Item 2C: Approval of Low-Income Housing Property Tax Exemption for Hawthorn Apts

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Adoption of Resolution 4999 Approving a Low-Income Rental Housing Property Tax Exemption for the Property Located at 2984, 2986, 2988 Oak Street, Eugene, Oregon (ShelterCare/Applicant) Meeting Date: February 8, 2010 Agenda Item Number: 2C Department: Planning and Development Staff Contact: Richie Weinman www.eugene-or.gov Contact Telephone Number: 541-682-5533 ISSUE STATEMENT The City Council is asked to consider a resolution related to a low-income rental housing tax exemption. th The resolution would grant a 20-year property tax exemption for ShelterCare’s 29 Place development (formerly known as Hawthorne Apartments). BACKGROUND The City of Eugene has a history of supporting increases to the supply of low-income housing. In order to address the housing needs of our community, the council has adopted a variety of subsidy tools. One tool is the 20-year low-income rental housing tax exemption. This program is enabled by state statute. To date, Eugene has approved 20 projects totaling 924 apartments since 1992. The council reviews each request on a case-by-case basis. Most recently, the council approved a low-income tax exemption for St. Vincent dePaul’s VetLIFT project in 2008. The Eugene Code provisions for a low-income rental housing tax exemption application do not include the discretionary ‘public interest’ criterion that is included in the code criteria for the MUPTE program. If an application meets the substantive criteria (EC 9.239(2)(e)-(i) & EC 9.239(3)(a)-(e)), the City must approve the application. A decision to deny the exemption cannot be made by simple motion or inaction, it would need to be made by a resolution that explains which of the criteria is/are not met. The City and other local taxing districts forgo revenue when property is exempted from taxes. A property tax exemption plays a very significant role in reducing rents and amounts to approximately $100 per month per apartment. This particular project has served chronically mentally ill adults since it was constructed in 1986, by a for-profit owner who used a federal program to subsidize the rents. The project is on the tax rolls and owes $16,874 for 2009. ShelterCare has staffed and operated the program since the beginning. This is known as an “expiring use” project because the federal program that provided the subsidies has run out. ShelterCare is acquiring the development to keep it in operation and affordable for its low-income disabled tenants. The alternative would be for the private developer to sell the project to another private developer and the subsidized units would be lost. This property tax exemption is critical for the project’s pro-forma. There are 35 one-bedroom housing units at this site. Z:\CMO\2010 Council Agendas\M100208\S1002082C.doc