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HomeMy WebLinkAboutItem 5: MUPTE on East 15th Townhouses ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Adoption of Resolution 4961 Approving a Multiple-Unit Property Tax th Exemption for Residential Property Located at 435 East 15 Avenue, Eugene, Oregon th (East 15 Townhouses; Newman Family Partnership, Applicant) Meeting Date: January 12, 2009 Agenda Item Number: 5 Department: Planning and Development Staff Contact: Richie Weinman www.eugene-or.gov Contact Telephone Number: 682-5533 ISSUE STATEMENT The City Council is asked to approve or deny a resolution granting a Multiple-Unit Property Tax thth Exemption (MUPTE) for East 15 Townhouses at 435 East 15 Avenue. BACKGROUND In 1975, the Oregon legislature adopted the enabling statutes for the MUPTE program. This incentive was created as an implementation tool to complement the state land-use laws that were approved in 1973. The intent was to “stimulate the construction of rental housing in the core areas of Oregon’s urban centers…” In July 1977, the City Council adopted the provisions through a resolution “. . . to complement the Eugene Community Goals and Polices adopted in 1974 which stated that ‘High density dwellings should be encouraged close-in to accommodate those people who prefer to live near the center of activity’…” Since that time both the state statutes and Eugene’s implementation of them have been amended. For instance, multi-family ownership is now allowed in addition to rental housing. Most recently, council amended E.C. 2.945 through 2.947 to add a new transit-oriented MUPTE area in November 2008. This is one of three applications that were submitted to the City before the council adopted new evaluation criteria in November. Therefore, the revised criteria were not formally applied to this application. However, staff examined the application and new criteria and find that it is very likely that it would have been in compliance. th This proposed six-unit project will be built at 435 East15, which is zoned R-3, high-density residential. There is currently a small house on the site. The proposal has been reviewed by the Planning Division Director and a determination has been made that no significant historic buildings are on this parcel. The existing house will be either demolished or moved. The new development includes six two-bedroom units and eight on-site parking spaces. The Planning Director has also reviewed the application for any potential code conflicts and found none at this time. The Planning and Development Director has reviewed this application and recommends approval. This report is in Attachment C. A copy of this MUPTE application will be placed in the Council Office for review. Z:\CMO\2009 Council Agendas\M090112\S0901125.doc Public Comments A display advertisement was published in the Register-Guard on October 15, 2008, soliciting comments for 30 days. No comments were received during the 30-day period ending November 11, 2008. The applicant met with the West University Neighbors and received its endorsement on July 15, 2008. Design Features Consistent with the council’s stated interests in the adopted MUPTE Standards and Guidelines, this application proposes infill housing that increases density in the core area and provides new housing using higher grade materials. In this zoning (R-3) the allowed density for this parcel is two to seven units. This is a six-unit development in a three-story building, achieving 86% of maximum density. Examples of other design and sustainability features are included in Attachment F. Impact and Need for Tax Exemptions to Encourage Housing The City and other local taxing districts forgo revenue when property is exempted from taxes. This project proposes new construction on a property that is underdeveloped and under-used based on the zoning. The land continues to be taxed during the exemption period. The improvements will bring substantial revenue, after ten years, beyond what is currently being collected. th The Pro-forma for East 15 Townhouses (below) shows three key reasons that the project would not be built without MUPTE. First, cash flow (CF) is negative through year ten. Without cash flow, banks would not be confident in the project’s ability to repay the debt. Second, the perceived risk is high demonstrated by the Cash on Cash return (CF divided by the equity that is invested by the developer) well below the market-expected 10% to 15% level. The Cash on Cash is negative through year ten. Third, the project valuation is well below the amount needed to qualify for conventional financing. (The value is determined by Net Operating Income (NOI) divided by the capitalization rate.) At project stabilization, the projected value of the property is $747,000. The total cost of the project is $941,000. At 70% loan to value, the project needs to be valued at $900,000 to qualify for $630,000 in bank debt. The applicant projects reducing the rent by 15% when/if the MUPTE is granted. Without MUPTEYear 1Year 2Year 10 Rent Income$ 72,000$ 72,720$ 78,745 Total Cost EQ $ 311,000 - Vacancy (5%)$ 3,600$ 3,636$ 3,937 Conventional Debt$ 630,000 = Effective Gross Rent$ 68,400$ 69,084$ 74,808 Total project $ 941,000 - Operating Exp (25%)$ 18,000$ 18,180$ 19,686 = NOI $ 50,400$ 50,904$ 55,122 - Debt Service$ 58,613$ 58,613$ 58,613 = CF $ (8,213)$ (7,709)$ (3,491) Cash on Cash Return -3%-2%-1% Value $ 747,000$ 754,000$ 817,000 Z:\CMO\2009 Council Agendas\M090112\S0901125.doc Fiscal Impact This property currently generates $1,413 in annual property tax. Based on valuation, 55% of that value is attributed to the land itself, which will continue to be taxed during the exemption period. Approximately $636 of current taxes will be lost each year during the exemption period because the existing structure is removed from the tax rolls, totaling $6,360. Based on today’s values, the new apartments will generate approximately $6,000 per year in taxes. The tax loss from removing the small house will be made up almost entirely in year 11 after the tax exemption period is over. The apartments will continue to generate a greater revenue stream into the future. Timing This application was submitted on October 10, 2008. If the council does not act within 180 days the application is considered approved. RELATED CITY POLICIES MUPTE is enabled by state statute. The City of Eugene has participated in the MUPTE program since 1978. Encouraging housing in the core area is consistent with numerous adopted planning and policy documents. Examples include: Growth Management Policies Policy 1 Support the existing Eugene Urban Growth Boundary by taking actions to increase density and use on existing vacant land and under-used land within the boundary more efficiently. Policy 2 Encourage in-fill, mixed-use, redevelopment, and higher density development. Policy 3 Encourage a mix of business and residential uses downtown using incentives and zoning. West University Refinement Plan V.9 The City will encourage residential uses in all parts of the plan area. V.11 The City and the neighborhood shall study ways to encourage a variety or mix of structure types providing both owner and rental opportunities and appealing to a diverse population. COUNCIL OPTIONS The council may approve the exemption, deny the exemption, or may delay approval in order to request additional information from the developer to determine that a satisfactory public benefit has been met. CITY MANAGER’S RECOMMENDATION The City Manager recommends approving the resolution to grant the exemption. SUGGESTED MOTION Move to adopt Resolution 4961 approving a Multiple-Unit Property Tax Exemption for residential thth property located at 435 East 15 Avenue, Eugene, Oregon (East 15 Townhouses; Newman Family Partnership, Applicant). Z:\CMO\2009 Council Agendas\M090112\S0901125.doc ATTACHMENTS A. Resolution approving a property tax exemption B. Resolution denying approval C. Exhibit B to the Resolution: Report from the Planning and Development Director D. Comments submitted by West University Neighborhood Association E. Images of the current property F. Examples of design and sustainability features FOR MORE INFORMATION Staff Contact: Richie Weinman Telephone: 682-5533 Staff E-Mail: richie.d.weinman@ci.eugene.or.us Z:\CMO\2009 Council Agendas\M090112\S0901125.doc ATTACHMENT A RESOLUTION NO. _____ A RESOLUTION APPROVING A MULTIPLE-UNIT PROPERTY TAX EXEMPTION FOR RESIDENTIAL PROPERTY LOCATED AT 435 EAST TH 15 AVENUE, EUGENE, OREGON. (NEWMAN FAMILY LIMITED PARTNERSHIP/APPLICANT-OWNER) The City Council of the City of Eugene finds that: A. Newman Family Limited Partnership is the owner of real property located at 435 th East 15 Avenue in Eugene, Oregon, more particularly described in the legal description attached as Exhibit A (“the property”), and has submitted an application pursuant to the City’s Multiple-Unit Property Tax Exemption Program (Sections 2.945 and 2.947 of the Eugene Code, th 1971), with respect to residential units identified as the E. 15 Townhouses (“the project”) to be constructed on the property. B. A display ad soliciting recommendations or comments from the public was published in the Register-Guard on October 20, 2008, and advised that written comments would be accepted for a period of 30 days from the date of publication. No comments were received in response to the ad. In addition, recommendations or comments were solicited from the Planning Commission, and other interested City departments, agencies, and neighborhood groups. C. The Report and Recommendation attached as Exhibit B, which was prepared by the Executive Director of the Planning and Development Department (“the Director”) as designee of the City Manager, recommends that the application be approved and the exemption granted. In making the recommendation, the Director found that the applicant submitted all materials, documents and fees required by the application and the City as set forth in Section 2.945 of the Eugene Code, 1971, and is in compliance with the policies set forth in the Standards and Guidelines adopted by Administrative Order No. 53-04-03-F. D. The project consists of the development of six two-bedroom units, which are not designed for, nor will be used as, transient accommodations. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. Based upon the above findings which are adopted, and the City Council’s review of the Report and Recommendation of the Executive Director of the Planning and Development Department attached as Exhibit B, the City Council approves Newman Family Limited Partnership’s application for an ad valorem property tax exemption under the City’s Multiple-Unit Property Tax Exemption Program for the residential units to be constructed at 435 Resolution – Page 1 of 2 S0901125-attA.DOC th East 15 Avenue, Eugene, Oregon, and more particularly described in the legal description attached as Exhibit A, subject to the following conditions: 1. The project shall consist of six two-bedroom units, which are not designed for, nor will be used as, transient accommodations. 2. The project shall be completed on or before January 1, 2012. 3. The project shall include all of the public benefit design elements as required in the Standards and Guidelines and described in Section 2.2 of the Report and Recommendation attached as Exhibit B. 4. The project shall be in conformance with all local plans and planning regulations, including special or district-wide plans developed and adopted pursuant to ORS Chapters 195, 196, 197, 215 and 227. Section 2. The residential units to be constructed upon the property described in Section 1 above are declared exempt from local ad valorem property taxation beginning July 1 of the year following certification of completion and continuing for a continuous period of ten years unless earlier terminated in accordance with the provisions of Section 2.947 of the Eugene Code, 1971. Section 3. The City Manager, or the Manager’s designee, is requested to forward a copy of this Resolution to the applicants, and to the other affected taxing districts, within ten days, and to cause a copy of this Resolution to be filed with the Lane County Assessor on or before April 1, 2009. Section 4. This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted and effective the ____ day of January, 2009. ___________________________________ City Recorder Resolution – Page 2 of 2 S0901125-attA.DOC ATTACHMENT B RESOLUTION NO. _____ A RESOLUTION DENYING A MULTIPLE-UNIT PROPERTY TAX EXEMPTION FOR RESIDENTIAL PROPERTY LOCATED AT 435 EAST TH 15 AVENUE, EUGENE, OREGON. (NEWMAN FAMILY LIMITED PARTNERSHIP/APPLICANT-OWNER) The City Council of the City of Eugene finds that: A. Newman Family Limited Partnership is the owner of real property located at 435 th East 15 Avenue in Eugene, Oregon, more particularly described in the legal description attached as Exhibit A (“the property”), and has submitted an application pursuant to the City’s Multiple-Unit Property Tax Exemption Program (Sections 2.945 and 2.947 of the Eugene Code, th 1971), with respect to residential units identified as the E. 15 Townhouses (“the project”) to be constructed on the property. B. A display ad soliciting recommendations or comments from the public was published in the Register-Guard on October 20, 2008, and advised that written comments would be accepted for a period of 30 days from the date of publication. No comments were received in response to the ad. In addition, recommendations or comments were solicited from the Planning Commission, and other interested City departments, agencies, and neighborhood groups. C. The Report and Recommendation attached as Exhibit B, which was prepared by the Executive Director of the Planning and Development Department (“the Director”) as designee of the City Manager, recommends that the application be approved and the exemption granted. In making the recommendation, the Director found that the applicant submitted all materials, documents and fees required by the application and the City as set forth in Section 2.945 of the Eugene Code, 1971, and is in compliance with the policies set forth in the Standards and Guidelines adopted by Administrative Order No. 53-04-03-F. D. The project consists of the development of six two-bedroom units, which are not designed for, nor will be used as, transient accommodations. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. Notwithstanding the above findings and the Report and Recommendation of the Executive Director of the Planning and Development Department attached as Exhibit B, the City Council denies the application of Newman Family Limited Partnership’s application for an ad valorem property tax exemption under the City’s Multiple-Unit Property Tax Exemption th Program for the residential units to be constructed at 435 East 15 Avenue, Eugene, Oregon, and more particularly described in the legal description attached as Exhibit A. Resolution – Page 1 of 2 S0901125-attB.DOC Section 2. The City Manager, or the Manager’s designee, is requested to forward a copy of this Resolution to the applicants within ten days. Section 3. This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted and effective the ____ day of January, 2009. ___________________________________ City Recorder Resolution – Page 2 of 2 S0901125-attB.DOC ATTACHMENT C (EXHIBIT B OF THE RESOLUTION) REPORT AND RECOMMENDATION of the Executive Director of the Planning & Development Department Newman Family Limited Partnership Application for Multiple-Unit Property Tax Exemption The Executive Director of the Planning & Development Department of the City of Eugene finds that: 1. Newman Family Limited Partnership is the owner of real property located at 435 th East 15 Avenue in Eugene, Oregon, more particularly described in the legal description attached as Exhibit A to the Resolution approving this tax exemption (“the property”), and has submitted an application pursuant to the City’s Multiple-Unit Property Tax Exemption Program (Sections 2.945 and 2.947 of the Eugene Code, 1971), with respect to residential units identified th as the E. 15 Townhouses (“the project”) to be constructed on the property. 2. I have reviewed the application and specifically find that the project to be constructed will result in an eligible structure for the property tax exemption as defined in the Standards and Guidelines, will be located within the downtown core area, the construction will be completed on or before January 1, 2012, and: 2.1 The applicant has submitted all materials, documents and fees required by the City; 2.2 Design elements that benefit the general public have been included in the project, which consist of: 2.2.1 Sustainability features. •Reasonable effort will be made to relocate the house currently on the site as requested by the previous owner. If that is not possible, the building materials from demolition of the house will be recycled by BRING, EcoSort or other recycling company. In addition, job site waste will be recycled to the greatest extent possible. •Project maximizes infill density to extent allowed. •Project is located in close proximity to downtown, the university, bike paths and mass transit systems minimizing the dependence on automobiles for transportation. •Native species and drought resistant plants will be used in the landscaping, and topsoil will be preserved and reused where practicable. •Windows are provided in each primary living space and oriented on the east and west to provide for natural light and ventilation. Energy efficient windows, insulation and construction techniques will be used. Windows and doors will be pan flashed at water entry points. REPORT AND RECOMMENDATION / Exhibit B to Resolution No. ______ - Page 1 of 4 S0901125-attC.DOC •Light colored “cool” asphalt roofing products with a 40-year life will be installed. •Siding will be composite or fiber cement style material (hardi-plank or similar). •Individually controlled zone heat sources for each room will allow for room-by-room control. •Engineered lumber is specified where practical, including floor joists and the majority of structural beams. •Oriented strand board sub-flooring and sheathing will be used; thermal mass (2 ½ inch concrete) flooring specified. •Exterior air infiltration barrier will be used. •Energy efficient appliances and water heater will be installed. •Possible use of photo-voltaic cells on the south facing roof structure. •Stormwater will be filtered and pretreated prior to entering the public stormwater system. •Water efficient plumbing fixtures will be used. •Bathroom fans will be installed with timers. •Outdoor lights will be “night sky” friendly minimizing light pollution. •Low VOC paints and carpets will be specified. •Recycling space will be provided for tenant use. •Covered parking area will be open on one side for ventilation; entry ways into the structure are located on opposite side of building to reduce infiltration. 2.2.2 Responsiveness to adjacent historic structures. There are no adjacent historic structures. 2.2.3 Use of higher quality materials that contribute to longevity. As mentioned in section 2.2.1 above, the project proposes to include: •Light colored “cool” asphalt roofing products with a 40-year life; •Composite or fiber cement style material (hardi-plank or similar) siding; •Engineered lumber specified where practical, including floor joists and the majority of structural beams; •Oriented strand board sub-flooring and sheathing; thermal mass (2 ½ inch concrete) flooring specified. 2.2.4 Prominent entry facing the public street. The project’s prominent th entry faces 15 Avenue. 2.2.5 Number of units by which minimum density is exceeded or which incorporate three or more bedrooms to encourage families. The project includes six two-bedroom units and is zoned to allow for a minimum density of two units and a maximum density of seven units. Thus, the project will exceed minimum density by four units. 2.2.6 Number of available ADA accessible units. The matter of ADA accessible units was not addressed in the application. REPORT AND RECOMMENDATION / Exhibit B to Resolution No. ______ - Page 2 of 4 S0901125-attC.DOC 2.2.7 Responsiveness to neighborhood character and safety in respect to height, mass, architectural detail, landscaping and open space. •The project will include eight parking spaces for the 12-bedroom complex which exceeds the minimum required by the city code as well as the West University Neighborhood Association desired bedroom/parking ratio. The parking is shielded from public view. •The project includes open porches and balconies to allow for the tenants to interact among themselves and with the community. Each space is provided with outdoor gathering space directly adjacent to the street. •Front porches, with their proximity to street and sidewalks, provide social gathering spaces, interaction with neighbors, and lessen the likelihood of vandalism. •Trees, shrubs and lawn area will be provided and professionally maintained. Existing street trees will be retained and protected through construction. •This 2 ¾ story project has been designed to balance the needs of the neighborhood with respect to scale and architectural character. The porches, rail details, stone columns and trim details will make this project a model for future redevelopment. •The project will help accommodate increased student population. 2.2.8 Number of units designed for home ownership. No units are designed for home ownership. 2.2.9 Solicitation of comments from relevant neighborhood associations. The project was reviewed by the West University Neighbors and received the Association’s unanimous support, with inclusion of certain safety features related to parking and access to the rear side of the building. 2.3 The project will be monitored through the City’s regular processes with respect to planning, permit and building and safety requirements to insure compliance with all local regulations; 2.4 The property currently includes a single family dwelling that is over 50 years old. However, the house is not on the list of historic structures. 2.5 The owner has stated in the application and provided evidence that the project as proposed, including the quality and quantity of sustainability features planned, would not be feasible without the tax exemption. 3. A display ad soliciting recommendations or comments from the public regarding this project was published in the Register-Guard on October 20, 2008. The period for comment expired on November 21, 2008. No comments were received in response to the ad. REPORT AND RECOMMENDATION / Exhibit B to Resolution No. ______ - Page 3 of 4 S0901125-attC.DOC Therefore, based upon the above findings, the project is or will be, at the time of completion, in conformance with all applicable local plans and provisions of the Eugene Code, 1971, planning regulations, the Metropolitan Area General Plan, and the criteria set forth in the City’s adopted Standards and Guidelines for Multiple-Unit Housing Property Tax Exemption, and I recommend that the application be approved. Dated this _____ day of January, 2009. _________________________________ Executive Director, Planning & Development Department, City of Eugene REPORT AND RECOMMENDATION / Exhibit B to Resolution No. ______ - Page 4 of 4 S0901125-attC.DOC ATTACHMENT E ATTACHMENT F Examples of Sustainability and Public Benefit Features Sustainability features. •Reasonable effort will be made to relocate the house currently on the site as requested by the previous owner. If that is not possible, the building materials from demolition of the house will be recycled by BRING, EcoSort or other recycling company. In addition, job site waste will be recycled to the greatest extent possible. •Project maximizes infill density to extent allowed. •Project is located in close proximity to downtown, the university, bike paths and mass transit systems minimizing the dependence on automobiles for transportation. •Native species and drought resistant plants will be used in the landscaping, and topsoil will be preserved and reused where practicable. •Windows are provided in each primary living space and oriented on the east and west to provide for natural light and ventilation. Energy efficient windows, insulation and construction techniques will be used. Windows and doors will be pan flashed at water entry points. •Light colored “cool” asphalt roofing products with a 40-year life will be installed. •Siding will be composite or fiber cement style material (hardi-plank or similar). •Individually controlled zone heat sources for each room will allow for room-by-room control. •Engineered lumber is specified where practical, including floor joists and the majority of structural beams. •Oriented strand board sub-flooring and sheathing will be used; thermal mass (2 ½ inch concrete) flooring specified. Will be filtered and pretreated prior to entering the public stormwater system. •Water efficient plumbing fixtures will be used. •Bathroom fans will be installed with timers. •Outdoor lights will be “night sky” friendly minimizing light pollution. •Low VOC paints and carpets will be specified. •Recycling space will be provided for tenant use. •Covered parking area will be open on one side for ventilation; entry ways into the structure are located on opposite side of building to reduce infiltration. Responsiveness to adjacent historic structures. There are no adjacent historic structures. Use of higher quality materials that contribute to longevity. As mentioned in section 2.2.1 above, the project proposes to include: •Light colored “cool” asphalt roofing products with a 40-year life; •Composite or fiber cement style material (hardi-plank or similar) siding; •Engineered lumber specified where practical, including floor joists and the majority of structural beams; •Oriented strand board sub-flooring and sheathing; thermal mass (2 ½ inch concrete) flooring specified. th Prominent entry facing the public street. The project’s prominent entry faces 15 Avenue. Number of units by which minimum density is exceeded or which incorporate three or more bedrooms to encourage families. The project includes six two-bedroom units and is zoned to allow for a minimum density of two units and a maximum density of seven units. Thus, the project will exceed minimum density by four units. Number of available ADA accessible units. The matter of ADA accessible units was not addressed in the application. Responsiveness to neighborhood character and safety in respect to height, mass, architectural detail, landscaping and open space. •The project will include eight parking spaces for the 12-bedroom complex which exceeds the minimum required by the city code as well as the West University Neighborhood Association desired bedroom/parking ratio. The parking is shielded from public view. •The project includes open porches and balconies to allow for the tenants to interact among themselves and with the community. Each space is provided with outdoor gathering space directly adjacent to the street. •Front porches, with their proximity to street and sidewalks, provide social gathering spaces, interaction with neighbors, and lessen the likelihood of vandalism. •Trees, shrubs and lawn area will be provided and professionally maintained. Existing street trees will be retained and protected through construction. •This 2 ¾ story project has been designed to balance the needs of the neighborhood with respect to scale and architectural character. The porches, rail details, stone columns and trim details will make this project a model for future redevelopment. •The project will help accommodate increased student population. Number of units designed for home ownership. No units are designed for home ownership.