*Approve application under the Multiple-Unit Limited Tax Exemption Program for a five-year extension of the limited property tax exemption for Albert Mixed-Use at 3600 N Williams Ave
The City of Portland ordains:
Section 1. The Council finds:
- 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.
- The MULTE Program provides a 10-year limited 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.
- The MULTE Program’s ten-year limited property tax exemption serves as an incentive to developments complying with the Inclusionary Housing (“IH”) Program, which requires 99 years of restricted rents since its implementation on February 1, 2017. Prior to IH, the MULTE Program was available to property owners voluntarily restricting at least 20 percent of residential units to households earning no more than 60 or 80 percent of Median Family Income (“MFI”) for a period of ten years in exchange for a ten-year limited property tax exemption.
- On March 17, 2009, RUJAXX 1, LLC (“Owner”) applied for a ten-year limited property tax exemption for an apartment building known as Albert Mixed-Use (the “Project”) and located at 3600 N Williams Ave (the “Property”) under the Transit Oriented Development (“TOD”) Program, which was authorized under ORS 307.600-307.637 and City Code Chapter 3.103. City Council approved the application through ordinance 183171 on September 9, 2009. The Project, located in the Boise neighborhood and the Interstate Corridor Urban Renewal Area, is a mixed-use housing project restricting 18 units, which is 25 percent of its 60 housing units, to households earning no more than 60 percent of MFI (the “MULTE Units”).
- In 2012, the TOD Program was combined with the New Multi-Unit Housing Program to become the MULTE Program.
- On May 10, 2023, City Council approved offering extensions for projects who received property tax exemptions under the MULTE Program, including previous versions, prior to the IH Program, that restrict affordability at 60 percent of MFI. The extension available to these buildings built within the last 15 years are not covered under state tenant protections limiting rent increases.
- On May 31, 2023, PHB received a request from the Owner for a five-year extension to the limited property tax exemption in effect for the Project under the MULTE Program.
- PHB has the responsibility for reviewing compliance of applications with the minimum MULTE Program requirements and has concluded that the application for the Project does indeed meet the minimum Program requirements for an extension.
NOW, THEREFORE, the Council directs:
- The request for a five-year extension of the limited property tax exemption under the MULTE Program is hereby approved for 100 percent of the residential portion of the structural improvements of Albert Mixed-Use, including 100 percent of residential parking and common areas.
- Approval of the application is provided subject to the Project meeting the following conditions:
- The Project must continue to restrict 25 percent of its 60 residential units to households earning no more than 60 percent of MFI for an additional five years beyond the initial ten years. The MULTE Units will reflect the unit-mix in the Project.
- The application will comply with the Program requirements established in City Code Chapter 3.103, including the requirement that the Owner sign a Regulatory Agreement and report annually to PHB each tax year that the exemption and restrictions are in effect.
- PHB shall provide a copy of this Ordinance to the Multnomah County Tax Assessor as prescribed by City Code Section 3.103.050 (A).
Section 2. The Council declares an emergency exists because timely City approval of the application for the MULTE Program is necessary in order to extend the limited property tax exemption for Albert Mixed-Use prior to July 1, 2023, when the exemption expires; therefore, this Ordinance shall be in full force and effect from and after its passage by the Council.
Official Record (Efiles)
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
Simone Rede
Impact Statement
Purpose of Proposed Legislation and Background Information
The purpose of this legislation is to approve an extension to a current tax exemption that is otherwise due to expire on June 30, 2023, thereby preventing an increase in rents for 18 households earning no more than 60% of area median family income (MFI).
City Council approved a ten-year property tax exemption for Albert Mixed-Use in 2012 though a prior version of the MULTE Program, referred to as the Transit Oriented Development (TOD) Limited Tax Exemption Program.
The Albert Mixed-Use’s tax exemption started July 1, 2013, after construction completion. Since the building is less than 15 years old, it is exempt from rental protections approved at the state through SB 611, Rent Stabilization.
On May 10, 2023, City Council approved offering five-year extensions to property tax exemptions expiring after 10 years when the restricted units are serving households earning no more than 60% MFI and not part of the Inclusionary Housing program.
On May 31, 2023, the owner of Albert Mixed-Use, RUJAXX I, LLC, applied for a five-year extension of the property tax exemption. PHB determined that the project needs a tax exemption in order to maintain restricted rents at 60% MFI, which are below market rents.
Approval of the five-year extension stabilizes 18 households, who will be further protected under state tenant protection laws by the time the exemption expires.
Financial and Budgetary Impacts
The Owner will pay a $1,000 application fee to PHB.
This Ordinance approves an additional five years of a property tax exemption resulting in foregone tax revenue. The most-current annual foregone revenue amount for Albert Mixed-Use from tax year 2021-22 was $109,674. Over another five years, the additional net present value of the exemption will amount to approximately $434,001, assuming a four percent discount rate and a three percent annual assessment increase. This five-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 $143,220. 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:
Estimated total foregone revenue: | $434,001 |
Estimated first year value of the tax exemption: | $112,964 |
Estimated annual value of the tax exemption per restricted unit during the exemption period: | $4,822 |
Estimated total foregone revenue per restricted unit over five-year restriction term: | $24,111 |
Community Impacts and Community Involvement
As the largest taxing jurisdiction affected by the tax exemption programs, Multnomah County has approved the administration of the MULTE program 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.
Financial and Budget Analysis
Analysis provided by City Budget Office
This Ordinance approves an additional five years of a property tax exemption resulting in foregone tax revenue. Approval of the five-year extension stabilizes rent for 18 households earning no more than 60% of area median family income. Over five years, the additional net present value of the exemption will amount to approximately $434,001. This five-year estimate includes taxes foregone by all jurisdictions. The reduced amount of property taxes to the City over the time period is $143,220. The estimated first year value of the tax exemption is $112,964. The City will still benefit from property taxes collected on the improved value of the land during the exemption period. The owner will pay a $1,000 application fee to PHB.