HomeMy WebLinkAboutItem 3: Ordinance on Low-Income Housing Property Tax Exemptions
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Public Hearing: An Ordinance Concerning Low-Income Housing Property Tax
Exemptions and Amending Sections 2.916, 2.920, 2.938, 2.939 and 2.940
of the Eugene Code, 1971
Meeting Date: April 11, 2011 Agenda Item Number: 3
Department: Planning and Development Staff Contact: Becky L. Wheeler
www.eugene-or.gov Contact Telephone Number: 541-682-5532
ISSUE STATEMENT
The City Council will hold a required public hearing to consider an ordinance amending the Eugene
Code extending the sunset date for the low-income housing property tax exemption program and the 20-
year low-income rental housing property tax exemption program. The proposed ordinance would extend
the sunset date by 10 years for each program. In addition, the proposed ordinance would enable
recipients to reapply for the 20- year low-income rental housing property tax exemption after the initial
20-year period has expired. Action on this item is scheduled for April 13, 2011.
BACKGROUND
Both the low-income housing property tax exemption and the 20-year low-income rental housing
property tax exemption are enabled by state statute. The low-income housing property tax exemption
provides an annual exemption for properties that are used for the purposes of a nonprofit corporation.
This housing is not required to be rental housing. The 20-year low-income rental housing property tax
exemption provides a 20-year exemption for properties offered for rent or held for the purpose of
developing low-income rental housing. Applicants requesting a 20-year exemption are not required to
be a nonprofit in certain instances.
In 1992, the City Council adopted both programs to facilitate the development of affordable housing for
low-income persons. In compliance with provisions enacted by the Oregon Legislature, the City
Council adopted Sections 2.910 to 2.922 and Sections 2.937 to 2.940 of the Eugene Code, 1971, which
provides procedures for granting exemptions from ad valorem taxes on low-income housing and low-
income rental housing developed by non-profits.
The Oregon Legislature extended the sunset for both the low-income housing property tax exemption
annual renewal program and the 20-year low-income rental housing property tax exemption program by
another 10 years to 2014 and 2020, respectively. In order to continue these programs, current Eugene
Code, 1971 must be amended to reflect changes in state law.
Changes to be Made
Eligible tax years – Subsection (2) of Section 2.916 and subsection (2) of Section 2.920 of the Eugene
Code, 1971, need to be amended to extend the tax years in which applicants are eligible to receive an
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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
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federal funds through a One-Year Action Plan. Affordable housing development programs support the
City Council Adopted Growth Management Policies, as well. The recommendation to amend Eugene
Code directly supports the following Growth Management Policies:
Promote construction of affordable housing.
Encourage in-fill, mixed-use, redevelopment, and higher density development.
Improve the appearance of buildings and landscapes.
Provide for a greater variety of housing types.
Extending the City’s tax exemption programs parallels the Envision Eugene pillar of providing
affordable housing for all income levels. The draft Envision Eugene proposal presents Strategy # 4 to
meet the growing and changing housing needs of Eugene residents by supporting subsidized affordable
housing projects. Continuing the existing property tax exemption programs has been identified as a way
in which this goal can be achieved.
COUNCIL OPTIONS
No action is required at this time; however, options will be provided at the time of City Council
deliberations and action scheduled for April 25, 2011.
CITY MANAGER’S RECOMMENDATION
As this is the public hearing for this item, no recommendation is suggested at this time. A
recommendation will be provided for the City Council deliberations and action scheduled for April 13,
2011.
SUGGESTED MOTION
None at this time. A suggested motion will be provided at the time of City Council deliberations and
action scheduled for April 13, 2011.
ATTACHMENTS
A.Location Map
B.Draft Ordinance
FOR MORE INFORMATION
Staff Contact: Becky L. Wheeler
Telephone: 541-682-5532
Staff email: Becky.l.wheeler@ci.eugene.or.us
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ATTACHMENT A
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ATTACHMENT B
ORDINANCE NO. ________
AN ORDINANCE CONCERNING LOW-INCOME HOUSING PROPERTY TAX
EXEMPTIONS AND AMENDING SECTIONS 2.916, 2.920, 2.938, 2.939 AND
2.940 OF THE EUGENE CODE, 1971.
THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS:
Section 1.
Sections 2.916 and 2.920 of the Eugene Code, 1971, are amended to
provide:
2.916 LowIncome Housing Property Tax Exemption - Annual Application
-
Renewal.
(1)
Applicants who have received a property tax exemption under section
2.912 of this code must reapply each year, following the procedures set
forth in section 2.912, no later than March 1 in order to be qualified for
property tax exemption for the following tax year.
(2)
Applicants for property tax exemption under section 2.912 of this code
shall apply for, and may be eligible for property tax exemptions for tax
years beginning on or after July 1, 1994, and before July 1, [2004]
2014.
2.920 LowIncome Housing Property Tax Exemption - Assessment
-
Exemption.
(1)
Property for which an application for a property tax exemption has been
approved under the provisions of sections 2.910 to 2.922 shall be
exempt from ad valorem taxation for one tax year beginning on or after
July 1 of the year immediately following the calendar year in which
construction is completed, determined by that stage in the construction
process when, pursuant to ORS 307.330, the property would have gone
on the tax rolls in the absence of the exemption. The exemption
provided for herein shall be in addition to any other exemption provided
by law.
(2)
Applications for property tax exemption under section 2.912 shall apply
to and may be approved for tax years beginning before July 1, [2004]
2014.
Section 2.
Subsection (1)(g) of Section 2.938 of the Eugene Code, 1971, is amended to
provide:
2.938 Low-Income Rental Housing Property Tax Exemption - Application.
(1)
An application for exemption from property taxes hereunder for low-
income rental housing units constructed after February 12, 1990 shall
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be filed with the city manager, on a form provided by the city manager,
which shall contain the following, if applicable:
(g) Evidence that the property is owned or being purchased by a non-
profit corporation which meets the criteria for a public benefit
corporation as described in ORS 65.001([31]37), or a religious
corporation, as described in ORS 65.001([33]39);
Section 3.
Subsections (2)(h), (3)(c) and (3)(d) of Section 2.939 of the Eugene Code,
1971, are amended to provide:
2.939 Low-Income Rental Housing Property Tax Exemption - Review,
Approval or Denial of Application.
(2)
Upon receipt of the city manager's recommendation the council shall
consider the application and grant or deny the property tax exemption.
The city manager shall recommend approval of an application, and the
council shall grant the exemption upon determining satisfactory
compliance with or mitigation of the following criteria:
(h) The proposed development does not cause destruction of historic
properties (as defined in section [9.202] 9.0500 of this code),
except:
1. Where development has proceeded according to historic
property moving and demolition procedures as set forth in
sections [9.212] 9.8160, 9.8180 and 9.8185 of this code, or
2. The property is granted an exception by the council; and,
(3)
As an alternative to an application considered under subsection (2) of
this section, the city manager shall recommend approval of an
application, and the council shall grant the exemption upon determining
the applicant meets the criteria set forth in subsections (2)(e), (f), (g),
(h) and (i) of this section and all the following criteria:
(c) The applicant’s application was filed prior to January 1,
[2010]2020;
(d) The property is owned or being purchased by a nonprofit
corporation organized in a manner that meets the criteria for a
public benefit corporation, as described under ORS
65.001([31]37) or for a religious corporation, as described under
ORS 65.001([33]39); and
Section 4.
Subsections (1)(a), (4) and (5) of Section 2.940 of the Eugene Code, 1971,
are amended to provide:
2.940 Low-Income Rental Housing Property Tax Exemption - Termination.
(1)
If after a resolution approving an application for exemption hereunder
has been filed with the county assessor the city manager finds that:
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(a) Construction or development of the exempt property differs from
the construction or development described in the application for
exemption, or was not completed or on or before January 1,
[2010]2020, and no extensions or exceptions as provided in
subsection (4) hereof have been granted; or,
(4)
Upon receipt of a request from the property owner, the council may, by
resolution, extend the deadline beyond January 1,[ 2010]2020 for
completion of construction of the low-income rental housing for a period
not to exceed 12 consecutive months, i.e., January 1, [2011]2021, if it
finds the failure to complete construction by January 1, [2010]2020 was
due to circumstances beyond the control of the owner, and that the
owner had been and could reasonably be expected to act in good faith
and with due diligence. If property granted an exemption hereunder is
subsequently destroyed by fire or act of God, or is no longer capable of
owner-occupancy due to circumstances beyond the control of the
owner, the exemption shall cease, but no additional taxes shall be
imposed upon the property under ORS 307.531 or 307.533.
(5)
[In no event shall t]The low-income housing granted an exemption by
the council shall be exempt from ad valorem taxation for [more than] 20
successive years beginning with the tax year commencing immediately
following the calendar year in which the application was approved.
The exemption shall apply only to the land and improvements located
thereon that are a part of the low-income rental housing unit, or land
that is being held for future development of low income rental housing.
The exemption shall be in addition to any other exemption provided by
law. In the final year of low-income housing tax exemptions,
applications for subsequent low-income housing tax exemptions
for the property may be submitted. Such applications shall be
processed in accordance with sections 2.937 to 2.940 of this code.
Section 5.
The City Recorder, at the request of, or with the consent of the City
Attorney, is authorized to administratively correct any reference errors contained herein, or in
other provisions of the Eugene Code, 1971, to the provisions added, amended or repealed
herein.
Passed by the City Council this Approved by the Mayor this
___ day of _______________, 201__ ____ day of _______________, 201__
____________________________ _____________________________
City Recorder Mayor
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