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City staff seeks state law tweak to enable 10‑year tax exemptions for moderate‑income housing
Summary
City of Eugene planning and development staff told the IGR committee that a modest change to existing state tax‑exemption statutes could allow cities to offer a 10‑year exemption to spur new moderate‑income housing, expanding tools beyond current transit‑oriented and existing‑use provisions.
City of Eugene planning and community development staff described a proposed legislative concept on Oct. 1 that would clarify state tax‑exemption statutes to enable local moderate‑income tax exemptions and thereby encourage new development targeted at workforce households.
Will Doughty, Eugene’s community development director, told the Intergovernmental Relations Committee that state law currently allows some tax exemptions tied to transit‑oriented development and to income‑qualified projects when the city enters an agreement with the state, but he said existing language tends to favor exemptions for existing uses and state‑level agreements. “We think there’s an opportunity…to create a moderate‑income exemption program that would, by being clear that this could apply to new housing and by clarifying the agreement path, give cities a clear yes to move forward,” Doughty said.
Staff said the city needs tools to meet an Oregon housing needs assessment that identifies thousands of moderate‑income units needed over the next 20 years. The proposed change would allow a local program to offer a 10‑year tax exemption for new developments that commit to rents or tenant income limits targeted at moderate incomes (generally described in committee materials as roughly 60%–120% of area median income, depending on property). Doughty described the local program as functionally similar to existing programs (such as MUFTI and LRPTE) but calibrated to workforce housing levels.
Committee members asked technical questions about eligibility and mechanics. Councilor Yeh asked whether the proposal was simply an expansion of an existing MUFTI program; Doughty answered that the statutory route would be similar but the local tool would be closer in function to LRPTE‑style exemptions — shorter than the 20‑year LRPTE exemptions typically used for deep‑affordability projects, but targeted to incomes above the low‑income band.
Staff said the planning division will present the concept to the Planning Commission on Oct. 28 and expects to bring the item to a City Council work session on Nov. 12 as part of the Urban Growth Strategy discussion. Ethan, the IGR manager, said staff may pursue a legislative vehicle in the short session in February if a sponsor is available; if enacted, the statute could take effect either quickly via an emergency clause or by the July 1 fiscal effective date, which would broaden the city’s policy tools sooner.
Ending: Committee members generally signaled support for continued exploration and directed staff to continue due diligence, present details to planning and council and seek a legislative sponsor if the timeline and council direction align.
