Item A: Adoption of Ordinance on Low-Income Housing and Adoption of Resolution 5028 on Standards for Low-Income Housing Applications

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The Oregon Legislature extended the sunset for both the low-income housing property tax exemption annual renewal program and the 20-year low-income rental housing property tax exemption program by another 10 years to 2014 and 2020, respectively. In order to continue these programs, current Eugene Code, 1971 must be amended to reflect changes in state law. Resolution - ORS 307.521(3) provides that local jurisdictions adopt standards and guidelines establishing policy governing basic requirements for approving low-income rental housing tax exemption applications. In accordance with that provision, on February 12, 1990, Resolution No. 4168 was adopted establishing Standards and Guidelines for processing such applications. Resolution No. 4168 has subsequently been amended by Resolution Nos. 4327, 4418 and 4623. By adopting the proposed ordinance, the City Council will amend Sections 2.938, 2.939 and 2.940 of the Eugene Code, 1971. To bring those sections into conformity with amendments to the state statutes, revisions to the Standards and Guidelines are necessary in order to ensure compliance with state law and conformity with Sections 2.937 to 2.940 of the Eugene Code, 1971. Changes to be Made Eligible tax years – Subsection (2) of Section 2.916 and subsection (2) of Section 2.920 of the Eugene Code, 1971, need to be amended to extend the tax years in which applicants are eligible to receive an exemption. If approved, applicants may apply for and receive an exemption, if eligible, for tax years beginning on or after July 1, 1994, and before July 1, 2014. ORS and Eugene Code References – Subsection (1)(g) of Section 2.938, (2)(h) and (3)(d) of Section 2.939 of the Eugene Code, 1971, need to be amended to reflect changes is referenced sections of the ORS and Eugene Code, 1971. Eligible years to apply and construction deadline – Subsection (3)(c) of Section 2.939 and (1)(a) and (4) of Section 2.940 of the Eugene Code, 1971, need to be amended to reflect the extended date by which an application can be submitted and the date by which construction must be completed. If approved, each date is extended to on or before January 1, 2020. Several of the properties initially granted 20-year low-income housing property tax exemptions are coming to the end of their exemption period. The proposed ordinance would allow owners of such properties to reapply for this program and effectively extend their commitment to providing affordable housing for another 20 years. Subsection (5) of Section 2.940 of the Eugene Code, 1971, is amended to allow recipients to reapply for the property tax exemption after the initial 20 year period has expired. Program Impact Since 1992, Eugene has approved 22 property tax exemptions for low-income developments totaling over 1,000 housing units (Attachment A). The City and other local taxing districts forgo revenue when property is exempted from taxes. A property tax exemption plays a significant role in reducing rents for low- and very-low income residents of Eugene. The benefit of each exemption varies based on development size and appraised tax value, however, estimates suggest the rent reduction amounts to approximately $100 or more per month per unit. This approximation is based on an average tax savings of between $1million and $2.5million dollars per development over the life of the exemption. With commitment of local subsidies, including continued support from the City Council in the form of property tax exemptions, developers have successfully leveraged highly competitive state and federal \\Cesrv500\cc support\CMO\2011 Council Agendas\M110413\S110413A.doc