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HomeMy WebLinkAboutItem 01 Housing Diversity Tax ExemptionAGENDA ITEM SUMMARY Meeting Date: 3/13/2023 Meeting Type: Work Session Staff Contact/Dept.: Katie Carroll/DPW Staff Phone No: 541-726-3660 Estimated Time: 45 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 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 the 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: Draft Tax Exemption Area Maps 3: Property Tax Exemption Scenarios 4: Background FAQ 5: Program Review: Insights from Other Cities 6: Presentation Slides DISCUSSION/ Council developed the City's Housing Strategy between 2016 and 2017, identifying FINANCIAL property tax exemptions as one tool that could be used to help meet housing needs. IMPACT: Council directed staff to explore a property tax exemption for multiple -unit housing (ORS 307.600-637). Council discussed this exemption and provided direction to staff during several work sessions between 2017 and 2020. During this work session, staff is seeking confirmation of the geographical areas that would be included in the tax exemption. Staff is also seeking direction on if and how to cap the total tax exemptions available through this program. 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. To address the fiscal impact of the program, Council may decide to institute a cap. MEMORANDUM City of Springfield Date: 3/13/2023 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 the 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/ Promote and Enhance our Hometown Feel While Focusing on Livability and Environmental Quality BACKGROUND: Between 2016 and 2017 Council conducted a comprehensive analysis of housing needs in Springfield and developed Springfield's housing strategy. As part of the strategy, Council identified low-income and market -rate property tax exemptions as tools the City is interested in exploring to incentivize the development of more housing in Springfield. In an April 10, 2017 work session, Council reviewed a comparison of the City's existing Vertical Housing Development Program (VHDP) and the State -enabled multiple -unit property tax exemption. Both offer tax exemptions for development of transit -served multi -unit housing. At that meeting, Council directed staff to continue developing a potential multiple -unit property tax exemption program which is being called the Housing Diversity Tax Exemption (HDTE). Council provided additional direction on the potential HDTE program during work sessions from 2017 through 2020. Most recently, Council directed staff to continue developing this program in a May 9, 2022 work session. During tonight's work session and an upcoming work session this spring, staff is seeking direction from Council on additional aspects of the potential HDTE program. For more background on this tax exemption, please see Attachment 4. A summary of other cities' exemption programs is available as Attachment 5. Attachment 1 Page 1 of 6 Need for Prooertv Tax Exembtion In 2018, AARP and LOCUS partnered with the City to assess Springfield's multifamily housing market and the potential HDTE program. At that time, there had only been one market -rate multi -unit residential project developed in the previous decade. The findings of that report were summarized in a February 4, 2019 Council work session. The report determined that high development fees, lower market rents, and a high capitalization rate' curbed multifamily housing development in Springfield. The report recommended implementation of the tax exemption to prepare the City to capture future changes in the market that would encourage multifamily housing development to occur, and to attract different types of developers that may be interested in the exemption. Since the LOCUS report findings, some multiple -unit market -rate housing has been built and other projects have been proposed. However, rising interest rates and high construction costs could hamper development and make it harder for projects to pencil without financial incentives like tax exemptions. EXEMPTION AREAS: History Council must designate areas of Springfield within which the tax exemption would be available. By statute, these areas must be core areas or areas within one quarter mile of a fixed transit route. Council provided direction on areas to include in the tax exemption in work sessions on November 6, 2017, February 12, 2018, and March 9, 2020. Council has directed staff to include areas around Downtown, Main Street, Mohawk, and Q Street as program areas. Council also directed staff to not allow projects proposing ground floor residential facing Main Street to qualify for the exemption. During its March 9, 2020 work session, Council reviewed options for including Downtown as a program area. Council considered the interaction between the potential HDTE area and the existing urban renewal district and VHDP zone. It directed staff to include Downtown as an HDTE area, and to replace the existing VHDP zone with the HDTE program. Most recently, Council directed staff to include an additional property in the Q Street area, east of Mohawk Boulevard/ 19' Street, in the areas under consideration. Since the HDTE area downtown overlaps with the urban renewal district, neither the City nor the Springfield Economic Development Agency (SEDA) would collect property taxes on any new residential improvements from approved projects in those areas for the duration of their exemption. Council has directed staff to allow developers building Downtown to choose either receiving SEDA's incentives (payment of SDCs on behalf of developer) or the tax exemption so as to prevent stacked incentives. Staff anticipates developers would generally be more interested in SEDA's System Development Charges (SDC) assistance because it would reduce upfront development costs. Tax exemptions do not reduce the cost to develop but do help balance cash flow once a project is built. Current Draft Areas Planning staff have reviewed draft exemption areas maps presented to Council in 2018 and 2020 and made several recommendations for refining exemption area boundaries. The following ' The capitalization rate (cap rate) is the rate of return on a real estate property investment based on the income that the property is anticipated to generate. It is used as a measure of risk that developers and investors consider when determining where to build. When indicating market stability, cap rates should be lower than a local project's yield on costs. Attachment 1 Page 2 of 6 adjustments have been made to the mapping methodology, which has somewhat altered the mapped exemption area boundaries included for Council's review as Attachment 2. Changes include: 1. Based boundaries on plan designations rather than zoning. This approach focuses the exemption program in areas of Springfield where multiple -unit residential of higher densities is a desired future land use.2 Applicants would be required to meet all applicable planning regulations, so if current zoning does not allow for the housing proposed, an applicant would apply for a zone change so the zoning is consistent with the plan designation. 2. Simplified boundaries. Individual properties were not analyzed and included or excluded based on development potential, giving developers flexibility to make site- specific determinations about redevelopment or infill potential if proposed projects meet Development Code requirements. 3. Included and excluded properties based on proximity to transit. Statute requires exemption areas to be within '/4 mile of transit. For exemption areas intersected by that distance, properties were included in the exemption area when at least 80% of the property fell within 1/4 mile of transit. 4. Limited southern extent of the Downtown exemption area. This boundary was refined by only including areas within '/4 mile of the downtown Springfield transit station to account for the access barrier created by the train tracks. This more accurately reflects southern areas of Downtown that can access transit with '/4 mile walking distance. The exemption area boundaries shown on maps in Attachment 2 may need slight adjustments before adoption of an HDTE program to match the plan designations adopted during the Comprehensive Plan Map Clarification Project. Question: Does Council want to make any changes to the draft exemption areas? FISCAL IMPACT: The purpose of the exemption is to spur multiple -unit residential development by exempting property taxes on residential improvements for approved projects for a number of years. In exchange, Springfield would benefit from the addition of needed housing, project -related public benefits (see page 5 for discussion), and an influx of valuable improvements on the tax rolls once an exemptions end. The impact an HDTE program could have on the City's property tax revenue depends on several factors, including: Individual Proiect Characteristics By statute, property taxes may only be exempted for new multiple -unit residential improvements (including residential parking) or commercial improvements approved as a public benefit. Land and other improvements are taxed during a project's exemption period. A project approved for exemption that is built on a vacant site would not result in a net loss of existing property tax revenue for the City. The land would continue to be taxed. If a project were 'Plan designations included: High Density Residential, Medium Density Residential, Commercial Mixed Use (MU), Downtown MU, Booth -Kelly MU, Medium Density Residential MU, MU/Nodal, MU, MU 2&3, MU 2A&2B. Attachment 1 Page 3 of 6 built on a site with existing improvements that were razed, the City would lose the property tax revenue those improvements brought in. If existing improvements were kept, the City would continue to receive tax revenue from those improvements during the exemption. It should be recognized that although the City would not "forgo" property taxes under this program, there would be no additional tax revenues collected during the exemption period to offset the increased demand on City services by the additional people residing there. To demonstrate how different projects granted this exemption might impact the City's tax revenue, Finance staff prepared three scenarios of estimated exempted property tax revenue based on existing, recently built multiple -unit projects in Springfield (see Attachment 3). These scenarios assume the actual assessed value (AV) of each project in fiscal year 2023 (FY23) as a starting AV for the project if it were newly built in FY23. The AV shown includes only the value of structures, not land, to better represent tax the City would exempt. The scenarios assume a 3% annual growth in AV, and a constant tax rate over a ten-year period. The scenarios do not account for more complex taxation scenarios that could impact the tax collected from a property, such as razing of existing taxed improvements or addition of improvements that are ineligible for a tax exemption. The FY33 column estimates the AV of structures and the taxes that would be collected beginning the year after a ten-year exemption ends. When an exemption expires, the County Assessor reassess the project's AV which may cause it to increase or decrease. Along with the tax rate in place that year, the reassessed AV would determine actual taxes collected. Pro ar m�Cap Council may choose to set a cap on the program to limit its fiscal impact with greater certainty. Of exemption programs reviewed by staff, only the cities of Eugene and Portland have program caps. Eugene has capped the total number of units that can be approved, and Portland has a rolling five-year cap on the maximum forgone revenue that is approvable. Two options Council could consider include: Option A: Include language allowing Council to institute a cap on forgone revenue by motion at any time. • Example: At any time, the city council may, by motion or upon request by the Lane County Board of Commissioners, set a limit on the maximum amount of foregone tax revenue provided as a benefit of the exemption under this chapter. (via Cottage Grove Municipal Code, 3.10.010(D)) • Commentary: Council would be required to review and approve or deny each exemption application. Staff could also provide Council with an annual report on HDTE applications and approved projects. These touchpoints would allow Council to regularly check in on the program's fiscal impact. Under Option A, Council could institute a cap at any point it determines it is necessary based on the level of interest in the program and budgetary conditions. Option B: Set a cap on the total taxes exempted for the program. • Example: This program is subject to a capon total City of Springfield taxes exempted of one million dollars ($1,000,000), based on the total estimated tax exemption of each approved project. When cap is reached Council may either extend the cap or sunset the program. Attachment 1 Page 4 of 6 Commentary: Based on the three project scenarios and assumptions detailed above and in Attachment 3, the property taxes the City would exempt over ten years would average a little less than $3000 per unit. The actual amount of tax exemption per unit would vary based on project AV and tax rate. Generally, larger projects have lower per unit property taxes. Using the per unit average calculated, capping the program at one million dollars in total exempted tax revenue would support the addition of about 350 new units in Springfield. Option B would allow Council to set an upfront maximum fiscal impact to the City, however, given the wide variability in AV, it is not possible to determine how many units could be built under any given financial cap. If Council moves forward with Option B and there is significant interest in the HDTE program, the City could institute an additional per year cap on the program to help spread out the fiscal impact. Question: Should staff move forward with Option A or Option B? If Option B, what should the cap be on City of Springfield taxes exempted for the program? NEXT STEPS: Public Benefit Requirement Per statute, projects approved for the tax exemption must provide at least one public benefit in exchange for the exemption. The City must determine what public benefits qualify for the program. This is an opportunity for the City to realize certain public benefits in multiple -unit housing projects that support other City goals and which the market may not otherwise provide. Staff will review this aspect of the program with Council in greater detail at its next work session on the HDTE later this spring. Public benefits will likely also be a topic of interest for Springfield's other taxing districts when the City approaches them about the exemption program. More information on the public benefit requirements of other cities is available in the program summary memo as Attachment 5. Other Program Requirements In addition to determining exemption areas, whether to cap the program, and the public benefit requirement, the City will need to set other minimum application requirements and determine an application review process. Staff will review potential minimum program standards and an application review process with Council at its next work session on the HDTE later this spring. Additional Steps Needed to Begin Program • Notify other taxing districts of intent to move forward with a tax exemption program • Evaluate program administration costs and determine application fee in coordination with County Assessor • Develop program guidelines and code • Hold a public hearing on the adoption of ORS 307.600-637 • Adopt necessary code changes, exemption area maps, program guidelines • Develop application materials • Council review and rule on individual applications Attachment 1 Page 5 of 6 RECOMMENDED ACTION: Give staff direction on the following questions: 1. Does Council want to make any changes to the draft exemption areas? 2. Should staff move forward with Option A or Option B? If Option B, what should the cap be on City of Springfield taxes exempted for the program? Attachment 1 Page 6 of 6 Draft Tax Exemption Boundaries Bou *DraftExemption M Springfield, OR City Limits - f-� . , , • Urban Growth Boundary r a / •�• McKenzie River (D 'i`� t • ✓1� . . , . . . . . . . . . . . . rl• Hclyden -B-rldge Rd ILII 1 " — "Q" STREET N _ _ -� �" �" • • Cedar Mar o a Rd I' 1 t t I •� 1 - W Q Sf ympic St « 1 CD _ _ 7 « n Centennial Blvd �� ��h High Banks «i ••'� r a Rd V7 /n0'ustrial Ave o MOHAWK C / V F Thursfbn fid' 00 C St °miner°; n U-) in in aj9 � MAIN STREET w D Sf DOWNTOWN ~ \ n N M \� ® Main St Main Sf �.� S A St _ Virginia Ave Daisy St 0360 <II ! A" liasper � r_�I,�-, -- 7 I I L II • -1 I I�It I�(ecnon Rd r' ►wr � -� : – i • i — • 6&OREGON NGFIELD 0 0.5 1 N * Tax exemption boundaries are in draft form and subject to change. A L L Mi There are no warranties that accompany this product. Users assume all responsibility for B O U N D A R I E S published: 3/3/2023 any loss or damage arising from any error, omission, or positional inaccuracy of this product. Attachment 2 Page 1 of 5 I W WIST � ST W I ST WHST HST G��yc 41V �v J M J m C��, Y N co Draft Tax Exemption Boundaries Springfield, OR "A N ,` \ PARK ST ®*Draft Tax Exemption Boundaries City Limits Urban Growth Boundary E ST N S F DOWNTOWN G ST F ST E ST D ST F N S CST a B ST A ST AS F co _ U) F = H co SASr N M: Nw SBSr c SE ST SPRINGFIELD 0 0.1 0.2 N * Tax exemption boundaries are in draft form and subject to change. �OYL Mi44� There are no warranties that accompany this product. Users assume all responsibility for DOWNTOWN OREGON Published: 2/23/2023 any loss or damage arising from any error, omission, or positional inaccuracy of this product. Attachment Page 2 of 5 KA " 0` Mp�C ST �'IAVE INDUSTRIAL WE �y O� t T1 E ST E ST D ST z c F B OyyfC"PCG r9(� MAIN ST \ST GEM 5 a Draft Tax Exemption Boundaries Springfield, OR MAIN STREET MiGry HgNKS ®*Draft Tax Exemption Boundaries ' City Limits : Urban Growth Boundary " PL 2B GST F GST O 52ND Qy5T PL "TH ST O FIT 59TH ST EST LLti W E ST " 55TH IT D ST o DST 55TH " 55TH ST ST y 55rTH csr N i s " m " B ST N BST BST MAIN ST AVE 4 / a .�HWAYLP T IT S " N 49TH �P PL B EBELLE BLUEBELLE WAY K ALCONAST BLUEBELLE WAY N 3 Q U S5ISTPL " y " CAMELLIAST I y N CAMELLIAST a CYNTHIA CT AVE DAISY A i C' V C T " m CAMELLIA ST VIRGINIA L VIRGINIA AVE DAIS ST J Q Q DAISVST V' D DAISY ST VIRGINIA AVE _ DAISY ST MNP EA£ BA D_ BEST ~ c9Q y�ST of o S !y gnu F y h v6 x FBF S49THP- B 51ST PL S 53RD It � w " yT CT ST MONTER (� y x N N y PptH 3 '�N TER" H LSF (� N w EMEMfiP ISLE SFST o- -� LL BKDY BOOTH KELLY qG SHO FORSYTHIA ST�FgNyLP FORSYTHIA OR EME 1 D y 800 " FORS' LL O(9CF WEYERHAEUSER RD CHEROKEE OR BOOTH kELLV So .- _ _ _ _ _ _ f RO - GV.CIER MEADOWS R LP '`� SQUIRREL ST CHEROKEE DR I GLAC GLACIER ST 551 GLACIER ROCKY RD VIEW DR DOUGLAS DR HALEY n SREDWOOD_Dl " ---i MT VERNON RD ST t ' i� , HOLLY L ------ _ x \ y iJORTH _ I I 4 q SPRINGFIELD N * Tax exemption boundaries are in draft form and subject to change. &�. 0 0.15 0.3 I There are no warranties that accompany this product. Users assume all responsibility for MAIN STREET OREGON Published: 3/3/2023 any loss or damage arising from any error, omission, or positional inaccuracy of this product. r- 545T – _— – _— �_—_ JASPER RD A J • S Attachment � Page 3 of 5 R ST N o �o Draft Tax Exemption .U)RST Draft Tax Exemption Boundaries / ® Boundaries FUCHSIA ST Springfield, OR / City Limits Urban Growth Boundary Q ST Q ST Cd d/ V—J EB � � • - - � � � ._., QUINALT ST -� J J Z Jh O� ,O N PIEDMONT ST m P�FgSANT ST F PLEASANT ST U OLYMPIC ST w N ¢ F U OLYMPIC ST F rn OLYMPIC ST F N N ST Y ¢ � SCOTT RD K N = m o MST U) Cl) Msr M ST F H L ST to F� N L ST L ST N CENTENNIAL BLVD CENTENNIAL Yr CENTENNIAL BLVD BLVD x PARKER ST Q° F- J ST J ST U J ST N J ST MODOC ST HEALTH WAY IST IST F- x IST H N �O HMOHAWK N HST U) o HST F- DUBENSLN U) S M 0 = ~ d F = Q O~i r N N u� H GARSON LN G ST o U N N FST FST ~ n U a FST� F N N N N N N N S WHITWORTH LN SPRINGFIELD 0 0.1 0.2 N * Tax exemption boundaries are in draft form and subject to change. O; Mi There are no warranties that accompany this product. Users assume all responsibility for M O H AW K OREGON Published: 2/23/2023 any loss or damage arising from any error, omission, or positional inaccuracy of this product. U U D ST Attachment iPage 4 of 5 3T a ST 05 EB RD y O Z N R ST 126 1105 WB OFRP� ' It Y QUINALT ST r ry r ' 1 JVEI < N * Tax exemption boundaries are in draft form and subject to change. There are no warranties that accompany this product. Users assume all responsibility for 2 . , � STREET NU I VIEWM ONT any loss or damage arising from any error, omission, or positional inaccuracy of this product. 1105 EB ONRP � w 0a � • • ' ' ' ' r� MANSFIELD Draft Tax Exemption Boundaries *Draft Tax Exemption ® f P<egSANT ST Boundaries RHOQ SEWARD AVE DOSP rn '( ST �O �O PLEASANT ST ;____ ST // a; J Springfield, OR _ _-=i City Limits N ; Bv ST w 0 LY M F 0h B(FC DELF Urban Growth Boundary DAPHNC SI J F N ST I Q-1OSQ RO , O O > YOLANDAAVE -N ALLEN AVE w I RIVER KNO «WqY LIMAS O a HAYDEN BRIDGE WAY CAsTBRIDOE I O<oOROy 4111,M��W I G90P 16TH ST �qO WAV Q y a CHEEK ST F 7THFNTg AVE o —_—_— 2 PL HENR 16TH' ti iv CORRAL --, BRIDGE RD! ST CT m a I K k ! i DR I GREENVALF DR -I < I_—_—_ -RAFOENf9RIDGE PL ------------ --MAYDEN ; O.RO ST —_—_—_—_-- _—_—_—� I--FRAYDEN BRIDGE ID 0 of I I_ L , 5 WOODLANE DR I VST VST 11TH m VST �_—_—_—_—_—_ I N � I I `- — OTTO 5T I_ � I I � LOCH OR I ,T 9TH ST Q_f--� _J --- _—_—_—_______— __� � 20 T zw I 8TH ST 9TH ST 1PLc ;- l uIil I ZW> Sa —_ v UST J SH 9TH ST r w F K _-_�--' SLA NRIDGE AVE < 4gm wW aI I m I LOMOND AVE J RAvE� O{ ST i i 8TH ST VE w A Oo K z 9<3@ �j I o DR R` O FIRTH AVE I J ti m NOR THRIDGE AVE �NINRIDGE z LING 9 I I ' o I a rsr LN 3W aQ rF?AM ' � _ -- � p1 F RIVERSTONE 1111 STREET _ CARRIAGE PL —L_ J l �m n BONNIE LN n SHADY LP z r w TST m F TST T .r T ST O 3T a ST 05 EB RD y O Z N R ST 126 N C F/UIlii ti 1105 WB OFRP� 126 O It Y QUINALT ST r ry r MST 1105 W B < N * Tax exemption boundaries are in draft form and subject to change. There are no warranties that accompany this product. Users assume all responsibility for � � Q � � STREET NU PIEDMONT ST 0 any loss or damage arising from any error, omission, or positional inaccuracy of this product. 1105 EB ONRP c J ST J ST f P<egSANT k PLEASANT ST ST DOSP rn '( ST �O �O PLEASANT ST // J MOFFITOLYMPIC OLYMPIC ST w 0 LY M 9PIC LN ST q F v O OLYMPIC ST F F N ST a 2 < N C F/UIlii ti y F K y M ST s M sr j COTT RD / r ry MST NGFIELD 0 0.1 0.2 Mi 6&OREGO N * Tax exemption boundaries are in draft form and subject to change. There are no warranties that accompany this product. Users assume all responsibility for � � Q � � STREET N Published: 2/23/2023 any loss or damage arising from any error, omission, or positional inaccuracy of this product. �..... J ST J ST Attachment Page 5 of 5 ATT3: Property Tax Exemption Estimates All scenario projects are located in tax code area 01900, which has a tax rate of 18.2578 per $1,000 assessed value (AV). The City of Springfield's share of this tax rate is 7.0489 (does not include any rate attributable to SEDA). AV shown only reflect structure value (does not include land value which is not exempted). 5800 A Street Parcel: 1702343200201 Details: 9 x 2 -bed units, built 2021 Built: 2021 # 1 2 3 4 5 6 7 8 9 10 11 Fiscal Year FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 Assessed Value $ 755,425 778,087 801,430 825,473 850,237 875,744 902,017 929,077 956,949 985,658 1,015,228 Property Tax $ 13,792 14,206 14,632 15,071 15,523 15,989 16,469 16,963 17,472 17,996 18,536 Total Property Tax Exempted 158,114 Total City of Springfield Property Tax Exempted 61,044 1100 Q Street Parcel: 1703261403 808 Details: 20 x 2 -bed units, built 2019 # 1 2 3 4 5 6 7 8 9 10 11 Fiscal Year FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 Assessed Value $ 1,083,393 1,115,895 1,149,371 1,183,853 1,219,368 1,255,949 1,293,628 1,332,436 1,372,410 1,413,582 1,455,989 Property Tax $ 19,780 20,374 20,985 21,615 22,263 22,931 23,619 24,327 25,057 25,809 26,583 Total Property Tax Exempted 226,760 Total City of Springfield Property Tax Exempted 87,547 Attachment 3 Page 1 of 2 511 Street Apartments (several addresses) Parcel: 1703262402900, 1703262400902, 1703262400903 Details: 18 x 1 -bed 76 x 2 -bed 4 x 3 -bed units, built 2016 & 2019 # 1 2 3 4 5 6 7 8 9 10 11 Fiscal Year FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 Assessed Value $ 2,698,998 2,779,968 2,863,367 2,949,268 3,037,746 3,128,878 3,222,744 3,319,427 3,419,010 3,521,580 3,627,227 Property Tax $ 49,278 50,756 52,279 53,847 55,463 57,126 58,840 60,605 62,424 64,296 66,225 Total Property Tax Exempted 564,914 Total City of Springfield Property Tax Exempted 218,100 Attachment 3 Page 2 of 2 ATT4: Background Frequently Asked Questions For the Housing Diversity Tax Exemption, ORS 307.600-637 1. What is the Housing Diversity Tax Exemption? The Housing Diversity Tax Exemption (HDTE) is a property tax exemption enabled by ORS 307.600-637 which can be used to incentivize the development of multiple -unit housing in transit -served and core areas. It is commonly known as the Multiple -Unit Property Tax Exemption, or "MUPTE." The program exempts some property taxes for qualifying multiple -unit residential projects during their first several years of operation. It can be used for new development or redevelopment. The tax exemption incentivizes development by lowering a project's operating costs during its first years, making it financially feasible to build. The exemption can encourage higher quality and/or denser development than may be feasible without it. It can be leveraged to help cities achieve other local objectives. Springfield City Council has been considering implementing this incentive since 2017. 2. What are the program requirements? Every city with this tax exemption must establish program guidelines and standards. All cities must follow certain requirements, but Springfield has significant flexibility to decide what the tax exemption would look like here. A few requirements all cities must follow: • Can only offer exemption in core areas and areas within '%4 mile of a fixed transit route unless offering the exemption for affordable housing • Cannot allow exemption to be used for transient accommodations like hotels and motels • City Council must review and approve or deny each application for an exemption Some aspects of the HDTE the City of Springfield would get to decide: • Specific areas of Springfield where the exemption is available • Whether the program should be capped, and if so, how • What public benefits a developer would need to provide in the project to qualify • Other minimum application requirements, such as the number of housing units a project must add • What the application review process and application fee should be 3. What is the scope of the tax exemption? Cities can offer tax exemptions for up to ten years. Taxes may only be exempt for the residential portion of the improvements (including residential parking) or commercial improvements that are approved as a public benefit. Land and other pre-existing or new non-residential improvements are still taxed during the exemption period. For the exemption to apply to the tax levy of all taxing districts, the City would need support from enough other taxing districts to equal at least 51% of the total combined tax levy. Otherwise, the exemption would only apply to the tax share collected by the City. Attachment 4 Page 1 of 3 4. How would the City's tax revenue be impacted? If a project is built on a vacant lot or on an unimproved portion of a lot, the City would not lose tax revenue because the owner would continue paying taxes on the land and any existing improvements. If a project were built by redeveloping a site and replacing existing improvements, the City would forgo the revenue the existing improvements may have brought in during the exemption period. This tax exemption is intended to spur development that might not otherwise happen. If a project is not built, the City and other taxing districts lose out on the revenue that project would have generated over its lifetime once its exemption period ends. While exempting taxes can decrease revenue in the short-term, incentivizing new housing development has potential to generate significant revenue in the long-term by adding valuable improvements to the tax rolls. Cities may set program caps to limit the impact the exemption program has on tax revenue. 5. Is there a need for more multiple -unit housing in Springfield? Springfield's 2011 Residential Land and Housing Needs Analysis estimated the City would need to issue building permits for approximately 296 new dwelling units annually between 2010 and 2030 to accommodate Springfield's population projections. The City did issue building permits for 376 new units in 2022, but this level of development has not been consistent. The 2011 Needs Analysis estimated that 40% of housing demand would be for multi -family housing. In 2010, approximately 29% of the City's 24,411 housing units were multi -family; by 2020, multi -family housing made up only 26% of Springfield's 25,754 housing units.' The share of multiple -unit housing has not changed significantly during last decade, nor has the number of new housing units built kept pace with Springfield's projected need. Encouraging the construction of multiple -unit housing in transit -served and core areas supports multiple adopted housing goals and policies in the Springfield Comprehensive Plan. The exemption: • Plans for growth and needed housing by encouraging development of denser housing • Supports livability and transportation planning policies by incentivizing development near commercial services and transit • Incentivizes increased housing diversity by supporting development of housing less frequently produced by the market 6. Can the tax exemption attract new housing development? At least nine other Oregon cities have adopted or are considering this tax exemption, including Cottage Grove, Eugene, and Florence in Lane County. Several cities have seen significant success in spurring multiple -unit housing development since implementing the program. As of Fall 2022, Cottage Grove had permitted 210 new dwelling units since 2019, and 144 of those used the tax exemption. The City estimated it was 66 units behind on keeping pace with its projected annual need, and that it would likely be much further behind without the program. Eugene's program has supported development of at least 1,500 units since 1978, including 177 built since 2015. No housing has been built in Eugene's downtown core without this or another property tax exemption for at least twenty years. Before Florence adopted the program, the city had very few multiple -unit developments built ' U.S. Census American Community Survey 5 -year estimates, multi -family percentages includes 2+ unit structures. 2 Attachment 4 Page 2 of 3 during the last three decades; it approved two projects in the program's first year (2022) which will add 91 units. Attachment 4 Page 3 of 3 ATT5: Tax Exemption Program Review: Insights from Other Cities For the Housing Diversity Tax Exemption, ORS 307.600-637 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 1.1 Exemption programs reviewed (adoption date): • Bend (2022) • Cottage Grove • Florence (202 1) • 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 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. 1 This memo excludes Portland's exemption program which is closely tied to its Inclusionary Housing requirements. Attachment 5 Page 1 of 8 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 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 2 Corvallis, which is currently developing its program, is also looking at requiring applicants to demonstrate need. 2 Attachment 5 Page 2 of 8 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 - 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 Attachment 5 Page 3 of 8 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 Reauirements 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 5 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 5 Page 5 of 8 Appendix 1 - Tax Exemption Program Comparison Table Attachment 5 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 5 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 5 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 5 Page 8 of 8 Housing Diversity Tax ORS 307.600-637 emption Exemption Overview State -enabled incentive (ORS 307.600-637) ■Multiple -unit housing near transit Application -based incentive Adopt program standards Council decision to grant 9 cities have adopted or considering Attachment 6 Page 2 of 15 Past Council Work 2016-2017 —Housing Strategy work, identified tax exemption as tool to explore 2017 —Housing Diversity Tax Exemption vs. Vertical Housing Development Program 2017-2020 —Discussed eligible areas 2022 —Directed staff to continue exploring Upcoming: May 1 work session Attachment 6 Page 3 of 15 Tax Exemption Eligible Areas Must be within Y4mi of transit or center Proposed changes Base on plan designation Simplify boundaries Adjust for proximity to transit ac vff of15 Draft Tax Exemption Boundaries BoundaraesExemptian Springfield, OR City Limits o Urban Growth Boundary a � T v _ z -- ---------------- -1 HLyden Srldge Rd nRr' STREET - -- -• `-;, r , ..... 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Users assunre A responsibility for BOUNDARIES O I I N D A R I E Is'_.:�li:,••ec.3,'3/2023 any loss ordamagearisin from my error omission- or positional inaccuracy of this product_ U v r , Attachment 6 Page 5 Qf 15 W i_T ST W I ST m WGST G ST i W F ST gGV6 WEST Gft4 � `n w WCST a }4 5 1 1 1 Draft Tax Exemption Boundaries Springfield, OR ` c ®"Draft Tax Exemption Boundaries J City Limits Urban Growths Boundary DOWNTOWN n �w + ( SCST S '� , 5 51 S 0 ST Phf K ST _ cEST t * Tax exemption boundaries are in draft form and subject to change. a a.� a.z " Mi There are no warranlies that acrompany this product. Users assume all responsibility for DOWNTOWN Published; 2/23/2023 any lois nr llama, e au.ch C frorr anv error. onvrs Jn., or positional inaccuracy of this product. Attachment 6 Page 6 of 15 Daft Tax EX@ m pti OP Boundarles �d es , ! Springfield, DR r. u j ,..5urb.n Growth Boundary � � � � ■ �/ | wuNSMEEI | z L | W3 _ — .- � � Ln MAIN 2 �V"NIA AVE DAIAY ST | Ln _. _ `- '' t in 0.15 - .�� �k& _m&o�km&W OaNe. Thwe_m_Ar somffpwlMpmLpa Usm_&am.a.*m",# MAIN STREET --- -__:M3)z7 arrikm ord_m � tM9 'w.�m=� mg_§ a � �_ , _ Attachment 6 Page 7 o .1.5 . . �. & n s R Draft Tax Exemption Boundaries ' 1,WRT f Springfield, 4R .... - OIANALT ST z s � I PIEDMONTST 0Q N pLSAIJT ST r~ - PLEASANT ST J x OLYMP[C ST w N ST m x M ST N � x = N L ST F r� CENTENNIAL BLVD N = PARKER ST w J ST J ST MODOC ST HEALTH "Draft Tax Exemption ® Boundaries City Limits Urban Growth Boundary LST CENTENNIAL BLVD J ST OLYMPIC ST WAY IST 57 'n I S! oZr F �wq .v N ry z ;­MOHAWK HST to H SI DUBENSLN GARSON LN G S i � r+ i I ST FST N ~ m Ja F ST r~n n N N N N �1J M. „r tn WHITWORTH LN SPRINGFIELD N * Tax exemption boundaries are in draft form and subject to change. 0 0.1 6.2 �/ Mi There are no warranties that arrempany this product. Users assume all responsibility for M O H A V V K � �coN Pua's ec:ziz$2o23 yyy "' any loss ordama eausrngfromgoyerror.omnssion:orpositional0accumcyofthisproduct. Attachment 6 Page 8 of 15 r. 9T DSI �T A i105 WROFRp IN.�'� Q FLEA M OFPITi PLV PIG TIC O 4 LN ST L G � MST N-GfIELD 0 0.1 0.2 � Mi OREGON r1u:) F RFT n ffiT I.IARG'.?RD TR S1Ham sT�Y CS o Ss I105 E75 CDIWLTST CD 7 y 3 U '• PIEDMONT ST ANT ST PISA` -`QM? ST C)Lv,,lK PLEA3RM Si l II ET - 'n " * Tax exemption boundaries are in draft form and subject to change. "Q" STREET There are no warranties that acrompany this product. Users assume all responsibility for any loss or damage au r�r� from goy error; omnssion: or positional inaccuracy of this product. Attachment 6 Page 9 of 15 % rr. -"V -' -. � _ 3 ------ =-- -- Draft Tax Exemption Boundaries Tax ® BoundariesExemptian SEWRF'D AVE Springfield, OR - City Limits DY - w o m , , I� Urban Growth Boundary - L ; ,04 ALLEN AVE RN RIVER OIL y"FY V ��gl•0.5 pP I I__ - HAYDEN B R I D G E WAY CASTBRIOpE 'NtNT CO Q�L ; N z I y� �P m BTH t, %,A E o c ¢ Y 0�� a ¢ CHEEKSi C z € MA PLL % p4N N� OCN ¢ 'r T(1N� },ETY, GREENVALE-[�R o w_-------------- BRIDGE RDi SETH- N S� � k 'C ---HAYDEN HAYIYEN-SRIOGETID L NfOODLANE DR O.. V ET 45T tlTk i � VST S BTH 5T 8TH STTBTH ST 10TH DSl MST go N a 1 kl9ffi ANE M iti =�I LOMONO AVE - - 8TH 5T WwN _ _ AVE o o qW NRIINSE '4A F N '4 �' DR�pcZ� FIRTH AVE �I NORr''RmGE A4E w w PFN.B! IkG I ! "Q" STREET N CARRIAGE PL -J m gONAl1E iN EHACYIp wen TST ~ - T a �`/�/�/�J�/.fy/�J� V / ! l / IV 1 SET / /N i 5T - T - ___ ST o{j1 y r•�` I �T A i105 WROFRp IN.�'� Q FLEA M OFPITi PLV PIG TIC O 4 LN ST L G � MST N-GfIELD 0 0.1 0.2 � Mi OREGON r1u:) F RFT n ffiT I.IARG'.?RD TR S1Ham sT�Y CS o Ss I105 E75 CDIWLTST CD 7 y 3 U '• PIEDMONT ST ANT ST PISA` -`QM? ST C)Lv,,lK PLEA3RM Si l II ET - 'n " * Tax exemption boundaries are in draft form and subject to change. "Q" STREET There are no warranties that acrompany this product. Users assume all responsibility for any loss or damage au r�r� from goy error; omnssion: or positional inaccuracy of this product. Attachment 6 Page 9 of 15 % rr. QU ESTI ON Does Council want to make any changes to the draft exemption areas? Attac �� 10 of 15 Fiscal Impact Exemption in exchange for: New units Public benefit Can be exempted (for up to 10 years): New residential improvements Residential parking Commercial (if public good) ■Only City's tax share unless supported by other taxing districts (51% of levy) Variables affecting fiscal impact 1. Individual Project Characteristics Program Cap? Attachme�11 of 15 SEG Example Project — 1100 Q Street Units: 20 x 2 -bed Built: 2019 # 1 2 3 4 5 6 7 8 9 10 11 Fiscal Year FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 Assessed Value ($) 1,083,393 1,115,895 1,149,371 1,183,853 1,219,368 1,255,949 1,293,628 1,332,436 1,372,410 1,413,582 1,455,989 Property Tax $ 19,780 20,374 20,985 21,615 22,263 22,931 23,619 24,327 25,057 25,809 26,583 Total Property Tax Exempted 226,760 Total City of Springfield Property Tax Exempted 87,547 Attach 'JL=R 12 of 15 �EGON Cap Options Option A - Include language allowing Council to institute a cap on forgone revenue by motion at any time. Option 6 - Set a cap on the total taxes exempted for the program. Attachme�13 of 15 SEG QU ESTI ON Should staff move forward with Option A or Option B7. If Option B, what should the cap be on City of Springfield taxes exempted for the program? Attachme� 14 of 15 �EGON Attachment 6 Page 15 of 15 Next Discuss public benefit requirement Develop minimum program standards Talk to other taxing districts Create code