City staff presented a state program that would loan money to the city, which would re‑grant funds to developers to subsidize affordable rental or ownership housing. Staff described the program as a possible funding source for local nonprofit projects such as a proposed Habitat for Humanity development, but councilors and staff raised significant concerns about the administrative burden and the fact that participating developments would generate no property tax revenue to the city or other local taxing districts for the fee‑in‑lieu period.

Why it matters: The program could provide capital to support affordable ownership units that otherwise are difficult to finance, but it requires the city to accept a loan structure with a fee‑in‑lieu mechanism that captures property tax revenues for 10 years and imposes ongoing monitoring responsibilities.

Staff described the program’s main mechanics: the state would loan money to the city; the city would pass funds to a developer as a grant; the developer builds the project; the county collects a fee‑in‑lieu of taxes and uses that fee to repay the state loan over about 10 years. Staff said affordability must be maintained for 10 years; for ownership projects that means deed restrictions or resale controls to keep the home affordable to income‑qualified buyers during the restriction period.

Councilors and staff asked whether the city has capacity to set up and administer the program and who would monitor compliance over the 10‑year affordability period. One city staff member warned that the county and assessor would need to be party to an intergovernmental agreement and that the program would capture taxes that otherwise would flow to the city and other taxing districts. A councilor asked whether the program’s technical assistance could be provided by a third‑party nonprofit, such as Polk County Community Development Corporation, Polk County Family Services or Habitat for Humanity; several councilors urged staff to seek state technical assistance and to contact Polk County about a joint approach.

Staff noted practical examples and figures mentioned in the session: a councilor reported finding 22 short‑term rental listings on one platform as an indicator of potential market pressure; staff estimated that a small 10‑unit project could forgo roughly $3,000 per house per year in property taxes over 10 years, a ballpark cited as about $300,000 in lost captured taxes across that scenario.

Next steps: Staff were asked to provide formal feedback to the state about the program’s design and to discuss the program with Polk County and local nonprofits to identify whether a pilot partnership (for example, assisting Habitat for Humanity) is feasible. No formal vote or commitment to apply for state funds occurred at the work session.