Corvallis staff outline new state property-tax tool to support housing development

City of Corvallis housing staff on March (date not specified) told the Housing Operational Committee that a new state program administered by Oregon Housing and Community Services could give the city a tool to help finance new housing developments by pairing a property-tax exemption with a revolving loan mechanism.

Housing and Neighborhood Services Manager Brigitte Olson said the program "just rolled out from the state in February of this year" and described it as a new state tool that would allow sponsoring jurisdictions to enter a master agreement with the state and then make loan or grant funds available to developers for new construction or conversions of nonresidential structures.

Why it matters: committee members said the program could help cover infrastructure or predevelopment costs that make building in Corvallis expensive. Olson said the program can support projects serving households up to 120% of area median income (AMI), and that the city would need to adopt a local ordinance, enter an intergovernmental agreement with Benton County and a master agreement with the state, and define local site-control and compliance plans before using the tool.

Details and city considerations: Olson said the program exempts taxable improvements from property taxes for up to 10 years, and developers or homeowners would pay an annual fee that is returned to the state and then revolved into future loans. "The program costs can be used for infrastructure, redevelopment, construction, land write downs," Olson said. She added the sponsoring jurisdiction would be responsible for ensuring the affordability requirements are met. "We would then apply to OHCS, we being the municipality or sponsoring organization," Olson said, describing the multi-step approval process.

Chloe (housing and neighborhood services coordinator) clarified that the annual fee "is not necessarily always paid by the developer. It may be paid by the homeowner or other involved party." Committee members asked whether the program requires prevailing wages; Olson said that would be a determination by the Bureau of Labor and Industries.

Funding timeline and scale: Olson and staff said the program's first biennium includes $50 million for the initial two years of rollout (part of a $75 million total authorization noted by staff), and that the state planned a phased rollout with more guidance expected later in the year. Staff reported they had not yet seen any nearby municipalities adopt the required ordinance or apply on behalf of a project, and that Corvallis would watch the state's templates and neighbor jurisdictions to design the city’s approach.

Policy choices the city faces: staff asked whether to limit program use to specified income bands (for example 80–120% AMI to target workforce housing), or allow flexibility to cover very low-income through workforce up to 120% AMI, and whether the city should extend affordability requirements beyond the program's nominal 10-year period. Committee members favored flexibility with a priority for 80–120% AMI, but noted the practical constraint that developers must be willing to build at those price points.

Next steps: Olson said staff will continue outreach with developers and neighboring jurisdictions, prepare materials for a potential local ordinance and intergovernmental agreement with Benton County, and return to the committee with draft recommendations. Staff invited organizations interested in participating to contact the city and said they would circulate the presentation and proposed ordinance language when available.