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February 19, 2019, Public Hearing – Item 3 <br />EUGENE CITY COUNCIL <br />AGENDA ITEM SUMMARY <br />Public Hearing: An Ordinance Concerning Imposition of a Construction Excise Tax on Commercial and Residential Improvements and Adding Sections 3.730, 3.732, 3.734, 3.736, 3.738, 3.740, 3.742, 3.744, 3.746 and 3.748 to the Eugene Code, 1971. <br />Meeting Date: February 19, 2019 Agenda Item Number: 3 Department: Planning and Development Staff Contact: Denny Braud <br />www.eugene-or.gov Contact Telephone Number: 541-682-8817 <br />ISSUE STATEMENT Housing affordability and availability is a long-standing and growing problem in Eugene. In response to multiple work sessions on the topic, City Council directed staff in May 2018 to implement a six-month process to identify potential tools and strategies available to the City to address housing affordability, availability and diversity for all income levels. A key tenet of the direction was to include broad stakeholder engagement in the process. Staff summarized the community engagement process, the outcomes from that process, and recommended next steps for council during work sessions in December 2018 and January 2019. On January 14, council passed a motion directing the City Manager to hold a public hearing on an ordinance that establishes a Construction Excise Tax as follows: i.0.33 percent tax rate effective July 1, 2019.ii.0.50 percent tax rate effective July 1, 2020.iii.1 percent tax rate effective July 1, 2021.iv.CET rate would apply to residential and commercial types of construction, consistentwith state statute.v.In addition to state-mandated exemptions, the following would be exempted from theCET: Affordable housing projects, projects receiving a Multi-Unit Property TaxExemption, and houses priced at less than $250,000.vi.Establish an advisory committee to recommend CET allocations.vii.The total CET imposed on any single or multi-phase project would be capped at$1,000,000.viii.During the first two years (July 2019 – June 30, 2021), the City will offset the cost ofthe CET paid by an applicant by an equivalent reduction in Systems DevelopmentCharges (SDCs).