Item 3: Ordinance on Low-Income Housing Property Tax Exemptions

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exemption. If approved, applicants may apply for and receive an exemption, if eligible, for tax years beginning on or after July 1, 1994, and before July 1, 2014. ORS and Eugene Code References – Subsection (1)(g) of Section 2.938, (2)(h) and (3)(d) of Section 2.939 of the Eugene Code, 1971, need to be amended to reflect changes referenced in sections of the ORS and Eugene Code, 1971. Eligible years to apply and construction deadline – Subsection (3)(c) of Section 2.939 and (1)(a) and (4) of Section 2.940 of the Eugene Code, 1971, need to be amended to reflect the extended date by which an application can be submitted and the date by which construction must be completed. If approved, each date is extended to on or before January 1, 2020. Several of the properties initially granted 20-year low-income housing property tax exemptions are coming to the end of their exemption period. The proposed ordinance would allow owners of such properties to reapply for this program and effectively extend their commitment to providing affordable housing for another 20 years. Subsection (5) of Section 2.940 of the Eugene Code, 1971, is amended to allow recipients to reapply for the property tax exemption after the initial 20-year period has expired. Program Impact Since 1992, Eugene has approved 22 property tax exemptions for low-income developments totaling over 1,000 housing units (Attachment A). The City and other local taxing districts forgo revenue when property is exempted from taxes. A property tax exemption plays a significant role in reducing rents for low- and very-low income residents of Eugene. The benefit of each exemption varies based on development size and appraised tax value, estimates suggest the rent reduction amounts to approximately $100 or more per month per unit. This approximation is based on an average tax savings of between $1million and $2.5million dollars per development over the life of the exemption. With commitment of local subsidies, including continued support from the City Council in the form of property tax exemptions, developers have successfully leveraged highly competitive state and federal resources for the continued development of quality affordable housing in Eugene. There is significant competition for funding at both the state and federal level. Commitment of local resources gives Eugene projects an advantage in such competitions. The developments also help support the local economy through the creation of construction jobs. The proposed ordinance would allow Eugene projects to continue to access such resources. There are currently four developments whose property tax exemption will expire in the next five years. This equates to 115 units of affordable housing that potentially could be lost should the property owner be unable to locate alternative subsidies to maintain affordability. If alternative means to subsidize the units cannot be found, impacts could range from increased rents to reductions in resident programming. Many tenants are unable to support an increase in rent due to fixed incomes and may be forced to vacate. RELATED CITY POLICIES The City of Eugene established current goals and programs for the development of housing affordable to low-income people through the adopted 2010 HUD Consolidated Plan. The Consolidated Plan guides the use of Home Investment Partnerships Program (HOME) funds and Community Development Block Grant (CDBG) funds over a five-year period. Each year, the City Council approves the allocation of \\Cesrv500\cc support\CMO\2011 Council Agendas\M110411\S1104113 - and Att's A and B.doc