Item C: MUPTE - Envision Eugene Implementation (2)

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Multi-Unit Property Tax Exemption - Envision Eugene Implementation Meeting Date: July 20, 2011 Agenda Item Number: C Department: Planning and Development Staff Contact: Nan Laurence www.eugene-or.gov Contact Telephone Number: 541-682-5340 ISSUE STATEMENT The City Council is asked to review the Multi-Unit Property Tax Exemption (MUPTE) program in the context of Envision Eugene implementation, consider a new sunset date for the MUPTE program to match that of the recently extended state legislation and discuss potential boundary changes. BACKGROUND The Multi-Unit Property Tax Exemption program is enabled by state legislation and designed to encourage higher density housing and redevelopment in the core area and along transit corridors. The program provides a 10-year property tax exemption on qualified improvements; the land continues to be taxed during the exemption period. The intent behind MUPTE is to support development of multi-unit housing as desired in the targeted area where that development would not occur “but for” the granting of the exemption. Over time, the completed developments create desired density in the target area and ultimately strengthen the tax base. The tax exemption is a tool used to offset real financial obstacles associated with developing multi-unit housing in the core or in transit oriented areas. The obstacles could be related to higher land cost, higher construction cost resulting from multi-story construction and higher quality urban design, parking constraints, code requirements, and environmental conditions related to prior uses. As property taxes are a major operating expense for a development project, the property tax exemption provided by the MUPTE program can play a significant role in allowing a project to move forward. The MUPTE can help create opportunities for financing and return-on-investment that are not otherwise achievable in core area multi-unit development. The council has a nearly 30-year history of reviewing MUPTE proposals, which are considered on a case-by-case basis. To date, the council has approved 22 projects, resulting in 753 new multi-family units in the targeted areas. The council has also modified the implementation of MUPTE in ways that range from boundary adjustments and the evaluation method, to a program moratorium. In November 2008, the council approved an expanded boundary to include portions of the Trainsong and Whiteaker neighborhoods and a modified evaluation process. The new process includes a scored public benefit criteria and review by the Planning and Development Department’s Loan Advisory Committee. The eight scored public benefits are density, green building features, mixed income, homeownership, accessibility, historic sensitivity, location, and parking. The public benefit scoring criteria is another way of ensuring the desired benefits from this program. (See Attachment A for a list of the projects, \\Cesrv500\cc support\CMO\2011 Council Agendas\M110720\S110720C.doc