ORDINANCE No. 181500

*Direct the City not to accept new applications for the New Multiple-Unit Housing Property Tax Exemption Program until December 31, 2009, except for projects where 100 percent of the housing units are affordable to low-income households. (Ordinance)

The City of Portland ordains:

Section 1.  The Council finds:

1.  The Portland City Council adopted Chapter 3.104, Property Tax Exemption for New Multiple-Unit Housing, Title 3, of the Municipal Code of the City of Portland in 1975. This City Code chapter establishes program criteria, a process for reviewing applications, and guidelines for program review and evaluation.

2.  City Council adopted the New Multiple-Unit Housing (NMUH) program to create an incentive for the construction of new multifamily housing to support the development of a larger residential base in the city’s core as called for in the Downtown Plan of 1972.

3.  In 1988, the boundaries of the NMUH program were extended to cover the entire Central City to implement the housing objectives of the Central City Plan, which called for new housing construction for a wide range of housing types, prices, and rent levels.

4.  City Council denied a tax exemption request under this program in August 2005 because there was not agreement on whether the project met current City housing goals.

5.  On October 19, 2005, City Council adopted Ordinance No. 179693, which directed City staff not to accept new applications for the NMUH property tax exemption program for 180 days and to review policy goals and fiscal impacts of the program and return to Council with recommendations within 180 days.

6.  City Council also directed staff to provide stakeholders, including but not limited to the Planning Commission, the Housing and Community Development Commission, and the Portland Development Commission, the opportunity to review and comment on recommended program guidelines prior to presenting a proposal to City Council for formal action. They also directed Office of Management and Finance to assess the fiscal impacts of this and other tax exemption programs.

7.  City Council and the Portland Development Commission discussed the City’s tax exemption programs at their joint work session on January 11, 2006. In response to the concerns raised in this discussion, City staff drafted concepts for program changes to the City’s multifamily tax exemption programs in February 2006.

8.  These concepts included the possible merging of the NMUH program with the Transit Supportive Residential and Mixed-Use (TOD) tax exemption program, which was adopted in 1996 to support the development of the regional rail system and other mass transit facilities. The regulations of the TOD program are included in City Code Chapter 3.103. Both programs offer 10-year tax exemptions on new multifamily or mixed-use projects and are authorized by the same State statutes. The boundaries of the two programs overlap in places outside the Central City.

9.  On March 15, 2006, City Council adopted Ordinance No.179993, extending the suspension of the acceptance of new applications for the NMUH program until July 30, 2006, to provide staff more time to conduct public outreach on concepts.

10.  City staff briefed the Planning Commission on March 14, 2006, and the Portland Development Commission on March 26, 2006, on the concepts for changes to the City‘s two multifamily tax exemption programs that attempted to address the concerns expressed by City Council and the two commissions about them.

11.  City staff held meetings with both the development community and other community stakeholders in April and May of 2006 on these concepts. The advice provided by the development community and other community stakeholders was that there should be separate tax exemption programs for the Central City and for designated areas outside the Central City because of the difference in housing market conditions.

12.  Additional advice from the development community and other community stakeholders was that changes to the program for the Central City should not be brought forward for Council action until there was agreement on the goals that the City intends to pursue through the use of the program and additional outreach to the public about the accomplishments of the NMUH program.

13.  City staff then drafted a proposal to expand the TOD program to cover transit-oriented areas outside the Central City that would benefit from the program and to update the public benefit requirements to reflect current City housing priorities. Staff also proposed to extend the suspension of the acceptance of new applications for the NMUH program until the goals of that program could be considered in conjunction with upcoming Central City planning processes scheduled to take place from 2006 through 2010.

14.  On July 12, 2006, City Council held a hearing on an ordinance to extend the suspension on the acceptance of new applications for the NMUH program until December 31, 2007. At that hearing, there was testimony that low-income housing projects built by private owners could not receive an exemption under the NMUH tax exemption program during this time period.

15.  City Council exempted 100 percent low-income housing projects when it extended the suspension of new applications for the NMUH program to December 31, 2007 by passage of Ordinance 180327 on July 19, 2006.

16.  City Council adopted the changes to the TOD program boundaries and regulations by Ordinance 180572 on November 8, 2006. The TOD areas boundaries were extended to cover some transit-oriented areas outside the Central City that had previously been covered by the NMUH program.

17.  The update of the Central City Plan, now named the Central Portland Plan, is scheduled for 2008 through 2010. Since the NMUH program was adopted to create an incentive for development of new housing units in the Central City, the changes to the NMUH program could be considered in tandem with the update of this plan. A review of the NMUH program during the update of the Central Portland Plan may help clarify the objectives that the City wants to accomplish through the use of this program and inform the changes to it.

18.  The City Council recognizes that predictability in implementation of City policies and programs is essential to maintaining a positive business environment and attracting new investment to the City, and it may be beneficial to continue the current suspension on the acceptance of new applications for this program until the program’s goals have been clarified.

NOW, THEREFORE, the Council directs:

a.  Provisions of City Code Chapter 3.104 that require the City to accept and process new applications for the New Multiple-Unit housing tax exemption program are hereby suspended until December 31, 2009.

b.  The City shall not accept new applications for the New Multiple-Unit housing tax exemption program until December 31, 2009, except for projects that are 100 percent affordable to households with incomes below 60 percent MFI and have longterm affordability agreements with the City or other public agencies.

c.  The Bureau of Planning shall return to City Council with recommendations for changes to the NMUH program’s boundaries and regulations that are found in City Code Chapter 3.104 as part of the Central Portland Plan process in 2009.

2.  Section 2. The Council declares that an emergency exists in order that there be no delay in taking measures to ensure the suspension of the acceptance of new applications for this program be extended; therefore, this ordinance shall be in full force and effect from and after its passage by Council.

BACKING SHEET INFORMATION

AGENDA NO. 04-2008

ORDINANCE/RESOLUTION/COUNCIL DOCUMENT NO. 181500