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ENB-20.01 - Limit on Cumulative Value of New Projects Applied for Under Tax Exemption Program

LIMIT ON CUMULATIVE VALUE OF NEW PROJECTS APPLIED FOR UNDER TAX EXEMPTION PROGRAM
Binding City Policy
BCP-ENB-20.01
 

PURPOSE
 
WHEREAS, the City adopted the New Transit Supportive Residential or Mixed Use Development (TOD) tax exemption program in 1996 to encourage new high-density housing near light rail station areas and other transit-oriented areas such as Town Centers and Main Streets designated to accommodate housing and job growth; and
 
WHEREAS, the TOD program is one of two tax exemption programs that provide an incentive for high-density residential and mixed-use development in areas of the City with good transit service, and the other is the New Multiple-Unit Housing program that was available in the Central City and urban renewal areas; and
 
WHEREAS, City Council directed staff not to accept new applications under the New Multiple-Unit Housing program for a six-month period by passing Ordinance 179693 on October 19, 2005.
 
WHEREAS, one of the concerns that City Council has about the New Multiple-Unit Housing program and the City’s other tax exemption programs is the amount of property tax revenue foregone to the City and other taxing jurisdictions due to the granting of limited tax exemptions; and
 
WHEREAS, City Council adopted Ordinance 180327 on July 19,2006, which extended the directive not to accept new applications under the New Multiple-Unit Housing program, unless the applications are for projects that are 100 percent affordable to households at or below 60 percent area median income, until December 31, 2007, and further directed City staff to come back to City Council with changes to the TOD program; and
 
WHEREAS, City staff prepared a proposal for the Planning Commission that changed the TOD program’s requirements to reflect current Planning Commission and City Council housing and sustainability priorities; and
 
WHEREAS, the proposal for Planning Commission also included changes to the TOD program’s boundaries that included some light rail station and other transit-oriented areas outside the Central City that were formerly covered by the New Multiple-Unit Housing program; and
 
WHEREAS, the Planning Commission held a hearing on June 27, 2006, on the TOD boundary and program changes and approved them for recommendation to City Council after making some revisions; and
 
WHEREAS, City staff proposes an annual limit on the cumulative improvement value of new projects applying for the TOD program that is not included in the Planning Commission recommendation; and

WHEREAS, this annual cumulative limit will provide guidance to developers, staff and the Planning Commission; and
 
WHEREAS, the annual cumulative limit on the improvement value of new projects will limit the amount of revenue foregone due to tax exemptions as land is still taxed on projects with the TOD tax exemption; and
 
WHEREAS, the amount of the annual cumulative limit is to be determined by City Council every three years; and
 
WHEREAS, staff proposes an annual cumulative limit of $20 million for the first three years; and
 
WHEREAS, staff bases this proposal on the average annual cumulative real market improvement value of TOD projects that have been added to the program each year of about $10 million; and
 
WHEREAS, staff proposes a limit that is double the average annual TOD program amount because some individual TOD projects have had improvement values of close to $20 million; and
 
WHEREAS, the boundary changes recommended by the Planning Commission will result in a net increase of acreage over the area included under the current boundaries and may result in more applications for the program and greater than the $10 million average increase in exempted improvement value due to new TOD projects; and
 
WHEREAS, the TOD projects approved for tax exemption in the mid-1990s will start expiring in 2007 so that the total exempted improvement value of all TOD projects may not increase every year due to TOD tax exemption expirations.
 

POLICY
 
NOW, THEREFORE, BE IT RESOLVED, that the City Council directs the Portland Development Commission and the Planning Bureau staff to come to Council at least every three years with a proposal for an annual cumulative limit on the estimated real market improvement value of all new TOD projects; and
 
BE IT FURTHER RESOLVED, that City Council directs the Portland Development Commission and Planning Bureau staff not to accept new TOD applications that exceed an annual cumulative limit of $20 million in real market improvement value for the first three Tax Years of 2006-2007 through 2009-2010, effective January 1, 2007; and
 
BE IT FURTHER RESOLVED, that Portland Development Commission staff will advise applicants for the TOD tax exemption about the eligibility of projects for the program in particular years due to the maximum improvement value limit, and
 
BE IT FURTHER RESOLVED, that this resolution is a Binding City Policy and this resolution shall be placed in the Portland Policy Documents.
 

HISTORY
 
Resolution No. 36453 adopted by City Council November 1, 2006.