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HomeMy WebLinkAboutItem 04- Housing Diversity Tax Exemption AGENDA ITEM SUMMARY Meeting Date: 10/23/2023 Meeting Type: Work Session Staff Contact/Dept.: Katie Carroll/DPW Staff Phone No: 541.726.3660 Estimated Time: 45 Minutes S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Promote and Enhance our Hometown Feel while Focusing on Livability and Environmental Quality ITEM TITLE: HOUSING DIVERSITY TAX EXEMPTION ACTION REQUESTED: Give staff direction on the draft program guidelines and code for this tax exemption. ISSUE STATEMENT: 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. One challenge Springfield faces is a lack of diversity in housing types available in the market. Several multiple-unit housing projects have been built in recent 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 help spur housing development. A property tax exemption for multiple-unit housing could incentivize development of more diverse housing types. ATTACHMENTS: 1. HDTE Memo 2. HDTE Draft Program Guidelines 3. HDTE Draft Code 4. HDTE Slides DISCUSSION/ FINANCIAL IMPACT: Council directed staff to explore a property tax exemption for multiple-unit housing (ORS 307.600-637) as part of the City’s Housing Strategy. Council discussed this exemption and provided direction to staff in several work sessions starting in 2017. Most recently Council provided direction in work sessions in March and May 2023. In this work session, Council will review updated draft program guidelines based on Council direction, feedback from developers, and City Attorney’s Office review. Staff seeks direction on the draft program guidelines and draft code. 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. M E M O R A N D U M City of Springfield Date: 10/23/2023 To: Nancy Newton COUNCIL From: Katie Carroll, Housing Analyst Jeff Paschall, Community Development Director BRIEFING 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. One challenge Springfield faces is a lack of diversity in housing types available in the market. Several multiple-unit housing projects have been built in recent 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 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 has been considering adoption of a property tax exemption to incentivize development of multiple-unit housing in specified transit-served and core areas since 2017. The Housing Diversity Tax Exemption (HDTE) is codified as the multiple-unit property tax exemption (MUPTE) at ORS 307.600-637. Additional background on the tax exemption is available at the end of this packet. Most recently Council provided direction in two spring work sessions on March 13, 2023 and May 1, 2023. In the March meeting, Council directed staff to not cap the amount of total property tax that could be exempted through the program, but to provide an option for Council to do so at any time. Council also confirmed its prior direction on the geographic areas of Springfield which would be eligible for the HDTE. In the May meeting, Council discussed the public benefit aspect of the program and reviewed draft program guidelines. Council directed staff to bring back a longer list of public benefit categories which was less specific. Council said the list should provide applicants with some guidance but give flexibility for developers to bring their own ideas to the City. Additional Input Following the spring work sessions, staff reached out to other impacted taxing districts and to local developers to solicit feedback on the HDTE program. Staff have incorporated feedback into the draft criteria for the program detailed below and in Attachments 2 (Program Guidelines) and 3 (Code). Taxing Districts: The exemption would apply only to the City’s tax levy unless other taxing districts equaling at least 51% of the total combined tax rate support it. Staff from the Springfield School Board and Lane County shared support for the exemption. Willamalane staff have expressed some concern about potential impacts to the district’s revenue from the exemption. Council could address this concern by pausing, changing, or ending the program at any time upon Willamalane’s or another impacted district’s request. MEMORANDUM 10/19/202310/18/2023 Page 2 Staff has planned additional follow up with Willamalane’s board later this year. Staff has not heard back from other taxing districts which represent smaller shares of the levy. Staff will reach out again if the Council moves forward with adoption. Developers: Staff solicited input from eight local developers on the HDTE and received feedback from six. Themes that emerged from these conversations include: • Certainty: Developers want a program that is clear and offers certainty about requirements that must be met for approval. • Efficiency: An approval process which is quick and relatively simple for applicants is critical. • Flexibility: Developers like having a variety of options to meet program requirements. Some may be more interested in a prescriptive approval path, and others in an open path. DRAFT CRITERIA: Updated draft criteria for the program, which were revised based on input received, additional research, and City Attorney’s Office review are summarized below and further detailed in the draft Program Guidelines (Attachment 2) and draft Code (Attachment 3). Policy considerations which are outlined in this memo are highlighted in the draft code and guidelines in blue. Exemption Length: The City must determine for how many years to offer tax exemptions, with a maximum of ten years allowed by statute. In May, Council members shared multiple opinions on this criterion. Council could uniformly offer exemptions for ten or fewer years or could adopt criteria to determine different exemption lengths on a project-by-project basis. One way to do this would be to require applicants to demonstrate whether their project would not pencil “but-for” the tax exemption. This would require submission and analysis of project pro formas with and without the exemption applied. Recommendation: Uniformly offer tax exemptions for ten years. Do not require applicants to show the project would not pencil “but-for” the exemption. Why: • Certainty o Applicants would know before applying what benefit they could get if approved. This would allow developers to evaluate whether to apply and to build the exemption into a project’s pro forma for planning purposes. o Analysis of pro formas to determine financial need is subjective. Developers have different levels of risk versus return on investment they require to move forward with a project. Pro formas may also shift during a project with changing market conditions and construction costs. • Efficiency o To conduct analyses of pro formas, the City would need to contract with an outside agency which would add onto the administrative burden, as well as the cost and decision timeline for an application. • Offering ten-year exemptions aligns with the practices of other cities with this program which would make Springfield more competitive when developers consider where to build. Offering exemptions for fewer than ten years could result in fewer developers using the program and fewer units being built in Springfield. • Council could put more limitations on the program in the future, including shortening the exemptions offered. MEMORANDUM 10/19/202310/18/2023 Page 3 Stacked Incentives: Council previously directed staff to not allow developers taking advantage of the Springfield Economic Development Agency’s (SEDA) system development charge (SDC) payment assistance to also qualify for the HDTE incentive. Multiple developers requested that the City reconsider this policy choice and allow developers to stack these two incentives. This would only be applicable in the areas of Downtown where the boundaries of the urban renewal district and the HDTE overlap. Recommendation: Allow developers receiving SDC payment assistance from SEDA to be eligible for the HDTE conditionally – to qualify for a tax exemption, projects would need to reach a height of four or more stories. Why: • Certainty o Basing the conditional allowance of stacked incentives on the number of stories in the development is a simple way for developers to evaluate potential eligibility for both incentives and determine whether to apply for the tax exemption. • Staff previously recommended not allowing these incentives to be stacked. Current market conditions are a barrier to higher density development Downtown. Conditionally allowing incentive stacking can help address the high costs developers are facing so more development can occur Downtown. • Basing this criterion on building stories recognizes the higher price tag for mid- and high-rise development, providing more tools for developers trying to make these types of projects pencil. • Apart from the Royal Building (which benefitted from the Vertical Housing Tax Exemption and various affordable housing subsidies) and the in-progress Rivett development, Downtown is mainly one- and two-story development. Encouraging denser development would address the Downtown Refinement Plan’s goal to revitalize the Downtown with new uses by encouraging high-density uses near transit. • Denser development Downtown would also mean higher value development and more long-term revenue for the urban renewal district. Public Benefit Structure: By statute, to qualify for an exemption a developer must provide one or more public benefits as part of the project. In May, Council reviewed initial staff recommendations for this aspect of the program. Council directed staff to make the public benefit requirement more open and flexible to allow developers to come to the City with ideas. Over the summer, staff spoke with developers who expressed interest in having multiple options to meet this requirement, including a clear and objective pathway to approval. Recommendation: Offer three options for developers to choose from to meet the public benefit requirement. OPTION 1: CLEAR AND OBJECTIVE CRITERIA This option would be for developers interested in a prescriptive approval pathway. Developers would pick public benefits from a list with clear minimum thresholds for meeting the requirement. Developers would be required to include two public benefits if at least one of those met the List A requirements or would be required to include three public benefits if all public benefits met List B requirements. List B items are generally lower cost and/or lower effort items than List A items. This option is similar to what Council reviewed in its May work session, but the list of benefit categories has been refined. At its May meeting, Council expressed interest in including a longer list of public benefit categories. For this draft, the benefit categories for which staff was able to identify clear and objective criteria were included in OPTION 1. Benefit categories that did not lend themselves to a clear and objective review were included in OPTION 3 (see below). MEMORANDUM 10/19/202310/18/2023 Page 4 OPTION 1 PUBLIC BENEFIT OPTIONS Category List A Criteria List B Criteria Amenities Supporting Bicyclists and Pedestrians ✓ ✓ Units Accessible to a Range of Household Sizes ✓ Affordable Housing ✓ ✓ Amenities Supporting Mass Transit Use ✓ ✓ Dedication of Land or Easement for Public Purpose ✓ Electric Vehicle and Micro-mobility Charging ✓ ✓ Offsite ADA Accessibility ✓ ✓ Accessible Units ✓ Child Care Center ✓ Energy Efficiency/Green Building ✓ ✓ Development or Redevelopment of Underutilized Property ✓ ✓ Community Spaces ✓ Moderate Income Housing ✓ ✓ OPTION 2: FEE-IN-LIEU FOR ADA ACCESSIBILITY This option would be available for developers interested in an alternative to including a public benefit in their project. The developer would pay a fee to City which would be reserved for completing infrastructure projects that increase ADA accessibility, such as curb ramps, in HDTE program areas. These projects are already identified in the City’s Capital Improvement Program. The fee would effectively reduce the total benefit received by 10% and could be paid upfront with a discount or annually beginning in the third year of the exemption to allow time for project stabilization. This option is similar to how the City of Eugene has structured one of the public benefit requirements for its exemption program. Why OPTION 1 and OPTION 2: • Certainty o Both Option 1 and 2 address feedback from developers that there should be a prescriptive path for meeting the public benefit requirement. o Having clear and objective criteria would allow a developer to evaluate the likelihood of being granted an exemption before applying. o Clear and objective criteria would also give developers more confidence to invest in plans and concept renderings which integrate public benefits they know are likely to be approved. • Efficiency o Applications submitted under Option 1 and 2 would be straightforward to evaluate, so could be reviewed more quickly with lower administrative effort. This addresses developers’ interest in having a streamlined evaluation process. o Option 2 would require minimal additional staff time to administer as the City has already identified needed accessibility upgrades and has a process in place to complete those. o Clear and objective criteria would reduce the need for a back and forth between the City and applicants to determine what would adequately address the public benefit requirement, offering time and money savings to developers completing applications. MEMORANDUM 10/19/202310/18/2023 Page 5 OPTION 3: COUNCIL PROPOSAL This option would allow developers to propose their own ideas for public benefits to include in the project. The Program Guidelines (Attachment 2) include some categories and examples of the types of benefits a developer may want to propose. These categories are carried over from the list of public benefits Council saw in its May work session. A developer could propose benefits within those categories or could put forward something else for consideration as a public benefit. Benefit categories listed as examples under Option 3 in the draft program guidelines include: OPTION 3 PUBLIC BENEFIT OPTIONS Accessibility Features Energy Efficiency and Green Building Special Architectural Features Community Spaces Tenant Amenities Structured Parking Disaster Resiliency Innovative Material Use/Re-Use Other Developer Proposal Extra Costs Associated with Infill and Redevelopment Public Art Why OPTION 3: • Flexibility o Option 3 responds to direction from Council and interest from developers in having a flexible and open option for meeting program requirements. o The draft program guidelines include discretionary evaluation criteria for Council to use in determining whether an applicant’s proposal is sufficient. The criteria give Council latitude to accept creative public benefit ideas, while ensuring those benefits meet minimum program standards. Approval Authority: In past work sessions, staff shared that Council must review and rule on every application for exemption. However, during the most recent legislative session, a bill passed (House Bill 2080) which changed the requirements for this tax exemption so that Council is no longer required to approve each application. Recommendation: Staff recommends delegating approval authority for this program to the City Manager or designee for applications meeting clear and objective criteria (public benefit OPTION 1 and OPTION 2). The draft Guidelines and draft Code (Attachments 2 and 3) require all applicants to attend a pre- application meeting before submitting an application to discuss preliminary plans for the project and meeting the public benefit requirements, and to get staff feedback to assist with preparing a complete application. Staff recommends that Council delegate approval authority to the City Manager or designee to rule on those HDTE applications which meet clear and objective criteria (public benefit OPTIONS 1 and 2), and that Council review and rule on discretionary applications (public benefit OPTION 3). Under staff’s recommendation, the approval pathways would be: MEMORANDUM 10/19/202310/18/2023 Page 6 Why: • Efficiency o Delegating approval authority for applications meeting clear and objective criteria would reduce the decision timeline for those applications and allow developers to avoid potential delays to moving forward with a project (for example if an application was received during Council recess). o Allowing staff to rule on applications meeting those criteria would reduce the administrative burden to run the program. Council would not see projects meeting clear and objective criteria before they were approved for an exemption, but staff could keep Council updated on the program’s effectiveness with communication packet memos upon granting an exemption or by providing Council with an annual report. Exemption for Parking: The City could choose to limit the tax exemption to multiple-unit housing, or it could choose to also include onsite parking for the housing in the exemption (see Attachment 3, section 3.558(2)). The City will soon no longer have onsite parking requirements anywhere in the City as part of complying with the Climate Friendly Equitable Communities (CFEC) rules, so including parking in the exemption could potentially incentivize developers to provide it. However, the market may already drive developers to include parking. Excluding parking from the exemption would increase the taxable value of projects granted exemptions. Staff does not have a recommendation on this policy choice. QUESTION: Does Council want to include onsite parking constructed for the multiple-unit housing in the tax exemption? QUESTION: Does Council concur with staff’s policy recommendations for the Housing Diversity Tax Exemption? NEXT STEPS When Council is ready to move forward with the program, staff will return with adoption-ready program guidelines and code incorporating any additional Council direction. The City must hold a public hearing in order to determine whether multiple-unit housing meeting the qualifications laid out in the draft Code and Program Guidelines would not otherwise be built in the designated areas without the benefits provided by the tax exemption. Upon making that finding, the Council would then adopt the program by ordinance. If the Council adopts the HDTE program, the City will seek concurrence for the program from other taxing districts. The City will also need to establish an application fee in coordination with the Lane County Assessor and prepare outreach and application materials. Multiple developers urged the City to be expeditious in implementing this program to help meet housing needs. Notably, Obie Companies has requested this tax exemption as part of their letter of interest to develop City-owned tax lots Downtown (see June 5, 2023 Council agenda item). ADDITIONAL BACKGROUND: The HDTE is a program that the City is permitted to adopt by ORS 307.600-637. While there are many aspects of the program which the City has discretion over, there are certain minimum requirements for the property tax exemption program. Those include: • Must identify a minimum number of units a project must include to be eligible for exemption • Must identify areas where the exemption would be available that are core areas or within ¼ mile of transit • Can offer tax exemptions for a maximum of 10 years MEMORANDUM 10/19/202310/18/2023 Page 7 • Tax exemption does not apply to land • Project must provide public benefit(s) • Transient accommodations are not eligible for an exemption There are at least eight other Oregon cities that have adopted this tax exemption, including Cottage Grove, Eugene, and Florence in Lane County. RECOMMENDED ACTION: Give staff direction on the following questions- 1. Does Council want to include onsite parking constructed for the multiple-unit housing in the tax exemption? 2. Does Council concur with staff’s policy recommendations for the Housing Diversity Tax Exemption? HDTE Program Guidelines 1 Key: Policy Decision Housing Diversity Tax Exemption - City of Springfield Program Guidelines The following standards and guidelines expand on program requirements articulated in the Springfield Municipal Code (SMC) sections 3.550-3.558, and in ORS 307.600-637. Prospective applicants should review both the code requirements and these guidelines before applying. Purpose 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 adopts the Oregon Multiple Unit Property Tax Exemption (MUPTE) 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. Applicants intending to build multiple-unit low-income rental housing projects may be better served by the Low Income Rental Housing Property Tax Exemption (see SMC 3.500 through 3.508). Applicants building multiple-unit housing that meets the definition in SMC 3.552 can apply to receive an exemption of property taxes for a period of ten (10) successive years on residential improvements if program requirements are met. Housing made available for rental or sale of individual units is eligible for the exemption. Eligibility Criteria To be eligible for the exemption, applicants must meet the following minimum criteria: • Applicant has attended a pre-application meeting • Applicant controls (owns or has proof of future ownership) of project site at time of application • Project will add a minimum of five new dwelling units and meet the definition of “Multiple-Unit Housing” in SMC section 3.552 • Project site is located within an eligible program area as shown in SMC section 3.554 • Project will provide public benefits as outlined in these program guidelines • The construction of the project for which the exemption is sought will be completed on or before the date specified in ORS 307.637 • At completion, the project will conform to the requirements of the Springfield Comprehensive Plan, any applicable refinement plans or functional plans, and the Springfield Development Code, in effect at the time the application for this tax exemption is approved • Project must comply with the Springfield Development Code and not rely on any type of statutory exemption or exception HDTE Program Guidelines 2 • Applicants receiving system development charge (SDC) payment assistance from the Springfield Economic Development Agency (SEDA) are not eligible for the tax exemption unless the project will have a height of four or more stories upon completion (includes projects that have ground-floor commercial) • Projects on properties abutting Main Street from 38th Street to Bob Straub Parkway may not include any ground floor residential which faces Main Street. • Projects granted the exemption cannot be designed or used as transient lodging, including but not limited to hotels, motels, AirBnbs, VRBOs, and Short Term Rentals • Projects for which the applicant has already applied for a building permit are not eligible for the exemption Application A complete application must be filed on or before February 1 for consideration of an exemption beginning July 1 of the following 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: • Explanation of why the applicant is requesting the exemption • Preliminary site plans showing major features, including public benefits, as applicable • Legal description of the property • Proof of ownership/site control • Project design elements and planned façade 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 • Proposed number of housing units, including a breakdown of the number of units by unit size • Description and preliminary proof 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. Application fees cover the City and County’s costs for processing the application and 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 1. Before submitting an application, the applicant must attend a pre-application meeting to discuss their plans for meeting the requirements of the program, including provision of public benefits. Materials for the meeting must be submitted at least two weeks in advance. Staff will provide preliminary feedback to assist the applicant in preparing their exemption application. Staff will try to coordinate the pre-application meeting with development review meetings the applicant may schedule where applicable and possible. HDTE Program Guidelines 3 2. A complete application must be submitted by February 1 immediately preceding the first assessment year for which the exemption is requested. Applications are accepted on a rolling basis but applicants are encouraged to coordinate timing with the project’s 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 be the Approval Authority for applications applying for approval under public benefit OPTION 1 or OPTION 2 and will rule on the application within one hundred and eighty days (180) of the City’s receipt of a complete application. Review may require a follow-up meeting with the applicant to clarify or request additional application materials. The Council will be the Approval Authority for applications applying for approval under public benefit OPTION 3. The City Manager or designee will review applications applying for approval under public benefit OPTION 3 and forward a recommendation to the Council to approve, approve with conditions, or deny the application. Review may require a follow-up meeting with the applicant to clarify or request additional application materials. 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. Following approval or denial of an application, the City will provide notice to the applicant and Lane County Assessor as provided in ORS 307.621. Prior to issuance of the Certificate of Occupancy, the applicant may be required to record one or more restrictions or other covenants pertaining to the property that reflects any requirements or conditions required in the application approval. 4. The City may require the applicant to provide verification of the project’s public benefits before issuing the Building Permit and/or Certificate of Occupancy. 5. For approved projects, the City Manager or designee may require submission of an annual report during the exemption period to verify the continuation of public benefits and continued conformance with other eligibility requirements. The project owner will be required to allow on-site inspections for the purposes of verifying that the project remains in compliance with its eligibility requirements. HDTE Program Guidelines 4 Public Benefits In exchange for granting the property tax exemption, the City requires applicants to include public benefits as part of the project. There are three options applicants can choose between to meet the public benefit requirement for the program. OPTION 1: Clear and Objective Criteria The applicant may pick public benefits from the list below to include in the project. The applicant may include two (2) public benefits if at least one benefit is a List A item. The applicant must include three (3) public benefits if all proposed benefits are List B items. These benefits must be in addition to any land use or building code requirements. The City Manager or designee will be the Approval Authority for applications applying under OPTION 1. Benefit List A List B Amenities Supporting Bicyclists and Pedestrians Provide at least one element from the following list: • Raised or signalized pedestrian crossing in excess of any requirements and as approved by the Community Development Department • Street lighting in excess of any requirements (one or more) • Create new sidewalk connections in excess of any requirements (100 feet or more of block length) • Convert existing curbside sidewalk to setback sidewalk in excess of any requirements (100 feet or more of block length) Provide at least one element from the following list: • Striping and signage for pedestrian crossing in excess of any requirements and as approved by the Community Development Department • Create new sidewalk connections in excess of any requirements (50 feet to 99 feet of block length) • Convert existing curbside sidewalk to setback sidewalk in excess of any requirements (50 feet to 99 feet of block length) Applicant must show on site plan at application and include letter of support from the Community Development Department. City to verify prior to issuance of building permit and certificate of occupancy. Units Accessible to a Range of Household Sizes Project provides a mix of unit sizes. To qualify, must provide at least three different unit sizes. At least 10% of the total number of units must be allocated to each of the three unit sizes. Unit sizes include: live/work1, studio, 1 bed, 2 bed, 3 bed, etc. (Round up decimals to the nearest whole number) Applicant must state plan for providing in application. City will verify during building plan review and at certificate of occupancy. Affordable Housing At least 20% of units (only available for 6+ unit projects) are reserved for households with low incomes (at or below 80% AMI) for the duration of the exemption through: • Master lease with non-profit; OR At least 10% of units are reserved for households with low incomes (at or below 80% AMI) for the duration of the exemption through: • Master lease with non-profit; OR 1 Live/work unit is a dwelling unit or sleeping unit in which a significant portion of the space includes a nonresidential use that is operated by the tenant (OSSC 202.1). HDTE Program Guidelines 5 • Housing Choice Voucher; OR • Similar housing subsidy program (Round up decimals to the nearest whole number) • Housing Choice Voucher; OR • Similar housing subsidy program (Round up decimals to the nearest whole number) Applicant must state plan for providing affordable units and include letter of support from sponsoring agency as applicable. Prior to issuance of certificate of occupancy and annually, must submit verification letter, including letter of confirmation from entity issuing vouchers/leases. Amenities Supporting Mass Transit Use • Create new sidewalk to provide connection to a nearby bus stop location in excess of any requirements (100 feet or more of block length) • Installation of bus shelter or enhancement of existing bus shelter Provide at least one element from the following list: • Create new sidewalk to provide connection to a nearby bus stop location in excess of any requirements (50 feet to 99 feet of block length) • Installation and maintenance of trash receptacle at bus stop for duration of exemption Applicant must show on site plan at application and include letter of support from the Community Development Department or Lane Transit District (LTD) as applicable. City to verify prior to certificate of occupancy. Dedication of Land or Easement for Public Purpose Dedication or easement to a public agency on the project site which is not otherwise required, but which serves as a public benefit. Examples of dedications/easements that may be acceptable include: pedestrian or bike access path, park space, utility easements. Applicant must show planned location on site plan and submit a letter of support from the public agency verifying the dedication is sufficient. City to verify legal documentation of easement or dedication prior to certificate of occupancy. EV and Micro- mobility Charging Provide Electric Vehicle (EV) charging stations for a minimum of 40% of parking spaces, and a minimum of 2 EV charging stations. Stations may be limited to residents. (Round up decimals to the nearest whole number) Provide micro-mobility charging stations with locking which are accessible to the public. A minimum of 1 space for every 5 units is required with a maximum of 5 spaces required. (Round up decimals to the nearest whole number) Applicant must show on site plan at application. City to verify at building permit and prior to certificate of occupancy. Must annually submit report verifying still in use. Offsite ADA Accessibility Create ADA accessible path from front entrance of building to nearest transit stop in excess of any requirements. This could include curb improvements and/or sidewalk panel replacement. Replace existing broken or deteriorated sidewalk to help make ADA connections offsite for a minimum of one block face in excess of any requirements. Applicant must show on site plan at application and include letter of support from the Community Development Department. City to verify prior to certificate of occupancy. HDTE Program Guidelines 6 Accessible Units2 Where Type A units are required, increase 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 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). Applicant must explain plan for meeting requirement. City will verify during building plan review and prior to certificate of occupancy . Child Care Center3 Provide Child Care Center onsite. The center may be limited to residents or open more broadly. The applicant must demonstrate how the center will be provided for the duration of the exemption. Applicant must show location of child care center on site and building plans plan and demonstrate that code requirements for facility are met. Applicant should identify the care provider if available. City to verify prior to certificate of occupancy. Must annually submit copy of certification of child care center. Energy Efficiency/Green Building Project will comply with one of the following certification programs: • Energy Trust New Building Path to Net Zero • LEED Platinum • Earth Advantage Platinum or higher • Similar energy certification (applicant will be required to justify how program is similar to one of the above) Project will comply with an energy certification programs: • Energy Trust of Oregon New Building Whole Building • Energy Trust Multifamily Market Solutions Best • LEED Silver or higher • Earth Advantage Silver or higher • Similar energy certification (applicant will be required to justify how program is similar to one of the above) Applicant must show some level of coordination with the certifying agency in application. City to verify prior to issuance of building permit and certificate of occupancy. Development or Redevelopment of Underutilized Property Project meets all of the following criteria: • Aggregate development site is at least 0.5 acre. • Project will increase residential density to at least 40% above minimum density requirement for the site or 40% above current density, whichever is greater. Projects that hit maximum allowable density also qualify. • Project must not permanently displace any existing residents or businesses. Project meets all of the following criteria: • Aggregate development site is at least 0.25 acre. • Project will increase residential density to at least 40% above minimum density requirement for the site or 40% above current density, whichever is greater. Projects that hit maximum allowable density also qualify. • Project must not permanently displace any existing residents or businesses. 2 The terms Type A and Type B are defined in the Oregon Structural Specialty Code. 3 Child care center is defined in ORS 329A.440. HDTE Program Guidelines 7 Applicant must demonstrate how requirement is met in application. If there are existing residents or businesses that are temporarily displaced, applicant must demonstrate return of those residents/businesses after completion of project. Community Spaces Project includes at least one of the following community spaces which will be open to the public free of charge for at least 30 hours per week for the duration of the exemption. • Community garden with seating • Public plaza or park with seating • Common meeting rooms (can be open to public by reservation) • Rooftop gardens with seating • Playground • Facilities for cultural groups, youths, or seniors Applicant must show facility on site plan and explain how facility will meet requirements for public access. City to verify prior to certificate of occupancy. Must annually submit report verifying still in use. Moderate Income Housing At least 30% of units are reserved at prices affordable to households with moderate incomes (at or below 100% AMI) for the duration of the exemption. Required maximum rent levels to be calculated annually by City. (Round up decimals to the nearest whole number) At least 15% of units are reserved at prices affordable to households with moderate incomes (at or below 100% AMI) for the duration of the exemption. Required maximum rent levels to be calculated annually by City. (Round up decimals to the nearest whole number) Applicant must complete moderate income housing worksheet with application and submit proposed rental or sales prices. Prior to issuance of certificate of occupancy and annually, must submit rent rolls to verify moderate income units. OPTION 2: Fee-in-Lieu for ADA Accessibility The applicant may pay a fee in lieu of including a public benefit in the project which will be dedicated to completing infrastructure projects in HDTE program areas that increase ADA accessibility for the community. The fee will be 10% of the total HDTE tax exemption. Project owners can pay the fee annually during years three through ten of the exemption or may pay upfront with a 5% discount. The City Manager or designee will be the Approval Authority for applications applying under OPTION 2. OPTION 3: Council Proposal The applicant may choose to propose one or more public benefits to include in the project which do not meet the clear and objective criteria listed under OPTION 1. These benefits may be of a HDTE Program Guidelines 8 similar nature to those listed under OPTION 1 or may be other public benefits that are consistent with ORS 307.600 through 307.637. The burden is on the applicants to explain how the benefit(s) they have proposed meet the program’s requirements. The City reserves the right to exercise discretion in determining whether the proposed public benefits are appropriate for the site and if program requirements have been sufficiently met. The applicant must explain how the proposed benefit(s) further adopted City policies (if any) and demonstrate how they will certify to the City that the public benefit is included in the project. If any other public agencies will be impacted, the applicant should include a letter of support for the benefit from the relevant agency. In most cases, proposed benefit(s) should go above and beyond development requirements. Exceptions should be rare and require justification from the applicant. The Council will be the Approval Authority for applications applying under OPTION 3. Examples of public benefits an applicant may wish to propose include: • Accessibility Features: This may include dwelling units and/or communities designed to allow for aging in place and/or to meet mobility needs. It could also include other accessibility retrofits and upgrades not otherwise required by code. • Community Spaces: Community spaces are locations where people can gather and spend ample time building community. This may include recreation facilities or other community-serving facilities. These may be limited to residents or paying customers if Council finds the proposal provides a sufficient public benefit. • Disaster Resiliency: This may include building to an acceptable above-minimum seismic code standard, building to an acceptable flood standard within the 42nd Street levee impact area, including resilient community spaces (e.g. warming/cooling or cleaner air spaces, emergency food/water supplies), or including emergency shelter space. • Extra Costs Associated with Infill and Redevelopment: This may include development costs that go well beyond the regular cost of development, such as brownfield site remediation, high costs for offsite construction staging, or significant installation or replacement of infrastructure. The applicant should demonstrate the additional cost and include a comparative basis to show how the costs go beyond typical development costs. • Energy Efficiency and Green Building: This may include features such as a significant portion of the building’s energy being provided by renewable energy, reuse of grey water, green roofs, and other similar features. • Tenant amenities: This may include features such as broadband internet connection, and in-unit A/C. • Innovative Material Use/Re-Use: This may include preservation of a building shell or façade of an existing significant or historic building. It could also include significant use of innovative construction materials or techniques such as mass timber, 3D printing, or straw bales. HDTE Program Guidelines 9 • Public Art: Public art may include the installation of sculptures, murals, or other forms of public art. It may also include galleries or performance venues. • Special Architectural Features: Special architectural features could include extraordinary material use, outstanding architectural design, restoration of missing historical features based on photographic evidence, or similar. • Structured Parking: This may include providing parking for some or all units in a parking structure or as tuck-under parking to address parking needs while helping to create a dense urban form. The criteria used by Council to weigh public benefits proposed under OPTION 3 are: • The proposed public benefit(s) will provide a benefit to the public which is proportional to the exemption requested; and • The public benefit(s) goes above and beyond development requirements, or the applicant has made a compelling argument for an exception; and • The public benefit(s) will extend for at least the duration of exemption; and • The public benefit(s) will be included as part of the construction of the project; and • Staff will be able to verify on-going compliance without notable increase to workload Monitoring After a project is approved for the exemption, the project owner must continue to comply with program requirements for the duration of the exemption. The owner of a property receiving the HDTE may be required to submit a report annually to the City and must allow on-site inspections verifying the continuation of all conditions of approval, including 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, SMC section 3.550-558, or the program guidelines are not being met, or any condition of approval is not being or has not been complied with, the City shall give notice to the property owner and any known lender 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 307.627, and ORS 307.631. Extension HDTE Program Guidelines 10 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. 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. 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. 1 Key: Policy Decision CHAPTER 3 Public Improvements HOUSING DIVERSITY TAX EXEMPTION 3.550 Housing Diversity Tax Exemption (HDTE) – State Statutes Adopted The provisions of the Multiple Unit Property Tax Exemption (MUPTE) in ORS 307.600 through 307.637 are hereby adopted to stimulate the creation of multiple-unit housing through new construction, addition, or conversion in core and transit-supported areas of the City as designated in these sections 3.550 through 3.558. 3.552 Definitions For the purposes of the Housing Diversity Tax Exemption code in sections 3.550 through 3.558, the following definitions apply. Where the definitions in this section conflict with a definition provided in ORS 307.603, the definition in this section will prevail. Unless specifically defined below or in ORS 307.603, words or phrases used in the Housing Diversity Tax Exemption code must be interpreted so as to give them the meaning they have in common usage. Approval Authority. The individual or public body with authority to make a final decision on an application under the provisions of sections 3.550 through 3.558 of this code and the Program Guidelines: specifically, the City Manager or Council. Multiple-Unit Housing. Newly constructed structures, stories, or other additions to existing structures and structures converted in whole or in part from other use to housing, where the structure has a minimum of five new dwelling units, excluding cottage clusters. Program Guidelines. The standards and guidelines for this program as adopted by resolution of the Council. Project. The proposed construction, addition, or conversion of multiple-unit housing for which applicant is applying for a tax exemption under this section. Transient Lodging. As defined in section 7.700 of this code. 3.554 Application Criteria (1) The Approval Authority may approve an application under this section if it finds that the project meets the following criteria: (a) The applicant has attended a pre-application meeting; (b) The applicant has site control at time of application; (c) The project is for multiple-unit housing that will add a minimum of five new dwelling units; (d) The project will be located within an eligible program area as shown in Figures 1 through 4 of this section; (e) The project will include public benefits that comply with the requirements of the program guidelines; (f) The project will be completed on or before the date specified in ORS 307.637; (g) At completion, project will conform to the requirements of the Springfield Comprehensive Plan, any applicable refinement plans or functional plans, and the Springfield Development Code, in effect at the time the application under this section is approved; 2 (h) The project cannot be designed or used as transient lodging; and (i) The project will conform with any additional criteria provided in the program guidelines. Figure 1 Figure 2 3 Figure 3 Figure 4 3.556 Application Review (1) Prior to submission of an application, the applicant must attend a pre-application meeting. 4 (2) Applications must be submitted to the City Manager or designee as provided in ORS 307.615 and the program guidelines, on a form prescribed by the City Manager or designee. Complete applications must be submitted by February 1 immediately preceding the first assessment year for which the exemption is requested and must be accompanied by the application fee as established by Council resolution. Applications will not be considered complete until all required information and the application fee have been received. (3) The Approval Authority will review a complete application and make a final decision to approve, approve with conditions, or deny the application. An application not acted upon within 180 days of the date the complete application was received by the City, will be deemed approved. (4) Following approval or denial of an application, the City will provide notice to the applicant and Lane County Assessor as provided in ORS 307.621. 3.558 Exemption (1) Multiple-unit housing that is granted an exemption under sections 3.550 through 3.558 and ORS 307.600 through 307.637 will be exempt from ad valorem taxation for 10 successive years. The first year of exemption is the assessment year beginning January 1 immediately following the calendar year in which construction, addition, or conversion 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 exemption. (2) The exemption does not include the land or any improvements which are not part of the multiple-unit housing included in the project. Onsite parking constructed for the multiple-unit housing [is / is not] exempted. In the case of a structure to which 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 of dwelling units for the project may be exempt from taxation. Exemptions run with the property and will continue if the property is sold during its exemption period. (3) At any time, the Council may, by resolution, set a limit on the maximum amount of foregone tax revenue provided as a benefit of the exemption under this section. Provided, however, the maximum amount of foregone tax revenue shall not apply to any decrease or limit the amount of any exemption that was approved before the date a resolution is adopted under this subsection. Housing Diversity Tax Exemption ORS 307.600 -637 Background ▪Incentivize new multiple-unit housing ▪Help projects pencil ▪City identifies eligible areas (transit-served) Recent Council Direction ▪March 13 work session ▪Do not cap program ▪Confirmed eligible areas ▪May 1 work session ▪Public benefits-flexibility, developer proposals ▪Further discussion on number of years to exempt Outreach ▪Taxing Districts ▪Springfield School District, Lane County, Willamalane, Lane Education Service District, LCC, Upper Willamette Soil and Water, SEDA ▪Developers ✓Certainty:Clear requirements ✓Efficiency: Simple and quick process ✓Flexibility: Different options for meeting requirements DRAFT CRITERIA Exemption Length ▪Max 10 years: uniform or variable with criteria ▪Recommendation: Uniformly offer for 10 years, do not require a “but-for” analysis ▪Why: ✓Certainty ✓Efficiency ✓Comparability with other cities ✓Can limit in future Stacked Incentives ▪Applicable Downtown where urban renewal district and tax exemption overlap ▪Recommendation: Allow conditional stacking of SEDA SDC payment and HDTE →4+ stories ▪Why ✓Certainty ✓High development costs ✓More density and revenue Public Benefit Structure ▪Must provide 1+ benefits as part of project ▪Recommendation: Offer 3 options for developers to choose to meet requirement ▪Options: 1.Clear and Objective Criteria 2.Fee-in-Lieu for ADA Accessibility 3.Council Proposal OPTION 1 –Clear and Objective Criteria ▪Pick 2 if one item is List A or pick 3 ▪Why: ✓Certainty ▪Evaluate before applying ▪Help project planning ✓Efficiency ▪Low administrative effort ▪Quick turnaround OPTION 2 –Fee-in-Lieu ▪Alternative to including in project ▪Pay into City’s ADA fund for accessibility infrastructure projects in project areas ▪In Capital Improvement Program ▪Total of 10% of benefit –Paid starting year 3, discount for upfront ▪Why ✓Certainty ✓Efficiency ▪Projects already identified OPTION 3 –Council Proposal ▪Developer proposes public benefit ▪Guidelines give ideas: ▪Developer can propose something not listed ▪Why: ✓Flexibility Approval Authority ▪Change in law-Council does not need to rule on applications ▪Recommendation: Delegate approval authority to City Manager or designee for applications meeting clear and objective criteria (public benefit OPTION 1 & 2) Approval Authority ▪Why: ✓Efficiency ▪Avoid delays ▪Reduce administrative burden ✓Staff can update Council Exemption for Parking ▪Can limit exemption to housing or include onsite parking ▪CFEC implementation will remove parking requirements ▪Market may provide QUESTION FOR COUNCIL Does Council want to include onsite parking constructed for the multiple-unit housing in the tax exemption? QUESTION FOR COUNCIL Does Council concur with staff’s policy recommendations for the tax exemption? Next Steps ▪Public hearing to adopt program by ordinance ▪Seek concurrence from other taxing districts ▪Establish application fee with Lane County Assessor ▪Outreach and application materials