Establish 2024 sale price cap for the Homebuyer Opportunity Limited Tax Exemption Program
WHEREAS, in 1991, the Oregon Legislature passed legislation allowing local jurisdictions to forgo a portion of property tax revenue for a defined period of time as an incentive for the development of housing that achieve larger City affordable housing policy goals; and
WHEREAS, on behalf of the City of Portland, the Portland Housing Bureau administers the Homebuyer Opportunity Limited Tax Exemption (HOLTE) Program, authorized under ORS 307.651 and Portland City Code 3.102; and
WHEREAS, Portland City Council is required by ORS 307.661 to establish annually by Resolution the sale price cap for units eligible to receive the property tax exemption which may not exceed 120 percent of the area median sale price; and
WHEREAS, the Portland Housing Bureau has received data from the Multnomah County Tax Assessor to determine the median sale price for dwelling units located in the city of Portland for the period of January 1, 2023 through November 30, 2023 as defined by statute; and
WHEREAS, it has been determined that the annual median sale price for dwelling units in the city of Portland for the above-mentioned period is approximately $500,000; and
WHEREAS, the Portland Housing Bureau has elected to establish a sale price cap that remains affordable to households earning up to 100 percent of the area median family income in order to support homeownership affordability for moderate income homebuyers.
NOW, THEREFORE, BE IT RESOLVED that the City Council establishes the annual HOLTE sale price cap at $455,000 for the 2024 calendar year, which goes into effect January 1, 2024.
Official Record (Efiles)
Impact Statement
Purpose of Proposed Legislation and Background Information
The Portland Housing Bureau (PHB) administers the Homebuyer Opportunity Limited Tax Exemption (HOLTE) Program, authorized under ORS 307.651 and Portland City Code 3.102. The HOLTE Program promotes first-time homeownership opportunities for income-qualified homebuyers by providing a property tax exemption on the assessed value of newly built homes for ten years. During the exemption period, homes must continue to be owner-occupied and not used as rental properties, and any new owners must income-qualify.
In order to maintain compliance with state statute, PHB must establish an annual sale price cap for the HOLTE program which may not exceed 120% of the area median sale price between January 1 and November 30, 2023. The act to establish the price cap requires a resolution approved by City Council prior to January 1 each year. Based on data compiled by Multnomah County for sales between January 1 and October 16, 2023, the area median sale price was $500,000.
Given the slight decrease in Year-over-Year home prices and that the HOLTE program is intended to promote affordable homeownership, the Housing Bureau has elected to maintain the 2024 sale price cap at $455,000 - 91% of the area median sale price, which is close to the maximum affordability level of a median income homebuyer with a 20% down payment, and 108% the 2023 median sale price for attached homes.
Financial and Budgetary Impacts
Although the HOLTE program itself reduces future revenue to the City in the form of forgone property taxes, this resolution does not impact the amount of foregone revenue; this resolution merely limits the sale price for units eligible to receive the property tax exemption under the program.
Community Impacts and Community Involvement
As the largest taxing jurisdiction affected by the tax exemption programs, Multnomah County has approved the administration of this program in order to meet shared housing goals. County staff provide the City with the data necessary to establish the annual price.
The State of Housing report published annually by PHB demonstrates the community need to promote affordable homeownership opportunities.
PHB held a meeting with participating homebuilders (including the Homebuilders’ Association) to discuss current market conditions and options for setting the current sale price cap on November 2, 2023. Feedback overwhelmingly suggests that the $455,000 sale cap is an appropriate figure based on current market conditions.
100% Renewable Goal
Approval of the annual sale price cap for the HOLTE program does not impact the City’s total renewable energy use.
Financial and Budget Analysis
Analysis provided by City Budget Office
Although the HOLTE program itself reduces future revenue to the City in the form of forgone property taxes, this resolution does not impact the amount of foregone revenue; rather, it merely limits the sale price for units eligible to receive the property tax exemption under the program. Given the slight decrease in year-over-year home prices and that the HOLTE program is intended to promote affordable homeownership, the Housing Bureau has elected to maintain the 2024 sale price cap at $455,000 - 91% of the area median sale price, which is close to the maximum affordability level of a median income homebuyer with a 20% down payment, and 108% the 2023 median sale price for attached homes.