HomeMy WebLinkAboutItem 01 Housing Diversity Tax ExemptionAGENDA ITEM SUMMARY
Meeting Date: 5/1/2023
Meeting Type:
Work Session
Staff Contact/Dept.:
Katie Carroll/DPW
Staff Phone No:
541.726.3660
Estimated Time:
50 Minutes
SPRINGFIELD Council Goals:
Promote and Enhance
CITY COUNCIL
our Hometown Feel
while Focusing on
Livability and
Environmental Quality
ITEM TITLE: HOUSING DIVERSITY TAX EXEMPTION
ACTION Provide direction on the design of a property tax exemption program to incentivize
REQUESTED: development of multiple -unit housing in transit -oriented areas of Springfield.
ISSUE The City recognizes there is a need for more housing choice in the community and
STATEMENT: is working to address this problem through measures in Springfield's Housing
Strategy. Springfield has a very low vacancy rate and a third of households are cost -
burdened (paying more than 30% of their income on housing expenses).
A challenge Springfield faces is a lack of diversity in housing types available in the
market. Several multiple -unit housing projects have been built in the last five years,
but Springfield still does not have enough housing to meet demand. The Council's
Housing Strategy identified property tax exemptions as one tool to explore to help
spur housing development. A property tax exemption for multiple -unit housing
could incentivize development of more diverse housing types.
ATTACHMENTS: 1: Council Briefing Memo
2: Table of Public Benefit Options
3: Draft Program Guidelines
4: Program Review: Insights from Other Cities
5: Presentation slides
DISCUSSION/ Council directed staff to explore a property tax exemption for multiple -unit housing
FINANCIAL (ORS 307.600-637) as part of the City's Housing Strategy. Council has discussed
IMPACT: this exemption and provided direction to staff during several work sessions between
2017 and 2023. In its most recent work session on March 13, 2023, Council
confirmed its prior direction to staff on the geographic areas of Springfield that
would be eligible for the exemption. Council directed staff to not limit the total tax
that could be exempted through the program, and instead to provide the option for
Council to cap the program at any time. In this work session, staff seeks direction
on the program's eligibility requirements, including the public benefit requirement.
A property tax exemption could impact the City's property tax revenues by
exempting qualifying residential multiple -unit projects from paying some property
taxes for several years. The purpose of the tax exemption is to incentivize
construction of housing that would likely not otherwise be built, resulting in a long-
term revenue gain by adding improvement value to the City's property tax rolls.
MEMORANDUM City of Springfield
Date: May 1, 2023
To: Nancy Newton COUNCIL
From: Katie Carroll, Housing Analyst BRIEFING
Jeff Paschall, Community Development Director
Subject: Housing Diversity Tax Exemption MEMORANDUM
ISSUE: The City recognizes there is a need for more housing choice in the community and is
working to address this problem through measures in Springfield's Housing Strategy. Springfield
has a very low vacancy rate and a third of households are cost -burdened (paying more than 30% of
their income on housing expenses).
A challenge Springfield faces is a lack of diversity in housing types available in the market. Several
multiple -unit housing projects have been built in the last five years, but Springfield still does not
have enough housing to meet demand. The Council's Housing Strategy identified property tax
exemptions as one tool to explore to help spur housing development. A property tax exemption for
multiple -unit housing could incentivize development of more diverse housing types.
COUNCIL GOALS/MANDATE:
Promote and Enhance our Hometown Feel While Focusing on Livability and Environmental Quality
BACKGROUND:
The Council is working to address Springfield's housing needs through the City's Housing Strategy.
One tool Council has directed staff to explore is the use of property tax exemptions to incentivize
the development of certain types of housing. The Housing Diversity Tax Exemption (HDTE) is a
State -enabled property tax exemption codified at ORS 307.600-637 that is intended to spur the
development of multiple -unit housing in transit -served and core areas. The Council has been
exploring implementation of the HDTE since 2017 as a tool to increase housing diversity by
encouraging construction of market -rate multiple -unit housing.
The HDTE would allow qualifying applicants building new multiple -unit housing to have their
property taxes for the residential portion of the improvements exempt for the first several years of
operation. Taxes would not be exempt for land, pre-existing improvements, or most other new non-
residential improvements. The exemption would only apply to the City's portion of tax revenue
unless other taxing districts equaling at least 51 % of the total combined tax levy support the
program.
Most recently, at its March 13, 2023 work session Council reviewed and confirmed its direction to
staff on the geographic areas of Springfield that would be eligible for the HDTE. Council also
discussed whether to cap the program to limit the total tax that could be exempted through this
program and determined it did not want to institute a program cap at this time. Council directed staff
to include language in the program guidelines allowing the Council to institute a cap at any time by
Attachment 1 Page 1 of 5
motion. At this work session, staff is seeking direction on program eligibility requirements for
the HDTE, including direction on the program's public benefit requirement.
PUBLIC BENEFIT REQUIREMENT:
State statute requires applicants for the exemption to provide one or more public benefits as part of
their project. The City has significant flexibility to tailor this requirement to fit Springfield's needs,
and it is an opportunity to incentivize public benefits that the housing market may not provide on its
own. The public benefit requirement can be viewed as an exchange — in return for not paying
property taxes on new multiple -unit housing improvements for the first several years of operation,
the applicant must provide a benefit to the community. In creating program guidelines and
reviewing individual applications, Council may weigh whether the additional housing and public
benefits proposed are a sufficient exchange for the benefit the developer receives.
To determine the public benefit requirement of the HDTE program, the Council must decide:
• If the City will specify the benefits applicants must provide or will allow applicants to pick
benefits from a list of options
• How many public benefits applicants must provide
• What public benefits are eligible to meet the requirement
If Council moves forward with adopting the HDTE, the City will need to seek formal support from
other taxing districts to make the tax exemption a viable incentive. Staff anticipates other taxing
districts will have feedback on the public benefit requirement and will return to Council for further
direction on this aspect of the program as staff refines the program requirements.
To prepare initial recommendations for Council, staff solicited input on potential public benefits
from Development and Public Works (DPW) supervisors and the Economic Development team via
a survey and meetings. Staff also reviewed the public benefit requirements of eight other Oregon
cities' tax exemption programs (summarized on pages 2-3 and 5 of Attachment 4).
Benefit Structure and Number
Springfield can structure the public benefit requirement of the HDTE program to be more rigid by
specifying the public benefits an applicant must provide to be eligible, or more flexible by allowing
applicants to choose benefits from a list of options. In previous discussions on the HDTE in
November 2017 and May 2022, Council indicated support for keeping the program flexible and
giving developers choices.
Staff recommend structuring the public benefit requirement as a tiered list, with priority
benefits as options under "List A" and other benefits as options under "List B." Staff
recommends requiring that applicants provide two (2) public benefits, at least one of which is
a List A item. This approach is similar to the City of Bend's public benefit structure and would
allow the City to prioritize certain public benefits based on community need, cost, and longevity,
while still allowing applicants flexibility to make choices fitting their site and development plans.
Other cities reviewed require applicants to provide between one and six public benefits. Some cities
allow applicants to choose all their public benefits while others have a mix of required and
applicant -choice benefits or have only required benefits. Allowing applicants to pick two benefits
from a tiered list would put Springfield's public benefit requirement on the more flexible end of
Attachment 1 Page 2 of 5
programs reviewed, while balancing the need add to value to the community in exchange for
granting the exemption.
Eligible Benefits
The City must also determine what qualifies as a public benefit for this program. State statute lists
open spaces, parks and recreational facilities, common meeting rooms, childcare facilities, transit
amenities, transit or pedestrian design elements, and commercial use of a portion of the structure as
examples of benefits a city may choose. Other cities have offered or required a variety of benefits,
which are summarized in Attachment 4, pages 7-8.
Staff have proposed thirteen (13) categories of public benefits to include as eligible benefits for the
HDTE (see Attachment 2). These benefits have been proposed based on their ranking of priority in
the staff survey, adopted policy support, and feasibility of evaluation and monitoring. In weighing
whether each item should be a List A or a List B item, staff also considered whether the benefit
would or could be publicly accessible, whether it would be likely to extend past the exemption
period, and the cost to the developer to provide. For each public benefit, the developer would be
required to go beyond what would already be required by Springfield codes. Staff has listed
additional public benefits the Council may want to explore at the bottom of Attachment 2.
In addition to the twelve listed public benefit categories, staff has included an option in the draft
program guidelines (see Attachment 3) allowing applicants to propose a different public benefit.
This would allow the City to focus applicants on the public benefits most important to Springfield
while creating flexibility to consider other benefits that may be valuable on a site -by -site basis.
Question: Should staff move forward with the proposed public benefit structure (pick two
from a tiered list)?
Question: What public benefits should be eligible for this program?
OTHER PROGRAM REQUIREMENTS
The City must adopt program guidelines outlining the eligibility requirements that would be used to
grant exemptions. The City should also outline its process for reviewing applications. Although
there are some statutorily required considerations, the City has flexibility to set its own program
requirements. Draft HDTE program guidelines are included as Attachment 3 and have been color
coded to highlight areas where the Council has flexibility to make a policy decision on the program
requirements (M), and to show where program guidelines are reflective of statutory requirements
(grey).
Minimum Unit Number: The City must define the minimum number of units an applicant must add
to be eligible for the HDTE. The Springfield Development Code defines multiple -unit housing as
"Five or more dwelling units on an individual lot or parcel, except for Cottage Cluster housing, and
not counting Accessory Dwelling Units (AD Us). " Based on this definition, staff recommends
requiring a minimum of five units, although Council could increase the minimum required. No other
city in Oregon has required more than five units.
Exemption Length: The City can exempt property taxes for qualifying projects for no more than ten
successive years (unless granting the exemption for affordable housing). In a February 2018 work
session several councilors shared a preference for limiting exemptions to five years due to budgetary
Attachment 1 Page 3 of 5
concerns. Staff recommends that Council offer exemptions for the full ten (10) years for qualifying
projects. Of the eight other exemption programs reviewed, only the City of Salem had granted an
exemption for fewer than ten years (for a duplex). Given the challenges developers face with high
interest rates, increasingly strict lending requirements, and construction costs, shorter -term
exemptions may not be enough to make some projects pencil. Additionally, the administrative
burden of applying for the HDTE may not be worth it to some developers for a shorter exemption.
Council has the option to set a uniform exemption length that is less than ten years or may adopt
standards and guidelines to use to determine the exemption period for each application individually.
Staff did not find any examples of this approach, but one option could be to determine exemption
length based on the number or type of public benefits the project provides. If Council wishes to
pursue exemptions of fewer than ten years, staff recommends further work on the public benefit
requirement to right size the requirement with the benefit developers would receive.
An alternative option to shorter exemption periods would be adding a requirement that applicants
show their project would not pencil "but for" the tax exemption. Cities with this provision usually
require applicants to submit proformas with and without the exemption applied, and have the
information reviewed by an independent consultant. This provision would put stricter parameters
around what projects would be eligible for the HDTE and could be a way to limit the fiscal impact
of the program while maximizing the benefit for qualifying projects.
Project Type: Staff recommends allowing projects adding units through new construction,
addition, or conversion from non-residential uses to qualify for the HDTE. Springfield has a
limited supply of vacant land suitable for multiple -unit housing, especially within the identified
exemption areas. Allowing a wide variety of projects to qualify for the HDTE could encourage more
infill and redevelopment. Although redevelopment projects may result in a decrease in tax revenue
in the short -run where projects raze existing taxed improvements, the value of new, higher intensity
improvements would generate more tax revenue over the long -run.
Code Compliance: Recent and potentially upcoming State mandates from the legislature could
impact the City's ability to enforce its adopted code requirements, especially for housing
development. Staff recommends requiring applicants to comply with the Springfield
Development Code as adopted. The HDTE is a discretionary program, so the City can choose to
enforce its code where State mandates might otherwise permit statutory exemptions to code
requirements.
Applications: Staff recommends requiring that applicants attend a Development Initiation Meeting
(DIM) before submitting an application for the HDTE. This would allow staff to have a discussion
with prospective applicants about the public benefit requirement of the program, and to make site-
specific recommendations about which public benefits may be most appropriate and valuable to the
community at that location. Applications must be reviewed and decided upon by Council within 180
days of submission; requiring a DIM gives the City additional time to work with an applicant before
the review clock starts.
Question: Does Council have feedback on the draft program guidelines as written?
Attachment 1 Page 4 of 5
NEXT STEPS:
If Council moves forward with the HDTE, staff will begin to reach out to other taxing districts to
notify them of the City's intent to implement the HDTE program and to seek their input and support.
Staff will also solicit input from local developers on the draft program requirements. Staff will
return to Council with updated draft program guidelines and draft code language.
RECOMMENDED ACTION: Give staff direction on the following questions:
1. Should staff move forward with the proposed public benefit structure (pick two
from a tiered list)?
2. What public benefits should be eligible for this program?
3. Does Council have feedback on the draft program guidelines as written?
Attachment 1 Page 5 of 5
Benefit
List A
List B
Policy
Publicly
Likely to
Support
Accessible?
Extend Past
(source)?'
Exemption
Affordable
At least 20% of units (only available for
At least 10% of units are reserved for
Y
N
N
Housing
6+ unit projects) are reserved for
households with low incomes (at or below
(SCP, MP)
households with low incomes (at or below
80% AMI) through a:
80% AMI) through a:
• Master lease with non-profit; OR
• Master lease with non-profit; OR
• Housing Choice Voucher; OR
• Housing Choice Voucher; OR
• Similar housing subsidy program
• Similar housing subsidy program
This requirement can also be met by
This requirement can also be met by
reserving units at prices affordable to a
reserving units at prices affordable to a
household earning no more than 80% AMI.
household earning no more than 80% AMI.
(Round up decimals to the nearest whole
(Round up decimals to the nearest whole
unit number)
unit number
Moderate
At least 30% of units are reserved at prices
At least 15% of units are reserved at prices
Y
N
N
Income
affordable to households with moderate
affordable to households with moderate
(SCP, MP)
Housing
incomes (at or below 100% AMI).
incomes (at or below 100% AMI).
(Round up decimals to the nearest whole
(Round up decimals to the nearest whole
unit number)
unit number
Units
Project provides a mix of unit sizes. To
Y
N
Y
Accessible to
qualify, must provide at least three different
(SCP, MP)
Range of
unit sizes. At least 10% of the total number
Household
of units must be allocated to each of the
Sizes
three unit sizes. Unit sizes include:
live/work2, studio, 1 bed, 2 bed, 3 bed, etc.
(Round up decimals to the nearest whole
unit number)
' The following abbreviations have been used to indicate where policy support can be found for the public benefit: SCP= Springfield Comprehensive Plan, MP=
Eugene -Springfield Metropolitan Area General Plan (Metro Plan), TSP= Springfield Transportation System Plan, WCP= Willamalane Comprehensive Plan.
2 Term is defined in the building code.
Attachment 2 Page 1 of 4
Amenities
Provide at least one element from the
Provide at least one element from the
Y
Y
Y
Supporting
following list:
following list:
(SCP, MP,
Pedestrians
• Raised or signalized crossing
• Striping and signage for pedestrian
TSP)
and Bicyclists
. Street lighting
crossing
• Additional sidewalk beyond
• Additional sidewalk beyond
required (substantial)
required (minimal)
Amenities
Provide at least one element from the
Provide at least one element from the
Y
Y
Y
Supporting
following list:
following list:
(SCP, MP,
Mass Transit
• Additional sidewalk beyond
• Additional sidewalk beyond
TSP)
Use
required to provide connection to a
required to provide connection to a
bus stop location (substantial)
bus stop location (minimal)
• Installation of bus shelter or
0 Installation and maintenance of
enhancement of existing bus
trash receptacle at bus stop for
shelter
period of exemption
• Other identified site-specific
• Other identified site-specific transit
transit amenities
amenities
EV and
Provide EV charging stations (# of stations
Provide micro -mobility charging stations (#
Y
Depends
Y
Micro-
required based on number of units).
of stations required based on number of
(TSP)
mobility
units).
Charging
Parking in
Provide fully structured parking to allow
Provide full or partial structured parking
N
Depends
Y
Structure
for higher density of residential
(lower minimum # of spaces required to
development (high minimum # of spaces
qualify), OR provide garage parking for all
required to uali
units with no surface parking.
Offsite ADA
Improve nearby corners to ADA
Contribute to the City's ADA fund to
Y
Y
Y
Accessibility
compliance.
increase compliance (minimum dollar
(TSP)
amount toqualify).
Accessible
Where Type A units' are required, increase
N
N
Y
Units
accessibility to fully accessible ADA units;
AND where Type B units are required,
increase accessibility of at least 60% of
Type B units to Type A units. A maximum
3 The terms Type A and Type B are defined in the building code.
Attachment 2 Page 2 of 4
Attachment 2 Page 3 of 4
of 20 Type B units must upgraded to Type
A units to meet this requirement. For
projects with different unit sizes (1 -bed, 2 -
bed etc.), at least one unit of each unit size
must be upgraded from Type B to Type A
(where applicable).
Childcare
Provide childcare facilities onsite for full
Y
Depends
N
Facilities
exem tion period.
SCP
Community
Project includes at least one of the
Y
Depends
Depends
Spaces
following features:
(SCP,
• Shared community space
WCP)
• Community garden
• Public plaza
• Common meeting rooms
• Rooftop gardens
• Athletic facilities
• Playground
• Swimming pool, spa, sauna
• Gallery or performance venue
• Facilities for cultural groups,
youths, seniors
Facilities may be limited to members or
paying customers if the Council finds
proposal provides a sufficient public
benefit.
Development
Project site is vacant or underutilized. If
Project site is vacant or underutilized. If
Y
N/A
Y
or
there are existing improvements onsite,
there are existing improvements onsite,
(SCP, MP)
redevelopment
those improvements must have been vacant
those improvements must have been vacant
of vacant or
for at least one (1) year prior to
for at least one (1) year prior to application.
underutilized
application. Sites with occupied
Sites with occupied improvements may
property
improvements may qualify if the project
qualify if the project will not displace any
will not displace any existing residents or
existing residents or businesses. The
businesses. The aggregate development
aggregate development site is less than 1
site must be at least 1 acre.
acre.
Attachment 2 Page 3 of 4
Extra costs
Project site has additional development
Y
N/A
Y
associated
costs due to infill or redevelopment such as:
(SCP, MP)
with infill or
land assembly, demolition, infrastructure
redevelopment
replacement or upgrades, seismic upgrades,
brownfield redevelopment.
Some Other Public Benefits Council Could Choose to Explore Further:
• Disaster Resiliency Features (common space designed as emergency shelter, onsite emergency power/water/food, etc.)
• Energy Efficiency Certification (LEED, Energy Trust, Earth Advantage, etc.)
• Tenant Amenities (Broadband internet, BBQs, air conditioning, onsite laundry or storage, covered parking, etc.)
• Innovative material use/re-use (Mass timber, preserving existing building shell, etc.)
• Advancing public infrastructure projects (Pay into or complete priority public infrastructure projects identified in adopted Plans)
• Local economic impact (Pay prevailing wave for workers, source a percentage of contracts/services/materials locally)
• Include special architectural features or public art
Attachment 2 Page 4 of 4
Key:
Policy Decision
Statute Requires
Housing Diversity Tax Exemption - City of Springfield
Program Standards and Guidelines
The following standards and guidelines expand on but do not supersede program requirements articulated
in the Springfield Municipal Code (SMC), Section [ ], and in ORS 307.600-637. Prospective applicants
should review both the code requirements and these guidelines before applying.
Pur ose go
Property tax exemptions are one tool available to incentivize an increase to the supply and
diversity of housing. The Housing Diversity Tax Exemption (HDTE) program exempts some
property taxes for approved housing projects in designated areas of Springfield. The program,
enabled by state law, encourages development of new multiple -unit housing in transit -supported
and core areas of Springfield by reducing the operating costs for qualified projects during their
first several years of operation.
Multiple -unit residential developments meeting the Springfield Development Code's (SDC)
rnr ion of "Multipe nit Housing by adding dwelling units through new construction,
[ddition, or conversion from a non-residential use can apply to receive an exemption of property
taxes for a period of up to ten (10) years on residential improvements if program requirements
are met. Housing made available for rental or sale of individual units is eligible for the
exemption. Each project must be approved by Council.
Eli ibili
To be eligible for the exemption, applicants must meet the following minimum standards:
• Applicant controls (owns or has proof of future ownership) of project site at time of
application
• Project will meet the definition of "Multinle Unit Housing" irLSpC 6.1.100,
• Project site is located within an HDTE program area (see pages 8-12 for area maps)
• Project will provide at least _ public benefits as outlined in these program
guidelines
• The construction of the project for which the exemption is sought must be completed on
or before January 1, 2032, except where the City has granted an extension under ORS
307.634
• At completion, the project must be in conformance with all local plans and planning
regulations applicable at the time of approval
• Project must comply with the Springfield Development Code and not rely on any type of
statutory exemption or exception
SPRINGFIELD HDTE Program Guidelines 1
Attachment 3 Page 1 of 12
• Applicants receiving system development charge (SDC) payment assistance from the
Springfield Economic Development Agency (SEDA) are not eligible for the tax
exemption
• Projects granted the exemption may not be used as transient accommodations, including
but not limited to hotels, motels, and Short Term Rentals, Type 1 and 2 (as defined in the
Springfield Development Code Section 6.1.110)
• No part of the multiple -unit housing granted an exemption may be changed to a non-
residential use during the exemption period
•T Projects that have already applied for a building permit are not eligible for the
exemption
Application
A complete application must be filed on or before December 1 of the preceding calendar year for
consideration of an exemption beginning July 1 of the assessment year. Any application which
does not contain all required information and/or the required fee shall be returned and considered
not filed. The City reserves the right to request additional materials from the applicant during its
review.
At a minimum, the application must contain:
• Site plans
• Legal description of the property
• Proof of ownership/site control
• Project design elements and planned fagade materials
• Description of existing use of the property
• Justification of the elimination of any existing sound or rehabilitable housing or
businesses on the project site and planned steps to miTigaTwpacts of displacement (such
as advanced notice, relocation assistance, right to return, etc.),
• Proposed number of housing units, and proposed rental rates or sales prices
• Description of the public benefits to be provided
An application fee will be charged at the time of application and should be made payable to the
City of Springfield. The application fee is set by resolution of the Council, after consultation
with the Lane County Assessor. Application fees cover the City's costs for processing the
application and the Lane County Assessor's costs for administering the exemption. If an
application is denied, the City will retain the portion of the fee attributable to its expenses for
processing the application and will refund the balance to the applicant.
Review Process
Before submitting an application, the applicant must attend a Development Initiaticd
Meeting (DIM) with the City. The applicant must request the DIM at least 60 days in
advance of when the applicant plans to submit the application for exemption. The
purpose of the DIM is to discuss the development proposal, application timing, and
program requirements. Staff will provide preliminary feedback to assist the applicant in
SPRINGFIELD HDTE Program Guidelines 2
Attachment 3 Page 2 of 12
preparing the exemption application. Applicants should be prepared to discuss their plans
for meeting the program's public benefit requirement at the DIM.
2. A complete application must be submitted no later than December 1 of the calendar year
preceding the assessment year in which the applicant wishes the tax exemption to begin
(i.e. an application received December 1, 2023 could begin an exemption no earlier than
July 1, 2024). Applications are accepted on a rolling basis but applicants are encouraged
to coordinate timing with other development applications. Applicants should bear in mind
the Lane County Assessor's assessment date when determining application timing. Tax
exemptions will not begin until a project is complete and assessed at its completed value.
Applicants may wish to consult with the Lane County Assessor for additional
information.
3. The City Manager or designee will review application materials and forward a
recommendation to the Council recommending approval, approval with conditions, or
denial of the application. Review may require a follow-up meeting with the applicant to
clarify or request additional application materials.
4. The Council will rule on the application within one hundred and eighty days (180) of the
City's receipt of a complete application. The Council may approve, approve with
conditions, or deny the application. The Council may hold a public hearing on the
application at its discretion. Final action by the Council shall be by resolution.
Applications not acted upon within 180 days of receipt of complete application are
deemed approved.
5. The applicant will be notified of the decision in writing. If approved, the City will notify
the applicant on or before April 1 following the approval.
If denied, the applicant will be mailed notice within ten (10) days. The decision shall be
accompanied by a written explanation stating the reasons for the denial. For guidance on
review of a denied exemption, refer to ORS 307.631.
6. Prior to issuance of the Certificate of Occupancy, the applicant will be required record a
deed restriction on the property that reflects any eligibility requirements upon which
approval of the application was conditioned. This may include restrictions such as
disallowing the use of the property for transient accommodations and maintaining
approved public benefits for the duration of the exemption period.
7. The City may require the applicant to provide verification of the project's public benefits
before applying the exemption. Following issuance of the Certificate of Occupancy and
receipt of outstanding documentation needed for verification, the City will inform the
Lane County Assessor's Office to apply the exemption on or before April 1 following the
approval.
SPRINGFIELD HDTE Program Guidelines 3
Attachment 3 Page 3 of 12
8. The City may require submission of an annual report and allow on-site inspections
verifying that the project remains in compliance with its eligibility requirements.
Exemption
An exemption of property taxes may be granted for no more than FW A successive years. The
first year of the exemption will be the assessment year beginning January 1 immediately
following the calendar year in which the project construction is completed, determined by that
stage in the construction process when, pursuant to ORS 307.330, the improvement would have
gone on the tax rolls in the absence of the HDTE.
The exempted amount will include only the improvements that are part of the project. Land and
existing improvements will continue to be taxed during the exemption period. Exempt
improvements include the newly created multiple -unit housing and may also include on-site
parking constructed for the multiple -unit housing. Where stories or other improvements are
added, or a structure is converted in whole or in part from another use to dwelling units, only the
increase in value attributable to the addition or conversion may be exempt. Exemptions run with
the property and will continue if the property is sold during its exemption period.
Program Cap
At any time, the Council may, by motion set a limit on the maximum amount of exempted tax
revenue provided as a benefit of the exemption under this chapter.
Program Areas
Only projects located within the mapped program &yeas (see pages 8-12 for maps) are eligible to
apply for the exemption. Within exemption areas, ITojects mus ith the followir
area-speciriTcrequirem'TURT, as well as all other development requirements as set forth in the
Springfield Development Code and Springfield Municipal code.
Projects on properties abutting Main Street from 38th Street to Bob Straub Parkway may
not propose any ground floor residential which faces Main Street.
The City may add or withdraw territory from the program areas as provided for in ORS
307.606(2).
Public Benefits
In exchange for granting the property tax exemption, the City requires applicants provide at least
two (2) public benefits as part of the project. The applicant must choose at least one (1) benefit to
prnifrom List A and may prole the second benefit from List A or List B, Benefits must go
above and beyond normal development requirements for the site (as applicable). The burden is
on the applicants to explain how the benefits they have chosen to provide meet the program's
requirements and serve the public, and to demonstrate the values of those benefits relative to the
exemption applicant seeks. The City reserves the right to exercise discretion in determining
SPRINGFIELD HDTE Program Guidelines 4
Attachment 3 Page 4 of 12
whether the proposed public benefits are appropriate for the site and if the requirements have
been sufficiently met.
Additional details on meeting the requirements of each public benefit are available on page 7.
List A List B
[To be filled in] [To be filled in]
If the applicant wishes to provide a public benefit that is not outlined in List A or List B, they
must make a detailed proposal to the City. The proposal must outline the benefit proposed to be
provided and explain how it supports a community need. The proposal should identify adopted
policy support for that benefit (if any). Where appropriate, the City may consider funding of
equivalent improvements at an alternative location as an eligible public benefit (such as paying
for a crosswalk at another location).
Monitoriniz
After a project is approved for the exemption, the project owner must continue to comply with
program requirements for the duration of the exemption. On or before February 1 of each year,
the owner of a property receiving the HDTE may be required to submit a report to the City and
allow on-site inspections verifying the continuation of all approved public benefits. The City or
Lane County Assessor may conduct additional monitoring of projects granted the exemption as
needed, including following the sale of a project participating in the program which is still within
its exemption period.
The City Manager or designee shall submit an annual report to Council summarizing the status
and fiscal impact of all approved projects within an exemption period.
Termination
If the City finds that construction of multiple -unit housing was not completed on or before the
date specified in these guidelines, or that any provision of ORS 307.600-637, Springfield
Municipal Code Section [ ], or the program guidelines are not being met, the City shall give
notice to the property owner in writing of the proposed termination of the exemption. The notice
shall list the reasons for termination and require the project owner to appear at a time specified
by the City (not less than 20 days after mailing the notice) to show cause, if any, why the
exemption should not be terminated. For additional guidance on termination of an exemption,
refer to ORS 307.624 and 307.627. For guidance on review of a terminated exemption, refer to
ORS 307.631.
Extension
If the City finds that, due to circumstances beyond the control of an owner who is acting in good
faith, the multiple -unit housing cannot be completed by the date specified in these guidelines, it
may grant an extension of up to one year for completion of construction as provided for in ORS
307.634.
SPRINGFIELD HDTE Program Guidelines 5
Attachment 3 Page 5 of 12
Changes to a Project
Following a project's approval for exemption, the applicant may need to make changes to the
project from what was approved due to materials availability, land use requirements, or other
unforeseen circumstances. Before making changes, the applicant must contact the City to
determine if the changes can be approved. Changes to a project that relate to specific conditions
upon which the approval of the application is based will require a new application and approval
but may not require a new DIM.
Additional Requirements
The City may choose to apply additional regulations or requirements on applications at any time.
The City may choose to alter or eliminate the tax exemption program at any time. Applications
that have been approved before program changes are made will continue under the program
guidelines in effect at their time of acceptance.
SPRINGFIELD HDTE Program Guidelines 6
Attachment 3 Page 6 of 12
Public Benefit Requirements
Benefit
Evaluation Criteria
Reporting Requirements
[To be filled in
[To be filled in
[To be filled in
SPRINGFIELD
OREGON
Attachment 3 Page 7 of 12
HDTE Program Guidelines 7
Exemption Area Maps
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Attachment 3 Page 8 of 12
HDTE Program Guidelines 8
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Attachment 3 Page 9 of 12
HDTE Program Guidelines 9
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Attachment 3 Page 11 of 12
HDTE Program Guidelines 11
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Attachment 3 Page 12 of 12
HDTE Program Guidelines 12
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Attachment 3 Page 12 of 12
HDTE Program Guidelines 12
ATT4: Tax Exemption Program Review: Insights from Other Cities
For the Housing Diversity Tax Exemption, ORS 307.600-637
Note: This attachment previously appeared in the Council's March 13, 2023 packet on this topic.
Overview
To inform recommendations for the design of the Housing Diversity Tax Exemption program (HDTE),
staff reviewed the programs of eight cities with this State -enabled tax exemption, including conducting
seven informational interviews with current and former staff. State statute includes several requirements
for the exemption, however, there is significant flexibility for cities to adapt the program to meet local
needs. This memo provides a brief overview of lessons learned from program review and interviews. A
summary table comparing major aspects of each program is available on pages 5-6 as Appendix 1.'
Exemption programs reviewed (adoption date):
• Bend (2022) • Cottage Grove • Florence (2021)
• Corvallis (2019) • Newport (2017)
(Developing) • Eugene (1978, • Portland (2012)
amended 2015) • Salem (1976)
Key Takeaways
• Setting a low minimum -unit number threshold has not resulted in small projects. Many projects
approved have been of a larger scale.
• Cities have significant latitude to shape the exemption's public benefit requirement to make the
program more or less rigorous. This is also an opportunity to further other city goals and priorities.
• Granting exemptions for fewer than ten years is rare, as are program caps. Requiring applicants to
demonstrate financial need is more common and recommended by multiple interviewees.
• Interviewees recommended seeking feedback from other taxing districts on public benefits, and from
the development community to ensure program requirements are aligned with development realities.
Eligible Areas
Cities must designate areas within which the tax exemption is available. Those areas must be near transit
or in core areas. Cottage Grove and Florence both offer the exemption generally anywhere within a
quarter mile of transit and leave it up to land use approval and Council discretion to further restrict where
the exemption is available. Eugene, Bend, and Corvallis have more targeted programs focused on certain
areas or zoning types. No interviewees reported doing property -level analysis to remove individual
properties from exemption areas.
Program Caps and Applicant Need
Only one program has a cap in place. Eugene is capped at 1,500 units which is tied to the Envision
Eugene Plan. The program's advisory committee has already recommended increasing the cap. Bend has
considered implementing a cap based on input from other taxing districts, but for now is requiring
applicants to individually seek approval from other taxing districts. Cottage Grove and Newport both
1 This memo excludes Portland's exemption program which is closely tied to its Inclusionary Housing requirements.
Attachment 4 Page 1 of 8
have code provisions allowing the City Council or County Board of Commissioner's to set a limit on
forgone revenue by motion at any time.
Four cities require applicants to demonstrate that they could not make the project pencil "but for" the tax
exemption.' Three of those cities require review of the project's finances by an independent consultant,
the cost of which can be included in the program application fee. Interviewees explained that this
requirement can be a valuable tool for weighing the value of the public benefits proposed on a case-by-
case basis and for building the support of other taxing districts for the program.
Applicability to Other Taxing Districts
The tax exemption only applies to the tax levy of the adopting city unless other taxing districts equaling at
least 51% or more of the total combined tax rate approve the exemption. Four cities with adopted program
received sufficient support from other districts to meet this threshold. Applicants in Bend and Salem must
seek this approval on an application -by -application basis. Some cities approached all their local taxing
districts for support, while others only sought it from districts needed to reach the 51% threshold
(generally a school district or county). The public benefit requirement of multiple cities was shaped by
feedback from other taxing districts.
Exemption Length
Statute limits the length of the exemption to no more than ten successive years, except that a city may
choose to grant a longer exemption for affordable housing. All cities reviewed have codes allowing for
the exemption to be granted for up to ten years (two allow extensions for low-income housing). Salem
staff was aware of one applicant granted an exemption for fewer than ten years for a duplex; that decision
was made at the Council level. No other interviewees were aware of exemptions being granted for fewer
than ten years.
Public Benefits
One significant area of control cities have is the public benefit requirement of the exemption. In exchange
for the tax exemption, approved projects must include one or more design or public benefits specified by
the city. State statute lists open spaces, parks and recreational facilities, common meeting rooms,
childcare facilities, transit amenities, transit or pedestrian design elements, and commercial use of a
portion of the structure as benefits. Cities have flexibility in determining:
• What public benefits are eligible to meet the requirement
• If the city will specify benefits applicants must provide or allow applicants to pick the benefits
from a list of options
• How many public benefits applicants must provide
Several cities' programs include locally important benefits in addition to or instead of the statutorily
named benefits. Public benefits offered generally fall into the categories of housing,
environment/transportation, urban design, employment/workforce, and other community needs (see
Appendix 2 on pages 7-8 for a summarized list of public benefits). While some benefits would be
incorporated into the development itself, such as energy efficiency standards or redevelopment of blighted
property, others may require ongoing monitoring to ensure that they continue for at least the duration of
2 Corvallis, which is currently developing its program, is also looking at requiring applicants to demonstrate need.
2
Attachment 4 Page 2 of 8
the exemption period. Several cities' programs include provisions for annual monitoring of approved
public benefits such as affordable units or childcare facilities.
Salem's program offers the most public benefits (19), while Newport's program is very focused and
includes only two. Bend and Newport, have an "other" category that applicants can use to meet their
public benefit requirement. Interviewees shared that this option provides increased flexibility for
applicants to meet program requirements while still requiring Council approval. Some cities have created
more specific criteria for each public benefit; others have left benefits broader, sharing that this gives
developers flexibility and puts the onus on them to explain how program requirements are met.
Interviewees recommended ensuring that any public benefit offered goes above and beyond what is
required by code or would likely be provided by the market. Another recommendation was to offer
benefits that align with and enhance other city programs, plans, and goals.
Cities can structure this aspect of the exemption program to be more rigid by specifying exact public
benefits an applicant must provide, or more flexible by providing a list of benefits applicants can choose
from. Of cities reviewed, Eugene's program is the most rigid, requiring all applicants to meet the same six
public benefit requirements. Cottage Grove and Salem's are the most flexible, allowing applicants to pick
one benefit from a list. Corvallis is considering a mix of required and applicant's -choice benefits. Salem
has an affordability requirement triggered only for projects of 50+ units. Bend uses a tiered list where
applicants must provide at least one benefit from a priority list, and two from a second list.
Interviewees shared than an overly prescriptive public benefit requirement can be cumbersome for
applicants and create an administrative burden. Cities with flexible programs have found that project
applications usually propose including more benefits than required. One interviewee recommended
offering fewer public benefit choices to focus developers on including those that are the city's highest
priorities, and to reduce the staff effort required to create application criteria for each benefit.
The programs reviewed require applicants to provide between one and six benefits. Florence allows
affordable housing to count as two of its three required benefits, while Bend uses a tiered list to
differentially weight benefits. Multiple interviewees recommended carefully considering how many
benefits to require to balance the value of the tax exemption requested with program requirements.
Minimum Number of Units
Statute requires cities to specify the minimum number of dwelling units a project must add to be eligible
for the exemption. Half of cities reviewed require a minimum of three units. The fewest units required is
two (Newport for remodels and Salem), and the highest is five (Eugene).
Although cities have set low thresholds for the program, exemptions granted have been for large
developments. Cottage Grove granted exemptions for 40- and 80 -unit projects in 2021. Florence granted
exemptions for 24- and 67 -unit projects in 2022. Eugene granted exemptions in 2022 for projects of 95,
130, and 156 units. One interviewee said they have had conversations with smaller developers about
using the program, but that requirements were too complicated to meet for small-scale development.
However, a second interviewee said the program had piqued local developer interest in building triplexes
and quadplexes rather than the single -unit homes they usually build in order to access the incentive.
Review Process
By statute all exemption applications must be approved or denied by Council ordinance or resolution
within 180 days of application. Beyond this, cities have flexibility to set review processes. A required pre -
Attachment 4 Page 3 of 8
application conference is a common feature of cities' programs. Interviewees shared that this step is
helpful for reviewing timelines and requirements with applicants, including a preliminary review of
proposed public goods before the application review timeframe starts. Eugene has the most involved
application process, which includes several public engagement components and an application review
panel. Corvallis is considering requiring application review and recommendation by its existing housing
committee, and Newport has its Planning Commission review applications.
Cities have provisions for monitoring approved projects during and after construction. Eugene's program
committee meets both mid -way through project construction and post -construction to verify the required
public benefits were included in the project. Bend requires applicants to submit proof of public benefits
after the project is completed before it certifies the exemption to the assessor's office. Several cities
require an annual report from developers, generally to certify the ongoing inclusion of public benefits.
Other Program Requirements
Some cities have set additional program requirements that applicants must meet to ensure they are
incentivizing the types of multiple -unit housing that are most desirable or needed. Eugene does not allow
the exemption to be used for student housing. Florence has limited the exemption to be available only to
new construction (excluding additions and conversions) to focus the program on vacant land. Bend
requires applicants' projects to be a minimum of two stories, or three stories on larger lots. Corvallis is
also considering a minimum height requirement. Other than minimum heights, Eugene is the only city to
have program -specific design requirements in place.
4
Attachment 4 Page 4 of 8
Appendix 1 - Tax Exemption Program Comparison Table
City
Bend
Corvallis
Cottage
Eugene
Florence
Newport
Salem
Grove
Program Name
Multiple Unit
MUPTE
MUPTE
MUPTE
MUPTE
MUPTE
Multi -Unit
Property Tax
Housing Tax
Exemption
Incentive
(MUPTE)
Program
MUHTIP
Adoption Year
2022
Developing
2019
1978, revised
2021
2017
1976
2015
Approved
-
-
6 projects, 144
(Since 2015) 6
2 projects, 91
1 project, 110
9 projects, 588
Projects
units
projects
units
units
units created
approved (2
(706 approved -
built), 177 units
1 project
built, 381 units
canceled)
upcoming
Years Exempt
Up to 10
10
Up to 10
No more than 10,
Up to 10
10, may be
Up to 10
may be extended
extended for low
for low income
income rental
rental subject to
subject to
contract
contract
Applies to All
No
-
Yes
Yes
Yes
Yes
No
Taxing Districts
Minimum Units
3
4
3
5
3
3 (new
2
construction), 2
remodel
Required to
Yes, third party
Yes, third party
No
Yes, third party
Yes, staff
Yes, third party
No
Demonstrate
review
review
review
review
review
Financial Need
Cap
No
No
No, code
Yes, 1,500 units
No
No, code allows
No
allows
Public Benefits
3, pick from tiered
5, 2 required &
1, pick from
6, must meet all
3, pick from list
2, must meet
1, pick from list
list of 16- must pick
pick 3 from list
list of 16
of 16
both, has 'other"
of 19
at least 1 from
of 11
(affordable
option as
priority list (5
housing counts
alternative
choices), has 'other"
as 2)
option
Other
2 story minimum (3
minimum height
-
cannot use for
only new
-
50+ unit
Requirements
story for lots of
(potentially)
student housing
construction
projects must
10,000+ sq ft)
Attachment 4 Page 5 of 8
Appendix 1 - Tax Exemption Program Comparison Table
Attachment 4 Page 6 of 8
provide 15%
affordable units
Application
pre -app, post -app (if
housing
pre -app,
pre -app and
pre -app, council
planning
pre -app,
Review
necessary), staff
advisory
council review
design review,
review & public
commission
council review
review, taxing
committee
pre -app
hearing
review &
district review and
review, council
neighborhood
hearing, council
comment, council
review
contact,
review
review
comment period,
post -app design
review, project
review panel,
council review,
neighborhood
contact, design
review, project
review panel x2
Monitoring
annual report
-
no
annual report,
no
annual report
annual report
review panel
Other Details
allowed in urban
-
change of use
may also receive
change of use to
must be outside
change of use
renewal area, must
to non-
SDC credit of up
non-residential
known hazard
to non -
justify elimination &
residential
to 50% if certain
must be
areas
residential must
mitigate impact of
must be
conditions met
approved by
be approved by
displacing existing
approved by
council & won't
council &
housing/businesses,
council &
be considered
won't be
must deed restrict
won't be
during
considered
transient use during
considered
exemption
during
exemption
during
exemption
exemption
Application Fee
$5,200 (includes
-
$1,504
$3,720 (includes
$970
$4,500 (includes
$1,200
financial review)
financial review)
financial review)
Attachment 4 Page 6 of 8
Appendix 2 - Tax Exemption Program Public Benefits List
This list of public benefits was compiled and summarized from the programs of seven other Oregon cities with this property tax exemption. Bold letters at the end
of each bullet point indicate which cities offer that benefit. Not all benefits listed are required by the city to be publicly accessible. Some benefits serve goals in
multiple areas, but have only been listed once.
Goal: Housing
• Affordable Housing (60-80% of area median income, units subject to low-income housing assistance contract) B C F N
• Middle -Income Housing (100-120% of area median income) BE
• Payment into Affordable Housing Fund (in lieu of providing affordable units) C E
• Units accessible to a broad income range (different values or a range not well represented in market) F S
Goal: Environment/Transportation
• Energy Efficiency and Sustainability (LEED, Earth Advantage, Energy Trust, etc. certifications) B G C E F N S
• Electric Vehicle Charging B
• Open Space B G F S
• Development on existing surface parking lots G S
• Onsite stormwater treatment B G
• Amenities or programs to support use of mass transit B G S
• Bicycle and pedestrian amenities B
• Environmental remediation of site B
• Enhanced landscaping (native, pollinator, water -wise) B
Goal: Urban Design
• Pedestrian -oriented design features G F S
• Special architectural features G C F S
• Compact urban development (minimum densities, development on sites with existing single -story commercial) E F S
• Wrapped parking or parking within the structure B S
• Placemaking or Active Public Spaces C
• Connectivity Improvements C
Goal: Employment/Workforce
• Commercial ground floor B G C F S
• Meeting Rooms — G F S
• Use of local, minority, women -owned businesses, or local ownership C E
Attachment 4 Page 7 of 8
Appendix 2 - Tax Exemption Program Public Benefits List
• Economic Catalytic Effect C
Goal: Other Community Needs
• Parks and recreation facilities G F S
• Childcare facilities B G F S
• Advances priority public infrastructure projects C
• Facilities for people with disabilities G C F S
• Dedication of land or facilities for public use G F S
• Development on underutilized property (blighted, abandoned, vacant, etc.) G C F S
• Extra costs associated with infill and redevelopment (land assembly, demolition, infrastructure replacement or expansion) G S
• Retrofitting (seismic, historic) G C
• Facilities supportive of the arts or public art F S
• Tenant amenities (laundry, storage, covered parking on-site) F
Key
Bend
Cottage Corvallis
Grove
Eugene
Florence
Newport
Salem
B
G C
E
F
N
S
Attachment 4 Page 8 of 8
Housing Diversity Tax
ORS 307.600-637
xemption
Background
Incentivize new multiple -unit housing near transit
■Exempts property taxes during first years of operation
Application based, must meet eligibility requirements
Council considering as part of Housing Strategy since 2017
March 13t" work session: program areas, cap discussion
Attachme "' ` g 2 of 11
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Attachment
Public Benefit Overview
Applicant must provide 1+ public benefits as
determined by City
Need to decide:
Whether to specify the benefits or allow applicants to pick
from list of options
How many public benefits are required
What public benefits are eligible
Attachme "' ` g 4 of 11
Public Benefit- Structure/Number
Requirement can be rigid (must do items) or
flexible (pick choices)
Council wanted flexible
Staff recommends tiered list (List A & List B)
2 benefits- At least 1 from List A
5of11
OREGON
Public Benefit- Categories
Affordable housing
Moderate income housing
■Units of variety of sizes
Bike/ped amenities
Mass transit amenities
EV & micro -mobility charging
Parking in structure
■Offsite ADA accessibility
Accessible units
Childcare facilities
Community spaces
Development/redevelopment of
vacant/underutilized property
Costs associated with
infill/redevelopment
AND "other" option for flexibility
6 of 11
�E�
QUESTIONS
Should staff move forward with
the proposed public benefit
structure (pick 2 from tiered
list)?
What public benefits should be
eligible for this program.?
7 of 11
��EGON
Other Eligibility Requirements
Meet SDC "Multiple Unit Housing" definition
Five or more dwelling units on an individual lot or parcel, except for
Cottage Cluster housing, and not counting ADUs.
Exemption length — 10 years
Other options:
<10 years
Variable length (need criteria)
Require "but for" showing
ac OR
i8of11
OREGON
Other Eligibility Requirements
Project type — New construction, addition,
conversion
Comply with adopted code requirements
Attend Development Initiation Meeting (DIM)
9of11
�EGON
QU ESTI ON
Does Council have feedback on the draft
program guidelines.?
Attac �� 10 of 11
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a
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