Hillsborough City Council discusses property tax exemption for nonprofit affordable housing

The Hillsboro City Council convened on March 18, 2025, to discuss the nonprofit-owned affordable housing property tax exemption program, a key initiative aimed at supporting affordable housing in the city. Chris Hardy, senior project manager in the community development department, presented an overview of the program, highlighting its significance and operational details.

The property tax exemption program, established by an ordinance in February 2019, allows nonprofit organizations to apply for tax relief on properties designated for affordable housing. This exemption covers all property taxes, including local option levies and school district taxes, providing substantial operational savings for existing affordable housing and making new construction projects more economically viable.

Hardy emphasized that the program is authorized by state statute and requires approval from tax districts representing at least 51% of the total tax rate. This approval was successfully obtained from both the Hillsboro and Beaverton School Districts, ensuring comprehensive support for the initiative.

The program has been in effect for seven years, with various nonprofit organizations participating. These include Vienna Star, Bridge Housing, and Catholic Charities, among others, which collectively manage nearly 700 affordable housing units. However, the program does come at a cost to the city, with an estimated $175,000 in foregone property tax revenue annually, alongside an additional $350,000 allocated through the strategic investment program, totaling over $500,000 in city support for affordable housing each year.

During the meeting, council members raised questions regarding the program's impact on residents. Hardy explained that the tax savings often translate into reduced rent increases and enhanced resident services, such as educational programs and facility upgrades. The program mandates that operational savings be used to benefit residents, ensuring that the financial relief contributes directly to improved living conditions.

The discussion underscored the city's commitment to affordable housing amidst rising construction costs and economic challenges. The council is expected to vote on a resolution related to the program in the coming weeks, marking a continued investment in the community's housing needs.