Item A: Multi-Unit Property Tax Exemption Program

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• Final approval – Exemptions will receive final approval by PHB through the filing of an ordinance with City Council within 180 days of application. PHB will send a copy of the approved resolution to the applicant. • County activation – PHB will send a copy of the approved ordinance and list of approved properties along with the corresponding fee to Multnomah County no later than April 1 each year. Compliance Requirements • Eligible multiple-unit housing shall be constructed, converted, or preserved after the date of adoption of this program, and completed on or before January 1, 2022 unless the program is extended and a later sunset date is established through the Oregon State Legislature. • Project owners must submit certification including any necessary supporting documentation of the public benefits and other project requirements identified in the approved application to PHB with the first annual financial documentation submitted. Rental projects • Extended Use Agreement – The owner of a rental project approved for exemption will be required to sign an extended use agreement (EUA) to be recorded on the title to the property. • Annual reporting and review – During the exemption period, the owner must submit project financial information annually to PHB within 45 days from the end of the project’s fiscal year. The financial information shall include, but is not limited to the following: • Full project-based audited financial statements • Internal Revenue Services tax information (tax returns) • Ten year operating cash flow statement, showing actual cash flow for all prior years and the current year and shall include a to-date calculation of the rate of return for the project • Electronic Operating Statement (EOS) or similar form • Electronic Tenant Survey (ETS) (to validate subsequent rental and household income compliance, when unit becomes available for rent after initial occupancy) - Every fifth year, the tenant income qualification submitted shall be certified by a third party. • Any other documentation deemed necessary by PHB to calculate or evaluate the rate of return for the project PHB will prepare an annual analysis of the project’s financial data including a to-date calculation of the rate of return for the project using the same method utilized in its initial recommendation for the tax exemption within 180 days of receipt of all required financial information. PHB will advise the owner in writing whether the projected rate of return will exceed 10 percent for the entire exemption period and may result in an Accrued Payment Liability (APL). If PHB determines that the number and unit mix of affordable units is less than the approved percentage or does not match the unit mix of the project, the next available units must be rented to households meeting the income requirements and the project must be brought into compliance before the next reporting period. • Project rate of return – At the end of the final year of the exemption, PHB will calculate the rate of return for the project during the exemption. If the rate of return does not exceed 10 percent, then the EUA terminates at the end of exemption. If the rate of return exceeds 10 percent, then PHB sends a written notice to the last known address of the owner requiring the owner to elect one of the following: • The EUA may remain in full force and effect for an additional 5 years after the end of the tax exemption , extending the affordability requirements approved for the exemption; provided that the number of units subject to the rent restrictions as approved is the same number necessary to reduce the net present value, using a 10 percent annual discount rate of the project’s projected market-rate (unrestricted) annual cash flows by an amount equal to the APL; or • The owner pays an APL in an amount equal to the lesser of either: - The net present value using a 10 percent annual discount rate of the difference between the project’s actual annual cash flows during the exemption and the proforma projected cash flows for the project that would provide a 10 percent rate of return during the exemption; or - The maximum amount of the property taxes that would have been assessed if no exemption had been granted.