HomeMy WebLinkAboutItem A: Multi-Unit Property Tax Exemption Program
ECC
UGENE ITY OUNCIL
AIS
GENDA TEM UMMARY
Work Session: Multi-Unit Property Tax Exemption (MUPTE) Program
Meeting Date: April 22, 2013 Agenda Item Number: A
Department: Planning & Development Staff Contacts: Denny Braud
www.eugene-or.gov 541-682-5536
ISSUE STATEMENT
On February 27, 2013, the council approved an ordinance suspending the Multi-Unit Property
Tax Exemption (MUPTE) program to provide the time needed for the council to conduct a
detailed evaluation of the program and determine if modifications should be made. This work
session is an opportunity for the council to discuss potential modifications to the MUPTE
program.
BACKGROUND
The MUPTE program is enabled by state legislation and designed to encourage higher
density housing and redevelopment in the core area and along transit corridors. This
objective is strongly aligned with many of the pillars of Envision Eugene. Increasing the amount
of multi-family housing in the downtown and along transit corridors helps reduce the amount
of urban growth boundary (UGB) expansion that is necessary, provides opportunities for more
affordable housing types and protects existing neighborhoods. The program provides a 10-
year property tax exemption on qualified new multi-unit housing investments that
occur within a specific, targeted area, that meet program requirements, and that are reviewed
and approved by the council. During the exemption period, property owners still pay taxes on
the assessed value of the land and any commercial portions of the project, except those
commercial improvements deemed by the council to be a public benefit and included in the
exemption. Currently, eligible MUPTE projects must be located within the Downtown Plan Area
(see Attachment A). A summary of projects that have participated in the MUPTE program since
inception is included in Attachment B.
The following is a summary of recent council actions related to MUPTE:
2008 – The council adopted an ordinance amending the MUPTE boundary to include
the Trainsong area.
2008 – The council established the existing public benefit scoring system for
evaluating applications.
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2011 – The council adopted an ordinance extending the MUPTE program for 10
additional years and amending the boundary to include only the Downtown Plan area
(Trainsong and West University areas were removed). The council also expressed an
interest in staff coming back to discuss other MUPTE areas such as Trainsong.
2011 – Initial council work session related to MUPTE and Envision Eugene. The
council passed a motion to direct staff to not spend any more time on the MUPTE in
the West University Neighborhood.
2012 – The council approved three MUPTE projects: Park Place (Master
Development) Broadway Lofts (Master Development), and 13 and Olive (Capstone).
th
February 25, 2013 – Public Hearing on suspension of the MUPTE program.
February 27, 2013 – The council approved ordinance suspending the MUPTE
program.
The ordinance suspending the MUPTE program expires on June 30, 2013. The council has
expressed a desire to finalize potential modifications to the program prior to the June 30
expiration date. The modifications could include boundary considerations, program criteria, and
project reporting. Such modifications would require a public hearing and approval of an updated
ordinance. If no action is taken before June 30, the suspension will terminate.
Through the comprehensive Envision Eugene analysis, it was determined that meeting the
community’s housing needs within the existing Urban Growth Boundary will not likely occur in
the absence of community investment tools needed to stimulate more dense housing.
Additionally, the community has favored a more urban form of transit-oriented development
focused along corridors, recognizing that more dense mixed-use, walkable neighborhoods
provided numerous community, economic, and environmental benefits. MUPTE is considered
to be one of the primary, cost-effective tools that can be used to impact the location, form,
quality, and density of multi-unit housing development, particularly in areas where significant
transportation infrastructure investments have been made or are planned to be made.
Therefore, it is anticipated that MUPTE will remain a valuable tool for downtown
redevelopment and will be considered for implementation of Envision Eugene in locations
outside of the Downtown Plan Area.
In previous council discussions, it has been suggested that Portland’s Multi-Unit Limited Tax
Exemption (MULTE) be used as a model for potential changes to the MUPTE program. For
discussion purposes, a comparative summary of the MUPTE and MULTE programs is included
in Attachment C. A map of eligible areas in Portland’s MULTE program, and the Portland
MULTE Administrative Rules are included in Attachments D and E. Eugene’s MUPTE program
ordinance and Administrative Order are included in Attachments F and G.
RELATED CITY POLICIES
Utilization of the MUPTE program to stimulate new multi-unit housing development addresses
many goals for Eugene and downtown, including:
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Eugene Downtown Plan
Stimulate multi-unit housing in the downtown core and on the edges of downtown for a
variety of income levels and ownership opportunities.
Downtown development shall support the urban qualities of density, vitality, livability and
diversity to create a downtown, urban environment.
Actively pursue public/private development opportunities to achieve the vision for an
active, vital, growing downtown.
Use downtown development tools and incentives to encourage development that provides
character and density downtown.
Facilitate dense development in the courthouse area and other sites between the core of
the downtown and the river.
Envision Eugene Pillars
Promote compact urban development and efficient transportation options.
- Integrate new development and redevelopment in the downtown, in key transit
corridors
and in core commercial areas.
- Meet the 20-year multi-family housing need within the existing Urban Growth Boundary.
- Make compact urban development easier in the downtown, on key transit corridors,
and in
core commercial areas.
Provide housing affordable to all income levels.
Regional Prosperity Economic Development Plan
Strategy 5: Identify as a Place to Thrive - Priority Next Step - Urban Vitality
- As we foster a creative economy, dynamic urban centers are an important asset.
Eugene, Springfield and many of the smaller communities in the region recognize the
importance of supporting and enhancing vitality in their city centers. Building
downtowns as places to live, work and play will support the retention and expansion of
the existing business community and be a significant asset to attract new investment.
The Cities of Eugene and Springfield will continue to enhance their efforts to promote
downtown vitality through development and redevelopment.
City Council Goal of Sustainable Development
Increased downtown development
COUNCIL OPTIONS
This work session is an opportunity for staff to get feedback from the council regarding potential
changes to the existing MUPTE program. The following next steps have been identified:
1. Draft updated MUPTE program modifications for the council to consider at a subsequent work
session.
2. Seek community and stakeholder input.
3. Council work session to review MUPTE program modifications.
4. Public hearing for ordinance on new MUPTE program modifications.
5. Council action on ordinance implementing MUPTE program modifications.
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CITY MANAGER’S RECOMMENDATION
The City Manager will use council feedback obtained in this work session to bring back
recommendations regarding MUPTE program modifications.
SUGGESTED MOTION
No motion proposed at this time.
ATTACHMENTS
A. MUPTE Boundary Map
B. MUPTE Projects Summary
C. Comparative Summary: Eugene MUPTE and Portland MULTE Programs
D. Portland MULTE Program Map
E. Portland MULTE Program Administrative Rules
F. MUPTE Program Ordinance
G. MUPTE Program Administrative Order
FOR MORE INFORMATION
Staff Contact: Denny Braud
Telephone: 541-682-5536
Staff E-Mail: denny.braud@ci.eugene.or.us
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Attachment C
Comparative Summary: Eugene MUPTE and Portland MULTE
Program Purpose
EUGENE MUPTE PORTLAND MULTE
Stimulate construction of transit supportive multi-unit housing Stimulate the construction of transit supportive multi-unit housing
downtown in order to improve the balance between residential and in the core areas of urban centers to improve the balance between
commercial, ensure use of areas as places for live and work. residential and commercial.
Encourage development of vacant or under-utilized sites downtown. Ensure use of the areas places for live and work.
Encourage development of multi-unit housing with or without parking Promote private investment in transit supportive multi-unit
in structures that include ground floor commercial, on sites with single housing in light rail station areas and transit oriented areas in
story commercial structures, and on existing surface parking lots. order to maximize the transit investment to the fullest extent
possible.
Preserve existing publicly assisted affordable housing.
Establish and design programs to attract new development of
Result in the preservation, construction, addition, or conversion of
multi-unit housing, commercial, and retail in areas located within
units at rental rates or sale prices assessable to a broad range of the
light-rail and transit oriented areas.
general public.
Stimulate the construction of affordable housing and other public
benefits where such housing and benefits may not otherwise be
made available.
Leverage market activities to advance housing and economic
prosperity goals.
Analysis/Comments
Although both programs have similar goals related to transit-oriented development, Portland has taken a more aggressive approach by
o
including downtown and many other areas throughout the City including light rail areas and transit-oriented corridors.
Existing Eugene MUPTE boundary = approx. 0.50 square miles; Existing Portland MULTE boundary = approx. 17 square miles.
o
Because the Portland rental real estate market has experienced significant strengthening (higher rents are more capable of supporting the
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cost of new construction), the program has shifted its purpose to mandate that new affordable housing units are created in every eligible
project.
Application Process
EUGENE MUPTE PORTLAND MULTE
Ongoing application process Competitive application process annually
No limit on number of applications approved Annual Cap: Approve no more than $1 million of estimated
foregone tax revenue each year.
Application fee: $400
Application fee: Established annually (currently $11,000)
30-day public comment period
Public hearing – Portland Housing Advisory Committee
Review of financial information by Loan Advisory Committee
Final approval by Portland Housing Bureau through the filing of an
Application approved by City Council
ordinance with City Council
Analysis/Comments
Portland’s annual cap establishes a competitive environment for a limited amount of tax exemption each year and assumes that there will
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be more project demand than exemptions available. The cap policy was recently implemented in 2012.
The number of approved Eugene MUPTE projects has averaged slightly less than one per year over the life of the program.
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The cap may create scenarios where desirable projects do not move forward once the cap is reached.
o
Portland’s MULTE application fee is intended to meet the administrative cost associated with monitoring program compliance, although
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Portland has indicated that actual administrative costs likely exceed the fees collected.
Application Submission Requirements
EUGENE MUPTE PORTLAND MULTE
Schematic drawing/elevation of the proposed project. Conceptual site plan
Description of the number, size, and type of dwelling units and Description of the number, size, and type of dwelling units,
dimensions of structure. dimensions of structure, proposed lot coverage of building,
amount of open space, type of construction, public/private
Plan identifying public/private access, parking/circulation, and
access, parking/circulation plan, number of commercial/residential
landscaping.
off-street parking spaces, floor area dedicated to residential/non-
Proper notification before removing structures, and appropriately
residential uses.
addressing historic structures.
Description of existing use of property and justification for
Description of public benefits (as defined in the program criteria) to be
elimination of rehabilitable housing.
included in the project.
Public benefits description.
Information on the project costs and financing, and other information
Project schedule.
required by City on the financial feasibility of the project, including:
-Pro forma financial analysis of projected rate of return for the
Financial Information:
project with and without the tax exemption.
-Pro forma development budget
-Projected rental rates with and without the tax exemption.
-Pro forma sources and uses
-15-year pro forma operating cash flow without exemption
-15-year pro forma operating cash flow with exemption
-15-year pro forma operating cash flow showing necessary
increase in units rents necessary to achieve the same return as
with the exemption
-Rent structure by unit type
-Description of how real estate taxes were determined
-All components of developer equity
-Copy of market study provided by senior lender
Analysis/Comments
Both programs’ financial submission requirements are similar; however, the Portland MULTE program is more specific in their program
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description.
The Portland MULTE requires a market study for the proposed project in cases where projects are petitioning to provide affordable units at
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80% median income in high costs areas (ex. downtown).
Financial Analysis
EUGENE MUPTE PORTLAND MULTE
Staff conduct a 10-year financial analysis, based on industry-standard Portland Housing Bureau staff conduct a financial analysis without
methodologies, without and with the exemption and with the tax exemption.
Financial analysis is reviewed by the Loan Advisory Committee
PDD Director provides recommendation regarding financial “but for”
analysis.
Analysis/Comments
The up-front staff financial analysis for both programs is similar.
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The Eugene MUPTE program also utilizes outside the outside, community expertise of the Loan Advisory Committee to review staff’s
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analysis.
Minimum/Required Criteria
EUGENE MUPTE PORTLAND MULTE
Five or more units. At least 10 units with a minimum density of 35 units per net acre
(residential only), or 20 units per net acre (mixed-use with ground
Located within Downtown Plan Area.
floor commercial), and at least two times the amount of
Project would not be built “but for” the tax exemption.
residential floor area to non-residential floor area.
Comments solicited from affected neighborhood.
Located within identified Designated Plan Areas/Metro 2040
Applications must respond to specific Public Benefit Criteria related to:
Centers, within a quarter mile radius of Max Station Areas, or
- Density
within a quarter mile from either Metro 2040 Main Streets with
- Location (Downtown, Opportunity Site)
Transit with Transit Service or Metro 2040 Corridors with Frequent
- Green Building: LEED or Earth Advantage
Transit Service within City of Portland.
- Affordable Housing
Project would not be built “but for” the tax exemption
- Home Ownership
For rental project, submit documentation that the anticipated rate
- ADA Accessibility
of return for the exemption period will not exceed 10 percent.
- Historic Preservation
- Parking
For rental projects, minimum of 20 percent of units affordable to
households earning 60 percent of area median family income, or
80 percent in high cost market areas.
For sale housing units must sell for less than 120% of Portland
annual median sale price.
Must provide a plan to meet minority, women, and emerging small
business hiring for professional services and construction
contracting.
Must submit marketing plan for engaging community stakeholders
and use of gathering and commercial space.
Required to participate in Neighborhood Contact process prior to
application.
Must certify to build the project using a green building standard:
LEED silver, Earth Advantage Multi-Family silver, Oregon’s Reach
Code, Enterprise Green Communities for affordable housing.
Project must provide a pedestrian connection (sidewalks,
walkways, stairways, pedestrian bridges) to enhance effectiveness
of light rail or mass transportation system.
Must own or have site control of project site.
Analysis/Comments
Eugene’s required MUPTE criteria reflects the requirements included in state statutes and additional public benefits.
o
Portland has established a longer list of requirements for MULTE eligibility which reflects their specific program purpose, particularly related
o
to the required provision of affordable housing and the cap (10%) on the projects financial rate of return.
Portland has indicated that no projects in the MULTE portfolio have been required to make a Accrued Payment Liability payment under their
o
rate of return cap.
Rent levels in the Portland market that are considered to meet the “affordable” requirement are much higher than in Eugene. Therefore, it
o
may be difficult to mirror Portland’s affordable housing approach without significantly impacting the financial feasibility of a project.
Eugene has used an alternative program, the Low-Income Housing Tax Exemption, to stimulate affordable housing in the core (ex. Aurora
o
th
Apartments, WestTown on 8).
Public Benefit Scoring
EUGENE MUPTE PORTLAND MULTE
Degree to which the project exceeds minimum density requirements Priority points for:
-Affordability in addition to minimum requirement
Located on a designated “opportunity site”.
-Achieve the vision contained in Portland Housing’s “Guiding
LEED certification or Earth Advantage Certification
Principles on Equity and Social Justice” through partnerships
Number of units affordable to households earning 60 percent of
with community based organizations, the use of commercial
median income.
space, etc.
At least 50 percent of the units dedicated to home ownership.
-Units available to persons with special needs, accessible units.
Number of ADA accessible units.
Bonus Points for:
Acceptable plan for preservation and enhancement of historic locales.
-Family sized units (2+ bedrooms) in areas lacking such units,
Located in the Downtown Plan Area.
with family friendly amenities.
In Residential Parking Program zones, number of parking spaces
-Access to grocery stores, schools, day care
provided in excess of what is required by code.
-Quality gathering space available to the community
-Portion of units reserved in partnership with agency serving
vulnerable populations.
Analysis/Comments
Eugene MUPTE program uses a point system that reflects specific public benefit outcomes beyond the minimum state statute requirements.
o
Portland MULTE uses a point system that reflects additional public benefits provided beyond their minimum program requirements as a tool
o
for comparing and selecting amongst multiple, competing applications.
Compliance Requirements
EUGENE MUPTE PORTLAND MULTE
Following application approval and immediately prior to Owners sign an “Extended Use Agreement” related to affordability
commencement of construction, working drawings and other and the project rate of return.
documents reviewed by City to ensure project will comply with
Owners submit certification of public benefits requirements with
approval conditions upon completion.
the first annual financial documentation submitted.
Council resolution includes disqualification provision in the event that
Owners submit financial information annually (audited financial
the approved project does not meet the approved project description.
statements, tax returns, 10-year operating cash flow with to-date
Submission of green building certification (if applicable). rate of return)
Portland Housing Bureau prepares annual analysis and informs
owner if rate of return is expected to exceed 10 percent for the
entire exemption period.
At the end of 10-year period, if the overall rate of return exceeds
10 percent:
-The Extended Use Agreement requires an additional 5-year
period of affordability (number of units necessary to reduce
the return to 10 percent); or
-Owner pays an “Accrued Payment Liability” in an amount
equal to the net present value of the difference between the
actual cash flow during the exemption period and the pro
forma projected cash flows that would provide a 10 percent
return during the exemption.
For ownership projects, verification that homebuyers meet
program criteria.
Analysis/Comments
Portland MULTE requirements, particularly related to affordable housing and the rate of return cap, require significant on-going monitoring
o
for compliance. Project monitoring may be required for several years following expiration of the program.
Financial statements and tax returns are typically treated as confidential information.
o
%XXEGLQIRX(
Attachment E
PORTLAND MULTE – ADMINISTRATIVE RULES
Definition of Administrative Rules
These Administrative Rules are created in accordance with the City of Portland’s Administrative Rule
process by the Portland Housing Bureau (PHB) in order to define the policies, processes, and
procedures of implementation of the Multiple-Unit Limited Tax Exemption Program authorized by City
Code 3.103 (Property Tax Exemption for Multiple-Unit Housing Development) and State Statute, ORS
307.600 through 307.637.
The Administrative Rules shall be approved through City Council annually however the Director of the
PHB or a designee shall have authority to make changes to the Administrative Rules as is necessary to
meet current program requirements throughout the year.
Program policies, processes, and procedures are outlined in these Administrative Rules however there
may be additional program requirements necessary to maintain compliance with City Code and State
Statute. The items included in these Administrative Rules are the following:
1. Program Goals
2. Benefit of the Tax Exemption
3. Minimum Threshold Requirements
4. Application Review and Scoring of Public Benefits
5. Application Approval
6. Compliance Requirements
7. Termination of Active Exemptions
8. PHB Administrative Requirements and Dates
9. Attachments
Program Goals
The Legislative goals of the Multiple-Unit Limited Tax Exemption Program include:
• Stimulate the construction of transit supportive multiple-unit housing in the core areas of urban
centers to improve the balance between the residential and commercial nature of those areas;
• Ensure full-time use of the areas as places where citizens of the community have an opportunity to
live as well as work;
• Promote private investment in transit supportive multiple-unit housing in light rail station areas and
transit oriented areas in order to maximize transit investment to the fullest extent possible; and
• Establish and design programs to attract new development of multiple-unit housing and commercial
and retail property, in areas located within a light rail station area or transit oriented area.
The City of Portland and Multnomah County have established these additional core goals:
• Stimulate the construction of affordable housing and other public benefits where such housing or
benefits may not otherwise be made available;
• Leverage market activities to advance housing and economic prosperity goals by aligning those
activities with the goals of the Portland Plan and the PHB’s Strategic Plan; and
• Provide transparent and accountable stewardship of public investments.
Benefit of the Tax Exemption
The Multiple-Unit Limited Tax Exemption Program provides a ten year property tax exemption on the
residential portion of the structural improvements as long as program requirements are met. During
the exemption period, property owners are still responsible for payment of the taxes on the assessed
value of the land and any commercial portions of the project, except for those commercial
improvements deemed a public benefit and approved for the exemption.
The value of the exemption cannot exceed 100 percent of the real market value. In the case of a
structure converted in whole or in part from other uses to multiple-family, only the increase in value
attributed to the conversion is eligible for the exemption.
The property is reassessed when the exemption is either terminated for noncompliance or expires
after the ten years, and owners begin paying full property taxes.
• Commercial portions of a project – For exemption of the commercial portion of a mixed use
development, the developer must demonstrate through community engagement and/or a market
analysis that the commercial space meets a community identified need for a good or service that is
not currently available within walking distance, does not compete with a similar established business
within walking distance, and advances Portland Development Commission’s (PDC) Neighborhood
Economic Development Goals.
• Parking – The exemption may include parking constructed as part of the multiple-unit housing
construction, addition or conversion; any parking available shall not be required as payable rent.
• Extensions for low income housing – Extensions beyond the ten year exemption period will be
granted only for projects subject to a low income housing assistance contract with an agency or
subdivision of Oregon or the United States.
Applications for extensions must be submitted under the same application timeline as new applications
prior to the exemption expiring. Extensions may be granted only for the portion of units which meet
the affordability requirements through June 30 of the tax year during which the termination date of
the low income housing assistance contract falls. Projects that propose to make changes to the
affordability mix must reapply through the competitive process.
Minimum Threshold Requirements
• Eligible areas – Projects must be located within identified Designated Plan Areas/Metro 2040
Centers, within a quarter mile radius of Max Station Areas, or within a quarter mile from either Metro
2040 Main Streets with Transit Service or Metro 2040 Corridors with Frequent Transit Service within
the City of Portland as illustrated on the map attached as Exhibit 1.
• Timing of application – Applications for tax exemption must be submitted and approved prior to
application for the project’s building permit.
• Rental project financial need – Analysis of the project pro forma must establish that the project
would not otherwise be financially feasible without the benefit provided by the property tax
exemption; the applicant must submit documentation that the anticipated rate of return for the
project for the period of the exemption will not exceed 10 percent.
• Affordability – For rental projects, during the term of the exemption, a minimum of 20 percent of
the number of units must be affordable to households earning 60 percent or less of the area median
family income upon initial occupancy of the unit by that household. In high cost market areas a
project may propose 20 percent of the number of units affordable to households earning 80 percent or
less of the area median family income based on the market for similar units in the same geographic
area supported by a market study.
Subsequent monitoring of the incomes of these households is not required until the affordable unit
again becomes available for rent, at which time it must be rented to an income qualified household
earning 60 percent (or 80 percent if approved as such) of the area median income for the remaining
term of the property tax exemption, unless another unit has subsequently been rented at an
equivalent affordable rate to a qualified household so that the project continues to comply with the
affordability guidelines.
Measurement of household income shall be determined using the U.S. Department of Housing and
Urban Development’s, or its successor agency’s, annual household income for the Portland
Metropolitan Area for a family of one person (for a studio apartment), two persons (for a one-bedroom
apartment), three persons (for a two-bedroom apartment), or four persons (for a three-bedroom
apartment). Affordability shall be defined as a rental rate which does not exceed 30 percent of the
monthly gross income including allowances for utilities (rent burden).
Affordable units to be distributed evenly amongst unit mix (bedroom sizes). Projects must maintain
the same unit distribution of affordable units during the exemption period but individual units do not
need to be designated.
• For-sale project financial need/Affordability – Units receiving tax exemption will be sold to
buyers meeting the affordability requirements. Homebuyers (who will be both on title to the property
and occupying the home) must earn no more than 100% median family income for a family of four,
adjusted upward for households larger than 4 persons.
• For-sale project price cap – The property must sell for less than the sale price cap established
annually by PHB – no more than 120% of the annual median sale price (or appraised value if an
owner/builder) for the City of Portland.
• For-sale project occupancy – For-sale units may not be rented at any time (both prior to initial
sale and after homebuyer qualification); properties which are rented are subject to termination of the
exemption. Homebuyers must occupy the property as their primary residence.
• MWESB goals – Applicants must provide a plan to meet PHB’s business equity goals for
participation of Minority, Women, and Emerging Small Businesses (MWESB) in professional services
and construction contracting and City workforce training and hiring goals.
• Marketing Plan – Applicants must submit a Marketing Plan that describes elements including but
not limited to engaging community stakeholders, the use of gathering and commercial space in the
project, and outreach to a target audience.
• Neighborhood Contact – Applicants are required to participate in the Neighborhood Contact
process prior to applying for the building permit and tax exemption program. The Neighborhood
Contact process provides a setting for the applicant and neighborhood residents to discuss a proposed
project in an informal manner. By sharing information and concerns during the application process, all
involved have the opportunity to identify ways to improve a proposed project, and to resolve conflicts
before the tax exemption is approved.
The requirements for Neighborhood Contact are:
• The applicant must contact the neighborhood association for the area, by registered or certified
mail, to request a meeting. A copy of this request must also be sent by registered or certified mail to
the district neighborhood coalition.
• The neighborhood association should reply to the applicant within 14 days and hold a meeting within
45 days of the date of the initial contact. If the neighborhood association does not reply to the
applicant's letter within 14 days, or hold a meeting within 45 days, the applicant may request a land
use review or building permit without further delay. If the neighborhood requests the meeting within
the time frame, the applicant must attend the meeting. The applicant may attend additional meetings
on a voluntary basis. The neighborhood may schedule the meeting with its board, the general
membership, or a committee.
• After the meeting and before pulling the building permit, the applicant must send a letter to the
neighborhood association and district neighborhood coalition. The letter will explain changes, if any,
the applicant is making to the proposed project.
• Copies of letters, and registered or certified mail receipts must be submitted with the tax exemption
application.
• Green building – The project must be built to meet healthy and resource efficient environmental
building standards. The applicant must certify in the application to build the project using one of the
following standards:
• Register and certify at the silver level for US Green Building Council’s Leadership and Energy in
Environmental Design (LEED);
• Register and certify at the silver level for Earth Advantage Multifamily;
• Build to meet Oregon’s Reach Code for Commercial or Residential Buildings; or
• Comply and certify for Enterprise Green Communities’ criteria for affordable housing.
Certification must be submitted to PHB with the first year’s financial document submission. If the
project is not built to meet one of the standards, the exemption will be terminated.
• Eligible project types – Projects must be proposed construction, additions to existing structures or
conversion of existing non-residential property to housing.
Projects must have at least ten units with a minimum density of 35 units per net acre of site area
(residential only); or at least ten units with a minimum density of 20 units per net acre of site area
(mixed use with ground floor commercial space) and at least two times the amount of residential floor
area to non-residential floor area; home ownership projects are exempt from this requirement.
A row-house or townhouse development containing for-sale or rental units is eligible as long as all
other eligibility criteria are met.
The project must not be designed or used as transient accommodation, including but not limited to
hotels and motels.
Existing multiple-unit housing projects which are currently or will become subject to a low income
housing assistance contract with an agency or subdivision of Oregon or the United States are eligible
to apply through the competitive process to receive an exemption in order to preserve or establish
existing housing that is affordable to low income persons.
• Pedestrian connection – The project must provide a pedestrian connection and be physically or
functionally related to and enhance the effectiveness of a light rail line or mass transportation system
Pedestrian connection means a continuous, unobstructed, reasonably direct route between two points
that is intended and suitable for pedestrian use. Pedestrian connections include but are not limited to
sidewalks, walkways, stairways and pedestrian bridges. On developed parcels, pedestrian connections
are generally hard surfaced. In parks and natural areas, pedestrian connections may be soft-surfaced
pathways. On undeveloped parcels and parcels intended for redevelopment, pedestrian connection
may also include rights-of-way or easements for future pedestrian improvements.
• Qualified applicant – Applicant must own or have site control of the project site.
• Additional application requirements – Applicant must provide the following information in the
completed application and supporting documentation:
Project description:
• Number, size, and type of dwelling units;
• Dimensions of the multiple-unit structure(s), parcel size, proposed lot coverage of building, and
amount of open space;
• Type of construction;
• Public and private access;
• Parking and circulation plan;
• Number of residential and commercial off-street parking spaces;
• Proposed amount of floor area dedicated to residential and nonresidential uses;
• Description of the existing use of the property, including if appropriate a justification for the
elimination of existing sound and rehabilitable housing;
• Conceptual site plan and supporting maps (drawn to a minimum scale of one inch equal to 16 feet,
or a scale suitable for reproduction on 8-1/2" by 11" paper, showing the development plan of the
entire project including streets, driveways, sidewalks, pedestrian ways, off street parking, loading
areas, location, design, and dimension of structures, use of land and structure(s), major landscaping);
• Public benefits description (including any extension of public benefits from the project beyond the
period of the exemption); and
• Project schedule.
Financial Information (for rental projects only) – spreadsheet(s) to be submitted electronically/”live”
(not PDF):
• Pro forma development budget (detailed project costs);
• Pro forma Sources and Uses;
• 15 year pro forma operating cash flow (income and expense analysis) without the exemption –
demonstrate the 10 year average cash on cash return;
• 15 year pro forma operating cash flow (income and expense analysis) with the exemption –
demonstrate the 10 year average cash on cash return;
• 15 year pro forma operating cash flow (income and expense analysis) showing the necessary
increase in unit rents to achieve the same return as with the exemption – demonstrate the average
cash on cash return;
• Rent structure by unit type (affordable units to be net of utility allowance);
• Description of how real estate taxes without the exemption were determined;
• All components of developer equity including invested cash; and
• Copy of the market study provided to the senior lender for the project.
Legal:
• Property tax printout for all parcels, showing tax account numbers and legal descriptions (include
copy of deed to document ownership or full legal description if necessary);
• Legal articles of entity who will receive the exemption (Identifying signature block);
• Applicant should identify any mutual identity of interest between themselves and the construction
contractor;
• Such other information required by state or local law or otherwise which is reasonably necessary;
and
• Application provided by PHB with applicant’s signature verifying oath or affirmation.
Application Review and Scoring of Public Benefits
• Annual cap – PHB will approve no more than $1 million of estimated and projected foregone
revenue each year. Properties located in eligible areas within the Gateway and Lents Urban Renewal
Areas are exempt from the cap.
• Time frame – PHB will have an annual open application window through a competitive process. The
first application round is expected to start on August 15, 2012. Applicants will have 45 days to submit
an application for review. Approved exemptions will go into effect July 1 of the assessment year in
which construction was completed, but no earlier than July 1, 2014.
• Threshold requirements – Applications will be reviewed to determine if the program minimum
threshold requirements are met and if there is a financial need for the exemption. Projects meeting
the minimum threshold requirements will be weighed for the largest benefits to the city.
• Public Benefits – Applicants must commit to providing public benefits to the community and will
receive points for the level of commitment made, allowing them to compete against other applicants.
Projects must achieve a minimum score to reach a “medium” level in the scoring in order to be
competitive. The possible public benefits include but are not limited to the following:
Priority points for:
• Affordability in addition to threshold requirement, balanced with market rents (rental projects ) or
sale prices (for-sale unit) in the area;
• Applicant’s demonstration in the MWESB and Affirmative Marketing Plans of how the project will help
PHB achieve the vision contained in PHB’s “Guiding Principles on Equity and Social Justice” through
partnerships with community based organizations, the use of any commercial space, etc.; and
• Units accessible to persons with special needs, such as the mentally or physically disabled or other
categories of persons as defined by the Federal Fair Housing Amendments Act of 1988 in addition to
ADA and Fair Housing minimum requirements (i.e. all units “accessible ready”, a portion of or all units
fully “accessible”, and incorporation of established accessible design features, such as Universal
Design, at both unit and site level.)
Bonus points available for:
• Family sized units (2+ bedrooms) in areas lacking housing units with two or more bedrooms (as
defined in a map attached as Exhibit 2) with appropriate family friendly amenities (family oriented
recreational facilities for the children of project residents such as secure on-site play area, on-site
garden area, etc.);
• Access to grocery stores, schools, day care, etc. (within ¼ mile);
• Quality gathering space (exterior or interior) available to the community at large (on-going or by
reservation) such as permanent dedications for public use including open space, community gardens,
or pedestrian and bicycle connections to public trails and adjoining neighborhood areas; and
• A portion of units reserved for and an established partnership with an agency to provide services to
vulnerable populations (i.e. youth who have transitioned or are transitioning out of foster care, women
fleeing domestic violence, veterans).
• PHIC Review – The PHB Housing Investment Committee will confirm the projects selected based
on the scoring of the public benefits.
• Application fee – Applicants must pay PHB an application fee (to be established annually, including
the fee to be paid to Multnomah County) for each selected application.
• Public hearing before PHAC – PHB will present the selected applications to the Portland Housing
Advisory Committee at a public hearing, for which public notice will be given and public testimony will
be heard.
• URA approval – For properties located in Urban Renewal Areas, PHB will contact Portland
Development Commission (PDC) for approval prior to approval of the application.
Application Approval
• 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.
For-sale units
• Agreement/Notice – Prior to approval, applicants must execute a document to be recorded on
title to the property requiring PHB verification of homebuyer affordability and owner-occupancy
qualification prior to the sale of the property to the initial homebuyer.
• Homebuyer verification – The initial homebuyer must submit a verification form and supporting
documentation at least 10 business days prior to closing on the home purchase and must not close
without PHB review and response. The verification form must be signed by all homebuyers; income
documentation should be submitted for all homebuyers who will both be on title to the property and
living in the home.
Supporting income documentation includes the last two years of W2s, the most current month’s worth
of paystubs, and documentation of any additional income received such as social security, child
support, alimony, or unemployment; self-employed homebuyers must submit two years of filed
federal tax returns with all schedules and a current year-to-date profit and loss statement. PHB may
require additional documentation in order to fully verify current income of the homebuyers including
letters of explanation or affidavits.
• PHB review prior to closing – PHB will notify homebuyer and escrow of homebuyer qualification
(affordability and owner-occupancy) prior to closing.
• Sales over the price cap – Escrow must notify PHB if a property is selling over the established
price cap. If the exemption is already in effect, it will be terminated and escrow must request the
amount of any taxes exempted due from Multnomah County to be paid at closing by the seller.
• Construction completion – The property must be fully constructed upon sale (documented by
final permit or certificate of occupancy and usually verifiable by PHB through Portland Maps).
• Verification of closing – Homebuyers must send PHB documentation of the final sale price and
title holders within 30 days of closing by submitting a copy of the recorded Warranty Deed or the Final
HUD-1 Settlement Statement.
• Subsequent homebuyers – If a property with a tax exemption transfers title during the ten year
exemption period, the exemption will continue as long as the property remains owner occupied.
• Owner Occupancy – The Property may not be rented at any time (both prior to initial sale and
after homebuyer approval). After initial sale, the property must be owner occupied (or listed for sale
and vacant) during the exemption period.
Multnomah County will provide an annual list to PHB of all multiple-unit for-sale exemptions where the
property (situs) address differs from the mailing address on record for the tax bill prior to June 30
each year. Properties with a post office box as the mailing address will be included in this list.
PHB will send a letter to property owners on the list provided by Multnomah County at both the
property and mailing addresses requesting documentation that a property is being occupied as the
owner’s primary residence and that the property is not rented. Documentation includes but is not
limited to copies of the prior year’s complete federal tax return, government issued photo
identification showing the property address, and a recent (within two months) utility bill showing the
mailing address and billing address as the property address.
PHB will determine if documentation submitted is sufficient to document owner occupancy. If PHB
finds that the property is not owner occupied, the exemption will be terminated.
Hardship exception process – If PHB determines that a property owner is not meeting the owner
occupancy requirement of the program, a property owner may submit a letter to PHB asking for a
hardship exception to the requirement.
Hardship exceptions may be granted for (but are not limited to) the following situations: active
military duty outside of the area, temporary relocation to care for an ill or dying family member, or
temporary relocation caused by an employer. Hardship exceptions are allowed for one year so a
property owner would need to request an additional exception each year should the hardship situation
continue.
PHB will review the hardship situation and determine whether or not an exception to the owner
occupancy requirement can be granted for one year. PHB will not accept a hardship exception if the
property has been rented.
Termination of Active Exemptions
If the property no longer qualifies for the tax exemption prior to the exemption expiring, the
exemption will be terminated.
PHB will send a certified letter to the mailing addresses on record with the date of a hearing where the
property owner may show cause why the exemption should not be terminated. The hearing will be
scheduled at least 20 days from the mailing of the letter. PHB staff will determine whether or not the
property owner has presented sufficient cause to not terminate the exemption. PHB will also send a
letter to the lender on record from recorded documents notifying them of their right to attempt to cure
or remedy the non-compliance within 30 days.
PHB will go before city council annually in late August with a list of all exemptions to be terminated for
the current tax year.
PHB Administrative Requirements and Dates
• Annual review of market value/price cap for for-sale units – PHB must review and establish
an annual maximum market value and price cap based on data of the previous year’s sales within the
city of Portland provided by Multnomah County. PHB must present a resolution to City Council to
approve the cap prior to January 1.
HISTORY
Ordinance No. 185477, passed by City Council June 27, 2012 and effective August 1, 2012.
Attachment F
COUNCIL ORDINANCE NUMBER 20479
COUNCIL BILL NUMBER 5055
AN ORDINANCE CONCERNING MULTIPLE -UNIT HOUSING
PROPERTY TAX EXEMPTIONS AND AMENDING SECTIONS
2.945 AND 2.947 OF THE EUGENE CODE, 1971.
ADOPTED: September 26, 2011
SIGNED: September 28, 2011
PASSED: 8:0
REJECTED:
OPPOSED:
ABSENT:
EFFECTIVE:
October 29, 2011
ORDINANCE NO. 20479
AN ORDINANCE CONCERNING MULTIPLE -UNIT HOUSING PROPERTY
TAX EXEMPTIONS AND AMENDING SECTIONS 2.945 AND 2.947 OF
THE EUGENE CODE, 1971.
The City Council of the City of Eugene finds as follows:
A. In accordance with State law, Sections 2.945 and 2.947 of the Eugene Code
1971, were adopted setting forth provisions regarding approval of multiple -unit housing
property tax exemptions. One of the criteria for approving a multiple -unit housing
property tax exemption required that the project be completed on or before January 1,
2012.
B. State law has recently been amended and extended the January 1, 2012
project completion deadline to January 1, 2022, and authorized the granting of an
exemption for a commercial use that is part of the multiple -unit housing building.
C. The Council has determined that Sections 2.945 and 2.947 of the Eugene
Code 1971, should be amended to allow the City's multiple -unit housing property tax
exemption program to continue, consistent with the new State law, for the downtown
core. Although this Ordinance extends the program at this time only for the downtown
core, the Council will be considering in the near future what other parts of the City
should be eligible for the multiple -unit housing property tax exemption program.
THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS:
Section 1 . Sections 2.945 and 2.947 of the Eugene Code, 1971, are
amended to provide as follows:
2.945 Multiple -Unit Housina — Prot)erty Tax Exemption.
(1) The provisions of ORS 307.600 to 307.637 enable cities to grant local
property tax exemptions for multiple -unit housing located in core and
transit oriented areas designated by the city. There is a need and
demand for better housing at rental rates or sale prices accessible to a
broad range of the general public in the core and transit oriented areas
which is not likely to be produced without this incentive. This incentive
is intended to:
(a) Stimulate the construction of transit supportive multiple -unit
housing in the city's core and transit oriented areas to improve the
balance between the residential and commercial nature of those
Ordinance -- Page 1 of 7
areas, and to ensure full -time use of the areas as places where
citizens of the community have an opportunity to live as well as
work;
(b) Encourage the development of vacant or under utilized sites in
core and transit oriented areas, rather than sites where sound or
rehabilitable multiple -unit housing exists;
(c) Encourage the development of multiple -unit housing, with or
without parking, in structures that may include ground level
commercial space;
(d) Encourage the development of multiple -unit housing, with or
without parking, on sites with existing single -story commercial
structures;
(e) Encourage the development of multiple -unit housing, with or
without parking, on existing surface parking lots; and
(f) Preserve existing publicly assisted housing that is affordable to low
income persons by providing the incentives authorized in ORS
307.600 to 307.637 to existing multiple -unit housing that is subject
to a low income housing assistance contract with an agency or
subdivision of this state or the United States.
(2) The provisions of ORS 307.600 to 307.637 are hereby.adopted'as the
city's multiple -unit housing property tax exemption program. Sections
2.945 and 2.947 of this code shall apply in the downtown area depicted
on Map 2.945(2) attached to Ordinance 20479 and appended to
chapter 2 of this code.
(3) Applications for property tax exemption hereunder shall be filed with the
city manager on or before February 1 immediately preceding the first
assessment year for which exemption is requested and shall be
accompanied by an application fee. The application shall be processed
in accordance with standards and guidelines adopted by administrative
rule of the city manager. As used in this section and section 2.947 of
this code and the standards and guidelines, "city manager" includes the
manager's designee. The standards and guidelines adopted by the city
manager in the manner described in section 2.019 of this code shall
contain provisions relating the net financial benefit from the property tax
exemption to the public benefits provided by the improvements,
including a public benefit scoring system for evaluating applications.
(4) Upon receipt of the city manager's written recommendation on an
application, the council shall consider the application, the city
manager's written recommendation, and any written comments
submitted during the 30 day comment period on the application at its
next scheduled meeting. If the council fails to act on an application
which has been timely referred to it as provided in the standards and
guidelines within 180 days From the date it was filed, the application
shall be deemed approved and processed thereafter in accordance with
subsection (9) of this section.
Ordinance -- Page 2 of 7
(5) At the meeting at which the city manager's recommendation on an
application is considered, the council shall adopt a resolution approving
the application and granting the property tax exemption, or adopt a
resolution disapproving the application and denying the property tax
exemption.
(6) In order to approve an application, - the council must find that:
(a) The project will provide multiple -unit housing of five or more units;
(b) The project is located within the boundaries of the core or transit
oriented areas described in subsection (2) above;
(c) The proposal could not financially be built "but for" the tax
exemption;
(d) The applicant solicited comments from city- recognized affected
neighborhood associations;
(e) The requirements in the standards and guidelines related to
proximity to historic resources have been satisfied;
(f) The applicant has complied with the provisions of the standards
and guidelines;
(g) In case of multiple -unit housing located in the transit oriented area
described in subsection (2)(b) of this section, the structure must:
1. Be physically or functionally related to a light rail or mass
transportation system; and
2. Enhance the effectiveness of a light rail or mass
transportation system.
(h) In the case of the construction of, or the addition or conversion to
multiple -unit housing:
1. The construction, addition or conversion will be completed
on or before January 1, 2022;
2. The owner has agreed to include in the construction,
addition or conversion, as a part of the multiple -unit housing,
one or more public benefits, including but not limited to
commercial uses of a portion of the multiple -unit housing
structure, open spaces, parks and recreational facilities,
common meeting rooms, child care facilities, transit
amenities and transit or pedestrian design elements, or
benefits otherwise specified in the standards and guidelines;
3. The proposed construction, addition or conversion project is,
or will be at the time of completion, 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, that are applicable at
the time the application is approved;
(i) In the case of multiple -unit housing subject to a low income
housing assistance contract with an agency or subdivision of this
state or the United States,
1. The application for exemption was made on or before
January 1, 2022;
Ordinance -- Page 3 of 7
2. It is important to the community to preserve the housing as
low income housing and it is probable that the housing would
not be produced as or remain low income housing without
the exemption being granted;
(j) The multiple -unit housing is not designed for, and will not be used
as transient accommodations; and
(k) Granting the application is in - the public interest. In making this
determination, council shall consider, among other things, the
number of points awarded based on the public benefit scoring
system contained in the standards and guidelines.
(7) Unless the council makes each of the findings required by subsection
(6) of this section, the council shall deny the application. In addition to
the owner's name and address, and a legal description or the
assessor's property account number for the subject multiple -unit
housing, the resolution approving the application shall contain the
above findings and set forth the specific conditions of approval or
exclusions therefrom and specify the percentage and duration of the
exemption. A resolution denying an application shall set forth the
specific reasons for denial.
(8) The city manager shall forward to the applicant a copy of the resolution
adopted by the council within 10 days from the date the council acts on
the application, and on or before April 1 following approval, shall file
with the county assessor a copy of - the resolution approving an
application.
(9) With respect to an application deemed approved through inaction of the
council under subsection (4) of this section, on or before April 1
following the expiration of the 180 -day period, the city manager shall file
with the county assessor an administrative order containing the same
findings and information as required to be set forth in a resolution
approving an application and forward a copy thereof to the applicant.
(10) In the case of a structure to which stories or other improvements are
added or a structure that is converted in whole or in part from other use
to dwelling units, only the increase in value attributable to the addition
or conversion may be exempt from taxation.
(11) Notwithstanding subsection (6) of section 2.947 of this code, if the
multiple -unit housing is or becomes subject to a low income rental
assistance contract with an agency of this state or the United States,
the city may extend the exemption through June 30 of the tax year
during which the expiration date of the contract falls.
2.947 Multiple -Unit Housina - Termination of Aauroval. Review.
(1) After a resolution approving an application has been filed, if the city
manager finds that:
(a) Construction of multiple -unit housing was not completed within the
time specified in the resolution, and no extensions as provided in
subsection (5) hereof have been granted, or
Ordinance -- Page 4 of 7
(b) The applicant has failed to comply with the provisions of ORS
307.600 to 307.637, the provisions of this code, any provisions of
the standards and guidelines adopted by the city manager, or
(c) The applicant has failed to comply with any conditions imposed in
the resolution approving the application, or
(d) Construction of multiple -unit housing was not completed on or
before January 1, 2022, or
(e) In the event units within the development are sold individually, a
unit owner fails to comply with applicable requirements described
in paragraphs (b) or (c) of this section,
the city manager shall notify the council; the owner of the property, at
the owner's last known address; and any known lender, at the lender's
last known address, of the manager's intention to recommend to the
council that the exemption be terminated. The notice shall clearly state
the reasons for the proposed termination, and shall require the owner to
appear before the council, at a time specified in the notice, which shall
not be less than 20 days from the date the notice was mailed, to show
cause, if any exists, why the exemption should not be terminated.
(2) If the owner fails to appear and show cause why the exemption should
not be terminated, the city shall further notify every known lender of the
owner's failure to appear and shall allow the lender a period of not less
than 30 days, beginning with the date that the notice of failure to appear
and show cause is mailed to the lender, to cure any noncompliance or
to provide adequate assurance that the noncompliance will be
remedied.
(3) If the owner fails to appear before the council at the time specified in the
notice, or if the owner appears and fails to show cause why the
exemption should not be terminated, and a lender fails to cure or give
adequate assurance that any noncompliance will be cured, the council
shall adopt a resolution terminating the exemption, which shall contain
its findings in support thereof. Copies of the resolution shall be filed
with the county assessor and mailed to the property owner, at the
owner's last known address, and to any lender at the lender's last -
known address, within 10 days from the date adopted. If a
determination is made that the exemption should continue as previously
granted, the council shall enter written findings of record in support of
the continued exemption and forward a copy thereof to the property
owner and to any lender within 10 days From the date of the hearing.
(4) All reviews of council action in denying, approving, or terminating an
application shall be governed by the procedures set forth in ORS
34.010 to 34.100, and correction of assessments and tax rolls and the
evaluation of the property shall be in conformity with ORS 307.687.
The council's action on an exemption shall not be a land use decision
for purposes of administrative review.
(5) If construction, addition, or conversion of multiple -unit housing is not
completed by January 1, 2022, upon receipt of a request from the
Ordinance -- Page 5 of 7
property owner, the council may, by resolution, extend the deadline for
completion of construction of multiple -unit housing for a period not to
exceed 12 consecutive months, if it finds the failure to complete
construction by the time specified in the resolution 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.
(6) In any event, no multiple -unit housing granted an exemption by the
council may be exempt from ad valorem taxation for more than 10
successive years. The first year of exemption is the assessment year
beginning January 1 immediately following the calendar year in which
construction, addition or conversion is completed, determined by that
stage in the construction process when, pursuant to ORS 307.330 the
improvement would have gone on the tax rolls in the absence of the
exemption. The exemption may not include the land, nor any
improvements located thereon that are not a part of the multiple -unit
housing but may include commercial use of a portion of the structure
and parking constructed as part of the multiple -unit housing
construction, addition or conversion, and is in addition to any other
exemption provided by law. However, no property may be exempt
beyond 100 percent of its real market value.
(7) Any exemption granted by the council shall terminate immediately,
without right of notice or appeal, in the event the county assessor
determines that a change of use to other than residential or residential
with commercial uses of a portion of the structure, or housing has
occurred for the multiple -use housing, or portion thereof, or if a low
income housing assistance contract with an agency or subdivision of
this state or the United States is breached or terminated prematurely, or
a declaration as defined in ORS 100.005(12) is presented to the county
assessor or tax collector for approval in connection therewith.
Termination shall be in accordance with the provisions of ORS 307.627.
Section 2 . Applications submitted or approved pursuant to Sections 2.945 and
2.947 of the Eugene Code, 1971, prior to the effective date of this Ordinance, shall be
governed by the Code provisions that were in effect prior to the effective date of this
Ordinance.
Section 3 . 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,
Ordinance -- Page 6 of 7
or in other provisions of the Eugene Code, 1971, to the provisions added, amended or
repealed herein.
Passed by the City Council this
26 day of September, 2011
Approved by the Mayor this
day of September, 2011
&YId 4 La- Q -
Deputy CW Recorder
Ordinance -- Page 7 of 7
Map 2.945(2)
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City of Eugene - August 4, 2011
Planning and Development Department - Community Development Division
City Attorney's Office
City of Eugene
TT T 777 Pearl Street, Room 105
MEMORANDUM M Eugene, Oregon 97401 -2793
(541) 682 -8447
(541) 682 -5414 FAX
www.eugene- or.gov
Date: November 10, 2011
To: Sandra Stubbs, Deputy City Recorder
rte,,
From: Glenn Klein, City Attorney
Subject: Scrivener Error Correction to C 2.945 Adopted by Ordinance No. 20479
It has come to our attention that two reference errors exist in Ordinance No. 20479 which
was adopted on September 26, 2011.
Ordinance No. 20479 amended EC 2.945(2) to redefine the area eligible to receive
multiple -unit property tax exemptions ( MUPTE). That redefinition deleted subsections (2)(a)
and (2)(b) from EC 2.945, thereby removing the areas known as "the core area" and "the transit
oriented area" as MUPTE eligible areas, and instead adopted a new subsection (2) which
described the MUPTE eligible area as the "downtown area."
Due to the amendment to EC 2.945(2), the reference to "core or transit oriented areas" in
'EC 2.945(6)(b) should have been amended to read "downtown area." In addition, EC
2.945(6)(g) should have been deleted because that subsection refers to deleted subsection EC
2.945(2)(b) and deals solely with MUPTE in the transit oriented area.
Please effect a scrivener error correction so that EC 2.945(6)(b) reads as follows:
"(b) The project is located within the boundaries of the downtown area described in
subsection (2) above ;"
Please also effect a scrivener error correction to delete subsection (g) from EC 2.945(6)
and reletter the subsequent subsections.
This correction is authorized by Ordinance No. 20479. A copy of this memo should be
attached to that Ordinance.
{00058887;1)
Attachment G
ADMINISTRATIVE ORDER NO. 53-12-01-F
of the
City Manager
AMENDMENT OF MULTIPLE -UNIT HOUSING PROPERTY TAX
EXEMPTION STANDARDS AND GUIDELINES, RULE R -2.945 AND
REPEAL OF ADMINISTRATIVE ORDER NOS. 53- 09 -01 -F AND 53- 11 -05.
The City Manager of the City of Eugene finds that:
A. Section 2.019 of the Eugene Code, 1971, ("EC") authorizes the City Manager to
adopt rules for administration of provisions of the Eugene Code. EC 2.945 authorizes the City
Manager to adopt Standards and Guidelines for processing applications for multiple -unit housing
property tax exemptions.
B. On March 30, 2009, Administrative Order No. 53- 09 -01 -F was issued adopting
amendments to the Multiple -Unit Housing Property Tax Exemption ( "MUPTE ") Standards and
Guideline Rule R- 2.945.
C. On September 26, 2011, the City Council adopted Ordinance No. 20479 which
amended EC 2.945 and 2.947. The amendments included extending the MUPTE application and
construction completion deadlines to January 1, 2022, and amending the MUPTE program
boundaries.
D. On December 14, 2011, Administrative Order No. 53 -11 -05 was issued
temporarily amending the MUPTE Standards and Guidelines to extend the MUPTE application
and construction completion deadlines to January 1, 2022. Administrative Order No. 53 -11 -05
will expire on June 11, 2012.
E. In order to make the amendments to amend the Standards and Guideline
provisions permanent and to amend the provisions to reflect changes to the MUPTE program
boundary, on May. 17, 2012, I issued Administrative Order No. 53 -12 -01 proposing to make the
necessary amendments.
F. Notice of the proposed rule amendment was published in the Register -Guard
Newspaper on May 21, 22, 23, 24 and 25, 2012. Notice was also made available to persons who
had requested such notice, and provided that written comments would be received for a period of
15 days from the first date of publication. No comments were received within the time or in the
manner provided in the Notice.
Administrative Order - Page 1 of 11
BASED UPON the above findings which are adopted, and pursuant to the authority
contained in Sections 2.019 and 2.945 of the Eugene Code, 1971, Administrative Order Nos. 53-
09 -01 -F and 53 -11 -05 are repealed and Multiple -Unit Housing Property Tax Exemption
Standards and Guidelines Rule R -2.945 is amended to provide as follows:
MULTIPLE -UNIT HOUSING PROPERTY
TAX EXEMPTION STANDARDS AND GUIDELINES RULE R -2.945
R- 2.945 -A Definitions For purposes of these rules, the following words and phrases mean:
City Manager The City Manager of the City of Eugene, or his or her designee.
Core area The area described in section 2.945(2) of the Eugene Code
Historic Locale A building that has historic, cultural and/or architectural
significance, locally, regionally, or nationally. A historic locale can also include a
building acknowledged by the Eugene Historic Review Board as strongly or possibly
eligible for City Landmark or National Register listing.
Historic structure Any building, structure or object which has been identified
as a primary or secondary historic resource (strong or possible eligibility for city
landmark or National Register status) in a survey acknowledged by the Eugene Historic
Review Board and the State Historic Preservation Office, or which is an "historic
property" as that term is defined by section 9.0500 of the Eugene Code.
Lender Any person who makes a loan, secured by a recorded mortgage or trust
deed, to finance the acquisition, construction, addition or conversion of multiple -unit
housing.
Low - income housing assistance contract An agreement between a public
agency and a property owner that results in the production, rehabilitation, establishment,
or preservation of housing affordable to those with a defined level of household income.
Multiple -unit housing
(1) Housing subject to a low - income housing assistance contract with an agency
or subdivision of this state or the United States; or
(2) Newly constructed structures, stories or other additions to existing structures,
and structures converted in whole or in part from other use to dwelling units that meet the
following criteria:
(a) The structure must have five or more dwelling units;
(b) The structure must not be designed or used as transient
accommodations, including but not limited to hotels and motels; and
(c) The structure must have those design elements benefitting the
Administrative Order - Page 2 of 11
general public pursuant to section R- 2.945 -G.
Pedestrian connection A continuous, unobstructed, reasonably direct route
between two points that is intended and suitable for pedestrian walkways, stairways and
pedestrian bridges. On developed parcels, pedestrian connections are generally paved.
In parks and natural areas, pedestrian connections may be soil or bark pathways. On
undeveloped parcels and parcels intended for redevelopment, pedestrian connection may
include rights -of -way or easements for future pedestrian improvements.
Potential historic structure Any building or structure which is older than 50
years in age and located in an area of the City which has not been canvassed as part of a
historic resource survey acknowledged by the Eugene Historic Review Board and the
State Historic Preservation Office.
R- 2.945 -B Program Purpose and Boundaries
1. The purpose of the program is to:
1.1 Stimulate the construction of transit supportive multiple -unit housing in
the City's downtown area in order to improve the balance between the residential and
commercial nature of those areas, and to ensure full -time use of the areas as places where
citizens of the community have an opportunity to live as well as work;
1.2 Encourage the development of vacant or under- utilized sites in the
downtown area, rather than sites where sound or rehabilitable multiple -unit housing
exists;
1.3 Encourage the development of multiple -unit housing, with or without
parking, in structures that may include ground -level commercial space;
1.4 Encourage the development of multiple -unit housing, with or without
parking, on sites with existing single -story commercial structures;
1.5 Encourage the development of multiple -unit housing, with or without
parking, on existing surface parking lots; and
1.6 Preserve existing publicly- assisted housing that is affordable to low -
income persons by providing the incentives authorized in ORS 307.600 to 307.637 to
existing multiple -unit housing subject to a low- income housing assistance contract with
an agency or subdivision of this state or the United States.
2. The program shall emphasize:
2.1 The development of multiple -unit housing, with or without parking, in
Administrative Order - Page 3 of 11
structures that may include ground -level commercial space;
2.2 The development of multiple -unit Housing, with or without parking, on
sites with existing single -story commercial structures; and
2.3 The development of multiple -unit housing, with or without parking, on
existing surface parking lots.
3. The program shall result in the preservation, construction, addition or conversion
of units at rental rates or sale prices accessible to a broad range of the general public.
R- 2.945 -C Eligible Structures
To be eligible for local property tax exemption hereunder, a structure must:
1. Be multiple -unit housing as defined above, which:
1.1 In the case of the construction, addition, or conversion of multiple -unit
housing, the construction, addition, or conversion must be completed on or before
January 1, 2022;
1.2 In the case of housing subject to a low- income housing assistance contract
with an agency or subdivision of this state or the United States, the application for
exemption was made on or before January 1, 2022.
2. Be located within the downtown area; and
3. Meet the approval criteria set forth in these Standards and Guidelines.
R- 2.945 -D _Application for Exemption for Housing Subiect to a Low Income Housing
Assistance Contract
1. On or before February 1 immediately preceding the first assessment year for
which exemption is requested, the applicant shall submit to the City Manager, on a form
provided by the City, an application for exemption, containing the following information:
1.1 The applicant's name, address, and telephone number;
1.2 A legal description of the property or the assessor's property account
number for the site;
1.3 A written description of the existing use of the property, including a
justification for the elimination of, or a plan for the relocation of existing sound or
Administrative Order - Page 4 of 11
rehabilitable housing located on the property; and
1.4 Any other information required by state or local law or requested by the
City or which is otherwise reasonably necessary to effectuate the purposes of this
program.
2. The applicant must also attach to the application the low - income housing
assistance contract that has been executed with the agency or subdivision of this state or the
United States.
3. The application shall be verified by oath or affirmation of the applicant and
submitted with an application processing fee to be set by the City Manager pursuant to Section
2.020 of the Eugene Code, 1971. The application fee shall include the amount to be paid to the
County Assessor as the County's agreed processing fee for those applications receiving Council
approval. The amount of the basic fee shall be prominently displayed on the application,
together with a statement that the applicant may be required to pay other reasonable costs,
including publication costs and appraisal costs, if any are incurred by the City or the County in
processing the application. Any additional costs shall be paid to the City by the applicant prior
to the granting of any final approval. If the application is approved, the City shall pay the
application fee to the County Assessor for deposit in the County General Fund, after first
deducting that portion of the fee attributable to its own administrative costs in processing the
application. In the event an application is denied, the City shall retain that portion of the
application fee attributable to its own administrative costs and shall refund the balance to the
applicant.
R- 2.945 -E Application for Exemption for New Construction, Additions, or Conversions
On or before February 1 immediately preceding the first assessment year for which
exemption is requested, the applicant shall submit to the City Manager, on a form provided by
the City, an application for exemption, containing the information required in section (1) of Rule
R- 2.945 -D, and the additional information as follows:
1. A schematic drawing, drawn to a minimum scale of one inch equals 16
feet (1" = 16'), which shows the site plan and major features and dimensions of the
proposed development, and a schematic drawing, drawn to a minimum scale of one inch
equals 16 feet (1" = 16'), that shows both a side and front elevation of the proposed
development;
2. A written statement which:
2.1 Pinpoints the location of the proposed development;
2.2 Describes the number, size, and type of dwelling units, and
dimensions of structures;
Administrative Order - Page 5 of 11
2.3 Identifies public and private access, parking and circulation plans,
and landscaping uses; and
2.4 Describes the public benefit(s) in section R- 2.945 -G which the
applicant proposes to include in the project; and
3. Information on the costs and financing for the housing and other
information required by the City on the financial feasibility of the project.
4. The application shall be verified by oath or affirmation of the applicant
and submitted with an application processing fee to be set by the City Manager pursuant
to Section 2.020 of the Eugene Code, 1971. The application fee shall include the amount
to be paid to the County Assessor as the County's agreed processing fee for those
applications receiving Council approval. The amount of the basic fee shall be
prominently displayed on the application, together with a statement that the applicant
may be required to pay other reasonable costs, including publication costs and appraisal
costs, if any are incurred by the City or the County in processing the application. Any
additional costs shall be paid to the City by the applicant prior to the granting of any final
approval. If the application is approved, the City shall pay the application fee to the
county assessor for deposit in the county general fund, after first deducting that portion of
the fee attributable to its own administrative costs in processing the application. In the
event an application is denied, the City shall retain that portion of the application fee
attributable to its own administrative costs and shall refund the balance to the applicant.
R- 2.945 -F Duration of Tax Exemption
1. Except as provided in subsection 2 of this section, the maximum term of a tax
exemption for any multiple -unit housing project is ten years.
2. For a multiple -unit housing project under an existing low- income housing
assistance contract, the exemption may extend through June 30 of the tax year in which the
contract expires.
3. If the City Manager recommends the approval of an application, the City Manager
shall recommend a grant of the maximum permissible term. The final determination of the
exemption term will be made by the City Council.
R- 2.945 -G Approval Criteria for New Construction, Additions, or Conversions
1. Public Benefit The City Council places a great deal of importance on adding
high quality housing to the downtown area. Therefore, applicants must respond in writing as to
how each of the following eight public benefits relate to the proposed project. Based on an
Administrative Order - Page 6 of 11
applicant's written response and other materials included with the application, the City Manager
will award each project a certain number of points using the public benefit criteria described
below. Council will consider the number of points awarded when determining whether to grant
the application.
Benefit Points
1.1 Densi . The MUPTE program is designed to encourage
higher density housing and redevelopment in the City's downtown area.
Therefore, points will be awarded to a project based on the degree to
which the project exceeds the minimum density requirements for that
location.
Criteria / Tier 1 : Project is located on a site officially
designated as an "opportunity site: as that term is defined by the
City Council. 100 pt.
Criteria / Tier 2 : 10 points awarded for each unit in excess
of the minimum required density. (50 point maximum) 50 pt. max.
1.2 Green Building Features and Quality of Building Materials
Criteria (Option 1) : For projects seeking Leadership in
Energy & Environmental Design (LEED) certification, the
applicant must submit the LEED Registration Number, Project
Checklist and narrative describing the project's green elements.
The LEED Project Checklist must demonstrate an award of at least
five points more than the minimum needed for certification. (If an
applicant is awarded points under this paragraph and is granted a
MUPTE, the applicant must submit documentation of LEED
certification (copy of USGBC Rating Certificate and final LEED
review) no more than 18 months after receiving a Certificate of
Occupancy. If this documentation is not timely submitted, the
MUPTE may be revoked.) 100 pt.
Criteria (Option 2) : For projects where LEED certification
would not be feasible, but where the applicant intends to utilize
green practices, the applicant may demonstrate the intent to earn an
Earth Advantage Certification by submitting an Earth Advantage
Points Worksheet and narrative describing green elements as part
of the MUPTE application. (If an applicant is awarded points
under this paragraph and is granted a MUPTE, the applicant must
submit documentation of Earth Advantage certification no more
than 18 months after receiving a Certificate of Occupancy. If this
documentation is not timely submitted, the MUPTE may be
revoked.)
Earth Advantage Platinum 75 pt.
Earth Advantage Gold 50 pt.
Earth Advantage Silver 25 pt.
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1.3 Mixed Income
Criteria Ten points awarded for each housing unit
dedicated to controlled income and rental housing that is affordable
to a household at 60% of median income as published each year for
the Eugene - Springfield area by the United States Department of
Housing and Urban Development (HUD). The applicant must
provide a written certification of the number of housing units
dedicated to controlled income and rental housing on a form
provided by the City.
1.4 Homewonershib
Criteria At least 50% of the project is dedicated to
homeownership.
1.5 Accessibilitv The building code requires that projects
include Americans with Disabilities Act (ADA) adaptable units (the
number depends on specific project details). For a unit to be adaptable, it
must have the structural enhancements necessary for the installation of
specific accessible features (grab bars, hallway width, etc.). ADA
accessible units have already been adapted and include specific features.
Criteria Ten points are awarded for each ADA accessible
unit.
1.6 Historic Sensitivity Any application for a project that is
immediately adjacent or contiguous to a historic locale shall include a plan
to mitigate impacts to the historic locale.
Criteria Project preserves and enhances an existing
historic locale, as evidenced by a concept plan that has been
reviewed and accepted by a Planning & Development Department
staff person with expertise in design and historic preservation.
1.7 Location Increased multiple -unit development in the heart
of downtown is both important and particularly challenging due to
increased property and construction costs. Proposals for projects located
within the adopted "Downtown Plan Area" are worthy of added
consideration.
Criteria Project is in the Downtown Plan Area.
1.8 Parking (Applicable only in Residential Parking Permit
Program (RPP ) zones) The Land Use Code requires one parking space
per dwelling unit, except in parking - exempt zones, In RPP zones, the City
has acknowledged a parking shortage and has developed a permit program
for residential street parking.
Criteria Ten points for each parking space provided
beyond what is required by the Code when the proposed project is
10 pt. /unit
100 pt.
10 pt. /unit
25 pt.
100 pt.
10 pt. /space
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located in an RPP zone.
2. Compliance with Local Law The proposed construction, addition or conversion
project is or will be, at the time of completion, 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, that are applicable at the time the application is approved
3. Local Standards The proposed project must comply with the following
additional standards:
3.1 Utilization of the Proposed Proiect Site
3.1.1 Removal of Historic Structure or Potential Historic Structure.
No exemption shall be granted for any property where a historic structure or
potential historic structure has been demolished or removed from the property
within the two years immediately preceding the date of application for the
exemption. This restriction shall be waived if the owner of the property gave
notice of the intent to demolish or move the structure to Eugene Planning staff
responsible for historic review issues at least 60 days before the owner's
application for a demolition or moving permit from the City.
3.1.2 Justification for Elimination of Exisiina Housing No exemption
shall be granted for any property on which any housing unit has been demolished
or removed from the property within the two years immediately preceding the
date of application for the exemption. This restriction shall be waived if the
proposed project increases the number of dwelling units by 50% from what
previously existed or if it replaces the old dwelling units by significantly larger
dwelling units that will accommodate families.
4. Public Benefit Beyond the Period of Exemption The applicant must
demonstrate that one or more of the public benefits described in the application will, extend
beyond the period of the tax exemption.
5. Proiect Would Not be Built Without Exemption The applicant must
demonstrate that the project as proposed could not be built but for the benefit of the tax
exemption. The applicant must submit documentation, including a pro -forma and an analysis of
the projected rate of return for the proposed project. This information will be reviewed by city
staff and a City loan advisory committee will make a recommendation on the application.
6. Comments from the Aupropriate Neighborhood Association Although
neighborhood association support is not a requirement for MUPTE approval, the application
must include evidence that the applicant made an effort to contact the appropriate neighborhood
association to share information and seek input. An applicant may show an effort to contact the
appropriate neighborhood association by providing either:
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6.1 Documentation of the applicant's attempt to solicit comments; or
6.2 A copy of the comments received from the neighborhood association.
Comments from the Neighborhood association, as well as other public comments, will be
provided to the City Council.
R- 2.945 -H Recommendations on Applications
Within 90 days from the date an application is filed, the City Manager shall:
1. Review the application and all supportive material to verify that the applicant has
provided the information required and notify the applicant of any omissions.
2. Publish a one column, 3" minimum display ad in the Register Guard soliciting
recommendations or comments from the public. The ad will advise that written comments may
be submitted to the City for a period of 30 days from the first publication date.
Recommendations or comments shall also be solicited from the neighborhood group(s) (if any).
3. Recommend to the Council that the application be denied, approved, or approved
subject to conditions. The recommendation shall set forth specific findings in support of the City
Manager's recommendation, based upon these Standards and Guidelines, Council resolutions
and ordinances, applicable State statutes, and the written comments received. The written
comments shall be forwarded to the City Council with the City Manager's recommendation.
R- 2.945 -I Compliance Review for New Construction, Additions or Conversions
Following approval of an application for tax exemption by the Council and immediately
prior to the commencement of construction, the applicant shall review the working drawings and
other documents with the City Manager. If construction commenced prior to Council approval
of a tax exemption, the applicant shall review the construction documents and other documents
with the City Manager prior to.completion of construction to ensure that the project will comply
with the approval conditions upon completion.
R- 2.9454 Reports
If requested by the Council, the City Manager shall submit reports to the Council for
transmittal to the House and Senate Revenue Committee of the Oregon Legislature describing
the effect of this program in the City of Eugene. The reports shall describe the number of
housing developments and residential units to which the exemption applies, the value of the
developments constructed, the value of the tax exemptions granted, and the general effectiveness
of the property tax exemption as an incentive for construction of housing. The reports shall be
Administrative Order -Page 10 of 11
submitted to the Council sufficiently in advance so as to permit the Council to file them at least
60 days prior to the beginning of each regular legislative session.
Dated and effective this / Z day of June, 2012.
Jon R. Ruiz
City Manager
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