HomeMy WebLinkAboutItem B: 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: May 13, 2013 Agenda Item Number: B
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 council to conduct a detailed
evaluation of the program and determine if modifications should be made. This work session is
a continuation of the discussion related to potential modifications to the MUPTE program.
BACKGROUND
At the April 22, 2013, council work session, staff received feedback on potential modifications to
the MUPTE program. The following is a summary of some of the key elements that were
discussed:
Establish minimum threshold criteria that provide a high degree of certainty relative to
public benefits that are desired
Consider a scaled/tiered system that reflects clear public benefit outcomes
Support local hiring
Consider the community’s need for affordable housing
Support projects that meet green building standards
Consider options for placing a cap on the project’s return on investment
If funds are recaptured based on a cap, consider dedicating these funds to affordable
housing or emergency housing needs
Consider options for capping the volume of projects within the program
Consider increasing the application fee to help cover program administration
Projects should address potential positive and negative impacts to neighborhoods
Consider expansion of the boundary in support of Envision Eugene desired outcomes,
including key corridors, transit-oriented areas, and commercial centers
Regarding the “but for” community debate, work with local developers and stakeholders to
gain a better understanding of the program need
The ordinance suspending the MUPTE program expires on June 30, 2013. However, at the May 8
work session, the council provided direction to extend the suspension to July 31 to provide the
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additional time needed to finalize program modifications. A public hearing and council action on
an ordinance extending the suspension is tentatively scheduled on May 28 and May 29
respectively.
For discussion purposes, Attachment A includes options for modifying the MUPTE program based
on council input from the April 22 work session. The options are presented as specific program
outcomes identified by the council (for example, “green building”) and categorized as MUPTE
minimum threshold criteria, additional public benefit criteria, and other program considerations.
For this work session, staff is seeking council’s review of various criteria options, and direction on
preferred MUPTE program criteria. This input will be used to draft refined program criteria that
would subsequently be reviewed by stakeholders and the council. The following is an updated
timeline for completing the MUPTE program modifications.
May 22 Council work session
May 28 Public Hearing – Ordinance extending MUPTE suspension
May 29 Council action – Ordinance extending MUPTE suspension
June 17 Public Hearing – Ordinance on new MUPTE criteria
June 24 Council action – Ordinance adopting new MUPTE criteria
RELATED CITY POLICIES
Utilization of the MUPTE program to stimulate new multi-unit housing development addresses
many goals for Eugene and downtown, including:
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.
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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 additional feedback from the council regarding
potential changes to the existing MUPTE program.
CITY MANAGER’S RECOMMENDATION
The City Manager will use council input obtained in this work session to continue refining MUPTE
program modifications for future council consideration.
SUGGESTED MOTION
No motion proposed at this time.
ATTACHMENTS
A. MUPTE Program Options
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 A
MUPTE PROJECT: Minimum Threshold Criteria
The following are options that could be considered as “minimum threshold criteria” which each MUPTE project
would be required to meet to be considered for approval.
Density
OBJECTIVE: Promote compact urban development and efficient transportation options, mixed- use
development, maximize the efficient use of land, and meet the multi-family housing needs within the
existing Urban Growth Boundary.
Option 1:
Mirror state statute – 5 or more units
Option 2:
For Mixed-Use projects (housing above commercial): 5 or more units
For Housing-only projects: Exceeds minimum density code requirement (for example, 2x
minimum density)
Project Need
OBJECTIVE: Verify that the project would not be built “but for” the tax exemption.
Option 1:
10-year pro forma reviewed by staff, the Loan Advisory Committee (or newly created panel,
third party), and City Council.
If the overall rate of return at the end of the exemption period exceeds 10 percent (“cap”), then
a payment equal to 25 percent of the earnings in excess of the cap will be made to the City.
Payments made under the cap provision shall be used by the City in support of local affordable
housing needs, or other City needs.
Option 2:
10-year pro forma reviewed by staff, the Loan Advisory Committee (or newly created panel, or
third party), and City Council.
If the rate of return is projected to exceed 10 percent (“cap”) during the 10-year period, then
one of the following shall be considered:
Shorten the period of exemption.
o
Applicant will have the option to add public benefit features (ex. open space, affordable
o
units, higher quality materials).
Applicant will have the option to agree to make payments to the City in lieu of the tax
o
exemption in later years.
Option 3:
10-year pro forma reviewed by staff, the Loan Advisory Committee (or newly created panel, or
third party), and City Council.
Based on program-wide annual financial reporting from projects, a panel shall periodically
review the financial performance of projects and make recommendations regarding the ongoing
need for the program, or potential program adjustments (boundary, criteria, etc.).
Green Building
Objective: Promote resource efficient buildings to help reduce energy dependence.
Option 1:
Must meet one of the following green building standards
LEED Silver
o
Earth Advantage Multi-Family Silver
o
Oregon’s Reach Code
o
Enterprise Green Communities (for affordable housing)
o
Other equivalent standard approved by City
o
Option 2:
Same as above, with council waiver provision for special cases.
Option 3:
Do not include in minimum threshold criteria, include in additional public benefit criteria.
Affordable Housing
Objective: Promote a mixture of housing units at various levels of affordability to help meet the
community’s diverse and changing needs.
Option 1:
Project must make a payment equal to 10-percent of the first year tax exemption, payable upon
completion of the project when the first year of tax exemption is granted. Funds would be used
by the City to support affordable housing/emergency shelter.
Option 2:
For rental projects, minimum of 20 percent of the units must be affordable to households
earning 60 percent of area median household income.
Option 3:
For rental projects, minimum of 20 percent of the units must be affordable to households
earning 80 percent of area median household income.
Option 4:
Do not include in minimum threshold criteria, include in additional public benefit criteria
Financial Reporting
Objective: Collect reliable financial data during the tax exemption for the purpose of gauging
individual project performance and evaluating the need and effectiveness of the MUPTE program
implementing Envision Eugene.
Option 1:
Project required to submit annual, accountant-prepared financial statements that are reviewed
by staff.
Option 2:
Project required to submit annual, accountant-prepared annual financial statements that are
reviewed by staff and a review panel, or third party.
Option 3:
Option 1 or 2. Plus, for special cases in which financial disclosure is not available (ex.
institutional investors), applicant will have the option to shorten the exemption, or make
payments to the City.
Neighborhood Contact
Objective: Protect, repair, and enhance neighborhoods to ensure a high level of livability.
Option 1:
Prior to application, applicant must solicit comments from affected neighborhood organization
Option 2:
Do not include in minimum threshold criteria, include in additional public benefit criteria
Application Fee
Objective: Contribute to program administration and ongoing monitoring costs
Option 1:
$500 paid with application submission
Additional fee of 1/20 of 1% (.0005) of the project cost, not to exceed $10,000, paid at
completion of construction
MUPTE PROJECT: Additional Public Benefit Criteria
The following are options that could be considered as “additional public benefit criteria”, some of which each
MUPTE project would be expected to meet to be considered for the maximum tax exemption available.
Local Hiring
Objective: Promote local businesses and local hiring that lead our area to a higher level of economic
prosperity.
Option 1:
Greater than 50 percent of total professional services, construction contracting, and jobs must
be local (based in Oregon).
Applicant must submit a plan to hire minority, women, and emerging small businesses for
professional services and construction contracting.
Option 2:
Applicant must submit a plan to hire local professional services and construction contractors, including
plan to meet minority, women, and emerging small business hiring.
Housing Type
Objective: Create a mixture of housing types to meet the needs of all residents now and into the
future.
Examples of Public Benefit Criteria:
Home ownership units
Design units that are more traditional apartments (1 bedroom, 2 bedroom, family-sized), or
easily converted to traditional apartments or ownership units.
Family-sized housing units (2+bedrooms configured as traditional apartments)
Inclusion of affordable housing units (or additional affordable housing units in the event that
there is a minimum threshold requirement)
Location
Objective: Increase the proportion of residents that live in 20-minute neighborhoods where residents
can meet most of their daily needs near their homes without the use of the automobile. Promote
efficient utilization of limited land resources through the redevelopment of properties that have
existing site constraints and economic barriers.
Examples of Public Benefit Criteria:
Located within the Downtown Plan Area
Located within economically disadvantaged areas (to be defined)
Located on a brownfield site
Located within close proximity to schools, groceries, and transit
Redevelopment of valuable historic property
Includes ground floor retail
Project Features
Objective: Promote a more urban and sustainable form of development that meets the needs of the
community and enhances neighborhood livability.
Examples of Public Benefit Criteria:
Inclusion of open space or gathering space available to the community
Use of high quality materials
Exceeds ADA code requirements
Positively address neighborhood compatibility
Embedded or structured parking
Unit/Parking space ratio and optional parking space rental encourages alternative
transportation
Additional bike parking, parking for shared vehicles and electric vehicles
MUPTE: Other Program Considerations
The following are options that could be considered in terms of the overall MUPTE program.
Boundary
Objective: Implement Envision Eugene through the promotion of compact urban development and
efficient transportation options, and the protection, repair, and enhancement of neighborhood
livability.
Option 1:
Maintain existing Downtown Plan Area boundary
Option 2:
Expand existing boundary to include a few other targeted areas (for example, Trainsong and
South Willamette)
Option 3:
Align boundary with Envision Eugene strategies to promote compact urban development and
efficient transportation options (downtown, key transit corridors, and core commercial areas)
Program Volume
Objective: Meet the community’s 20-year multi-family needs without compromising other
community goals and desired outcomes.
Option 1:
Cap the dollar amount of tax exemptions granted in any given year
Option 2:
Establish a rolling cap under which the program would be suspended when the total tax
exemptions being received reach the cap
As exempt projects come onto the tax roll, availability under the cap would be created and new
applications would be accepted
Option 3:
Cap the number of new units that are constructed with MUPTE, using Envision Eugene multi-
family housing need as the target measurement