191088

Emergency Ordinance

*Amend approved application under the Multiple-Unit Limited Tax Exemption Program under the Inclusionary Housing Program for SW Park Avenue Apartments located at 2061 SW Park Ave to increase the number of restricted units (amend Ordinance No. 190642)

Passed

The City of Portland ordains:

Section 1.  The Council finds:

  1. On behalf of the City of Portland, the Portland Housing Bureau (“PHB”) administers the Multiple-Unit Limited Tax Exemption Program (the “MULTE Program” or “Program”), authorized under ORS 307.600-307.637 and City Code Chapter 3.103.
  1. The MULTE Program provides a 10-year property tax exemption on the residential portion of the structural improvements so long as Program requirements are met. During the exemption period, property owners remain responsible for the payment of 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.
  1. The MULTE Program is an incentive provided to developments complying with the City Inclusionary Housing (“IH”) Program, which requires 99 years of restricted rents of a designated percentage of units within the building.
  1. Ordinance No. 190642, passed by the Council on December 15, 2021, authorized a 10-year property tax exemption under the MULTE Program, in conjunction with the City’s Inclusionary Housing Program for the development known as SW Park Avenue Apartments (the “Project”) and located at 2061 SW Park Ave (the “Property”). The application proposed 91 units, or 100 percent, of the Project’s 91 units would be restricted to households earning no more than 60 percent of Median Family Income (“MFI”) at the time of lease-up (the “IH Units”). The developers of the Project have requested to amend their approved MULTE application in order to accommodate an increase in the project’s total units and to extend the rent-restriction to additional units in the Project for 99 years. The total number of IH Units has increased compared to the initial application. The amended application proposes 98 units, or 100 percent, of the Project’s 98 units would be restricted to households earning no more than 60 percent of MFI at the time of lease-up.
     
  2. The MULTE Program has an annual cap limiting the approval of new property tax exemptions to no more than 15 million dollars of new estimated foregone revenue within a five-year period, defined as any current year and the previous four years. There is sufficient cap remaining for the 2022 calendar year to include the Project’s amended application.
  1. PHB has the responsibility for reviewing compliance of approved applications with the minimum MULTE Program requirements and has concluded that the amended application for the Project does indeed meet the minimum Program requirements.

NOW, THEREFORE, the Council directs:

  1. The amended request for a 10-year property tax exemption under the MULTE Program is hereby approved for 100 percent of the residential portion of the structural improvements of SW Park Avenue Apartments, including 100 percent of residential parking and common areas.
     
  2. Ordinance No. 190642 is amended as follows:
     
    1. The Project must restrict 100 percent of its 98 units to households earning no more than 60 percent MFI (the “Restricted Units”). The Restricted Units will reflect the unit-mix in the Project and will consist of 98 studio units.
       
  3. All other portions of Ordinance 190642 will remain the same.

Section 2.  The Council declares an emergency exists because timely City approval of the application for the MULTE Program is necessary in order to allow the Project to meet requirements to approve the building permit as outlined by the Bureau of Development Services; therefore, this Ordinance shall be in full force and effect from and after its passage by the Council.

An ordinance when passed by the Council shall be signed by the Auditor. It shall be carefully filed and preserved in the custody of the Auditor (City Charter Chapter 2 Article 1 Section 2-122)

Passed by Council

Auditor of the City of Portland
Mary Hull Caballero

Impact Statement

Purpose of Proposed Legislation and Background Information

To ensure Portland has economically inclusive development and neighborhoods, the city requires that new buildings being constructed (with more than 20 units) also provide Inclusionary Housing units (“IH Units”), restricted for 99 years under the Inclusionary Housing (“IH”) Program.

In exchange for providing IH Units, developers receive some benefits, including a 10-year property tax exemption – typically on all residential units in the Central City, or on only eligible rental units restricted under the IH Program outside the Central City.

On December 15, 2021 the Council passed Ordinance 190642 which authorized a 10-year property tax exemption for SW Park Avenue Apartments.  Under Ordinance 190642, the developer selected to provide 100% of the building’s 91 units, restricted to households earning no more than 60% median income for 99 years.

Since the passage of the aforementioned Ordinance, the developers of the building have requested to amend their approved 10-year property tax exemption application in order to accommodate an increase in the Project’s total units and to extend the rent-restriction to additional units in the Project for 99 years. The total number of IH Units has increased compared to the initial application. The amended application proposes 98 units, or 100 percent, of the Project’s 98 units would be restricted to households earning no more than 60 percent of MFI at the time of lease-up. For the building associated with this amended ordinance, below are the options available to the developer in city code. The option selected by the developer is in bold.

On-Site

Units

New

Off-Site Units

Existing

Off-Site Units

Fee-in-Lieu

Units at 80% of Median Income

15 Units

N/A

N/A

N/A

Bedrooms at 80% of Median Income

15 Bedrooms

N/A

N/A

N/A

Units at 60% of Median Income

8 Units

20 Units

25 Units

N/A

Bedrooms at 60% of Median Income

8 Bedrooms

N/A

N/A

N/A

Units at 30% of Median Income

N/A

10 Units

15 Units

N/A

No Inclusionary Units

N/A

N/A

N/A

$921,173

The developer selected the option to provide eight percent of the building’s 98 units, totaling eight units, restricted to households earning no more than 60% median income for 99 years and will voluntarily restrict the remaining 90 units, totaling 100% of the building’s units, restricted to households earning no more than 60% median family income for 99 years under Inclusionary Housing. In total, 98 units, or 100% of the building’s units, will be authorized for a 10-year property tax exemption under the ordinance amendment should it be adopted.

Because this building is outside the Central City Plan District, the tax exemption will apply to the IH Units.

Overview of building and units for Ordinance No. 190642:

91-unit building at 2061 SW Park Ave

  1. Market rate units: 0 units
  2. IH Units: 91 units

Studio

One

Bedroom

Two

Bedroom

Three

Bedroom

Total

91

-

-

-

Market Rate

0

-

-

-

Restricted to 60% of Median Income

91

-

-

-

Average Square Footage

309

-

-

-

Largest Square Footage

360

-

-

-

Smallest IH Unit

288

-

-

-

Overview of building and units for Amended Application:

98-unit building at 2061 SW Park Ave

  1. Market rate units: 0 units
  2. IH Units: 98 units

Studio

One

Bedroom

Two

Bedroom

Three

Bedroom

Total

98

-

-

-

Market Rate

0

-

-

-

Restricted to 60% of Median Income

98

-

-

-

Average Square Footage

309

-

-

-

Largest Square Footage

360

-

-

-

Smallest IH Unit

288

-

-

-

Regulated restricted rents compared to new construction market rate rents in the same neighborhood:

Studio

One

Bedroom

Two

Bedroom

Three

Bedroom

Market Rate

$1,313

-

-

-

Restricted to 60% of Median Income

$1,119

-

-

-

Monthly Rent Difference

$194

-

-

-

Annual Rent Difference

$2,328

-

-

-

Over the 99 years of required restriction, market rents will only continue to increase at a faster rate compared to regulated rents.

If this ordinance is not approved by City Council, the development will proceed without any IH Units.

ORS 307.621 and City Code Section 3.103.060(B) state that PHB will take applications to City Council for approval in the form of an ordinance and deliver approved applications to the Multnomah County Tax Assessor. This action meets those requirements.

Financial and Budgetary Impacts

The City will pay the $9,000 application activation fee to Multnomah County, should the application move forward.

This Ordinance approves a property tax exemption resulting in foregone tax revenue. The total estimated amount of the property tax revenue not collected for the 10 years of the exemption period is valued at approximately $687,522 in today’s dollars, assuming a four percent discount rate and a three percent annual assessment increase. This 10-year estimate includes taxes foregone by the City of Portland, Multnomah County and other entities which receive property taxes within Multnomah County. The reduced amount of property taxes to the City of Portland over the 10 years is roughly 33 percent of that amount, or $226,882. The City will still benefit from property taxes collected on the improved value of the land during the exemption period.

Property Tax exemption value and foregone revenue for Ordinance 190642:    

Estimated total foregone revenue:

$587,318

Estimated first year value of the tax exemption:

$63,771

Estimated annual value of the tax exemption per inclusionary unit during the exemption period:

$645

Estimated annual foregone revenue per inclusionary unit over 99-year restriction term:

$65

Property tax exemption value and foregone revenue for amended application:

Estimated total foregone revenue:

$687,522

Estimated first year value of the tax exemption:

$74,651

Estimated annual value of the tax exemption per inclusionary unit during the exemption period:

$702

Estimated annual foregone revenue per inclusionary unit over 99-year restriction term:

$71

Central City Plan District:      Yes     No

Remaining 5-Year Cap:       $12,234,350

Property Management:        Not selected yet

Community Impacts and Community Involvement

As the largest taxing jurisdiction affected by the tax exemption programs, Multnomah County has approved the administration of the programs in order to meet shared affordable housing goals.

100% Renewable Goal

Approval of the MULTE does not impact the City’s total or renewable energy use.

Budget Office Financial Impact Analysis

This action would result in estimated foregone property tax revenues to the City totaling $226,882 over ten years for 98 units affordable at or below 60% MFI. Total cost to all jurisdictions forgoing revenue is estimated at $687,522. The estimated value of the tax exemption for the first year is $74,651 (all jurisdictions), which equals approximately $702 per affordable unit per year during the exemption period. The City will still benefit from property taxes collected on the improved value of the land during the exemption period. The City will pay Multnomah County the $9,000 application activation fee if the application moves forward.

Agenda Items

1020 Consent Agenda in December 7, 2022 Council Agenda

Passed

  • Commissioner Mingus Mapps Yea
  • Commissioner Carmen Rubio Yea
  • Commissioner Dan Ryan Yea
  • Former Commissioner Jo Ann Hardesty Yea
  • Mayor Ted Wheeler Yea

Contact

Cassie Graves

Program Coordinator

Requested Agenda Type

Consent

Date and Time Information

Requested Council Date