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housing units from the fee is that these units will generally only be built with City support and funding; charging these units the fee means either raising the rents or seeking additional subsidy, including from the City. The tenants cannot afford higher rents, even a small amount, and these units are typically owned by nonprofits or the housing authority, so there is no owner profit from which to pay the fee. In a sense, the City would be charging itself the fee. 4. Why the Draft Proposed Fee Exemptions Should Be Amended: The amendments suggested in section 2 above reflect the following concerns, identified when several members of the HPB and several of our local housing nonprofits and the housing authority met with City staff in late August to review the proposal. a. The proposed first exemption is apparently intended to cover affordable housing projects built with federal low income housing tax credits. We agree that this is a good idea. However, the FLIHTC is limited by federal law to projects that house people at 60 percent of median income, not 50 percent. We propose amending exemption (2)(a) to reflect this. While HPB-sponsored projects typically house people whose incomes are below 50 percent of median, generally closer to 30 or 40 percent, imposing a 50 percent median income criteria risks conflicts with the federal rules, and complicates an already over-complicated subsidy program. b. The proposed second exemption is apparently intended to cover Section 8 voucher tenancies. The HPB recommends against this exemption. A Section 8 voucher is a rent subsidy paid by the federal government through the housing authority to - typically - a private landlord. The rationale for exempting affordable housing units stated above does not apply to these private landlords. Moreover, Section 8 tenants can and do move, and subsequent tenants may well not have a Section 8 voucher; this raises significant administrative issues regarding tracking when these units should be exempt from the fee. In addition, Congress and the Bush administration have recently proposed significant changes to the Section 8 program, and it is possible that future changes could include deletion of the current annual inspection requirement. c. The proposed third exemption refers to senior and disabled units so designated by a public agency. No public agency currently "designates" such units, so this is unworkable. In addition, this exemption does not require that the residents of these units be low income, which again conflicts with the rationale stated above for fee exemption. d. Our proposed new second exemption takes advantage of existing City (EC 2.910 et seq.) and State (ORS 307.092 for housing authority owned properties) property tax exemptions for low income housing. These exemptions are limited to rental units for low income people and the units are easily identified. f/jhv/hpb.memo, council.housingcode. 102704.wpd 2