HPSTF 6 02-16-24 Presentation COMMUNITY
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Housing Production Strategy
Task Force Meeting #6
February 16, 2024, 1 : 00pm
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Agenda
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1. Greetings & Announcements
k 2. Minutes — HPS Task Force Meeting #5, 12/8/2023 — V
(Sarah Walker, Chair)
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3. Summaryof Public Comments on the HPS to Date 1 , �- �_N� in
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(Erik Olson, City of Lake Oswego) - - I _ J
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4. Recommended Strategies
(Kate Rogers, MIG/group discussion) /
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5. Strategies Needing Further Discussion z. ;. - ', ot \, -
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(Kate Rogers, MIG/group discussion) 1
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6. Next Steps (Erik Olson)
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Summary of Public Comments
on the HPS to Date
Public Comments on the HPS
Tax Exemptions General Comments
• Comment letter from Mercy • Two letters received from
Housing NW proposing to work members of the community
together with the City to interested in "substantial zoning
implementand code reform to enable
a property tax
greater housing production"
exemption for affordable
housing • Concerned about high cost of
housing; family members unable
• Mercy Housing NW is currently to move to Lake Oswego,
developing a 100-unit affordable residents unable to stay due to
housing complex at the former increase in housing cost
Marylhurst University campus • Desire for higher-density, more
• Tax exemptions can ensure the livable neighborhoods - safe
transportation options, more
long-term stability of mission- neighborhood commercial
driven affordable housing options
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Recommended Strategies
Reminder of Housing Needs
Affordability Choices and Options
• Need for new housing units at • Options to meet
all income levels needs/preferences of the
whole community
• Particular need for housing
affordable to lowest income • Variety of housing types and
levels sizes
• <50% MFI and often <80% MFI • Deficit of residential land for
requires government subsidy all density levels
• Moderate-income housing • Majority of new units
(80-120% MFI) also needs projected to be attached
additional support housing
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Reminder of Housing Needs
Key Gaps in the Market
• Middle housing (e.g.,
townhomes, duplexes, cottage Lake Oswego also needs
clusters) more housing supply
• Opportunities for aging in place overall to slow rising
• Options for more attainable housing costs and meet
homeownership overall community need
• Apartments with family-size
units (2-3 bedrooms)
• Multi-family housing outside the
Town Center
Recommended Strategies NEAR TERM (1-3 YEARS)
Strategy 4=1 Housing Need Addressed
1.1 Code Audit and Amendments Increased housing production and housing
choices
Remove or Reduce Minimum Parking Increased housing production; especially
1.2
Requirements multi-family and affordable housing
Nonprofit Low-Income Housing
1.3 Government-subsidized low-income housing
Exemption
Low-Income Rental Housing Tax
1.4 Government-subsidized low-income housing
Exemption
Public-private partnerships for
1.5 Government-subsidized low-income housing
affordable housing
Doesn't directly address needs; helps prevent
1.6 Fair Housing Policy and Education housing discrimination & supports related
strategies
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MEDIUM TERM (3-5 YEARS)
Recommended Strategies
LONGER TERM (>5 YEARS)
Strategy Housing Need Addressed
1.7 Rezone Land Increased housing production; multi-family
housing
Evaluate accessible design incentives or Housing opportunities for seniors, people
1.8
mandates with disabilities
Use Tax Increment Financing (TIF) to
1.9 Government-subsidized low-income housing
support affordable housing development
Affordable Housing Preservation Preservation of housing for low-income
1.10
Inventory residents
Modify System Development Charge Smaller housing units; moderate-income and
1.11
(SDC) fee schedule smaller households
1.12 Pre-Approved Plan Sets for ADUs Housing choices in existing neighborhoods;
multigenerational living; aging in place
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Discussion
• Do you agree that these strategies should be
recommended for inclusion in the HPS?
• Do agree with the recommendations for
timing of implementation for the strategies
( Near-, Medium-, and Longer-Term ) ?
• Do you have any questions, concerns, or
suggestions about how these strategies are
implemented ?
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Strategies Needing Further
Discussion
Strategies Needing Further Discussion
Strategy Housing Need Addressed
Zoning Incentives for Affordable
2.1 Government-subsidized low-income housing
Housing
2.2 Construction Excise Tax (CET) Government-subsidized low-income housing
Vertical Housing Development Zone High-density housing in targeted areas; typically
2.3
Tax Abatement moderate- to higher-income
Multiple Unit Property Tax Exemption Multi-family or middle housing; can also be
2.4 structured to target certain needs, e.g., family-
(MUPTE)
size units or accessible units
Pre-Approved Plan Sets for Middle Increased housing choices, including
2.5
Housing Typologies homeownership options
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2. 1 - Zoning Incentives for Affordable Housing
Description • Additional height, density, bonus floor area ratio (FAR), or
relaxing other zoning standards for affordable housing.
• Allows affordable developers to make more efficient use of land
and potentially better compete for land with market-rate
developers.
Considerations • Senate Bill 8 already allows height/density bonuses for
affordable housing that's developed by a nonprofit.
• Could consider other types of bonuses — e.g., reduced open
space.
Magnitude of Low to Moderate
Impact Might lead to a small percent increase in the number of units that
are possible for affordable housing developments. Unlikely to
initiate new projects on its own.
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2. 2 - Construction Excise Tax (CET)
Description One-time tax on construction projects; potential funding source for
affordable housing.
Tax Rate:
• Residential construction: Up to 1% of permit value.
• Commercial and industrial construction: No cap on the tax rate;
typical rate is 1-3%.
Uses of CET Funds (defined by state statute):
Residential:
• 50% for developer incentives (e.g., permit fee and SDC
reductions, tax abatements)
• 35% flexible for affordable housing programs
• 15% to Oregon Housing and Community Services (OHCS) for
homeownership programs (typically spent in cities where paid)
Commercial/Industrial:
• 50% for housing-related programs (not necessarily limited to
affordable housing)
• 50% is unrestricted
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2. 2 - Construction Excise Tax (CET)
Considerations • One of the few available locally-controlled funding streams for
affordable housing.
• Without a new funding stream, the City could not participate
meaningfully in "Contingent Strategies"
• Housing Trust Funds
• Low-Interest Loans/Revolving Loan Fund
• Community Land Trusts
• Preserving Low-Cost Rental Housing to Mitigate Displacement
• Raises costs for construction of commercial, industrial, and/or
market-rate residential housing.
• Regulated affordable housing, public buildings, hospitals, and
certain other types of facilities are exempted.
• City can also choose to exempt other types of development.
Magnitude of High
Impact Annual revenue estimate for 1% CET:
$750k for residential, $850k for commercial/industrial
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CET: Implementation in Other Cities
When Adopted Tax Rate Exemptions
Tigard 2019 1% both residential • ADUs of 1,000 SF or less
and commercial/ • Projects valued under $50k
industrial • Residence destroyed unintentionally
• Cottage clusters, courtyard units,
quadplexes exempted from 75% of CET
Bend 2006 (res) Res: 0.33% • As required by state law
2021 (com/ind) com/ind: 0.67%
Newport 2017 1% both res and • As required by state law
com/ind
Eugene 2019 0.5% both res and • Residential units sold for $250k or less
com/ind • Projects granted MUPTE tax exemption
Milwaukie 2017 1% both res and • Projects valued $100k or less
com/ind • Initially exempted ADUs (for 5 years)
Other Cities: Grants Pass, Medford, Corvallis, Cannon Beach, Hood River, and Portland
(and likely others)
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2.3 - Vertical Housing Development Zone Tax Abatement
Description • Incentivizes multi-story mixed-use development and affordable
housing in targeted areas.
• City designates one or more "Vertical Housing Development
Zones."
• 10-year partial property tax exemption (up to 80% total) for the
improvement value (not the land)
• Including affordable housing allows additional partial exemption
of the land value
Considerations • Pilot VHDZ project recently approved for the North Anchor
development site.
• VHDZ has the potential to displace residents by encouraging
redevelopment in certain areas.
Magnitude of Low to Moderate
Impact Less likely to incentivize affordable housing than low-income
housing abatements. Could be beneficial in key districts where the
City wants to incentivize more vertical buildings and mixed-use.
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2.4 - Multiple Unit Property Tax Exemption (MUPTE)
Description • Incentivizes multi-family or middle housing with particular
features or at particular price points.
• Partial property tax exemption for 10 years (or longer, with
affordability agreements).
• City has broad discretion in structuring the program. Eligibility
criteria could include requirements for affordability,
accessibility/universal design, unit size, or other desirable
features.
Considerations • Could outcompete affordable housing tax incentives with for-
profit developers who would rather build market-rate housing.
Magnitude of Moderate
Impact Could encourage production of more multi-family / middle housing
units that meet needs not currently being met by the private
market.
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Tax Abatement Program Comparison
Multiple Unit
Nonprofit Low- Low-Income Rental Vertical Housing
Income Housing Housing Development Zone Property Tax
Exemption
Eligible
Nonprofits only Any developer Any developer Any developer
Developers
Market rate Market rate
Income Levels Up to 60% AMI Up to 60% AMI (80% AMI for (or as defined
affordable units) locally)
Tenure For rent or for sale For rent only For rent or for sale For rent or for sale
Housing Type Any type Rental housing Mixed-use Multi-family or
middle housing
New vs. Acquired New construction or New construction New construction or New construction or
Housing rehabilitation only rehabilitation rehabilitation
Annual Renewal
Yes No No No
Required?
10 years (or longer
Time Limit No limit 20 years 10 years with affordability
agreements)
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2.5 - Pre-approved plan sets for middle housing typologies
Description • Provide permit-ready plan sets for middle housing that have
been reviewed in advance for conformance with zoning and
building codes.
• Can reduce development costs by:
✓ Streamlining permit processes
✓ Reducing permit fees
✓ Reducing design fees
Considerations • Could help attract developers that typically develop only single-
family housing to get involved.
• Template plans won't work on all sites. Lake Oswego has
significant topography and often requires customized designs.
Magnitude of Moderate
Impact Cost savings to builders wouldn't necessarily translate to reduced
sale prices or rents, but would have the potential to deliver more
middle housing.
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Discussion
For each strategy:
• Given the breadth of housing needs identified in the
HNA, should this strategy be considered for inclusion in
the HPS? Is this an effective strategy to meet the
housing need it's intended to address?
• Would you recommend that this strategy be included
in the HPS? Should it be removed? Is there any
additional information needed in order to determine
whether to include or remove this strategy?
Overarching Question: How successful would the City's
HPS be without a new funding source?
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rStrategies
Othe
Contingent Strategies
Strategy Housing Need Addressed
3.1 Housing Trust Funds Government-subsidized low-income housing
Low-Interest Loans/Revolving Loan New or rehabilitated housing for low-income
3.2
Fund households
3.3 Community Land Trusts Homeownership opportunities for low-income
households
Preserving Low-Cost Rental Housing
3.4 Government-subsidized low-income housing
to Mitigate Displacement
Not Recommended
Homebuyer Opportunity Limited Tax Homeownership options for moderate-income
4.1
Exemption Program (HOLTE) households
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N ext Steps
• HPS Task Force meeting #7 (March 1)
• Community Forum / Public Workshop Event (March 14)
• City Council and Planning Commission joint work session
(April 2)
• Draft Housing Production Strategy (June)
• HPS Task Force meeting #8 (June 21)
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