Item C: Multi Unit Property Tax Exemption Program

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Multi-Unit Property Tax Exemption Program Meeting Date: October 22, 2007 Agenda Item Number: C Department: Planning and Development Staff Contact: Richie Weinman www.eugene-or.gov Contact Telephone Number: 682-5533 ISSUE STATEMENT The Mayor and City Council requested a work session to discuss the provisions and benefits of the Multi- Unit Property Tax Exemption Program (MUPTE), Section 2.945 of the Eugene Code, 1971. BACKGROUND The MUPTE program was adopted in order to encourage new, higher-quality housing in the core area. To qualify, developments must be five units or more. The program enables a 10-year property tax exemption on housing improvements only; the land and any non-housing improvements continue to be taxed. The exemption applies to taxes owed to all jurisdictions because School District 4J also formally accepted the provisions. This is possible under state law because Eugene and 4J together collect over 50 percent of property taxes. Each application for an exemption must be approved by the council on a case by case basis. The state enabling legislation sunsets in 2012 unless extended during a future legislative session. Council Action History The City Council has a nearly 30-year history of approving tax exemptions under this program. Sixteen applications have been submitted and the council approved 15(Attachment B). Of those, the MUPTE has expired on 11 of the developments. Ten are now taxed and one, Lawrence Court, is operated as public- purpose, tax-exempt, low-income housing. The remaining four are still in their MUPTE exemption period. In 1971, the City of Eugene adopted the provisions of this program, which is enabled by state statute. The state statute originally was limited to a city’s core area but many years ago the legislation was expanded to also include transit-oriented districts. Portland and surrounding counties have used the program to encourage housing along the MAX light rail line. In Portland, MUPTE is commonly referred to as the New Multi-Unit Housing (NMUH) Tax Exemption. In 1996, the council placed a moratorium on accepting MUPTE applications in order to redesign the program and clarify the benefits to the community. Soon thereafter, Measure 47 (a property tax limitation and redesign) was adopted by Oregon voters. The council ultimately debated and adopted a redesigned program in October 1996. However, due to the uncertainty around the provisions of Measure 47 (and then Measure 50), the ordinance that placed a moratorium on new applications was kept in place. F:\CMO\2007 Council Agendas\M071022\S071022C.doc