During the exemption period, property owners are still responsible for payment of the taxes on the assessed value of the land and any commercial portions of the project, except for those commercial improvements deemed a public benefit and approved for the exemption. The value of the exemption cannot exceed 100 percent of the real market value. In the case of a structure converted in whole or in part from other uses to multiple-family, only the increase in value attributed to the conversion is eligible for the exemption. The property is reassessed when the exemption is either terminated for noncompliance or expires after the ten years, and owners begin paying full property taxes.
Timing of Application – Applications for tax exemption must be submitted and approved prior to approval and issuance of the project’s building permit.
Qualified Applicant – Applicant must own or have site control of the project site.
Eligible areas – Projects must be within the area identified on the MULTE Program Map - within identified Designated Plan Areas/Metro 2040 Centers, within a half 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.
Eligible project types – Projects must be proposed construction, additions to existing structures or conversion of existing non-residential property to housing.
Projects must have at least ten units with a minimum density of 35 units per net acre of site area (residential only); or at least ten 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 the density requirement.
A row-house or townhouse development containing for-sale or rental units is eligible as long as all other eligibility criteria are met.
The project must not be designed or used as transient accommodation, including but not limited to hotels and motels.
Accessibility – At least 5% of units in the project will be built to be adaptable to fully ADA accessibility.
Pedestrian connection – The project must provide pedestrian design elements according to ORS 307.618 (1) (a) and be physically or functionally related to and enhance the effectiveness of a light rail line or mass transportation system.
Pedestrian design elements include continuous, unobstructed, reasonably direct route between two points that is intended and suitable for pedestrian use. Examples are 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.
Financial need – The project pro forma must show that the property tax exemption is necessary for the project to provide affordability.
Project affordability – During the term of the exemption, a minimum of 20% of the number of units must be affordable to households earning 60% or less of the area median family income (MFI), or to households earning 80% or less of the area MFI when the project’s market rents are at or exceed 120% of the area MFI levels or a market study supports rents of similar units in the same geographic area at or above 120% of the area MFI.
Measurement of household income is determined using the U.S. Department of Housing and Urban Development’s, or its successor agency’s, annually published Median Family Income and Rent chart for the Portland Metropolitan Area for a family of 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 is defined as a rental rate which does not exceed 30 percent of the monthly maximum MFI levels for each bedroom size including allowances for utilities that are either directly paid by tenants or billed back to tenants by the owner for reimbursement. No utility allowance is required for utilities paid by the owner and not reimbursed by the tenant.
For approval purposes, applicants must document and use the utility estimates available from Home Forward to calculate monthly affordable rents in the pro forma. Actual project utility expenses may be averaged and submitted to PHB for approval to be used in place of the Home Forward estimates after the project has been in service for one or more years.
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.
Financial need/Affordability – All for-sale units receiving the tax exemption will be sold to buyers meeting the affordability requirements. Homebuyers (who will be both on title to the property and occupying the home) must earn no more than 100% of MFI for a family of four, adjusted upward for households larger than 4 persons.
Measurement of income is determined using the U.S. Department of Housing and Urban Development’s, or its successor agency’s, annually published Median Family Income and Rent chart for the Portland Metropolitan Area.
Price cap – For-sale units must sell for less than the sale price cap established annually by PHB.
Owner occupancy – For-sale units may not be rented at any time (both prior to initial sale and after homebuyer qualification); properties which are rented are subject to termination of the exemption. Homebuyers must occupy the property as their primary residence.