Council approves MUPTI for First/Madison project; developer pledges 10% of exemption to affordable housing fund

The Corvallis City Council unanimously approved a multiple-unit property tax exemption (MUPTI) application from OB Companies for a proposed mixed-use development at 202 Southwest First Street during its Feb. 3 meeting.

The application covers 92 residential units in an eight-story building that also includes an associated hotel and ground-floor restaurants; staff noted the MUPTI applies only to the residential component. Staff reported the requested tax abatement would total $3,409,596 over 10 years and said a third-party financial review from Leland Consulting Group concluded the project was unlikely to move forward "but for" a public subsidy.

The applicant elected the second affordable-housing option available under the city's rule: rather than setting aside a share of units below market, OB Companies will dedicate 10% of the total property tax exemption to a fund for future affordable housing development. Staff also identified three qualifying public benefits for the project: use of local labor/materials/ownership commitments, catalytic economic impact on downtown, and redevelopment of underused parcels.

Why it matters: Staff said the project will substantially increase the taxable base relative to the current site and is expected to produce transient lodging tax revenue from the hotel component. Supporters said the development would bring new residents and daytime customers to downtown businesses, and the city's first MUPTI application under its 2023 ordinance signaled a new tool for encouraging dense downtown housing.

Applicant presentation and timeline Representatives from OB Companies told the council they plan to hold the building as a long-term investment rather than flip and sell. The developer said higher construction costs and current interest rates make financing difficult for such a downtown project without the 10-year exemption. The applicant said it would begin construction-bid activity and expects approximately two years of construction. The developer outlined shared amenities, including a fitness center, an amenity terrace with river views and several restaurants, and said parking and some shared services would be configured to serve both hotel guests and residents.

Council action Councilors voted unanimously to approve the resolution granting the MUPTI for the residential portion at 202 SW First Street. The staff report and the applicant's presentation were included in the public record. The council did not adopt a numerical rent schedule for the residential units; the applicant proposed market-rate apartments and instead directed the 10% contribution of the exemption to an affordable-housing fund as the affordable-housing public-benefit commitment.

Next steps City staff will finalize the exemption paperwork and monitor compliance with the MUPTI agreement. The resolution authorizing the exemption requires the applicant to satisfy conditions in city code, and the city will receive the affordable-housing contribution specified by the applicant. The project pro forma and third-party financial analysis will remain part of the project's administrative record.