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Senate hears briefing on extension of workforce multiunit rental exemption (SB 118)
Summary
Senate Bill 118 would extend the exemption for newly constructed or rehabilitated multiunit rental workforce housing from Jan. 1, 2027, to Jan. 1, 2033. Staff described eligibility (up to 120% AMI), two alternative local schedules and limited current use; Tax Fairness Oregon supported extension.
Senate Bill 118, which would extend the property-tax exemption for newly constructed or rehabilitated multiunit rental housing aimed at workforce households, was presented to the Senate Committee on Finance and Revenue during a Feb. 5, 2025 hearing.
LRO analyst Bo Olin said the exemption’s policy purpose (as reflected in committee materials) is to increase the supply of workforce rental housing. The program sets household income limits higher than the low-income exemptions: tenants may qualify up to 120% of area median income (AMI). Olin summarized that cities or counties may adopt ordinances granting exemptions under two alternative local schedules: (1) a fixed exemption percentage with a term (up to 10 years) that depends on the share of units rented to households at or below 120% AMI, or (2) a fixed 10-year term with an exemption amount that varies by the share of affordable units.
Olin said the exemption applies to all taxing districts if districts representing at least 51% of the tax rate adopt an ordinance. A property can receive a rehabilitation exemption only once and the construction exemption only once. Because this program was enacted in 2017, Olin said usage is limited: there is one existing project and one expected project coming online in Medford; Medford plans to continue using the exemption.
Richard Swift of Tax Fairness Oregon testified in support of extending SB 118 and said the exemption can incentivize rehabilitation and preservation in addition to new construction.
Committee members noted the rehab option could promote reinvestment in aging multifamily stock and asked for further detail; staff offered to provide additional information to members before work sessions. No formal vote was taken at the hearing.
