APPLICATION FROM LLOYD 2002, LLC FOR TEN YEAR PROPERTY TAX EXEMPTION FOR NEW MULTIPLE UNIT HOUSING (CHAPTER 3.104)
KNOWN AS MULTNOMAH ST. APARTMENTS
Planning Commission Report and Recommendation
to City Council
I. FACTS
A. GENERAL INFORMATION
Effective Dates: Pre-Application Date: May 2, 2002
Full Application Date: May 21, 2002
P.C. Hearing Date: August 27, 2002
Deedholder: John, James E TR ET AL
1701 SE Columbia River Drive
Vancouver, WA 98661
Applicant(s): Mike Simpson, Representative
Lloyd 2002 LLC
2001 SW River Drive
Portland, OR 97201
Architect: Robert S. Leeb Architects & Planners
71 SW Oak Street Suite 200
Portland, OR 97204
Proposal : Application for limited property tax exemption for the construction of a six story, 184-unit apartment project with 150 underground parking spaces and 14,330 square feet of ground floor commercial space.
Location: The full block bounded by NE Wasco, 3rd, Multnomah, and Martin Luther King Jr. Boulevard.
Legal Description: State ID 1N1E34AA 2401 and 2300; R182186 and R182184
Quarter Section: 2930
Zone(s): RX, Central Residential Zone (42,249 square feet)
CX, Central Commercial Zone (664 square feet)
d, Design Review Overlay (Central City Plan District)
Description of The applicant intends to construct a six story, 184-unit rental
Proposal: development with subsurface parking and ground floor commercial space.
B. SITE INFORMATION
Description: This full block site lies within the Lloyd District of the Central City in an area characterized by a wide variety of commercial, institutional, and entertainment uses. The area continues to undergo a dramatic transition initiated by public and private investment. The site is currently occupied by Lyons Restaurant which continues its operation but is proposed to be demolished to make way for this new residential, mixed-use development. Directly north of the site is the Holy Rosary Parish Center, west is a surface parking lot for Holladay Park Medical Center, east is a Burgerville Drive-In Restaurant, and south is a La Quinta Motor Inn. Two blocks farther to the southwest is the Oregon Convention Center and four blocks to the east is the Lloyd Center Mall. Scattered on nearby sites are older residential buildings dating from the early 20th Century.
History: The significant land use case affecting this site was 7922-PA, a Plan Map amendment approved concurrently with 7921-PA in 1989. This changed the zoning of the site from CXd to RXd to compensate for the lost housing potential resulting from the Plan Map amendment approved for a site at NE 16th and Multnomah to allow for the construction of the Marriott Residence Hotel. This action carried out the No Net Loss Housing Policy of the Comprehensive Plan. The proposed development further carries out this policy by the replacement of the stand alone restaurant at this site to permanent housing.
Planning Commission Finding: Because the site has a Design Overlay zone and is located within the Central City Plan District, the proposed development must receive Design Review approval. The project developer has applied for Design Review which will be heard in September 2002 (Case No. LUR 02-129330).
C. VICINITY DATA
Surrounding Conditions: As noted above, the project site is located in the Lloyd District of the Central City. It is a rapidly developing mixed use area serving the entire city as a job, retail, and tourist center. Recent planning efforts are attempting to increase the residential base of the district. This is little housing left of the historic neighborhood developed during the turn of the last Century. Two nearby residential developments that further this planning goal are the Cornerstone Apartments and the first phase of the Cascadian Condominiums, both of which have received the ten year property tax exemption for eligible units.
D. AGENCIES, NEIGHBORHOOD AND OTHER ASSOCIATIONS NOTIFIED
All appropriate agencies and associations have been notified in accordance with Title 33 regulations governing the Design Review of this project. The property tax exemption program falls under Title 3, Administration, of the City Code. The public notices of the meeting dates of the Portland Development Commission, the Planning Commission, and the City Council which are printed in area newspapers fulfill the notification requirement of this review.
E. EXHIBITS
1. Zoning Map
2. Site/Building Plan
3. Exterior Elevations
4. Applicant’s 10 Year Income Projections
5. Portland Development Commission Recommendation
F. LEGISLATIVE INTENT/STATUTORY AUTHORITY
1. Legislative Intent
Consideration for property tax exemption for a ten-year period is authorized by ORS 307.600 through 307.900 and by Title 3, Administration, of the Code of the City of Portland, Oregon.
State law specifies the following intent for the tax exemption provision under ORS 307.600, Legislative Findings:
"307.600. (1) The legislature finds that it is in the public interest to stimulate the construction of transit supportive multiple-unit housing in the core areas of Oregon's urban centers, to improve the balance between the residential and commercial nature of those areas, and to ensure full-time use of the areas as places where citizens of the community have an opportunity to live as well as work.
“(2) The Legislature also finds that it is in the public interest to promote private investment in transit supportive multiple-unit housing in light rail station areas and transit oriented areas in order to maximize Oregon’s transit investment to the fullest extent possible and that the cities and counties of this state should be enabled to establish and design programs to attract new development of multiple-unit housing, and commercial and retail property, in areas located within a light rail station area or transit oriented area.
“(3) The legislature further finds that the cities and counties of this state should be enabled to establish and design programs to attract new development of multiple-unit housing in light rail station areas, in transit oriented areas or in city core areas by means of the local property tax exemption authorized under ORS 307.600 to 307.690. The programs shall emphasize the following:
“(a) The development of vacant or under-utilized sites in light rail station areas, transit oriented areas or core areas, rather than sites where sound or rehabilitatable multi-unit housing exists.
“(b) The development of multiple-unit housing, with or without parking, in structures that may include ground level commercial space.
“(c) The development of multiple-unit housing, with or without parking, on sites with existing single-story commercial structures.
“(d) The development of multiple-unit housing, with or without parking, on existing surface parking lots.
“(4) The programs shall result in the construction, addition or conversion of units at rental rates or sale prices accessible to a broad range of the general public.”
Planning Commission Finding: The 1995 State Legislature amended this program to allow the tax exemption incentive to apply to transit supportive development and also added the option of granting the exemption for units that are developed for individual purchase, such as condominiums. The City adopted a separate program for transit supportive development in October 1996 and modified Chapter 3.104 to allow projects developed with housing units available for sale to individuals to qualify for the ten year tax exemption. This proposal is for a newly constructed rental development on the site of an existing single story restaurant and therefore fulfills the legislative intent of the enabling statute.
2. Statutory Authority/Planning Commission Review
Section 3.104.050 of the City Code requires that the Planning Commission review tax exemption applications and determine whether the applicant's proposed development is consistent with the City's Comprehensive Plan and shall recommend to the City Council that the application be approved subject to conditions which the Commission deems appropriate to achieve the purposes of Chapter 3.104.
In order for a limited property tax exemption to be approved, the following determinations must be made:
a) A determination that the proposed housing development is eligible for limited property tax exemption according to the requirements of City Code Chapter 3.104.
b) A determination that the proposed development is in conformance with adopted Comprehensive Plan and other adopted plans incorporated by the Comprehensive Plan, such as the Central City Plan.
c) A determination specifying the scope and nature of public benefit recommended for the proposed project.
Planning Commission Comment: The proposed project is within the boundaries of the Central City Plan District. Chapter 3.104, as amended in March 1990, requires review of all exemption applications by the Portland Development Commission for economic feasibility. The conclusion by the Development Commission is noted below in Section V.B. and in Exhibit 5 attached to this Report. Because the proposed project is located in the RX/CXd zone, the project must be reviewed by the Design Commission for conformance with applicable design guidelines. This Design Review case is currently under review (Case No. LUR 02-129330).
II. ELIGIBILITY DETERMINATION
Section 3.104.010(3) of the City Code requires that property must meet one of two locational requirements in order to be eligible for tax abatement:
(a). That it be located within the Central City Plan District boundary as shown on Map 510-1 Portland City Code Chapter 33.510; or
(b). That it be within the boundaries of any urban renewal or redevelopment area formed pursuant to ORS 457.
Planning Commission Finding: The proposed apartment project on the site identified as 1N1E34AA Tax Lots 2300 and 2401 (Block 66, Holladay’s Addition) is located within the boundaries of the Central City Plan District and within the Oregon Convention Center Urban Renewal Area. It, therefore, meets the locational criteria for eligibility.
III. DETERMINATION OF COMPLIANCE WITH ADOPTED PLAN POLICIES
A. COMPREHENSIVE PLAN CONSIDERATIONS
Chapter 197 of the Oregon Revised Statutes requires all cities and counties to develop a Comprehensive Plan for land use and development, in accordance with the requirements of the State Land Conservation and Development Commission (LCDC). The City of Portland's Plan was adopted by City Council on October 16, 1980 and became effective on January 1, 1981. The plan was acknowledged by LCDC on May 1, 1981.
The Plan establishes a set of goals and policies to guide future development of the City. Housing is addressed under Goal No. 4 which states:
“Enhance Portland’s vitality as a community at the center of the region’s housing market by providing housing of different types, tenures, density, sizes, costs, and locations that accommodate the needs, preferences, and financial capabilities of current and future households.”
The Multnomah Street development supports several of the policies of the Housing Goal including the following:
4.1: Housing Availability
Ensure that an adequate supply of housing is available to meet the needs, preferences, and financial capabilities of Portland’s households now and in the future.
4.2: Maintain Housing Potential
Retain housing potential by requiring no net loss of land reserved for, or committed to, residential, or mixed-use. When considering requests for amendments to the Comprehensive Plan map, require that any loss of potential housing units be replaced.
4.3: Sustainable Housing
Encourage housing that supports sustainable development patterns by promoting the efficient use of land, conservation of natural resources, easy access to public transit and other efficient modes of transportation, easy access to services and parks, resource efficient design and construction, and the use of renewable energy resources.
4.7: Balanced Communities
Strive for livable mixed-income neighborhoods throughout Portland that collectively reflect the diversity of housing types, tenures (rental and ownership) and income levels of the region.
4.8: Regional Housing Opportunities
Ensure opportunities for economic and racial integration throughout the region by advocating for the development of a range of housing options affordable to all income levels throughout the region.
4.10: Housing Diversity
Promote creation of a range of housing types, prices, and rents to 1) create culturally and economically diverse neighborhoods; and 2) allow those whose housing needs change to find housing that meets their needs within their existing community.
4.11: Housing Affordability
Promote the development and preservation of quality housing that is affordable across the full spectrum of household incomes.
4.14: Neighborhood Stability
Stabilize neighborhoods by promoting: 1) a variety of homeownership and rental housing options; 2) security of housing tenure; and 3) opportunities for community interaction.
Planning Commission Finding: This project complies with Comprehensive Plan policies related to housing by providing 184 units of middle-income and market rate rental housing on a site designated for commercial and residential mixed-use development and along the MLK Jr. Corridor which has been dominated by publicly assisted low-income housing. It also fulfills the No-Net-Loss policy by encouraging housing on a site committed to housing as a result of a related Plan amendment to allow hotel development on another site.
B. ZONING CONSIDERATIONS
1. The RXd and CXd Zones and Central City Plan District. As of March 24, 1988, the Central City Plan was adopted for the inner city along the west and east sides of the Willamette River. Much of the Inner East Side was incorporated within the Central City Plan boundary. Public review of projects in the Central City Plan District is now regulated by Central City Plan District requirements which supersede some CX regulations.
The Zoning Code regulations which apply to the subject site include the following:
• Zone and Plan Designation: RX, Central Residential and CX, Central Commercial
• Permitted Uses: A wide range of commercial and institutional uses as well as high density residential.
• Permitted Floor Area Ratio (FAR): 9:1
• Permitted Building Height: 250 feet with height bonuses available
Planning Commission Finding: The site is located within an area eligible for the limited property tax exemption The proposed use of this site conforms with the permitted uses and the scale of development falls within the dimensional standards of the Zoning Code as determined by the City’s land use review process.
C. DETERMINATION OF COMPLIANCE WITH THE CENTRAL CITY PLAN
The Central City Plan was adopted by the City Council on March 24, 1988. Relevant district and functional policies to be considered are the following:
"Policy 3: HOUSING. Maintain the Central City's status as Oregon's principal high density housing area by keeping housing production in pace with new job creation.
FURTHER:
1. Promote the construction of at least 15,000 new housing units in the Central City by the year 2010.
2. Preserve and encourage rehabilitation of existing housing.
3. Encourage the development of housing to meet diverse needs by encouraging a range of housing types, prices, and rent levels. Avoid isolating higher, middle, moderate, low and very low income households.
4. Foster housing development as a key component of a viable urban environment. Encourage a mix of rental and owner-occupied housing that accommodates the variety of households and families attracted to a Central City lifestyle. Include affordable housing in this mix..
5. Secure greater regional participation in addressing the housing needs of the homeless, low-income and other special needs populations.
6. Where residential development is required, assure that when development of the housing is deferred to the future, the housing site is designated and zoned residential.
7. House at least 15 percent of PSU students in university housing. Locate university housing within the District or within walking or bicycling distance of the District, or at a location with a direct transit connection to the District
8. Facilitate housing ownership in order to foster a vested interest and ‘stewardship’ in the Central City by residents."
Planning Commission Finding: The proposal complies with the overall policy statement and particularly with the elaborations addressed by the above statements 1, 3, and 4. This also marks the first middle income rental housing along the Martin Luther King Boulevard Corridor within the Central City area.
"Policy 19: LLOYD CENTER-COLISEUM. Reinforce the Lloyd Center as the eastern anchor of Central City retailing and locate the highest density new development in areas served by light rail.
FURTHER:
A. Recognize the Lloyd Center-Coliseum District's role as a major entrance to the Central City.
B. Improve the environment for pedestrians throughout the district and create a regional civic facilities campus which brings together the Convention Center and Coliseum.
C. Promote and encourage the development of uses supporting the Convention Center and Coliseum.
Planning Commission Finding: The proposal contributes to the overall district policy by contributing to the middle-income residential base in this area of the Central City designated for commercial, residential, and mixed use development. The project location introduces new residential development in this section of the Central City which has heretofore seen less new residential development than has occurred on the west side of the Central City during the last few years.
D. DETERMINATION OF COMPLIANCE WITH THE LIVABLE CITY HOUSING GOALS.
On March 11, 1992, the City Council adopted Resolution No. 34970, which proposed to increase the housing production goals for the Central City from 5000 new units during the next twenty years to 15,000 new units over that time period. These new housing goals were adopted as part of the Central City Plan.
Planning Commission Finding: The introduction of 184 new units of middle income rental housing supports this overall goal.
E. DETERMINATION OF COMPLIANCE WITH THE DOWNTOWN PLAN
Planning Commission Finding: This site is not located in an area subject to the policies of the Downtown Plan.
F. DETERMINATION OF COMPLIANCE WITH ANY RELEVANT URBAN RENEWAL PLANS OR POLICIES
In December 1988, the City Council adopted Resolution No. 34497 creating the Oregon Convention Center Area Policies and Procedures Guide .
The project is specifically supportive of OCC Plan Goal 6, which states:
"Ensure that urban renewal activities work to stabilize adjacent neighborhoods; mitigating adverse impacts and striving to strengthen neighborhood values."
The project is also supportive of Sub-Goal 6.2, which states:
"Foster middle income residential and mixed-use development in the Convention Center area as mutually supportive of retail opportunities and the maintenance of neighborhood values."
The project is supportive of the OCC Urban Design and Land Use Policy which states:
"The vision for the built environment in the Convention Center area includes a more urban character, overall district identity emphasizing both the area's unique neighborhood qualities and its new central city role, and land uses supportive of the convention center environment.
"Provide an enjoyable and active pedestrian environment.
"Promote design continuity and a distinctive character within the Convention Center area. Development of sub-areas within the Area Development Strategy study area should encourage unique, yet complementary design character.
"Encourage complementary and diverse land use activities in the Convention Center area."
IV. ELIGIBILITY, PLAN, AND POLICY CONFORMANCE: CONCLUSIONS
A. The proposed project is eligible for limited property tax exemption in accordance with City Code and statutory requirements referenced in Section II.
B. According to statutory intent and applicable City Code, the proposed project is consistent with and supportive of the purposes for which this authority was created. The legislative intent strongly encourages the development of new multiple-unit rental and for-sale housing in the State's largest urban core areas and recognizes the need to provide a financial incentive in areas where higher than average land costs exist due to a number of factors.
C. The foregoing references in Section III indicate that the proposed housing development is consistent with and supportive of adopted Comprehensive Plan policies and objectives including, specifically, the Central City Plan, the Livable City Housing Initiative, the Oregon Convention Center Urban Renewal Plan, and the governing development regulations of Title 33, particularly the RXd and CXd zones.
D. The proposal carries out the specific goals and objectives of the limited property tax exemption as approved by the Portland Development Commission based on an analysis of the market feasibility of the project.
E. The property tax exemption has been in existence since 1975. Beginning during the last half of the 1980s, several successful apartment projects were built on the west side of the Central City which have taken advantage of the limited property tax exemption program. This activity in large part was made possible by the incentives of the tax exemption in conjunction with additional loan assistance. Currently the City’s attention has been directed to increasing the residential base within the Lloyd District and dedicating additional tax increment resources for new housing. This project, however, has not requested any additional sources of city funding assistance.
F. The site under consideration is currently occupied by a restaurant. No existing housing will be removed by this project.
V. DETERMINATION OF PUBLIC BENEFIT
A. Examples of Public Benefit
Section 3.104.040, Public Benefits, specifies that the proposed project "must include a public benefit which may consist of, but is not limited to one or more of the following: (1) dwelling units at rental rates or sale prices which are accessible to a broad income range of the general public, (2) recreation facilities or space, (3) open spaces, (4) public meeting rooms, (5) day care facilities, (6) facilities supportive of the arts, (7) facilities for the handicapped, (8) service or commercial use which is permitted and needed at project, but not available for economic reasons, (9) dedications for public use, (10) other public benefits approved by the Planning Commission or City Council."
B. Proposal's Relationship to Public Benefits
The applicant notes the following public benefits to be incorporated into the project:
“Rental Rates. The project will provide dwelling units at rental rates accessible to a broad income range. Rental housing is generally affordable compared to for-sale housing. The project developer is committed to residential development in the Lloyd District and is working on several other projects within the District including projects with traditional affordable housing. The project developer believes that market rate rental housing is the best product type to begin to establish a residential character for the neighborhood. Affordable rental housing and for-sale housing are necessary and desirable but are not the best choice for the initial project.
“Recreation Facilities or Space. The project will include an on-site fitness and exercise room for use by the project’s residents. In addition, the project will include a sundeck facing the east for morning exposure and a rooftop recreation areas including a community gathering room, restrooms, a large sundeck, a spa, indoor and outdoor fireplaces, and landscaping facing the west. The recreation area is oriented toward the City and will have unimpeded views of downtown and the lighted Convention Center Towers.
“Open Spaces. The project contains a landscaped courtyard area accessible to project residents on the second story with southern exposure. A small public courtyard is located immediately below and in front of the second story courtyard. A visual connection between the courtyards will be established enhanced [sic] the street level open space. The Lloyd District has busy streets so this space will provide a quiet, protected area for residents.
“Public Meeting Rooms. The project will contain a business center with computers, fax machines and Internet access and a conference room. The business center and conference room are primarily for use by the project’s residents but the conference room will be available for small neighborhood and community meetings. On-site management staff will schedule availability and coordinate with staff at the Holy Rosary Church and Calaroga Terrace senior residential center.
“Facilities Supportive of the Arts. The Lloyd District does not appear to have an active neighborhood arts foundation. The project developer has discussed arts in the Lloyd District with PDC and Ashforth Pacific and will push for arts in the District. Tentatively, the project developer will work with the Metropolitan Arts Foundation to commission artwork for the project and help initiate a strong arts context for the Lloyd District.
“Facilities for the Handicapped. The entire project will be designed to be accessible for the handicapped. All areas are elevator served.
“Commercial Use. The property is currently occupied by an aging stand-alone restaurant and surface parking and parking is highly visible from all sides. The project will include large retail spaces facing the active streets with preliminary plans calling for two large restaurants and a coffee shop. Independent redevelopment of commercial uses on the site is not allowed by zoning so development of the project is necessary to provide upgraded active commercial uses on the site.
“Other Public Benefits. The project is being designed and will be constructed with sustainability in mind. The developer is working with Ecotrust to source sustainably harvested wood and recycled materials for the project. The developer is a large wood user and seeks to help create the market for sustainably harvested lumber. The project developer is also working with Ashforth Pacific to help define the Lloyd District as a district that places a premium on sustainability as the area redevelops.
“The project capitalizes on the region’s investment in light rail. The project is located less than two blocks from the light rail and in the Fareless square. The project is also located near the current southern terminus of the new Interstate light rail line and a Tri-Met transit center. The project is also walking distance to many entertainment venues including Lloyd Center, the Convention Center, the Rose Garden, and Memorial Coliseum.
“The project will actively promote the use of public transportation and alternate means of transportation. Project managers will actively promote light rail and the project’s location within the Fareless square. The project manager manages other projects on the light rail line and has worked with Tri-Met to promote public transportation. Tri-Met schedules and materials will be located in the building lobby. Project managers will also promote a car sharing service such as the Flexcar Program. The developer has worked with Flexcar and similar programs at other community locations and actively supports such programs.
“Provide high quality housing for the parishioners of the Holy Rosary Church and Priory. Holy Rosary Church and Priory has indicated a strong desire for housing within walking distance to support the needs of older members of its congregation. The applicant is working with the Church and PDC on other properties in the area to further create a neighborhood”
Planning Commission Finding: In establishing the review authority for tax exemption, the Portland Development Commission is given primary authority to recommend to the Planning Commission approval, denial, or approval with conditions [Section 3.104.050 (2)]. PDC's recommendation is determined by a finding that the property tax exemption is necessary in order to make the development economically feasible. The staff of the Portland Development Commission has examined the applicant’s submitted pro forma and finds that without the limited property tax exemption, the project will not achieve a positive rate of return during the ten year period without raising rents an average of 14 percent. Their report concludes that “these rent increases are not possible at the present time; therefore, the project is not financially feasible without the abatement.” (See Exhibit 5)
The Planning Commission's role is to “review the application to determine whether the proposed development is consistent with the City’s Comprehensive Plan. A recommendation shall thereafter be forwarded to the City Council that the application be approved subject to those conditions necessary to achieve the purposes of this Chapter. The Planning Commission shall specify in its recommendation to the Council the scope and nature of public benefit recommended for the proposed project.”
The substance of the Planning Commission's hearing on this proposal includes a determination whether the suggested public benefits are sufficient to meet the purpose of the tax exemption program in the context of wider city policy.
VI. STAFF RECOMMENDATION BASED ON ELIGIBILITY, PLAN, AND POLICY CONFORMANCE FINDINGS AND CONCLUSIONS
The project as proposed would add 184 units of market rate rental housing in an area of the Central City which is targeted by policy for increased residential development. The project is not applying for any additional public subsidy which would support deeper affordability in its rental structure. The applicants note that Trammell Crowell is seeking additional development opportunities within the Central City and believes that a market rate project establishes a positive precedent for the future residential character of the neighborhood. Other housing development along the Martin Luther King Corridor has been more deeply subsidized low-income housing.
The Planning Commission concludes that on balance the proposed development complies with the residential and community development policies of relevant Comprehensive, area and urban renewal plan policies and recommends approval of the limited property tax exemption application by Lloyd 2002, LLC for the project identified currently as the Multnomah Street Apartments, located on Block 66; Holladay's Addition, based on the eligibility, plan, and policy conformance findings and conclusions of Section IV., and subject to the condition that the public benefits and assurances recommended in Section VII. be provided by the applicant.
VII. PUBLIC BENEFIT RECOMMENDATION
A. The Planning Commission recommends to the Portland City Council approval of the limited property tax exemption for the Multnomah Street Apartments subject to the following conditions:
1. The individual apartment units be maintained as rental housing and not convert to condominiums or other ownership arrangement during the ten year term of the property tax exemption.
2. Ground level, locally oriented retail and service businesses serving individuals and households in this building as well as visitors can qualify as a public benefit under the terms of this exemption. A determination by the Director of the Bureau of Planning shall be made if there is a question regarding the neighborhood orientation of the proposed commercial and service uses.
3. The public benefits as described by the applicant be provided in accordance with agreements reached by the relevant review bodies and agencies, including but not limited to the Planning Bureau, the Portland Development Commission, and the Design Review Commission.
4. The project comply with all applicable standards of Title 33, Planning and Zoning, as well as all conditions of approval of any required Design Review or other land use review.
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