conclusion.

FIGURE 8 illustrates the TDR credit placement milestones and how they relate to the extension of revenue collection.

The consequence of not meeting these placement thresholds is that Pierce County would have the option of discontinuing revenue and stopping the program.

In previous examples of LCLIP implementation, there has been some diff erence in interpretation from program partners as to what is required to start an LCLIP program. Briefl y, the diff erence in interpretation is whether the placement of 25% of the specifi ed portion is required to start the program or whether the creation of the LCLIP program through ordinance is the trigger. Should Puyallup adopt LCLIP, this question of timing would be resolved through an interlocal agreement with Pierce County. Precedent suggests that the program begins accruing revenue immediately upon adoption and the fi rst payments would not occur until year two.

PROGRAM TIMING AND ADOPTION

FIGURE 7: LCLIP revenue across committment

and new construction activity (Source: Pierce

County Assessor, City of Puyallup Zoning)

FIGURE 8: TDR credit placement milestones

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 19IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

STRATEGY

Another decision in LCLIP use is when to start the program. The 25-year clock starts when the city adopts the enacting ordinance. It is to the city’s advantage to make the most of that time in terms of both revenue generation and TDR credit placement. This reduces the risk of the program ending early and increases the certainty of success. The consultant team recommends the city include the following approaches into an overall adoption strategy:

• Link adoption to launch project. By timing the start of the program to the construction of a project that uses TDR, the city is guaranteed to make progress towards credit placement and revenue generation from day one.

• Prepare legislation and documentation in advance to be ready for hearings. If the legislative package is complete and ready for introduction, the city can act quickly to adopt LCLIP when conditions are ideal.

• Define set of conditions for adoption. This will help the city to make an objective decision about when to move forward with adoption.

• Include WAC reference. To simplify regional TDR credit transfers, the city should incorporate by ref-erence into the adopting ordinance the Washington Administrative Code rule (WAC 365-198) that sets terms and conditions for interlocal TDR transfers. This will eliminate the need to negotiate separate interlocal agreements with other counties.

• Adopt regulatory updates now, including 8-year MFTE as part of a TDR program, so the foundation of the program will be in place when conditions are prime for starting LCLIP.

RISKS AND TRADEOFFS

Cities considering LCLIP pose a common question: what are the risks to adopting the program and what happens if the private market doesn’t place enough TDR credits to meet the performance thresholds? The short answer is that there is limited risk to the city. Should the city fall short of credit placement milestones the county has the option to end the program at that time. The consequences are that the city retains no further revenue from that point forward. Because the final years of the program generate the most revenue, the only loss is the opportunity cost of foregone income – although it’s a large cost. There is no cancellation fee, no early withdrawal penalty, and cities can keep revenues already collected. The primary incentive to meet the TDR credit placement milestones is the prospect of higher revenues toward the end of the program.

Consider a hypothetical scenario for illustrative purposes: Puyallup adopts LCLIP and commits to placing 364 credits, or 100% of its allocation. Under the terms of the program the city must place 182 credits by year 10. If, by year nine, the private market has only placed 162 credits, what will happen if it can’t place the remaining 20? Possible outcomes include:

• The city acquires the final 20 credits to close the gap and meet the threshold. The city could hold these credits and re-sell them to developers in future projects to recoup the purchase price.

• The city could approach the county to request flexibility in the threshold if it can demonstrate that there are new construction projects in the pipeline that would drive continued use of TDR or that demand for credits will continue.

• The jurisdictions could end the program. This would be an undesirable outcome for both the city and the county, as both would lose out on the future benefits of revenue and conservation, respectively.

The biggest risk associated with LCLIP is if a city bonds against future revenue from new construction. If the anticipated growth doesn’t materialize, or unexpected factors change demand for growth, the program won’t generate as much revenue as projected. This in itself wouldn’t be a significant problem absent the bond, however the city is responsible for servicing the debt regardless of what revenues the program generates. If the actual revenues are lower than expected then the city is still liable for that obligation. One way to mitigate that risk while still taking advantage of up-front revenue for infrastructure is to bond for an amount that is smaller than the projected revenue to hedge against uncertainty.

Predicting future trends in growth, construction, and the real estate market is difficult, especially across longer timelines. There are many unforeseen factors that could help or hamper a city’s implementation of LCLIP. Part of successful use of the tool is managing for these factors – adjusting TDR exchange rates if demand for growth changes, for example – and knowing that the long timeframe of the program allows for mid-course adjustments to keep the city on track to meet its goals.

ROAD MAP

In order to begin using LCLIP, a city must take a number of steps to set the program in motion. This section outlines – at a high level – the sequence of actions needed to start the program. The final report will cover these steps in greater depth. The goal at this point in the project is to provide an overview of the adoption trajectory and highlight how this final phase

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 20IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

fits into the LCLIP implementation picture.

There are two main elements that a city needs to start LCLIP: a TDR placement mechanism and an adopting ordinance.3

In order to create a TDR placement mechanism the consultant team recommends Puyallup adopt a program based on the framework outlined in this memorandum. General steps include:

• Draft code and policy changes identifying sending areas, creating receiving areas, establishing ex-change rates, and defining an administrative model. A TDR program will typically be a stand-alone chap-ter within the development code and policy chang-es to the Land Use element of the comprehensive plan will address future receiving area creation.

• Confer with Pierce County about an interlocal agreement defining development right transfers.

• Schedule public hearings for planning commis-sion and city council to consider policy and code changes.

The LCLIP adopting ordinance must contain the following components:

• Define the geography in which the city will use the program (the LIPAs), which may not exceed 25% of the city’s assessed value.

• Define the number of TDR credits the city will accept. This amount may be in the range of 73 to 364 credits.

3 From a practical standpoint, cities historically have implemented TDR through a private market using incentives to place credits in new construction, however other options exist for using LCLIP that do not involve the traditional TDR structure. These can include the city buying credits outright, or pursuing a density fee whose proceeds fund TDR acquisition, among other approaches in which the city plays an active role in credit placement. Feedback from city staff and council has indicated a preference for a lighter-touch approach to using TDR, relying on the private market to place credits.

• Identify the public improvements on which the city will spend LCLIP revenue within the program area.

• Provide the date when the use of local property tax allocation revenues will commence and a list of the participating tax districts (city and county).

The consultant team recognizes that Puyallup city council, planning commission, and staff will consider the benefits and choices outlined in this memorandum to inform a decision on whether to proceed with creation of a TDR program and use of LCLIP. Should the city wish to continue with putting one or both of these tools in place, the technical support to help craft the specific language needed is beyond the scope of the current project.

SUMMARY OF FINDINGS

There is a strong case for Puyallup to use LCLIP. The analysis suggests that, even with historic growth rates continuing unchanged, there will be sufficient demand in Puyallup to place all of the city’s TDR credit allocation within the program’s timeframe – provided the incentives and zoning prioritize use of the tool. If growth rates increase in the future, the certainty of credit placement also rises.

A market-driven approach to TDR credit placement should make LCLIP viable.The strongest market for housing development in Puyallup is for single family and medium-density, multifamily construction. Rising construction costs and current multifamily rents make new construction a more challenging economic investment. If the city streamlines its incentive zoning to emphasize use

of TDR in conjunction with implementing 8-year multifamily tax exemption (MFTE), the economic benefits will provide a compelling motivation for the private market to use these tools.

LCLIP revenue can pay for capital facilities that support growth.The range of revenues projected for Puyallup is between $5.2 million and $9.1 million (in nominal terms). A constraint affecting LCLIP’s revenue-generating potential in Pierce County is the lower relative levy rate (as compared to King or Snohomish County). The result of this is lower LCLIP revenue yields adjusted for every dollar of new construction value. Regardless, development brings other, broader tax benefits to the city. First, the city collects retail sales taxes on the construction and retail sales taxes from residents as more and more retail spending migrates to e-commerce. Second, the new construction al lows the city to grow its levy collection more than the statutory limit of 1% (through new construction add-on value). The bottom line is that use of TDR and LCLIP should result in aggregate revenues higher than the projections estimated in this analysis, which are only directly related to LCLIP.

This revenue would otherwise be unavailable to the city and it is highly flexible in nature. While this sum may not single handedly finance a large public improvement, it could play an important role as part of a broader infrastructure funding strategy. Puyallup could leverage it as match for other funding opportunities, for example. One of the top infrastructure needs the city has identified is that of additional stormwater treatment capacity in the South Hill regional growth center. Revenues from LCLIP

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PUYALLUP TDR - LCLIP FINDINGS AND RECOMMENDATIONS 21IV. LAND CONSERVATION AND LOCAL INFRASTRUCTURE PROGRAM (LCLIP)

could play a role in supporting such investments.

PHOTO: Joe Sambataro

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RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF CITY OF PUYALLUP, in support of devoting staff time for the development of City transfer of development rights policies and regulations and developing an Interlocal Agreement with Pierce County, Washington, for transferring working agricultural and forest land development rights.

WHEREAS, the transfer of development rights (TDR) is one tool available to Washington communities to encourage the preservation of working agricultural and forest land while also promoting higher-density infill development within incorporated cities, and this tool is consistent with the Washington State Growth Management Act (GMA), Chapter 36.70A RCW, and is provided for in the Regional Transfer of Development Rights Program, Chapter 43.362 RCW; and

WHEREAS, the Landscape Conservation and Local Infrastructure Program (LCLIP) is one tool available to provide a financial incentive to use TDR by funding infrastructure to support growth associated with TDR credit placement; and

WHEREAS, by harnessing forces in the real estate market, TDR can enable landowners to access the equity from their land without having to convert their land to nonagricultural uses, such as residential or commercial development; and

WHEREAS, to further City goals and policies established in the Land Use Element of the Comprehensive Plan, it is important to preserve working agricultural and forest land; and

WHEREAS, the City currently does not have the policies, codes, administrative procedures, or interlocal agreement required to receive TDR transfers from the County; and

WHEREAS, development of TDR policies and regulations will not diminish the City Council’s authority to regulate land use and development regulations within the City; and

WHEREAS, the City has hired Forterra and ECONorthwest to develop framework recommendations for the establishment of a TDR program that is consistent with the policy priorities of the City Council for conservation, receiving areas, market incentives, and administration, and conduct a feasibility analysis of LCLIP; and

WHEREAS, the City Council considered and provided policy direction on TDR and LCLIP components in February 2018 and February 2019.

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NOW THEREFORE, the City Council of the City of Puyallup, Washington hereby resolves as follows:

Section 1. The City Council supports the development of an interlocal agreement between the City of Puyallup and Pierce County.

Section 2. To facilitate the transfer of regional credits, the City Council will consider the adoption of the Washington State Department of Commerce Interlocal Terms and Conditions Rule by reference, for rural and natural resource land transfer of development rights (TDR) policies and regulations.

Section 3. The City Council directs City Staff to draft TDR policies and regulations designed to enact provisions necessary to enable the City to receive development rights from the Region, consistent with the program recommendations established in Exhibit A.

Section 4. By this Resolution, the City Council states the intent to review and considersaid policies and regulations for adoption of a TDR program and to consider companion adoptionof LCLIP in order to provide financial incentives.

ADOPTED by the City Council of the City of Puyallup, Washington, this day of , 2019.

John PalmerMayor

Approved as to form: Attest:

Joseph N. Beck Mary WinterCity Attorney City Clerk

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Exhibit A

Program Framework: TDR and LCLIP

Summary of TDR program framework

Based on analysis and city input, the City of Puyallup should incorporate the following elements into a transfer of development rights program, as it proceeds with adopting and implementing one:

Conservation priorities Puyallup should make all regional resource lands of long-term commercial significance

eligible for development right transfers into the city’s receiving areas. This includes lands zoned and designated for agriculture and forestry in Pierce, King, and Snohomish Counties. This will meet the criteria for using LCLIP.

Recognizing that the city has specific priorities for conservation that are a subset of the eligible lands, Puyallup wishes to incentivize protection of certain types of lands through calibration of its TDR exchange rate. These particular priorities include:

o Farm land in close proximity to the city, specifically in the Alderton-McMillin and Mid-County Community Plan areas, farmland in the Puyallup Watershed, and local farms that sell produce in the city

o Farm land generally in Pierce County (Agricultural Resource Land)o Forest land generally in Pierce County

Receiving areasPuyallup should designate specific zones within the Downtown and South Hill Regional Growth Centers and additional multi-family zones in the City as receiving areas, within the parameters identified in the subsequent sections discussing LCLIP:

CBD, CBD-Core, UCX, LMX, and RM-Core RM-20 RM-10 Future area-wide rezones or subarea plans

IncentivesWithin the designated receiving areas, streamline the number of incentives available to achieve development bonus to two public benefits:

Affordable housing TDR

This should be established through a prescriptive approach in which a project must provide both incentives to gain bonus density.

TDR incentives should take the form of additional density that is appropriate to the form of the receiving area project. For example, in the RM-10 and RM-20 zones the bonus is additional dwelling units, while in the CBD/core zones the bonus is additional floor area (expressed in square feet).

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A third component, which complements the city’s incentive zoning, is a multifamily tax exemption (MFTE). Puyallup should amend the existing 8-year MFTE program in conjunction with TDR, structuring it so that use of TDR is a condition for projects to access the exemption.

Market mechanismPuyallup should adopt exchange rates as proposed in the Exchange Rate Table (below). These values reflect the conservation priorities articulated by the city. Puyallup should also plan for periodic reviews of the exchange rates as market conditions evolve. Updating them on a regular basis (every 3-5 years, for example) will make the TDR program function more effectively as the exchange rates will more closely reflect the market for growth as circumstances change over time. In respect of the city’s desire to minimize operational complexity of a TDR program, revisions to exchange rates should be made as administrative decisions under planning staff discretion, following the policy direction of city council.

Recommended TDR Exchange Rate Table

Receiving Area Bonus Awarded Sending AreaAdditional Development per Credit

Regional Growth Centers

Floor area (square feet)

Near-city farm 1,300 sf

Countywide farm 1,100 sf

Countywide forest 1,100 sf

Regional (King, Snohomish) 1,300 sf

RM-20 zone Dwelling units

Near-city farm 1 unit

Countywide farm 1 unit

Countywide forest 1 unit

Regional (King, Snohomish) 1 unit

RM-10 zone Dwelling units

Near-city farm 2 units

Countywide farm 2 units

Countywide forest 2 units

Regional (King, Snohomish) 2 units

Administrative modelPuyallup should operate a TDR program using either the private market with public support or public-private partnership model. Both models achieve the city’s stated goals of administrative simplicity. Additional administrative recommendations include exploring an interlocal agreement with Pierce County and adopting the Commerce rule.

Interlocal agreement (ILA)Pierce County currently has an ILA in place with Tacoma to establish the roles and responsibilities between the two jurisdictions for TDR credit transfers from the county into the city. Pierce County may wish to negotiate a similar arrangement with Puyallup.

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Commerce ruleThe Washington Department of Commerce drafted a rule (WAC 365-199) defining terms and conditions for interlocal TDR credit transfers. Jurisdictions that adopt this rule by reference may conduct interlocal credit transfers without needing separate interlocal agreements. This introduces greater efficiency from an administrative standpoint and is advantageous for using TDR within a regional marketplace. Puyallup should adopt this rule as part of a TDR enacting ordinance.

TDR framework conclusions

Transfer of development rights is an innovative land use tool that helps to steer growth into areas where it’s desired and away from areas where it’s not. By itself, TDR doesn’t drive growth. It harnesses the demand for new development to create multiple public benefits for both urban and rural communities. The City of Puyallup expressed a desire to explore a simple, market-based approach to conserving lands important to the community while balancing other priorities. Adoption and implementation of an effective TDR program will give the city the option to pursue LCLIP, an infrastructure financing tool (described in the following section) that can help the city to grow with grace. Recommendations in the framework report lay out a path to streamlining the city’s existing incentive zoning structure that already includes TDR, making successful implementation of the tool a more likely outcome. Taken together, this set of recommendations will position Puyallup to have a functioning TDR program that will provide community benefits as the city gains greater access to regional transit and remains an attractive place to live in close proximity to major employment centers.

Summary of LCLIP findings

There is a strong case for Puyallup to use LCLIP.The analysis suggests that, even with historic growth rates continuing unchanged, there will be sufficient demand in Puyallup to place all of the city’s TDR credit allocation within the program’s timeframe – provided the incentives and zoning prioritize use of the tool. If growth rates increase in the future, the certainty of credit placement also rises.

A market-driven approach to TDR credit placement should make LCLIP viable.The strongest market for housing development in Puyallup is for single family and medium-density, multifamily construction. Rising construction costs and current multifamily rents make new construction a more challenging economic investment. If the city streamlines its incentive zoning to emphasize use of TDR in conjunction with implementing 8-year multifamily tax exemption (MFTE), the economic benefits will provide a compelling motivation for the private market to use these tools.

LCLIP revenue can pay for capital facilities that support growth.The range of revenues projected for Puyallup is between $5.2 million and $9.1 million (in nominal terms). A constraint affecting LCLIP’s revenue-generating potential in Pierce County is the lower relative levy rate (as compared to King or Snohomish County). The result of this is lower LCLIP revenue yields adjusted for every dollar of new construction value. Regardless, development brings other, broader tax benefits to the city. First, the city collects retail sales taxes on the construction and retail sales taxes from residents as more and more retail spending migrates to e-

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commerce. Second, the new construction allows the city to grow its levy collection more than the statutory limit of 1% (through new construction add-on value). The bottom line is that use of TDR and LCLIP should result in aggregate revenues higher than the projections estimated in this analysis, which are only directly related to LCLIP.

This revenue would otherwise be unavailable to the city and it is highly flexible in nature. While this sum may not single handedly finance a large public improvement, it could play an important role as part of a broader infrastructure funding strategy. Puyallup could leverage it as match for other funding opportunities, for example. One of the top infrastructure needs the city has identified is that of additional stormwater treatment capacity in the South Hill regional growth center. Revenues from LCLIP could play a role in supporting such investments.

Conclusion

As Puyallup continues to grow, the use of transfer of development rights and LCLIP are viable opportunities to help the city achieve its goals for growth management, conservation, placemaking, and funding new infrastructure investments. The analysis of potential LCLIP scenarios shows that the program could generate between $5.1 and $9.2 million for the city and that future growth should allow Puyallup to realize the full benefits of the program. The adoption of LCLIP would create additional value and expand the city’s capacity to make public improvements that support growth while also resulting in thousands of acres of resource land conservation.

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Conservation and infrastructure in Puyallup

Puyallup City Council

November 19, 2019

Presentation for:

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OVERVIEW

• Objectives

• TDR/LCLIP recap

• Framework recommendations

• Infrastructure financing

recommendations

• Questions

• Direction

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TDR RECAP

• Real estate tool

• Gives landowners choices

• Can sell the development

potential from property to a

developer who can achieve

higher density in an area

where it’s desired

• 100% voluntary, market-

based, respects private

property rights

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LCLIP

City retains a portion of county’s

share of property tax revenue

on new construction

City commits to accepting TDR

credits

Puyallup: 73 to 364 credits

Program runs up to 25 years

Time

Increment

Base Assessed Value

Incremental Assessed Value

$

Ass

ess

ed

Val

ue

LCLIP start LCLIP end(25 years later)

TDR + TIF = LCLIP

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LCLIP

City retains a portion of county’s

share of property tax revenue

on new construction

City commits to accepting TDR

credits

Puyallup: 73 to 364 credits

Program runs up to 25 years

WA State Distribution of Property Taxes (2015)

Schools (state)20%

Cities and Towns13%

Counties16%

Local Taxing Districts

15%

Schools (local)36%

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LCLIP

City can spend revenue on

public improvements.

Infrastructure can include parks,

transportation, streetscapes,

utilities, stormwater, security,

maintenance.

Works with LIFT

Schools (state)

Cities

CountiesLocal

Taxing Districts

Schools (local)

New Property Tax Revenues

Counties retain at least 25% of new revenues

Cities can retain up to 75% of new county property tax revenues accruing from new development in a defined area

Schools (state)

Cities

County

Local Taxing District

s

Schools (local)

City Tax Revenue Growth with LCLIP

City Tax Revenue Growth without LCLIP

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TDR FRAMEWORK

Conservation priorities

Receiving areas

Incentives

Exchange rates

Administration

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TDR FRAMEWORK

Conservation priorities

1. Farm lands close to city

2. Countywide farm lands

3. Countywide forest

4. Regional lands (LCLIP)

Recap in-city conservation

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TDR FRAMEWORK

Receiving areas

Desired growth, infrastructure

needs

1. Regional growth centers

2. RM-10, RM-20 zones

3. Future upzones

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TDR FRAMEWORK

Incentives

RM zones: additional units

RGC zones:

Additional height expressed as

floor area

Streamline bonus choices

All: multifamily tax exemption 112

TDR FRAMEWORK

Exchange rates

Function – normalize values of

additional development across

the landscape

Recommended exchange rates

reflect council’s conservation

priorities

Values reflect different prices 113

TDR FRAMEWORK

Administration

Goals:

Simplicity, light touch, scalable

Private market with public

support

Public-private partnership

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LCLIP FINDINGS

• LCLIP will work

• Risk issues

• With TDR recommendations,

market will place all 364

credits

• Revenue projections:

• $5.2 M – current growth

• $9.1M – increased growth

• Geography as shown

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LCLIP FINDINGS

Strategy

Pursue TDR framework now

Set conditions for adopting LCLIP

Prepare LCLIP package

Adopt LCLIP when market

conditions are ripe

Time

Increment

Base Assessed Value

Incremental Assessed Value

$

Ass

ess

ed

Val

ue

LCLIP start LCLIP end(25 years later)

TDR + TIF = LCLIP

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REQUESTED COUNCIL ACTION

• Approve a resolution that directs staff

to draft TDR policies & regulations

• Program based on recommendations

outlined in framework report

• Consider companion adoption of LCLIP

when market conditions are in place

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QUESTIONS

Contact:

Nick Bratton

nbratton@forterra.org

206-905-6941

Morgan Shook

mshook@econnw.com

206-388-0082

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