The Hermiston City Council voted to add a neighborhood commercial overlay (NCO) to the south 3.71 acres of a 12.34-acre site at 963 East Diagonal Boulevard — part of a rezoning the planning commission previously recommended — and then adopted a development incentive tied to local property taxes intended to attract market‑rate apartment construction on the site known as The Hub.

Planning Director Clint Spencer told the council the NCO adds multifamily housing and mini‑storage as conditional uses on the commercial portion adjacent to Diagonal Boulevard; the property is near schools and is walking distance to elementary schools and a middle school. Spencer said the planning commission approved conditional use permits for multifamily and mini‑storage earlier, but those approvals were contingent on the council’s rezoning action.

Spencer also reported the Oregon Department of Transportation (ODOT) raised an intersection‑capacity concern at the Elm/395 intersection based on the original traffic study. Staff and ODOT negotiated a high‑level agreement that would let the city collect developer mitigation fees and hold them until needed rather than reopen the intersection debate for each new development. Spencer said the developer’s calculated share for the project’s contribution to Elm/395 improvements would be about $200,000 based on the traffic modeling.

After the rezoning passed unanimously, council considered resolution 23-81, a development incentive for a 276-unit market‑rate apartment project proposed by The Hub, Hermiston, LLC. City staff presented the incentive as a declining, tax‑based reimbursement paid to the developer over five years: 100% of the developer’s local property tax in tax years 2026–27, 75% in 2028, 50% in 2029–30 and 25% in 2031 (after which the incentive ends). Staff estimated the incentive’s midpoint cost at about $1.3 million paid over five years, with a range between roughly $1.1 million and $1.5 million depending on final assessed values and construction timing.

Staff explained the mechanism: the developer will pay all property taxes to the county assessor (as required). The city will then reimburse the developer from city funds an agreed percentage of the developer’s local property tax payment, per the schedule in the agreement. Staff said all underlying taxing jurisdictions (schools, fire district, etc.) will still receive their share through the assessor’s normal distribution; the incentive is a city cash reimbursement to the developer, not a tax abatement or exemption.

Council discussion ranged from concerns about committing city resources to support private development to the local need for market‑rate rentals. Several councilors said Hermiston has seen strong single‑family and income‑restricted rental development but almost no market‑rate apartments in the past decade; staff argued the incentive is intended to overcome a market disincentive that directs apartment developers to larger, higher‑rent markets. The resolution passed 5–1, with Councilor Linton voting in opposition.