Item C: Multi Unit Property Tax Exemption Program

Home Browse Search

Dan Neal of Steelhead Townhouses is a single-site property developer who is employed as an attorney ? and professional musician. His law office has been at 1361 Pearl, in the West University th Neighborhood, for 27 years. His Coho Townhouse project on West 14 received a MUPTE and is under construction. Steelhead is scheduled for City Council consideration on November 13, 2007. Martin Henner is an attorney, mediator and long time Eugene resident. With the exception of one ? historic apartment rehabilitation experience in Cottage Grove seven years ago, Eugene Co-housing is his first real estate development and involves bringing a variety of potential homeowners together to live in the core area. This is scheduled for council consideration on November 13, 2007. Local Market Conditions and Activity The local rental housing market is tight. The low vacancy rate (under two percent in Eugene and near zero percent in the core area) has shown a tendency to increase rents at rates in excess of wage growth. Yet, because of increases in land and construction costs, local rental rates still appear to be insufficient to support new construction of quality infill rental housing. In an effort to understand this dynamic, staff solicited input from a local commercial appraiser, Corey Dingman of Duncan and Brown Inc. (Attachment F). MUPTE was highlighted in this discussion as a tool to bridge the feasibility gap particularly in regard to redevelopment projects at infill sites. Recently, staff mapped new, citywide, multi-family housing developments of five units or more (Attachment C). Based on available data, 1,332 units received permits during the last three years. MUPTE assistance represents seven percent of the total and three percent of the total of infill rentals. The 47 units at The Tate are infill condominiums. The remaining 86 percent are comprised of large-scale projects developed by out-of-area developers on vacant land (benefiting from economy of scale), senior assisted housing (Cascade Manor is connected to an assisted living development), condominiums, and heavily subsidized low-income housing. MUPTE rental assistance 45 units Infill rentals without MUPTE 153 units Condominiums 221 units (Includes The Tate (47 units), which received MUPTE assistance) Large scale projects 392 units Subsidized low-income housing 471 units Senior housing, undeveloped land 50 units Total 1,332 MUPTE Project Feasibility and Cost Reasonableness MUPTE is intended to influence feasibility, location and quality. Location and quality are addressed by the MUPTE boundaries and the quality standards in the application. In terms of feasibility, City staff review the pro-forma for each MUPTE application. The applicant must demonstrate in their financial presentation why the project could not be built “but for” the exemption. Staff is familiar with the construction costs of new multi-family housing because the City closely monitors the financial details of low-income housing development. At any given time, there are typically one or two low-income developments under construction and others in the pipeline. In a similar role, private lenders closely look at a project pro-forma, carefully examine the cash-flow, and determine cost reasonableness and feasibility before approving the project financing. In virtually every approved MUPTE project, the private lender required documentation of the MUPTE approval as a condition of their approval of project financing. F:\CMO\2007 Council Agendas\M071022\S071022C.doc