TO: Mayor and City Council
THROUGH: Steve Powers, City Manager
FROM: Kristin Retherford, Urban Development Director
SUBJECT:
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Property tax exemptions for qualifying non-profit, low-income housing
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
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ISSUE:
Shall City Council adopt Resolution No. 2018-14 approving property tax exemptions for three low-income housing properties owned by nonprofit entities?
RECOMMENDATION:
recommendation
Adopt Resolution No. 2018-14 (Attachment 1) approving property tax exemptions for three low-income housing properties owned by nonprofit entities.
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SUMMARY AND BACKGROUND:
Staff has determined the following applicants meet the program criteria:
- Catholic Community Services Foundation, 2579-2587 Wallace Road, NW
- Salem Self-Help Housing LLC, 539 Statesman St. NE, and
- Cornerstone Apartments Limited Partnership, Rose Garden Street, NE
Low-income housing was identified as a community need through the City’s 2017 strategic planning process. On January 8, 2018, Council approved Ordinance No. 29-17 to establish a property tax exemption program for low-income housing owned by nonprofits, codified under SRC Sec. 2.850 to 2.910. The program is authorized by Oregon Revised Statutes (ORS) 307.540 - 307.548. The intent of this program is to encourage low-income housing preservation and development by lowering costs for non-profit providers of low-income housing.
If approved, the property will be exempt from City property tax for a period of up to 10 years. The owner may receive exemption from all property taxes on the property, if they obtain the approval of applicable taxing districts that constitute 51% of the property’s tax liability. Property owners must annually certify they are in compliance with terms of Council’s approval in order for the exemption to extend each year.
FACTS AND FINDINGS:
The City’s program incorporates the requirements in State law, and as permitted by State law, includes certain additional requirements and guidance. Under the City’s program, to qualify for a maximum 10 year property tax exemption, the property must be:
1) owned by a nonprofit, 501(c) (3) or (4), corporation under the Internal Revenue Code;
2) occupied by low-income persons, or held for the purpose of developing low- income housing, and must be actually and exclusively used for charitable purposes; and
3) maintained in a safe and habitable condition throughout the period of exemption.
The owner of the property, during the period of exemption, must maintain a capital reserve for the property of at least $100 per housing unit per month.
Applications for this property tax exemption were received from:
- Catholic Community Services Foundation, 2579-2587 Wallace Road, NW
- Cornerstone Apartments Limited Partnership (LP), Rose Garden Street, NE
- Four Oaks Housing, 1051-1099 23rd Street SE,
- Oakhill Associates, 3837 12th Ave,
- Salem Self Help Housing LLC, 539 Statesman St, NE
- Sunnyslope Associates, 1000 Cunningham Lane, and
- Wallerwood LP, 1150 Waller Street,
On February 12, 2018, Council awarded exemptions for Four Oaks Housing, Oakhill Associates, Sunnyslope Associates, and Wallerwood LP.
Staff requested additional information from Catholic Community Services Foundation, 2579-2587 Wallace Road, NW, Salem Self-Help Housing LLC, 539 Statesman Street, NE, and Cornerstone Apartments LP to verify the applicants meet the minimum financial reserve criteria, and for Cornerstone, that the limited partnership was a qualified nonprofit corporation as defined under state law.
Catholic Community Services Foundation, 2579-2587 Wallace Road, NW and Salem Self-Help Housing LLC, 539 Statesman Street, NE provided the requested information on reserve requirements, and staff now recommends approval for these two properties. The applications are listed as Attachment 2.
Following approval of the exemptions, the property owners will need to apply annually for certification, provide documentation to support that the property is occupied by low-income persons, and show how the exemption will benefit project residents. As the preservation of low-income housing is a key component of the proposed program, the property must be maintained in a safe and habitable condition.
Cornerstone Apartments LP provided evidence that it qualified as a nonprofit under state law.
A public notification effort will be undertaken for subsequent application cycles for this program. Future application cycles will occur annually during the summer with applications due prior to September 1 each year.
If approved by Council, the approved applicants may seek approval from other taxing districts in the area so that the subject properties may be exempt from their entire property tax levy.
Kristin Retherford
Urban Development Director
Attachments:
1. Resolution No. 2018-14
2. 2018-19 Program Applications