HomeMy WebLinkAboutItem 08 Low Income Rental Housing (r)AGENDA ITEM SUMMARY Meeting Date: 6/25/2018
Meeting Type: Regular Meeting
Staff Contact/Dept.: Erin Fifield / DPW
Staff Phone No: 541-726-2302
Estimated Time: Consent Calendar
S P R I N G F I E L D
C I T Y C O U N C I L
Council Goals: Promote and Enhance
our Hometown Feel
while Focusing on
Livability and
Environmental Quality
ITEM TITLE: UPDATE LOW-INCOME RENTAL HOUSING PROPERTY TAX EXEMPTION
PROGRAM
ACTION
REQUESTED:
Conduct a second reading on and move to adopt/not adopt:
AN ORDINANCE CONCERNING PROPERTY TAX EXEMPTION FOR LOW-INCOME
RENTAL HOUSING; AMENDING SECTIONS 3.500, 3.502, 3.504, 3.506, AND 3.508
OF THE SPRINGFIELD MUNICIPAL CODE; ADOPTING A SEVERABILITY CLAUSE;
AND PROVIDING AN EFFECTIVE DATE.
and
A RESOLUTION ADOPTING STANDARDS AND GUIDELINES FOR THE CITY’S LOW-
INCOME RENTAL HOUSING PROPERTY TAX EXEMPTION PROGRAM, SPRINGFIELD
MUNICIPAL CODE SECTIONS 3.500-3.508.
ISSUE
STATEMENT:
The Council’s Affordable Housing Strategy includes incentivizing the creation of
housing at all levels of the continuum, including income-qualified housing. A Low-
Income Rental Housing Property Tax Exemption is one tool available to help make
it more feasible for developers to increase the number of new housing units and to
make those units affordable to the renters in our community who face the greatest
cost burdens and who are struggling to obtain or maintain a place to live.
ATTACHMENTS: ATT1: Ordinance and Exhibit A
ATT2: Resolution and Exhibit A
DISCUSSION/
FINANCIAL
IMPACT:
Oregon cities have been empowered to create low-income rental housing property
tax exemption programs under Oregon Revised Statutes since 1989. The purpose of
the low-income rental housing tax exemption is to provide an incentive that will
encourage rental housing for low-income (defined as income at or below 60 percent
of the area median income) persons. Upon Council direction, City staff have
initiated an update to the current Municipal Code and Standards and Guidelines for
the Low-Income Rental Housing Property Tax Exemption Program.
Council held a first reading of the Ordinance and held a public hearing on the
municipal code amendments and standards and guidelines of the program on June
4th, 2018. Following the testimony at the public hearing, Council asked for more
information and implications of allowing existing properties to qualify for the low-
income rental housing property tax exemption and setting criteria for their approval.
Council indicated they are supportive of moving forward right now with the
program for just newly constructed properties. This fall, staff will revisit the
question with Council of allowing existing properties to qualify as well.
Staff request that Council conduct a second reading of the Ordinance and adopt the
Ordinance and Resolution. Following approval of the Ordinance and Resolution,
the City will inform other taxing districts of the program and formally request their
support for an exemption to their portion of the tax levy.
CITY OF SPRINGFIELD, OREGON
ORDINANCE NO. __________________ (GENERAL)
AN ORDINANCE CONCERNING PROPERTY TAX EXEMPTION FOR LOW-INCOME
RENTAL HOUSING; AMENDING SECTIONS 3.500, 3.502, 3.504, 3.506, AND 3.508 OF THE SPRINGFIELD MUNICIPAL CODE; ADOPTING A SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Springfield has a shortage of affordable housing and the cost of housing
relative to household incomes is rising;
WHEREAS, the City of Springfield has developed an Affordable Housing Strategy that identifies and implements various initiatives to help address this issue;
WHEREAS, ORS 307.515-307.535 allows cities to establish and implement a program
exempting low-income rental housing from ad valorem real property taxes for twenty years;
WHEREAS, to comply with ORS 307.515-307.535, the Council adopted the Tax Exemption for
New Low-Income Housing on February 1, 1993 (Ordinance No. 5667) which was incorporated
in the Springfield Municipal Code sections 3.500-3.508;
WHEREAS, the Council has identified the Tax Exemption for Low-Income Rental Housing
program as one tool available to meet some of the objectives of its Affordable Housing
Strategy;
WHEREAS, the Oregon legislature has updated ORS 307.515 through 307.535 since Springfield
first established its program and the Springfield Municipal Code must be changed to reflect the
updated statutes;
NOW, THEREFORE, THE COMMON COUNCIL OF THE CITY OF SPRINGFIELD ORDAINS AS
FOLLOWS:
Section 1. Sections 3.500, 3.502, 3.504, 3.506 and 3.508 of the Springfield Municipal
Code are amended as shown and more particularly described and set forth in Exhibit A attached
hereto and incorporated herein by reference.
Section 2. Severability Clause. If any section, subsection, sentence, clause, phrase
or portion of this Ordinance is, for any reason, held invalid or unconstitutional by a court of
competent jurisdiction, such portion shall be deemed a separate, distinct and independent
provision and such holding shall not affect the validity of the remaining portion hereof.
Section 3. Effective Date of Ordinance. This ordinance shall become effective 30 days
from the date of passage by the City Council and approval by the Mayor.
ADOPTED by the Common Council of the City of Springfield this ___ day of _________,
____, by a vote of _____ for and ____ against.
Attachment 1, Page 1 of 7
APPROVED by the Mayor of the City of Springfield this ______ day of __________,
____.
_______________________
Mayor
ATTEST:
__________________________
City Recorder
Attachment 1, Page 2 of 7
Exhibit A
Chapter 3 Public Improvements
3.500 Tax Exemption for Low-Income Rental Housing
3.500 Intent.
It is the intent of this code to give effect to and adopt the provisions ORS 307.515 through ORS 307.537,
as amended.
3.502 Definitions.
For purposes of sections 3.502 to 3.508, the following words mean:
City Manager. The City Manager of the City of Springfield, or the manager’s designee.
Lender. The provider of a loan secured by the recorded deed of trust or recorded mortgage made to
finance the purchase, construction, or rehabilitation of a property used for low -income housing under
the criteria listed in section 3.506 of this code.
Low-Income. Income at or below 60 percent of the area median income as determined by the Oregon
Housing Stability Council based on information from the United States Department of Housing and
Urban Development.
3.504 Low-Income Rental Housing Property Tax Exemption—Application.
(1) An application for exemption from property taxes hereunder for low -income rental housing
units constructed after the effective date of sections 3.500 to 3.508 of this code shall be filed
with the City Manager, on a form provided by the City Manager, which shall contain the
following, if applicable:
(a) A description of the property, or portion thereof, for which the exemption is requested;
(b) A description of the purpose of the project and whether all or a portion of the property
will be used for that purpose;
(c) A certification of the income levels of low -income occupants;
(d) The proposed recommended rent payments reflect the full value of the property
tax exemption;
(e) A description of how the tax exemption will benefit project occupants;
(f) Evidence that, if unoccupied, the property is offered for rental solely as a residence for
low-income persons, or is held for the purpose of developing low -income rental
housing;
(g) Evidence that, if occupied, the property is occupied solely as a residence for low -income
persons;
(h) Evidence that the property is owned or being purchased by a non-profit corporation
that meets the criteria for a public benefit corporation as described in ORS 65.001(35),
or a religious corporation as described in ORS 65.001(37);
(i) Evidence that the non-profit corporation expends no more than ten percent of its
annual income from residential rentals for purposes other than acquisition,
maintenance, or repair of residential rental property for low -income persons, or for the
provision of on-site child care services for residents of the rental property ;
Attachment 1, Page 3 of 7
(j) A description of the plans for development of the property if the property is being held
for future low-income rental housing development; and
(k) Any other information required by the City Manager.
(2) The information contained in the application shall be verified by oath or affirmation of the
applicant.
(3) At the time the application is filed, the applicant shall submit the application processing fee. The
application fee will be set by resolution of the Council, in consultation with the County Assessor.
If the application is approved, the portion of the fee attributable to the County Assessor’s cost in
administering the program shall be paid by the City to the County Assessor. If the application is
denied, the City shall retain that portion of the application fee attributable to its own
administrative costs and shall refund the portion attributable to the County Assessor’s
administrative costs to the applicant.
(4) An application for exemption hereunder shall be filed on or before December 1 of the calendar
year immediately preceding the first assessment year for which an exemption is requested.
However, if the property is acquired after November 1st, the application shall be made within
30 days after the date of acquisition, but no later than December 31 of that same calendar year,
in order to be considered for the following assessment year.
(5) An application which does not contain all the required information and is not accompanied by
the required fee shall be returned. Any application returned for these reasons shall be deemed
not to have been filed.
(6) Notwithstanding the dates specified in ORS 307.517 and 307.518, property granted exemption
pursuant to an application filed under sections 3.502 to 3.508 of this code before the date
specified in ORS 307.523, shall continue to receive the exemption on the same terms, including
duration, on which the exemption was granted.
3.506 Low-Income Rental Housing Property Tax Exemption—Review, Approval or Denial of
Application.
(1) Upon receipt of the application and required fee, the City Manager shall review the application
and make a written recommendation thereon to the Council in sufficient time to allow the
Council to act within 60 days from the date the application is filed.
(2) Upon receipt of the City Manager’s recommendation, the Council shall consider the application
and grant or deny the property tax exemption. The City Manager shall recommend approval of
an application, and the Council shall grant the exemption upon determining satisfactory
compliance with or mitigation of the following criteria:
(a) If unoccupied, the property, or portion thereof subject to the property tax exemption, is
offered for rental solely as a residence for low -income person, or is held for the purpose of
developing low-income rental housing;
(b) If occupied, the property, or portion thereof subject to the property tax exemption, is
occupied solely as a residence by low-income persons;
(c) The required rent payment reflects the full value of the property tax exemption;
(d) The housing units on the property were constructed after the effective date of sections
3.500 to 3.508 of this code;
(e) The policies set forth in the Standards and Guidelines for Low -Income Rental Housing
Tax Exemption adopted by Council resolution;
(f) The proposed development does not cause displacement of low -income persons unless
the City and developer can reach agreement on provisions (to be provided by the
developer) that reflect satisfactory mitigation thereof;
Attachment 1, Page 4 of 7
(g) The proposed development does not cause destruction of historic structures unless
criteria established in Section 3.3-900 of the Springfield Development Code , are met,
and destruction is granted by the Historic Commission; and
(h) The proposed development is otherwise consistent with this code and adopted City
regulations and policies.
(3) As an alternative to an application considered under subsection (2) of this section, the City
Manager shall recommend approval of an application, and the Council shall grant the exemption
upon determining the applicant meets the criteria set forth in subsections (2)(e), (f), (g) , and (h)
of this section and all the following criteria:
(a) If unoccupied, the property is offered for rental solely as a residence for low -income
persons, or is held for the purpose of developing low-income rental housing;
(b) If occupied, the property is occupied solely as a residence for low -income persons;
(c) The applicant’s application was filed prior to the dates specified in ORS 307.517 and
307.518;
(d) The property is owned or being purchased by a non -profit corporation organized in a
manner that meets the criteria for a public benefit corporation, as described under ORS
65.001 (31) or for a religious corporation, as described under ORS 65.001(33); and
(e) The property is owned or being purchased by a non -profit corporation that expends no
more than ten percent of its annual income from residential rentals for purposes other
than acquisition, maintenance or repair of residential rental property for low-income
persons, or for the provision of on-site child care services for residents of the rental
property.
(f) For purposes of this subsection, a non-profit corporation that has only a leasehold
interest in property is considered to be a purchaser of that property if the non -profit
corporation is obligated under the terms of the lease to pay the ad valorem taxes on the
real and personal property used in the rental activity on that property, or the rent
payable has been established to reflect the savings resulting from the exemption from
taxation.
(4) At the meeting at which the City Manager’s recommendation is considered, the Council shall
adopt a resolution approving the application and granting the property tax exemption, or adopt
a resolution disapproving the application and denying the property tax exemption.
(5) A resolution approving an application shall contain:
(a) The owner’s name and address;
(b) The description of the development;
(c) The legal description of the property or the County Assessor’s property account number;
(d) Any specific conditions upon which the approval is based;
(e) If only a portion of the property is approved, a description of the portion approved; and
(f) A certification that the property or portion thereof is exempt from ad valorem taxation.
(6) Within 10 days from the date of the approval resolution, the City Manager shall forward to the
applicant a copy of the resolution adopted by the Council approving an application, and, on or
before April 1 following approval , shall file a copy thereof wi th the County Assessor. The copy
shall contain therein or be accompanied by a notice explaining to the applicant the grounds for
possible termination of the exemption prior to the end of the exemption period or thereafter,
and the effects of termination.
Attachment 1, Page 5 of 7
(7) A resolution denying an application shall state the reasons for denial, shall be forwarded to the
applicant within 10 days of its adoption, and shall inform the applicant of the right to appeal in
the manner set forth in ORS 34.010 to 34.100.
3.508 Low-Income Rental Housing Property Tax Exemption—Termination.
(1) If, after a resolution approving an application for exemption hereunder has been filed with the
County Assessor, the City Manager finds that:
(a) Construction or development of the exempt property differs from the construction or
development described in the application for exemption, or on or before the dates
specified in ORS 307.529, and no extensions or exceptions as provided in subsection (4)
hereof have been granted; or,
(b) The applicant has failed to comply with the provisions of ORS 307.515 to 307.523, the
provisions of this code, any provisions of the standards and guidelines adopted by
Council resolution; or
(c) The applicant has failed to comply with any conditions imposed in the resolution
approving the application;
the City Manager shall recommend to the Council, and notify the owner of the property, at the
owner’s last known address, and every known lender, at the last known address of each such
lender, of the manager’s recommendation that the exemption be terminated. The notice shall
clearly state the reasons for the proposed termination, and shall require the owner to appear
before the Council, at a time specified in the notice, which shall not be less than 20 days from
the date the notice was mailed, to show cause, if any exists, why the exemption should not be
terminated.
(2) If the owner fails to appear before the Council at the time specified in the notice, or if the owner
appears and fails to show cause why the exemption should not be terminated, the City Manager
shall notify every known lender and shall allow each such lender not less than 30 days after the
date the notice of the failure to appear and show cause is mailed to cure any noncompliance or
to provide assurance adequate to the Council that all noncompliance shall be remedied. If the
owner fails to appear and show cause why the exemption should not be terminated and the
lender fails to cure or give adequate assurance any noncompliance will be cured, the Council
shall adopt a resolution terminating the exemption, which shall contain its findings in support
thereof. Copies of the resolution shall be filed with the County Assessor and mailed to the
property owner, at the owner’s last address, and the lender, at the lender’s last known address,
within 10 days from the date adopted. If a determination is made that the exemption should
continue as previously granted, the Council shall adopt a motion rejecting the manager’s
recommendation, and notify the property owner of that action within 10 days from the date of
the hearing.
(3) All reviews of the Council action in denying an application or terminating an exemption shall be
governed by the procedures set forth in ORS 34.010 to 34.100 and correction of assessments
and tax rolls and the evaluation of the property shall be in conformity with subsection (2) of ORS
307.533. The Council’s action on an exemption shall not be a land use decision for purposes of
administrative review.
(4) Upon receipt of a request from the property owner, the Council may, by resolution, extend the
deadline beyond the dates specified in ORS 307.535, for completion of construction of the low -
income rental housing for a period not to exceed 12 consecutive month s, if it finds the failure to
complete construction by the dates specified in ORS 307.535, was due to circumstances beyond
the control of the owner, and that the owner had been and could reasonably be expected to act
Attachment 1, Page 6 of 7
in good faith and with due diligence. If property granted an exemption hereunder is
subsequently destroyed by fire or act of God, or is no longer capable of owner -occupancy due to
circumstances beyond the control of the owner, the exemption shall cease, but no additional
taxes shall be imposed upon the property under ORS 307.531 or 307.533.
(5) Any exemption granted by the Council shall terminate immediately without right of notice or
appeal, in the event the County Assessor determines that a change of use to other than that
allowed has occurred for the housing unit, or portion thereof, or a declaration as defined in ORS
100.005 is presented to the County Assessor or tax collector for approval under ORS 100.100.
Termination shall be in accordance with the provisions of ORS 307.531.
Attachment 1, Page 7 of 7
CITY OF SPRINGFIELD, OREGON
RESOLUTION NO. ___________
A RESOLUTION ADOPTING STANDARDS AND GUIDELINES FOR THE CITY’S LOW-INCOME RENTAL HOUSING PROPERTY TAX EXEMPTION PROGRAM, SPRINGFIELD
MUNICIPAL CODE SECTIONS 3.500-3.508
WHEREAS, ORS 307.515-307.535 allows cities to establish and implement a program
exempting low-income rental housing from ad valorem real property taxes for twenty years;
WHEREAS, the City of Springfield wants to encourage the construction of low-income
rental housing within the City of Springfield;
WHEREAS, the Council adopted corresponding municipal code sections 3.500-3.508
establishing an ad valorem real property tax exemption program pursuant to ORS 307.515-
307.535;
WHEREAS, ORS 307.521(4) requires that prior to any processing applications for
exemptions under the program, the City must adopt program standards and guidelines, which include policies to be complied with prior to granting approval of an application;
WHEREAS, these Standards and Guidelines, attached as Exhibit A and incorporated
herein by reference, provide the process to be followed by the City Manager in reviewing and
making recommendations on low-income rental housing property tax exemption applications;
WHEREAS, Section 4.2 of these Standards and Guidelines reference the application of
the exemption to the tax levy, as provided in ORS 307.519, if, upon request by the City, the
rates of taxation of such taking districts whose governing boards agree to the policy of
exemption under ORS 307.515-307.523, when combined with the rate of taxation of the City,
equals 51 percent or more of the total combined rate of taxation on the property granted
exception;
WHEREAS, these Standards and Guidelines replace previously adopted Standards and
Guidelines (Resolution 93-15);
NOW THEREFORE BE IT RESOLVED, by the Common Council of the City of Springfield as
follows:
1. The Standards and Guidelines for Processing Applications for Low-Income Rental
Housing Property Tax Exemption, attached as Exhibit A hereto, are approved and
adopted as the procedures to be followed in considering applications for exemption, and
the policy contained therein is declared to be the policy of the City of Springfield
governing the basic requirements for the program.
2. The City will formally request that the governing boards of taxing districts within the City
of Springfield agree to the policy of exemption under ORS 307.515 – 307.523.
Attachment 2, Page 1 of 5
3. This Resolution will take effect upon adoption by the Council and approval by the Mayor.
Adopted by the Common Council and approved by the Mayor of the City of Springfield,
Oregon, this ___ day of ________, ______. Adopted by a vote of ____ for and ____
against.
______________________
Christine Lundberg, Mayor
ATTEST:
____________________
AJ Ripka, City Recorder
Attachment 2, Page 2 of 5
Exhibit A
Standards and Guidelines
for
Low Income Rental Housing Property Tax Exemption
STANDARDS AND GUIDELINES FOR PROCESSING APPLICATIONS FOR THE LOW-INCOME RENTAL
HOUSING PROPERTY TAX EXEMPTION UNDER ORS 307.515 TO ORS 307.537
Pursuant to the provisions of the Springfield Municipal Code Sections 3.500 – 3.508, the City Manager
shall be governed by the following rules in considering applications and making recommendations for
the low-income rental housing local property tax exemption. These standards and guidelines are
adopted pursuant to ORS 307.521(4).
ADMINISTRATIVE PROCESS
For purposes of these rules, the following words and phrases mean:
City Manager. The City Manager of the City of Springfield, or the manager’s designee.
Lender. The provider of a loan secured by the recorded deed of trust or
recorded mortgage made to finance the purchase, construction, or
rehabilitation of a property used for low-income housing under the
criteria listed in section 3.506 of this code.
Low-Income. Income at or below 60 percent of the area median income as
determined by the Oregon Housing Stability Council based on
information from the United States Department of Housing and Urban
Development.
Low-Income Rental Housing. Rental housing constructed after April 5, 1993, which is occupied by
low-income persons.
1. Statement of Program Purpose. The intent of the low-income rental housing tax exemption
program is to benefit low-income residents and provide an incentive that will encourage
construction of housing or conversion of buildings to housing for rent by persons with low-incomes.
2. Eligible Property. To be eligible for City property tax exemption hereunder, the property must
comply with Sections 3.504 and 3.506 of the Municipal Code.
Attachment 2, Page 3 of 5
3.1 The tax exemption is only available for the creation of new units, either through new
construction or through conversion of a building from a non-residential use to new housing
units.
3.2 To qualify, the property must create a minimum of four (4) units to be rented to qualifying
low-income households.
3. Application for Exemption. To be considered complete, an application for property tax exemption
hereunder must comply with Section 3.504 of the Municipal Code. Additionally:
3.1 An application must demonstrate that a portion of housing units will be occupied, or offered
for rent, solely as a residence for low-income persons by December 31st of the first year for
which the tax exemption is requested.
3.2 There is currently no application fee.
4. Components of Tax Exemption. Per statute, an exemption from ad valorem taxes shall be granted
for a period of twenty (20) successive years for the land and the improvements located thereon that
are a part of the low-income rental housing.
4.1 Pro rata tax exemption. The requested tax exemption must reflect the portion of units that
will be occupied solely as a residence for low-income persons.
4.2 Application to tax levy. The exemption would apply to the tax levy of Springfield. The
exemption could also apply to the tax levy of all other taxing districts if the governing bodies
of those taxing districts agree to the exemption. There must be support from enough taxing
districts such that their combined rates total at least 51% of the combined rate of all taxing
districts. The City Manager shall notify the Lane County Tax Assessor that an exemption
certified by the city shall apply to the tax levy of all taxing districts in which the property is
located.
5. Policies. In addition to the criteria set forth above and in Sections 3.500 – 3.508 the Springfield
Municipal Code, the applicant must demonstrate compliance with the following policies in order to
be eligible for a property tax exemption hereunder:
5.1 Rent Regulatory Agreement. The owner must agree to execute and maintain in effect for
the duration of the tax exemption period, a Rent Regulatory Agreement in a form approved
by the City, and which contains, but is not limited to, provisions establishing regular
reporting requirements and periodic inspection period, and demonstrates that the required
rent payment reflects the benefit of the property tax exemption.
5.2 Inspection of Premises. The owner must consent in writing that for the duration of the tax
exemption period the City may inspect the property for which the exemption is granted at
Attachment 2, Page 4 of 5
reasonable times, without prior notice, to ensure that the premises are maintained in
decent, safe, and sanitary conditions for the occupants.
6. Recommendation on Applications. Upon receipt of an application for property tax exemption
hereunder, the City Manager shall:
6.1 Review the application to verify that the applicant has provided the information required
and paid the required fee. The City Manager shall promptly notify the applicant of any
omissions.
6.2 If necessary, establish a meeting with the applicant, or the applicant’s authorized
representative to review the application.
6.2 Make a written recommendation to Council in sufficient time to allow the Council to take
final action upon the application and certify the results of the action to the county assessor
within 60 days from the date the Application is filed. The recommendation shall be based
upon and contain findings of compliance or non-compliance with these Standards and
Guidelines, Sections 3.506(1) through 3.506(4) of the Springfield Municipal Code, Council
resolutions, ordinances, and adopted policies, and applicable State statutes, that support
the recommendation.
7. Final Action on Applications. Upon receipt of the City Manager’s recommendation, the City Council
shall consider the application and adopt a resolution granting or denying the property tax
exemption, per Sections 3.506(5) through 3.506(7) of the Municipal Code.
8. Termination of Exemption. Section 3.508 of the Municipal Code outlines the criteria for
termination of the exemption.
9. Amendments to Guidelines. The City Manager may, from time to time, propose such revisions,
deletions, or amendments to these Standards and Guidelines as deemed necessary or desirable for
the efficient implementation of the low-income rental housing property tax exemption program, but
no such revision, deletion, or amendment shall be effective until approved by Council Resolution.
Attachment 2, Page 5 of 5