ORDINANCE No. 176786

Amend Property Tax Exemption for Residential Rehabilitation and New Construction of Single-Unit Housing in Distressed Areas, to carry out the recommendations of the Housing and Community Development Commission (Ordinance; Repeal Ordinance No. 176378 and amend Code Chapter 3.102)

The City of Portland ordains:

Section 1.  The Council finds that:

1. On January 18, 1989, the Portland City Council adopted the Report of the Vacant and Abandoned Building Task Force by Resolution No. 34504. This Report included several directives to City bureaus, one of which included drafting enabling legislation to create a property tax incentive to encourage new infill development of single family housing in neighborhoods containing a large number of vacant sites and structures.

2. During their 1989 session, the Oregon Legislature passed SB 310, allowing local governments to adopt a new limited property tax exemption program to encourage the construction of single unit housing and the rehabilitation of owner-occupied single unit housing in areas designated as “distressed areas.” This enabling legislation is contained in ORS 308.450-.481 and 458.005-.065.

3. On March 22, 1990, the Portland City Council passed Ordinance No. 162854 amending Chapter 3.102 to permit local administration of this program.

4. The passage of Ordinance No. 162854 was intended to stimulate the construction of new single family residences in distressed areas in order to improve in those areas the general life quality, to promote residential infill development on vacant or underutilized lots, to encourage homeownership, and to reverse declining property values.

5. During briefings before the Portland Planning Commission on March 13, 1990, Commission members and staff discussed appropriate rules for the new program including whether homebuyers qualifying for the property tax exemption should be required to occupy the homes during the exemption period.

6. In response to Planning Commission concerns, the Portland City Council decided to forego the owner-occupancy requirement in order to determine how successful the tax incentive would be in fostering new production in distressed areas. A reassessment of this program’s performance was to be made at a later date.

7. Since the program was locally adopted in 1990, over 1,800 new single family units have been assisted by the limited property tax exemption. This infill construction was aided by a strong economy and the subsequent revitalization of City neighborhoods during the 1990s. These housing units have been built by both for profit and nonprofit developers.

8. In June 2000, a inter agency staff work group examined several policy and administrative issues associated with the City’s property tax exemption programs. Included in this examination was the question of requiring new regulations for the distressed area programs

including whether to apply owner-occupancy, household income limits, and first time homebuyer requirements to the program.

9. The Work Group’s recommendations place greater control over the program benefits, emphasize the homeownership purpose of the legislation, and ensure that the program is not unintentionally promoting gentrification by imposing an income limit on program recipients.

10. The work group recommendations were heard before the Planning Commission on January 23, 2001 and before the Housing and Community Development Commission on October 3, 2001. At both hearings, there was opposition testimony submitted by members of the Real Estate and homebuilding industries expressing concern about the recommended amendments to the program. Their concerns centered on the increased restrictions to the program which would narrow its availability to the public.

11. In response to this testimony members of the Commissions directed staff to meet with interested parties to determine areas of common ground. However, the Housing and Community Development Commission voted to recommend that City Council pass three of the four original Work Group amendments. These include a new income limit for qualifying homebuyers, an owner-occupancy requirement, and a change in name from distressed areas to Homebuyer Opportunity Areas. The HCDC voted against requiring buyers to be first time homebuyers.

12. On April 10, 2002, the City Council passed Ordinance No. 176378, as amended. Because of clerical errors in Ordinance No. 176378 it is necessary to repeal this Ordinance and replace it with this Ordinance in order to carry out the intent of the City Council.

NOW, THEREFORE, the Council directs:

That Ordinance No. 176378 is repealed and Chapter 3.102 of the City Code is amended as follows:

(New language underlined. Deleted language struckthrough.)

Chapter 3.102

PROPERTY TAX EXEMPTION FOR RESIDENTIAL REHABILIATION AND NEW CONSTRUCTION OF SINGLE-UNIT HOUSING IN DISTRESSED HOMEBUYER OPPORTUNITY AREAS

3.102.010 Definitions.

A. "Distressed area" means those areas of the City designated by rule by the Bureau of Planning in consultation with the Portland Development Commission, and the Bureau of Housing and Community Development that meet the requirements set out in ORS 308.450 (1), ORS 458.005 (1), and Section 3.102.090. For the purposes of administering Chapter 3.102, “distressed areas” shall hereafter in this Chapter be called “homebuyer opportunity areas” and be identified as such on any maps and application materials developed for this program.

B. through C. (No change)

D. (No change)

1. (No change)

2. The following expenditures have been made:

a. On property which is 25 years of age or more on January 1, 1986, sums were expended after September 13, 1975 and prior to July January 1, 2008 for the purpose of making rehabilitation improvements and which sums in the aggregate equal or exceed ten percent (10%) five percent (5%) of the true cash assessed value of the land and improvements as reflected in the last equalized assessment roll preceding the application date; or

b. (No change)

3. through 4. (No change)

5. If owner occupied, the structure is located in a distressed homebuyer opportunity area.

6. If it is a single-unit residential structure:

a. The unit was newly constructed on or after January 1, 1990 and prior to July 1, 2003.

b. It is located in a distressed homebuyer opportunity area; and

c. It falls within the price limit as provided by Section 3.102.010 2 a. 3.102.090 D.

E. 1. through 2. (No change)

F. (No change)

3.102.020 Application for Limited Assessment.

A. Any person desiring to apply for an exemption under the terms of this Chapter shall submit

an application ,on or before December 31st preceding the first tax year the exemption first applies, to the Portland Development Commission. Each applicant shall pay a non-refundable fee as provided below:

1. through 2. (No change)

3.a. through b. (No change)

c. That the applicant agrees, if the structure is not a newly constructed single-unit residence and is not intended to be owner-occupied, to negotiate through the Portland Development Commission rental rates to be charged for the rehabilitated rental units during the period of limited assessment; and

d. That the applicant certifies, if the structure is a newly constructed single-unit residence, that the household purchasing the structure have an annual gross household income not greater than one hundred percent of the area median income for a family of four as determined annually for the Portland Metropolitan Area by the United States Department of Housing and Urban Development as adjusted upward for a household of more than four persons. For the purposes of this program, household income shall be the annual gross income of the borrower or the deedholder who will occupy the eligible property; and

e. That the structure, once sold, remain owner-occupied as the principal residence of the household receiving the property tax exemption during the ten year period of the limited assessment. Hardship exception to the owner-occupancy requirement may be granted. Such hardship exceptions may include, but are not limited to, the following circumstances: active military duty outside of the area, temporary relocation to care for an ill or dying family member, or sudden relocation caused by an employer; and

f. That subsequent buyers of the structure during the ten year period of the limited assessment will have an annual gross household income not greater than one hundred percent of the area median income for a family of four for the Portland Metropolitan Area as adjusted upward for a household of more than four persons.

d. g. That the applicant acknowledges responsibility for compliance with the Code of the City of Portland regardless of whether the applicant obtains the assessment provided by this Chapter.

h. However, any application submitted prior to January 1, 2003 shall be subject only to subsections 3.102.020 3. a. through c. and g. of this Section during the ten year period of the property tax exemption.

B. (No change)

C. Should any of the application criteria noted in this Section be violated, the limited assessment shall be terminated according to the provisions of Section 3.102.080. Termination.

3.102.030 Review of Application

A. Within 90 days after receipt of a completed application and payment of all appropriate fees, the Commission shall approve the application if the Portland Development Commission finds that the property is eligible property according to the provisions of Section 3.102.010 D. Written notice of approval shall be sent to the applicant at his or her last known address within 10 days of approval, and, in the case of a residential structure to be rehabilitated, shall verify the structure’s noncompliance, and specify what rehabilitation improvements must be completed in order that the property be in substantial compliance.

B. For a newly constructed single-unit residence or an owner-occupied single unit residence to be rehabilitated, the Portland Development Commission shall determine whether the location is within a distressed homebuyer opportunity area at the time of application and may approve an application for limited property tax exemption for an eligible structure constructed prior to July 1 2003 or rehabilitated prior to July 1, 2008 within a distressed homebuyer opportunity area. Construction or rehabilitation must begin while the area is designated as a distressed homebuyer opportunity area in order to qualify.

1. through 3. (No change)

C. (No change)

3.102.040 Affordability Agreement.

A. through D. (No change)

3.102.050 Certificate of Qualification.

A. (No change)

B. (No change)

1. (No change)

a. through b. (No change)

2. In the case of a newly constructed single-unit residence:

a. Construction began while the area was designated as distressed a homebuyer opportunity area;

b. through c. (No change)

C. through D. (No change)

3.102.060 Assessment.

A. As provided by ORS 308.459, eligible rehabilitated property shall be assessed at no more than its assessed value as it appears in the last equalized assessment roll next preceding the date on which the application for limited assessment is filed with the Bureau Portland Development Commission as provided for in 3.102.020. If the certificate of qualification is filed with the Assessor after June 30 December 31 but prior to August 1 April 1, the limited assessment shall apply with respect to the first assessment roll equalized after August 1 that date; or if the certificate of qualification is filed after August 1 April1 but prior to July 1 January 1, the limited assessment shall apply as of the following July 1 January 1 and shall continue to apply thereafter for a total of 10 consecutive assessment rolls.

B. (No change)

C. As provided by ORS 458.020, a newly constructed single-unit structure, exclusive of the land on which it is built, shall be exempt from ad valorem taxation for no more than 10 successive years beginning July January 1 of the assessment year immediately following the calendar year in which application is approved under Section 3.102.040 3.102.020 of this Chapter. The exemption provided by this Chapter shall be in addition to any other exempt] on exemption provided by laws for the property. However, the amount of assessed value exempted under this Chapter shall not exceed the true cash real market value of the structure determined as of the date that the property is inspected for purposes of making a determination under this Chapter.

D. 1. through 2. (No change)

3. The tax exemption is necessary in order to prevent displacement of low and moderate income tenants or less of a low and moderate income housing resource.

E. through G. (No change)

3.102.070 Annual Statements. (No change)

3.102.080 Termination

A. If subsequent to the issuance of a certificate of qualification, it is determined by the City Portland Development Commission that the new construction was not completed on or before July 1, 2003 or the rehabilitation improvements were not completed on or before July January 1, 2008, or that any other provision of the Chapter is not being complied with, the Portland Development Commission shall give notice in writing to the owner, mailed to the owner’s last known address, of the proposed termination of the limited assessment, stating the reasons therefore; and requiring the owner to appear before the City Council and show cause why the limited assessment should not be terminated. This hearing shall be held not more than 20 days after the mailing of the notice.

B. (No change)

C. (No change)

D. (No change)

E. As provided by Subsection (4) of ORS 308.477, if no appeal is taken as provided in Subsection (4) D. of this Section, or upon final adjudication, the county officials having possession of the assessment and tax the rolls shall correct the rolls in the manner provided for omitted property under ORS 311.207 to 311.213, to provide for the assessment and taxation of any value not included in the valuation of the new construction or the rehabilitation improvements during the period of limited assessment prior to termination by the Council or by a court, in accordance with the findings of the Council or the court as to the assessment year in which the limited assessment is to terminate. The Assessor shall make the valuation of the property necessary to permit correction of the rolls, and the owner may appeal the valuation in the manner provided under ORS 311.207 to 311.213. Where there has been a failure to comply, as provided in Subsection (1) of this Section, the property shall be revalued beginning July 1 January 1 of the calendar assessment year in which the noncompliance first occurred. Any additional taxes becoming due shall be payable without interest if paid in the period prior to the 16th day of the month next following the month of correction. If not paid within such period, the additional taxes shall thereafter be considered delinquent on the date they would normally have become delinquent if timely extended on the roll or rolls in the year or years for which the correction was made.

F. through G. (No change)

3.102.090 Designation of Distressed Homebuyer Opportunity Areas.

A. The Bureau of Planning shall be the agency responsible for designating distressed homebuyer opportunity areas. The Portland Development Commission and the Bureau of Housing and Community Development shall be consulted in the designation process. The designation of such areas shall occur in the form of a public hearing conducted before the City Planning Commission through a legislative process appealable to City Council. If there is no appeal within 30 days of the decision by the Planning Commission, the decision of the Planning Commission shall be final. The Bureau of Planning shall make available maps indicating current distressed homebuyer opportunity areas. The designation of the first distressed homebuyer opportunity areas shall be conducted as nearly as possible in conjunction with the adoption of this ordinance implementing tax exemption in such designated areas. From the date of the first designation, a review of the areas for possible amendment of the boundaries of the distressed homebuyer opportunity areas shall occur at least every three years.

B. The criteria for designating distressed homebuyer opportunity areas shall include a consideration of the following factors:

1. (No change)

2. The incentive of limited property tax exemption in a distressed homebuyer opportunity area will help to carry out adopted policies, or areawide or district plans of the city related to housing or neighborhood revitalization.

C. At no time shall the cumulative land area within the boundaries of distressed homebuyer opportunity areas exceed 20 percent of the total land areas of the city.

D. (No change)

3.102.100 Sunset of the Exemption for Owner-Occupied Rehabilitation and New Single-Unit Residences in Distressed Areas.

Passed by the Council, AUG 07 2002

Mayor Vera Katz

Michael P. Saba:mps            GARY BLACKMER

June 14, 2002              Auditor of the City of Portland

                 By /S/ Susan Parsons

                       Deputy

BACKING SHEET INFORMATION

AGENDA NO. 930, 969-2002

ACTION TAKEN:

JUL 31 2002 PASSED TO SECOND READING AUG 07 2002 9:30 A.M.

ORDINANCE/RESOLUTION/COUNCIL DOCUMENT NO. 176786