To be eligible for the SDC Exemption Program, the applicant must have site control and the proposed development must meet the following affordability requirements (per Title 30.01 – Affordable Housing Preservation, Chapter 30.01.095):
- Developments must serve households earning at or below 60% of the Area Median Income (AMI) adjusted for household size with a maximum debt burden of 30% for a 60-year period.
- If a proposed rental housing development has units which do not meet the above requirements or includes a commercial component, the actual exemptions will be prorated as applicable to the residential portion of the development subject to the affordable housing restrictions.
- Developments must serve households at or below 100% of the Area Median Income (AMI) for a family of four (currently $74,700 and adjusted annually; adjusted upward for households of more than four people)
- Units must sell for less than the price cap provided by City Code, Section 3.102.090 D (2017 price cap is $350,000)
- Sales must be arm's length transactions. An arm’s length transaction is one in which the buyer and seller act independently and have no relationship (by blood, marriage or unrelated business dealings) to each other. An arm’s length transaction will be fair and equitable to all parties and will result in a fair market price.
- Units must sell to homebuyers who will occupy the homes as the initial occupants. Properties receiving homeownership exemptions may not be rented.
The Portland Housing Bureau (PHB) requires the applicant to comply with the terms and conditions outlined in their recorded Regulatory Agreement (view sample Rental or Homeownership Regulatory Agreement). The compliance requirements differ depending on the type of development as follows:
- Rental Projects: PHB’s Asset Management Department conducts annual audits of each project receiving SDC exemptions. Project Sponsors must certify tenant incomes and rents annually through the Web Compliance Management System (WCMS). See PHB’s Asset Management guidelines.
- Homeownership Projects: In order to prove the property is being sold to an income eligible homebuyer who will occupy the property, PHB must receive a Homebuyer Compliance Verification Form along with supporting documentation (see page two of the form) prior to the sale of the property. Income is evaluated based on a homebuyer’s current annualized income. In the event that the property is being sold to an ineligible homebuyer or over the sale price cap, the developer must repay the exempted SDCs plus interest and fees to the city of Portland SDC Bureaus.
Process Steps for Homeownership Project Compliance Requirements:
Homebuyer completes and signs the Homebuyer Compliance Verification Form and submits it along with supporting income documentation to PHB for review prior to the sale of the property. Generally the escrow officer handling the closing will help facilitate this step.
Escrow officer completes and faxes or emails PHB a completed Homebuyer Compliance Verification Form and supporting documentation to request a demand statement prior to closing. If it is known that the homebuyer will not meet the requirements, the escrow officer submits an SDC Demand Statement Request.
PHB reviews the forms and supporting documents within 10 business days and then emails a demand statement to escrow disclosing whether or not the homebuyer meets the affordability requirements and indicating if any repayments are due.* PHB demand statements are valid for 45 days.
The escrow officer collects and pays the applicable amounts of any repayments due.
Once PHB receives proof that the SDC Bureaus have been repaid and/or the property has sold to the verified homebuyer for $350,000 or less, PHB records a Release Agreement and the SDC Exemption Program requirements are released.
*Please note: The amount exempted in the Regulatory Agreement is an estimate only; do not use this figure to calculate repayments. Only a Demand Statement from PHB will list the correct repayment amounts. Any repayments due in the case of non-compliance will be charged a $250 processing fee by PHB and by each bureau requiring repayments. Repayments will be due based on the rate that was in effect at the time the complete building permit application was submitted, plus interest (currently 5.2%, based on the city’s interim rate effective as of July 1, 2014).