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HomeMy WebLinkAboutItem 6: MUPTE on Pearl on Campus ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Adoption of Resolution 4962 Approving a Multiple-Unit Property Tax th Exemption for Residential Property Located at 693 E. 16, 1584 and 1586 Hilyard, Eugene, Oregon (The Pearl on Campus, Dean Hansen and Gordon Anslow, Applicants) Meeting Date: January 12, 2009 Agenda Item Number: 6 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 th Exemption (MUPTE) for The Pearl on Campus at the northwest corner of 16 and Hilyard. 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, in November 2008, the council amended E.C. 2.945 through 2.947 to add a new transit- oriented MUPTE area. th This proposed eight-unit project will be built at 16 and Hilyard on property which is zoned R-3, high- density residential. The site currently has two small single-family homes. The structures have been reviewed by the Planning Division Director and a determination has been made that no significant historic buildings are on this parcel. The buildings are in poor condition and will be demolished. The new development will include three two-bedroom units, two two-bedroom units and three four-bedroom units. Nine parking spaces will be provided on site. The Planning Director has also reviewed the application for any potential code conflicts and found none at this time. The council previously considered and approved a MUPTE application for a different project at this same site. The applicant, David Corey, determined that the project was not financially feasible as proposed and sold the site to the current applicant. The project was then redesigned. The redesign was substantial enough that the City required a new MUPTE application. 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 Z:\CMO\2009 Council Agendas\M090112\S0901126.doc application. However, staff examined the application and new criteria and find that it is very likely that it would have been in compliance. 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. Public Comments A display advertisement was published in the Register-Guard on November 20, 2008, soliciting comments for 30 days. One comment was received during the 30-day period. The comment opposed the MUPTE program. The applicant met with the West University Neighbors and received their endorsement on December 4, 2008. Design Features Consistent with the public benefit criteria 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 three to ten units. This is an eight-unit development in a three-story building, achieving 80% 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. The pro-forma for The Pearl on Campus (below) shows three key reasons that the project would not be built without MUPTE. First, cash flow (CF) is negative until year five. With cash flow at such low levels, 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 only reaches two percent by year ten. Third, the project valuation is well below the amount needed to qualify for conventional financing. (The project value is determined by Net Operating Income (NOI) divided by the capitalization rate.) At project stabilization, the projected value of the property is $1.6 million. The total cost of the project is $1.8 million. At 70% loan to value, the project needs to be valued at $2 million to qualify for $1.4 million in bank debt. Z:\CMO\2009 Council Agendas\M090112\S0901126.doc Year 1Year 2Year 10 Without MUPTE Rent Income$ 158,400$ 159,984$ 173,240 - Vacancy (5%)$ 7,920$ 7,999$ 8,662 = Effective Gross Rent$ 150,480$ 151,985$ 164,578 - Operating Exp (25%)$ 39,600$ 39,996$ 43,310 = NOI $ 110,880$ 111,989$ 121,268 - Debt Service$ 114,606$ 114,606$ 114,606 = CF $ (3,726)$ (2,617)$ 6,662 Cash on Cash Return -1%-1%2% Value $ 1,643,000$ 1,659,000$ 1,797,000 Fiscal Impact This property currently generates $4,136 in property taxes. Based on valuation, 33% is attributed to the land. The land continues to be taxed during the exemption period. Staff estimates the land tax at $1,378 annually. If approved for MUPTE, about $2,758 that is currently collected each year from the existing improvements will be lost ($27,580 over ten years). The new apartments are estimated to generate $15,122 annually in taxes. Therefore, the lost revenue will likely be recovered in year 12, two years after the MUPTE period ends. Timing This application was submitted on November 14, 2008. If the council does not act within 180 days the application is considered approved. The council will have received the Director’s report in the first 90 days and consideration will take place soon thereafter. 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. Z:\CMO\2009 Council Agendas\M090112\S0901126.doc COUNCIL OPTIONS The council may approve the exemption, deny the exemption, or may delay approval in order to request additional information from the applicant 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 4962 approving a Multiple-Unit Property Tax Exemption for residential th property located at 693 E. 16, 1584 and 1586 Hilyard, Eugene, Oregon (The Pearl on Campus, Dean Hansen and Gordon Anslow, applicants). 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. Public Benefit Elements 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\S0901126.doc ATTACHMENT A RESOLUTION NO. _____ A RESOLUTION APPROVING A MULTIPLE-UNIT PROPERTY TAX EXEMPTION FOR RESIDENTIAL PROPERTY LOCATED AT 693 EAST th 16 AVENUE AND 1584 AND 1586 HILYARD STREET, EUGENE, OREGON (PEARL ON CAMPUS/APPLICANT-OWNER). The City Council of the City of Eugene finds that: th A. The Pearl on Campus LLC is the owner of real property located at 693 East 16 Avenue and 1584 and 1586 Hilyard Street, Eugene, Oregon, more particularly described in the legal description attached as Exhibit A (”the property”). Pearl on Campus LLC 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 as The Pearl on Campus (“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 November 20, 2008, and advised that written comments would be accepted for a period of 30 days from the date of publication. Recommendations or comments were also solicited from the Planning Commission, and other interested City departments, agencies, and neighborhood groups. One comment was received from Don Bowers who opined that he was opposed to multiple-unit property tax exemptions. 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 three two-bedroom units, two three- bedroom units, and three four-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 the application of Resolution – Page 1 of 2 The Pearl on Campus LLC for an ad valorem property tax exemption under the City’s Multiple- th Unit Property Tax Exemption Program for the residential units to be constructed at 693 East 16 Avenue and 1584 and 1586 Hilyard Street, Eugene, Oregon, and more particularly described in the legal description attached Exhibit A, subject to the following conditions: 1. The project shall consist of three two-bedroom units, two three-bedroom units, and three four-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 ___________, 2009. ___________________________________ City Recorder 00217117.DOC;1 Resolution – Page 2 of 2 ATTACHMENT B RESOLUTION NO. _____ A RESOLUTION DENYING A MULTIPLE-UNIT PROPERTY TAX EXEMPTION FOR RESIDENTIAL PROPERTY LOCATED AT 693 EAST th 16 AVENUE AND 1584 AND 1586 HILYARD STREET, EUGENE, OREGON (PEARL ON CAMPUS/APPLICANT-OWNER). The City Council of the City of Eugene finds that: th A. The Pearl on Campus LLC is the owner of real property located at 693 East 16 Avenue and 1584 and 1586 Hilyard Street, Eugene, Oregon, more particularly described in the legal description attached as Exhibit A (”the property”). Pearl on Campus LLC 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 as The Pearl on Campus (“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 November 20, 2008, and advised that written comments would be accepted for a period of 30 days from the date of publication. Recommendations or comments were also solicited from the Planning Commission, and other interested City departments, agencies, and neighborhood groups. One comment was received from Don Bowers who opined that he was opposed to multiple-unit property tax exemptions. 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 three two-bedroom units, two three- bedroom units, and three four-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: Resolution – Page 1 of 2 S0901126-attB.DOC 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 The Pearl on Campus LLC for an ad valorem property tax exemption under the City’s Multiple-Unit Property Tax Exemption Program for the th residential units to be constructed at 693 East 16 Avenue and 1584 and 1586 Hilyard Street, Eugene, Oregon, and more particularly described in the legal description attached Exhibit A. 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 S0901126-attB.DOC ATTACHMENT C (EXHIBIT B OF THE RESOLUTION) REPORT AND RECOMMENDATION of the Executive Director of the Planning & Development Department The Pearl on Campus LLC Application for Multiple-Unit Property Tax Exemption The Executive Director of the Planning & Development Department of the City of Eugene finds that: th 1. The Pearl on Campus LLC is the owner of real property located at 693 East 16 Avenue and 1584 and 1586 Hilyard Street, Eugene, Oregon, more particularly described in the legal description attached as Exhibit A to the Resolution approving this tax exemption (“the property”). Pearl on Campus LLC 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 as The Pearl on Campus (“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. •The project is within walking or biking distance of a wide range of shopping opportunities and other services and is ideally located for foot or bike commuting to the U of O, PeaceHealth, Northwest Christian College and the proposed OHSU medical training center. The project will include: •High efficiency, low emissivity coated windows in vinyl frames which provide for minimum heat transfer and which require no recurrent painting; •Traditional attic roof construction for gravity ventilation of heat build-up and traditional extended roof eaves for shade; •Glazing area designed to provide excellent day lighting, south and west windows for solar insulation in winter months, and highly efficient insulation and weatherization; Report and Recommendation / Exhibit B to Resolution No. _____ -- Page 1 of 3 •Time clock and occupancy sensors in the parking area to provide efficient fluorescent light, photocell exterior lights at common areas, and metered utilities for each unit; •The majority of the parking is located under living units to reduce the “heat island” effect of exposed asphalt and the need to cool overheated car interiors; •Construction waste will be kept to minimum and recycled, and the project includes a convenient tenant recycling area; •Builder will use materials produced in local area whenever practical and work with local subcontractors and suppliers when possible; •Architectural interest and contextual compatibility in building design. Larger interior yard set backs maintained; •Cabinets, doors, and trim are prefinished offsite, and the project includes more operable window area than required by Code to enhance indoor air quality. The units will include exhaust fans with timers to reduce moisture problems; •Washers and dryers included in units reduce travel to laundromats; •Individual thermostatic control of heat in each room; and •Landscaping with plants selected for low water usage, ease of maintenance and aesthetic considerations, including many native plants, on all sides of building; trees will be planted in available spaces and street trees will be planted if possible. 2.2.2 Responsiveness to adjacent historic structures. There are no adjacent historic structures. However, the form of the proposed building to be constructed will honor the forms of residential structures. 2.2.3 Use of higher quality materials that contribute to longevity. The project will use high quality 40-year plus rated roof shingles, Hardi brand cementitious exterior siding, vinyl windows, and will include a concrete parking area. A 100-year or longer life is anticipated for the building. 2.2.4 Prominent entry facing the public street. All the units have individual entrances, located at grade level, with six of the eight front doors facing toward the adjoining streets. 2.2.5 Number of units by which minimum density is exceeded or which incorporate three or more bedrooms to encourage families. The project will have eight units. In the R3 zone, this site is allowed to have a minimum of three units and a maximum of ten units. This project exceeds the minimum density by five units. Five of the eight units incorporate three or more bedrooms. 2.2.6 Number of available ADA accessible units. No units will be ADA accessible. 2.2.7 Responsiveness to neighborhood character and safety in respect to height, mass, architectural detail, landscaping and open space. Exterior materials, Report and Recommendation / Exhibit B to Resolution No. _____ -- Page 2 of 3 hips, gables, entry porches, covered balconies, residential style doors and windows, all serve to provide resonance with the neighborhood’s residential character. Allowable height in the R3 zone is 50 feet. The project will be about 36 feet tall and has been designed to compliment the streetscape and neighborhood. Security and safety details include: well-lit, covered parking area, well-lit, private entry door for each unit at grade level in highly visible locations, locked rooms for bicycle storage, and fire sprinklers. The lack of common use stairs and corridors is meant to discourage vandalism. 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 West University Neighborhood Association voted unanimously to support the proposed project. 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 Currently, two dwellings occupy the site. They were built in 1905 and 1948 but are not listed as historic structures. They are both vacant and uninhabitable and will be demolished; and 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 November 20, 2008. The period for comment expired on December 22, 2008. One comment was received from Don Bowers who opined that he was opposed to multiple-unit property tax exemptions. 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 00217120.DOC;1 Report and Recommendation / Exhibit B to Resolution No. _____ -- Page 3 of 3 ATTACHMENT E ATTACHMENT F Examples of Sustainability and Public Benefit Features Sustainability features: •The project is within walking or biking distance of a wide range of shopping opportunities and other services and is ideally located for foot or bike commuting to the U of O, PeaceHealth, Northwest Christian College and the proposed OHSU medical training center. The project will include: •High efficiency, low emissivity coated windows in vinyl frames which provide for minimum heat transfer and which require no recurrent painting; •Traditional attic roof construction for gravity ventilation of heat build-up and traditional extended roof eaves for shade; •Glazing area designed to provide excellent day lighting, south and west windows for solar insulation in winter months, and highly efficient insulation and weatherization; •Time clock and occupancy sensors in the parking area to provide efficient fluorescent light, photocell exterior lights at common areas, and metered utilities for each unit; •The majority of the parking is located under living units to reduce the “heat island” effect of exposed asphalt and the need to cool overheated car interiors; •Construction waste will be kept to minimum and recycled, and the project includes a convenient tenant recycling area; •Builder will use materials produced in local area whenever practical and work with local subcontractors and suppliers when possible; •Architectural interest and contextual compatibility in building design. Larger interior yard set backs maintained; •Cabinets, doors, and trim are pre-finished offsite, and the project includes more operable window area than required by Code to enhance indoor air quality. The units will include exhaust fans with timers to reduce moisture problems; •Washers and dryers included in units reduce travel to laundromats; •Individual thermostatic control of heat in each room; and •Landscaping with plants selected for low water usage, ease of maintenance and aesthetic considerations, including many native plants, on all sides of building; trees will be planted in available spaces and street trees will be planted if possible. Responsiveness to adjacent historic structures: There are no adjacent historic structures. However, the form of the proposed building to be constructed will honor the forms of residential structures. Use of higher quality materials that contribute to longevity: The project will use high quality 40-year plus rated roof shingles, Hardi brand cementitious exterior siding, vinyl windows, and will include a concrete parking area. A 100-year or longer life is anticipated for the building. Prominent entry facing the public street: All the units have individual entrances, located at grade level, with six of the eight front doors facing toward the adjoining streets. Number of units by which minimum density is exceeded or which incorporate three or more bedrooms to encourage families: The project will have eight units. In the R3 zone, this site is allowed to have a minimum of three units and a maximum of ten units. This project exceeds the minimum density by five units. Five of the eight units incorporate three or more bedrooms. Number of available ADA accessible units: No units will be ADA accessible. Responsiveness to neighborhood character and safety in respect to height, mass, architectural detail, landscaping and open space: exterior materials, hips, gables, entry porches, covered balconies, residential style doors and windows, all serve to provide resonance with the neighborhood’s residential character. Allowable height in the R3 zone is 50 feet. The project will be about 36 feet tall and has been designed to compliment the streetscape and neighborhood. Security and safety details include: well-lit, covered parking area, well-lit, private entry door for each unit at grade level in highly visible locations, locked rooms for bicycle storage, and fire sprinklers. The lack of common use stairs and corridors is meant to discourage vandalism.