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February 19, 2019, Public Hearing – Item 3 <br />ix.During the first two years (July 2019 – June 30, 2021), designate City funds,equivalent to the reduction in SDCs, to the appropriate SDC fund.x.Designate $500,000 per year of City funds to the Affordable Housing Fund.xi.Council review of program every two years beginning in 2021. <br />BACKGROUND In 2016, the State of Oregon passed Senate Bill 1533, which enabled local jurisdictions to adopt a CET to support the development of affordable housing. A CET is a one-time tax imposed on new construction where an established tax rate (percentage) is multiplied by the permit valuation of the construction permit. The CET is assessed at the time building permits are issued. SB 1533 allows up to a 1 percent tax for residential construction but sets no limit on a tax rate for commercial construction. To date, at least nine jurisdictions in Oregon have adopted a CET ranging from .33 percent (Bend and Medford) to 1.5 percent (Corvallis, commercial only). A CET would apply to the costs of improvements to residential property that result in a new residential structure or a remodel that adds living space and on improvements to commercial and industrial real property that results in a new structure or additional square footage. Based on Eugene residential and commercial construction activity over the two year period from April 2016-2018, it was estimated that a 0.33 percent CET would generate almost $1.0 million per year, a 0.5 percent CET would generate roughly $1.5 million per year, and a 1 percent CET nearly $3 million per year. <br />PREVIOUS COUNCIL DIRECTION April 12, 2017 Work Session – City Council received an introductory presentation on SB 1533 and directed staff to pursue development of policy options for a CET in collaboration with the Housing Policy Board. December 13, 2017 Work Session – City Council reviewed a set of recommendations from the Housing Policy Board for implementation of a CET. Council directed staff to continue engaging community stakeholders on implementation of a CET. April 9, 2018 Work Session – City Council continued discussion of options for a CET and directed staff to return with a process for council consideration that would identify existing barriers to housing affordability, availability, and diversity of type. January 14, 2019 Council Meeting – City Council directed staff to create a draft CET ordinance and to schedule a public hearing.