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ORDINANCE NO. :3 ,
AN ORDINANCE of the City of Port Angeles, Washington, Creating
Property Tax Exemptions for Multi -Family Housing.
THE CITY COUNCIL OF PORT ANGELES, WASHINGTON, DO ORDAIN AS
FOLLOWS:
Section 1. A new Chapter 46, Property Tax Exemptions for Multi -Family Housing, is
hereby added to Title 17 to read as follows:
CHAPTER 17.46 - PROPERTY TAX EXEMPTIONS FOR MULTI -FAMILY HOUSING
17.46.010
— Findings and Purpose.
17.46.020
— Definitions.
17.46.030
— Residential Targeted Area Designation and Standards.
17.46.040
— Tax Exemption Terms and Project Eligibility.
17.46.050
— Application Procedure.
17.46.060
— Extension of Conditional Certificate
17.46.070 — Final Certificate — Application — Issuance — Denial and Appeal.
17.46.080 — Annual Compliance Review.
17.46.090 — Cancellation of Tax Exemption — Appeal
17.46. 100 — Conflict of Provisions
17.46.010 Findings and Purpose.
A. Findings. The Council of the City of Port Angeles finds that:
1. Within Port Angeles there are insufficient housing opportunities, including affordable and
multi -family housing opportunities; and
2. Adoption of this ordinance will help to increase and improve residential opportunities,
including affordable and multi -family housing opportunities, within the City of Port Angeles.
B. Purpose. The purposes of this chapter are to:
1. Encourage more multi -family housing opportunities, including affordable housing
opportunities, within the City;
2. Stimulate the construction of new multi -family housing and the rehabilitation of existing
vacant and underutilized buildings for multi -family housing opportunities;
3. Increase the supply of mixed -income multi -family housing opportunities within the City;
4. Promote community development, neighborhood revitalization, and availability of
affordable housing; and
5. Encourage additional housing density in areas that are consistent with planning for public
transit systems.
C. Any one or a combination of these purposes may be furthered by the designation of
residential target areas under this chapter.
17.46.020 Definitions.
The following definitions shall apply to this chapter:
1. "Affordable Housing," means residential housing, either rental or owner -occupied, the
monthly cost of which, including utilities, other than telephone, and any mandatory recurring fees
required as a condition of occupancy for the unit do not exceed thirty percent of the household's
monthly income.
2. "Assessor" means the Clallam County Assessor.
3. "Building codes" means the City building and construction codes as set forth in Title 14
PAMC.
4. "City" means the City of Port Angeles.
5. "Council" means the Port Angeles City Council.
6. "Director" means the City's Director of the Community and Economic Development
Department and any authorized designee.
7. "Household" means a single person, family or unrelated persons living together.
8. "Local housing standards" means the International Property Maintenance Code as adopted
by the City of Port Angeles.
9. "Low-income household" means a single person, family, or unrelated persons living
together whose adjusted income is at or below 80 percent of the median family income adjusted
for family size, for Clallam County, as reported by the United States Department of Housing and
Urban Development.
10. "Growth management act" means chapter 36.70A RCW.
11. "Market Rate Exemption Option" means an eight (8) year property tax exemption with no
income or rent requirements. Properties are secured with a development agreement outlining
requirements such as enhanced design, public art, additional parking or structured parking,
enhanced landscaping, enhanced infrastructure (e.g. wider sidewalks, undergrounding utilities,
stormwater control), homeownership component, energy efficiency, consistency with subarea
plan.
12. "Moderate -income household" means a single person, family, or unrelated persons living
together whose adjusted income is more than 80 percent of the median family income adjusted for
family size, for Clallam County, as reported by the United States Department of Housing and
Urban Development.
13. "Multi -family housing" means a building having four or more dwelling units designed for
permanent residential occupancy resulting from new construction or rehabilitation or conversion
of vacant, underutilized, or substandard buildings.
14. "Owner" means the property owner of record as filed with the Clallam County Assessor's
Office.
15. "Permanent residential occupancy" means multi -family housing that provides either rental
or owner occupancy for a period of at least one month. This excludes hotels and motels that
predominately offer rental accommodation on a daily or weekly basis.
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16. "Rehabilitation improvements" means modifications to existing structures that are vacant
for 12 months or longer, or modification to existing occupied structures which convert non-
residential space to residential space and/or increase the number of multi -family housing units.
17. "Residential targeted area," also "residential target area," means an area within the City's
urban governmental center that has been designated by the Council as lacking sufficient, available,
desirable, and convenient residential housing to meet the needs of the public.
18. "Substantial compliance" means compliance with all local building, fire and zoning code
requirements, which are typically required for rehabilitation as opposed to new construction.
19. "Urban governmental center" is an identifiable district containing several business
establishments, adequate public facilities, and a mixture of uses and activities where residents may
obtain a variety of products and services. For Port Angeles, the Urban governmental center
includes the entire incorporated area of the City.
17.46.030 — Residential Targeted Area Standards.
A. Criteria. Following public notice and a public hearing, the Council may, in its sole
discretion, designate one or more residential target areas. Each designated target area must meet
the following criteria, as determined by the Council:
1. The target area is within an urban governmental center;
2. The target area lacks sufficient available, desirable, and convenient residential housing,
including multi -family and affordable housing, to meet the needs of the public who would be likely
to live in the urban governmental center if affordable, desirable, attractive, and livable residences
were available;
3. The providing additional housing opportunity in the target area will assist in achieving one
or more of the following purposes:
a. Encourage increased residential opportunities within the target area, including mixed
income and affordable housing opportunities; or
b. Stimulate the construction of new multi -family housing and/or the rehabilitation of
existing vacant and underutilized buildings for multi -family housing; or
c. Where appropriate, stimulate the construction, rehabilitation or conversion of existing
vacant and underutilized multi -family rental units to owner occupied multi -family
housing as such property redevelops.
4. In designating a residential target area, the Council may also consider other factors,
including, but not limited to: whether additional housing, including affordable housing units, in
the target area will attract and maintain an increase in the number of permanent residents; whether
an increased permanent residential population in the residential targeted area will help to achieve
the goals and policies described in the City's comprehensive plan or mandated by the Growth
Management Act under chapter 36.70A.020 RCW; whether encouraging additional housing in the
target area is consistent with public transportation plans; and whether additional housing may
contribute to revitalization of distressed neighborhoods or areas within the target area.
5. When designating a residential target area, the Council shall give notice of a hearing to be
held on the matter and that notice shall be published once each week for two consecutive weeks,
not less than seven days nor more than 30 days before the date of the hearing. The notice must
state the time, date, place and purpose of the hearing and generally identify the area proposed to
be designated.
A. Target Area Standards and Guidelines. For each designated residential target area, the
Council shall adopt and implement basic requirements for both new construction and
rehabilitation, including the application process and procedures. The Council may also adopt
guidelines including the following:
1. Requirements that address demolition of existing structures and site utilization;
2. Building requirements that may include elements addressing parking, building height,
residential density, access to alternative transportation facilities, environmental impact, public
benefit features, compatibility with the surrounding properties, and other site layout and design
amenities intended to enhance the livability of the residential target area;
3. More stringent income eligibility, rent, or sale price limits, including limits that apply to a
higher percentage of units than the minimum conditions under PAMC 17.46.100.
The required amenities shall be proportional to the size of the proposed project and the tax benefit
to be obtained.
B. Designated Residential Target Areas. The following areas, as depicted in Figure 1 and the
City's adopted map known as "Residential Targeted Areas," have been designated as residential
target areas in the City by Resolution adopted by the City Council on January 15, 2019.
Figure 1
(See attached map)
17.46.040 Tax Exemption Terms and Project Eligibility.
A. Duration of Exemption. For properties for which applications are submitted under Chapter
84.14 RCW, the value of improvements qualifying under this chapter is exempt from ad valorem
property taxation as follows:
1. For eight successive years beginning January 1st of the year immediately following the
calendar year of issuance of the certificate, if the property otherwise qualifies for the exemption
under Chapter 84.14 RCW and meets the conditions in this subsection. For the property to qualify
for the 8 -year exemption under this subsection, the applicant may choose a market -rate option or
affordable option as set forth below:
a. Market -Rate. In the case of projects intended for market -rate multi -family housing,
applicants shall enter into a development agreement outlining requirements such as
enhanced design; public art; additional parking, structured parking, or parking to
address interests other than automobiles, such as for instance bicycle parking;
enhanced landscaping; enhanced infrastructure (e.g. wider sidewalks, undergrounding
utilities, stormwater control); home ownership component; energy efficiency; and
consistency with subarea plans.
b. Affordable. In the case of projects intended for affordable multi -family housing,
applicants must commit to renting or selling at least 20 percent of the multi -family units
as affordable housing to moderate -income households.
2. For 12 successive years beginning January 1 st of the year immediately following the
calendar year of issuance of the certificate, if the property otherwise qualifies for the exemption
under Chapter 84.14 RCW and meets the conditions in this subsection. For the property to qualify
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for the 12 -year exemption under this subsection, the applicant must commit to renting or selling at
least 20 percent of the multi -unit housing units as affordable to low and moderate income
households as set forth below:
a. Owner Occupancy. In the case of projects intended exclusively for owner occupancy,
the minimum requirement of this subsection may be satisfied solely through housing
affordable to moderate -income households during the authorized exemption period.
b. Rental Occupancy. In the case of projects intended for rental occupancy, the minimum
requirement of this subsection must be satisfied based on affordability requirements
outlined in PAMC 17.46.040.C(8) .
B. Limits on Exemption. The exemption does not apply to the value of land or to the value of
non -housing related improvements not qualifying under this chapter, nor does the exemption apply
to increases in assessed valuation of land and non -qualifying improvements, or to increases made
by lawful order of the Clallam County board of equalization, the Washington State department of
revenue, state board of tax appeals, or Clallam County, to a class of property throughout the county
or a specific area of the county to achieve uniformity of assessment or appraisal as required by
law. In the case of rehabilitation of existing buildings, the exemption does not include the value of
improvements constructed prior to submission of the completed application as required under
PAMC 17.46.050. The incentive provided by this chapter is in addition to any other incentives,
tax credits, grants, or other incentives provided by law.
C. Project Eligibility. To be eligible for exemption from property taxation, the property must
satisfy all of the following requirements:
1. Applications. The Director shall have exclusive authority to determine whether an
application is complete. Only complete applications are eligible to be considered for the tax
exemptions authorized by this chapter.
2. Size. The project must include multi -family housing within a residential structure or as part
of a mixed-use development. This requirement can be satisfied either by constructing a minimum
of four new units in a residential structure, or constructing or converting at least four additional
multi -family units to existing occupied multi -family housing. Existing multi -family housing that
has been vacant for 12 months or more does not have to provide additional units so long as the
project provides for occupancy at least four units of new, converted, or rehabilitated multi -family
housing.
3. Tenant Displacement Prohibited: The project must not displace existing residential tenants
of structures that are proposed for redevelopment. Existing dwelling units proposed for
rehabilitation must have been unoccupied for a minimum of 12 months prior to submission of
application and must have two or more violations of the applicable City building codes.
Applications for new construction cannot be submitted for vacant property upon which an
occupied residential rental structure previously stood, unless a minimum of 12 months has elapsed
from the time of most recent occupancy.
4. Permanent Residential Housing. At least 50 percent of the space designated for multi-
family housing must be provided for permanent residential occupancy, as defined in PAMC
17.46.020.
5. Proposed Completion Date. New construction multi -unit housing and rehabilitation
improvements must be scheduled to be completed within three years from the date of approval of
the application.
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6. Compliance with Guidelines and Standards. The project shall be designed to comply with
the City's comprehensive plan, building, housing, and zoning codes, the standards and guidelines
adopted by the Council for the residential target area, and with any other applicable regulations in
effect at the time the application is approved.
7. Historic Resource Protection.
a. Applications for new construction that require the demolition of structures listed in the
local, state or national register, or identified as contributing to an historic district in the
City's historic property survey are not eligible for the multifamily tax exemption.
8. Affordability. Projects intended for rental occupancy seeking a 12 -year tax exemption shall
provide 20 percent of the multi -unit housing as follows:
a. Affordable housing units having one or fewer bedrooms shall be available to
households whose adjusted income is at or below 60 percent of the median family
income adjusted for family size for Clallam County.
b. The affordable housing requirement can be met, either partially or fully, for any units
with two or more bedrooms that are available to households whose adjusted income is
at or below 80 percent of median family income adjusted for family size for Clallam
County.
9. Contract. The applicant must enter into a contract with the City, approved by the Director,
under which the applicant agrees to the implementation of the development on terms and
conditions consistent with this chapter and chapter 84.14 RCW and satisfactory to the Director.
17.46.050 Application Procedure.
A. The owner of property applying for exemption under this chapter shall submit an
application to the Director, on a form established by the Director. The owner shall verify the
application by oath or affirmation. The application shall contain such information as the Director
may deem necessary or useful, and shall include at a minimum:
1. Information setting forth the grounds supporting the requested exemption including
information indicated on the application form.
2. A brief written description of the project and preliminary schematic site and floor plans of
the multi -family units and the structure(s) in which they are proposed to be located; and
3. A statement from the owner acknowledging the potential tax liability when the property
ceases to be eligible for exemption under this chapter.
B. In the case of rehabilitation or where demolition or new construction is required, the owner
shall secure from the City, before commencement of rehabilitation improvements or new
construction, verification of property noncompliance with applicable building and housing codes.
C. At the time of submitting an application under this section, the applicant shall pay to the
City an initial application fee in the amount of $1,000.00.
D. The Director shall notify the applicant within thirty days of the application being filed if
the Director determines that an application is not complete and shall identify what additional
information is required before the application will be complete. Within thirty days of receiving
additional information, the Director shall notify the applicant in writing if the Director determines
that the application is still not complete, and what additional information is necessary.
E. An application shall be deemed to be complete if the Director does not notify the applicant
in writing by the deadlines in this section that the application is incomplete; however, a
determination of completeness does not preclude the Director from requiring additional
information during the review process if more information is needed to evaluate the application
according to the criteria in this chapter.
F. Application Review and Issuance of Conditional Certificate. The Director may certify as
eligible an application if the Director finds that:
1. A minimum of four new units are being constructed, or in the case of occupied
rehabilitation or conversion, a minimum of four additional multi -family units are being developed;
2. If applicable, the proposed multi -unit housing project meets the affordable housing
requirements as described in RCW 84.14.040 A;
3. The proposed project is, or will be at the time of completion, in conformance with all local
laws and regulations that apply at the time the application is approved;
4. The owner has complied with all standards and guidelines adopted by the City under this
chapter; and
5. The site is located in a residential targeted area of an urban center that has been designated
in accordance with procedures and guidelines indicated in RCW 84.14.040; and
6. That the proposed project otherwise complies with the requirements of this chapter and
chapter 84.14 RCW.
G. A decision to approve or deny an application shall be made within 90 days of receipt of a
complete application.
1. Approval. If an application is conditionally approved, the applicant shall enter into a
contract with the city regarding the terms and conditions of the project as provided in PAMC
17.47.040 A. 9. The Director shall issue a conditional certificate of acceptance of tax exemption.
The conditional certificate expires three years from the date of approval unless an extension is
granted as provided in this chapter.
2. Denial. The Director shall state in writing the reasons for denial and shall send notice to
the applicant at the applicant's last known address within 10 days of the denial. The applicant may
appeal the Director's decision to the hearing examiner. If so, the city's hearings examiner shall
conduct the appeal hearing and grant or deny the appeal within 30 days of receipt of notice. The
appeal before the Hearings Examiner will be based upon the record before the Director, and the
Director's decision will be upheld unless the applicant can show that there is no substantial
evidence on the record to support the Director's decision.
17.46.060 Extension of Conditional Certificate. The conditional certificate may be extended
beyond its initial three year term by the Director for a period not to exceed 24 consecutive months.
The applicant must submit a written request stating the grounds for the extension, accompanied by
any processing fee in the amount of $500.00. No conditional certificate shall be eligible for more
than one such extension. An extension may be granted if the Director determines that:
1. The anticipated failure to complete construction or rehabilitation within the required time
period is due to circumstances beyond the control of the owner;
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2. The owner has been acting and could reasonably be expected to continue to act in good
faith and with due diligence;
3. The project will comply with the city's development regulations, building, housing, and
zoning codes, and any other applicable regulations in effect at the time the extension of the
conditional certificate is granted; and
4. All the conditions of the original contract between the applicant and the city will be
satisfied upon completion of the project.
17.46.070 Final Certificate — Application — Issuance — Denial and Appeal.
A. Upon completion of the rehabilitation improvements or new construction as provided in
the contract between the applicant and the City, and upon issuance of a temporary certificate of
occupancy, or a permanent certificate of occupancy if no temporary certificate is issued, the
applicant may request a final certificate of tax exemption. The applicant shall file with the Director
such information as the Director may deem necessary or useful to evaluate eligibility for the final
certificate, and shall include:
1. A statement of expenditures made with respect to each multi -family housing unit and the
total expenditures made with respect to the entire property;
2. A description of the completed work with evidence of final city inspection of all work
completed and a statement of qualification for the exemption;
3. A statement that the work was completed within the required three-year period or any
authorized extension; and
4. If applicable, a statement that the project meets the affordable housing requirements as
described in this chapter.
B. Issuance of Final Certificate. Within thirty days of receipt of all materials required for a
final certificate, the Director shall determine whether the completed work, and the affordability of
the units, is consistent with the contract between the City and owner and is qualified for exemption
under this chapter.
1. If the director determines that the project has been completed in accordance with the
contract between the applicant and the City and the requirements of this chapter, including, if
applicable, affordable housing requirements, the City shall file a final certificate of tax exemption
with the assessor within ten days of the expiration of the thirty -day period provided under
subsection (C) of this section.
2. The Director is authorized to require the applicant or owner to record, in the real property
records of the Clallam county assessor, the contract with the City required under PAMC
17.46.040(A)8, and such other document(s) as will identify such terms and conditions of eligibility
for exemption under this chapter as the Director deems appropriate for recording.
3. The Director shall notify the applicant in writing that the City will not file a final certificate
if the Director determines that the project was not completed within the required three-year period
or any approved extension, was not completed in accordance with the contract between the
applicant and the City and the requirements of this chapter, if applicable, that the affordable
housing requirements as described this chapter were not met, or if the owner's property is otherwise
not qualified.
8
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1001,
C. Within 14 days of receipt of the Director's denial of a final certificate, the applicant may
file an appeal with the hearing examiner, as provided in PAMC 2.56.050(B). The applicant may
appeal the hearing examiner's decision to Clallam County superior court, if the appeal is filed
within 30 days of receiving notice of the hearing examiner's decision.
17.46.080 Annual Compliance Review.
A. Within 30 days after the first anniversary of the date of filing the final certificate of tax
exemption and each year thereafter, for the tax exemption period, the property owner shall file a
notarized declaration with the Director indicating the following:
1. A statement of occupancy and vacancy of the multi -family units during the previous year;
and
2. A certification that the property has not changed use and, if applicable, that the property
has been in compliance with the affordable housing requirements of this chapter since the date of
filing of the final certificate of tax exemption, and continues to be in compliance with the contract
with the City and the requirements of this chapter; and
3. A description of any subsequent improvements or changes to the property; and
4. A report on affordable housing utilization, if applicable, including:
a. The total monthly rent or total sale amount of each unit produced;
b. The income of each renter household at the time of initial occupancy and the income of
each initial purchaser of owner -occupied units at the time of purchase for each of the
units receiving a tax exemption; and
c. Any additional information requested by the city in regards to the units receiving a tax
exemption.
B. City staff shall have the right to conduct on-site verification of the declaration.
C. Failure to submit the annual declaration may result in the tax exemption being canceled.
D. The City shall report annually by December 31 st of each year to the Washington State
Department of Commerce as required by RCW 84.14.100(2).
17.46.090 Cancellation of Tax Exemption — Appeal
A. If at any time the Director determines that the property no longer complies with the terms
of the contract or with the requirements of this chapter, or for any reason no longer qualifies for
the tax exemption, the tax exemption shall be canceled and additional taxes, interest and penalty
imposed pursuant to state law.
B. Upon determining that a tax exemption shall be canceled, the Director shall notify the
property owner by certified mail, return receipt requested.
1. The property owner may appeal the determination by filing a notice of appeal with the
hearings examiner within thirty days, specifying the factual and legal basis for the appeal.
2. The hearing examiner will conduct a hearing at which all affected parties may be heard and
all competent evidence received.
3. The hearing examiner will affirm, modify or repeal the decision to cancel the exemption
based on the evidence received. The hearing examiner shall give substantial weight to the
Director's decision and the burden of overcoming that weight shall be upon the appellant.
0
4. An aggrieved party may appeal the hearing examiner's decision to the Clallam County
Superior Court as provided in RCW 34.05.5 10 through RCW 34.05.598.
C. If the property owner sells the affordable multi -family housing units, the new property
owner shall file with the City a report indicating that the unit was purchased at a value affordable
to low and moderate income persons, to continue to comply with the twenty percent requirement
of RCW 84.14.020(1)(ii)(B).
D. If the owner intends to convert the multi -family housing to another use, or if applicable, if
the owner intends to discontinue compliance with the affordable housing requirements as
described in RCW 84.14.020(1)(ii)(B) or any other condition to exemption, the owner must notify
the Director and the Assessor within sixty days of the change in use or intended discontinuance.
If after the issuance of a final tax certificate an owner -occupied multi -family housing unit that
initially qualified as a low or moderate -income unit is sold and no longer qualifies as an affordable
housing unit, that unit shall lose its tax exempt status and all prior exempt taxes and penalties and
interest shall become a lien on the property per RCW 84.14.110 and the subsequent owner shall
no longer qualify for the tax exemption. The remaining units' tax exemption status shall not be
affected.
E. The Director may adopt administrative policies and procedures which are not inconsistent
the provisions of this chapter and chapter 84.14 RCW, to implement the reporting requirement for
this section.
17.46. 100 Tax Exemption Program Review
A. Not later than the last day of January, 2022, the Director shall report to the Council about
the utilization and consequences of the tax exemption created by this Chapter. Such report shall
include the number of applications filed, the number of tax exemptions granted, the number of
housing units created or rehabilitated, and any facts that indicate whether the tax exemption
program created by this Chapter should, or should not, continue to be available past the last day of
February, 2022, as now provided in section 17.46.040.C.1.
B. If and when 5 projects have been granted tax exemptions under this Chapter, the Director
shall report to the Council about the utilization and consequences of the tax exemption created by
this Chapter. Such report shall include the number of applications filed, the number of projects
successfully completed, the number of housing units created or rehabilitated, and any additional
facts that indicate whether the tax exemption program created by this Chapter is achieving any of
the purposes identified in section 17.46.010.B.
17.47.110 Conflict of Provisions.
If any provision of this chapter conflicts with any provision of Chapter 84.14 RCW, the provisions
of chapter 84.14 RCW shall apply as if set forth in this chapter.
Section 2. This ordinance, being an exercise of a power specifically delegated to the City
legislative body, is not subject to referendum.
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Section 3. This ordinance shall take effect five (5) days after passage and publication of an
approved summary thereof consisting of the title or on March 1, 2019, whichever is later.
PASSED by the City Council of the City of Port Angeles at a regular meeting of said
Council held on the Stn day of February, 2019.
ATTEST:
ari Martinez-Bai Clerk
PUBLISHED:Q, .0 2019
(By Summary)
roo
Sissi Bruch, Mayor
APP ' VEDAS FORM:
William E. Bloor, City Attorney
11
Summary of Ordinances Adopted by the Port Angeles City Council on February 5, 2019
ORDINANCE NO. 3618
AN ORDINANCE of the City of Port Angeles, Washington, Creating Property Tax Exemptions for
Multi -Family Housing.
This ordinance is not subject to referendum and shall take effect 5 days after passage and
publication of an approved summary thereof consisting of the title or on March 1, 2019,
whichever is later.
The full texts of Ordinances are available at City Hall in the City Clerk's office, on the City's
website at ww-w.cityofpa.us, or will be mailed upon request. Office hours are Monday through
Friday 8:00 a.m. to 5:00 p.m.
Kari Martinez -Bailey
City Clerk
Published by summary: Sunday, February 10, 2019
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This map is not intended to he used as a legal description.
This map/drawing is produced by the City ofPortAngeles for its own use and purposes.
Any other use ofthis map/drawing shall not he the responsihility ofthe City.
S. ArelmblMisel&11 Mu In Unit Dwething Tax Exemption Map.al