1. Timing of Application
Applications for tax exemption must be submitted and approved prior to application for the project’s building permit.
2. Qualified Applicant
Applicant must own or have site control of the project site.
3. Eligible Areas
Projects must be located within MULTE Program Eligibility Areas -- identified Designated Plan Areas/Metro 2040 Centers, within a quarter mile radius of Max Station Areas, or within a quarter mile from either Metro 2040 Main Streets with Transit Service or Metro 2040 Corridors with Frequent Transit Service within the City of Portland.
4. Eligible Project Types
Projects must be proposed construction, additions to existing structures or conversion of existing non-residential property to housing. Both rental and for-sale condo or townhome projects with at least 10 units are eligible to apply.
The project must not be designed or used as transient accommodation, including but not limited to hotels and motels.
Existing multiple-unit housing projects which are currently or will become subject to a low-income housing assistance contract with an agency or subdivision of Oregon or the United States are eligible to apply through the competitive process to receive an exemption in order to preserve or establish existing housing that is affordable to low income persons.
Projects must have at least 10 units with a minimum density of 35 units per net acre of site area (residential only) or at least 10 units with a minimum density of 20 units per net acre of site area (mixed use with ground floor commercial space) and at least two times the amount of residential floor area to non-residential floor area; home ownership projects are exempt from this requirement.
6. Rental Project Financial Need and Affordability
Analysis of the project pro forma must establish that the project would not otherwise be financially feasible without the benefit provided by the property tax exemption and that the anticipated rate of return for the project for the period of the exemption will not exceed 10 percent.
During the term of the exemption, a minimum of 20 percent of the number of units must be affordable to households earning 60 percent or less of the area median family income (MFI) upon initial occupancy of the unit by that household. In high cost market areas a project may propose 20 percent of the number of units affordable to households earning 80% or less of the area median family income (MFI) based on the market for similar units in the same geographic area supported by a market study.
Measurement of household income shall be determined using the area median family income (MFI) for one person (for a studio apartment), two persons (for a one-bedroom apartment), three persons (for a two-bedroom apartment), or four persons (for a three-bedroom apartment). Affordability shall be defined as a rental rate which does not exceed 30 percent of the monthly gross income including allowances for utilities (rent burden).
Affordable units must be distributed evenly amongst unit mix (bedroom sizes). Projects must maintain the same unit distribution of affordable units during the exemption period but individual units do not need to be designated.
7. For-Sale Project Financial Need and Affordability
Units receiving tax exemption must be sold to homebuyers meeting the affordability requirements and who will occupy the property as their primary residence. Homebuyers must earn no more than 100% area median family income (MFI) for a family of four -- currently $69,400, adjusted upward for households larger than 4 persons.
The property must sell for less than the sale price cap established annually by PHB – no more than 120 percent of the annual median sale price – currently $291,000.
8. MWESB Goals
Applicants must provide a plan to meet PHB’s business equity goals for participation of Minority, Women, and Emerging Small Businesses (MWESB) in professional services and construction contracting and City Workforce Training and Hiring Program goals.
9. Marketing Plan
Applicants must submit a Marketing Plan that describes elements including but not limited to engaging community stakeholders, the use of gathering and commercial space in the project, and outreach to a target audience.
10. Neighborhood Contact
Applicants are required to participate in the Neighborhood Contact process prior to applying for the building permit and tax exemption program. The Neighborhood Contact process provides a setting for the applicant and neighborhood residents to discuss a proposed project in an informal manner. By sharing information and concerns during the application process, all involved have the opportunity to identify ways to improve a proposed project, and to resolve conflicts before the tax exemption is approved.
11. Green Building
The project must be built to meet healthy and resource efficient environmental building standards. The applicant must certify in the application to build the project using one of the following standards:
- Register and certify at the silver level for US Green Building Council’s Leadership and Energy in Environmental Design (LEED);
- Register and certify at the silver level for Earth Advantage Multifamily;
- Build to meet Oregon’s Reach Code for Commercial or Residential Buildings; or
- Comply and certify for Enterprise Green Communities’ criteria for affordable housing.
Certification must be submitted to PHB with the first year’s financial document submission. If the project is not built to meet one of the standards, the exemption will be terminated.
12. Pedestrian Connection
The project must provide a pedestrian connection and be physically or functionally related to and enhance the effectiveness of a light rail line or mass transportation system.
Pedestrian connection means a continuous, unobstructed, reasonably direct route between two points that is intended and suitable for pedestrian use. Pedestrian connections include but are not limited to sidewalks, walkways, stairways and pedestrian bridges. On developed parcels, pedestrian connections are generally hard surfaced. In parks and natural areas, pedestrian connections may be soft-surfaced pathways. On undeveloped parcels and parcels intended for redevelopment, pedestrian connection may also include rights-of-way or easements for future pedestrian improvements.
13. Commercial Portions of a Project
For exemption of the commercial portion of a mixed use development, the developer must demonstrate through community engagement and/or a market analysis that the commercial space meets a community identified need for a good or service that is not currently available within walking distance, does not compete with a similar established business within walking distance, and advances Portland Development Commission’s (PDC) Neighborhood Economic Development Goals.
The exemption may include parking constructed as part of the multiple-unit housing construction, addition or conversion; any parking available shall not be required as payable rent.
15. Extensions for low income housing
Extensions beyond the ten year exemption period will be granted only for projects subject to a low income housing assistance contract with an agency or subdivision of Oregon or the United States.
Applications for extensions must be submitted under the same application timeline as new applications prior to the exemption expiring. Extensions may be granted only for the portion of units which meet the affordability requirements through June 30 of the tax year during which the termination date of the low income housing assistance contract falls. Projects that propose to make changes to the affordability mix must reapply through the competitive process.
16. Additional Application Materials
Please see the attached checklist of additional application requirements which must be part of the application submission.