MEMORANDUM

Date:  March 19, 2003

To:  Mayor Katz and Members of the Portland City Council

From:  Barbara Sack, City Planner (Ext. 3-7853), and Mike Saba, Senior Planner (Ext. 3-7838)

Re:  Resolution Setting Annual Price Limit for a Newly Constructed Single Family House for Limited Property Tax Exemption in a Homebuyer Opportunity (formerly “Distressed”) Area (Chapter 3.102)

The recommended resolution will be presented to City Council as a regular calendar item at their meeting on March 26, 2003. A summary of the resolution as well as background information is presented below for your use in preparation for the hearing.

Description / Purpose

Chapter 3.102 of the City Code allows the City to grant a limited 10-year property tax exemption on the improvement value of newly constructed single family houses in designated homebuyer opportunity (formerly “distressed”) areas. As of July 1996, the Portland Development Commission has administered this program.

The Planning Bureau is required to submit a resolution each year establishing a maximum sales price limit (including land value) on eligible houses.

This price limit is not to exceed 120 percent of the median sales price of single family houses in the city during the preceding year. The sales data can be obtained from the County Assessors Office or other equivalent source of such sales information. In the past, the Planning Bureau has used both County data and data from private research firms as the base price.

Summary of Public Outreach Efforts

Establishing the annual sales price limit is an administrative process culminating in the adoption of a resolution by City Council. The Planning Bureau consults with staff from the Bureau of Housing and Community Development and the Portland Development Commission. Persons who have testified on matters related to this program will receive notice of the Council meeting.

Other Issues Relevant to This Program

City Council adopted several changes to this program in August 2002 by Ordinance 17686. These changes were recommended in the June 2000 report titled Recommendations of the Property Tax Exemption Policy Work Group. These included adding an income limit for buyers, requiring owner-occupancy for the term of the tax exemption, and changing the name of the program to the “homebuyer opportunity” area tax exemption program. A reason for this last change is that the original objective of the program to encourage new construction in “distressed area” neighborhoods had been met. A fourth recommendation to limit the program to “first -time” homebuyers was not considered by City Council.

Potential Problems

None of the issues noted above affect the process for establishing an annual sales price limit for qualifying properties.

Recommendations

Adopt the resolution setting this new annual sales price limit of $170,000. This is less than a four percent increase over the current median sales price of $164,000.

Planning Bureau Contact Person

Mike Saba, 503-823-7838, will attend the Council meeting.