Council approves tax exemption for El Nido affordable housing; Hacienda CDC and council seek county coordination on supportive services

The Lake Oswego City Council on June 3 approved Resolution 25-26, granting a city nonprofit low-income housing property tax exemption to Hacienda CDC for the El Nido affordable housing project at 5110 West Sunset Drive and authorized Hacienda to request similar exemptions from other taxing districts. The motion passed 6-0.

Community Development Director Jessica Numanalou introduced the item and said Hacienda’s representative was en route; she explained the two requests before the council: (1) a city property tax exemption under the city’s nonprofit low-income housing program and (2) city authorization for Hacienda CDC to request tax exemptions from other taxing jurisdictions (notably the school district). Numanalou reported the county estimated the city share of the annual tax exemption at $28,500.

Dr. Ernesto Fonseca, CEO of Hacienda CDC, said the total annual tax exemption for the site is about $118,000, and he told council that without the tax-exemption package his organization would lose important financing—he described a shortfall figure in the meeting record (Fonseca said the project would lose “about $1.47 million” without the exemption). Hacienda described financing for the 55-unit project as layered and contingent on multiple public and private sources, including low-income housing tax credits through the Oregon Housing and Community Services (OHCS), private permanent lenders, construction financing and equity investors such as the National Equity Fund.

Council members used the discussion to press for clearer county coordination on referrals and services for residents. City staff and Hacienda representatives said some units will be permanent supportive housing (PSH) and that Hacienda is working with health‑service partners to define the appropriate residents for PSH units. Fonseca said Hacienda expects 10 PSH units within the project (five family units and five units intended for single adults or women at risk), and he described operational measures Hacienda will take — increased on-site security at PSH properties, careful intake and partnerships with health providers — to support resident stability.

Councilors and Hacienda stressed that supportive housing must be linked to adequate behavioral health and wraparound services. Several councilors, including Corrigan, Mullen, Wendland and others, thanked Hacienda for the letter the mayor and Hacienda sent to county officials and emphasized the need to align referral processes so highly acute behavioral-health cases are not placed in PSH without proper support. Council members offered the city’s assistance in outreach to Clackamas County and other jurisdictions to secure appropriate referral and service commitments.

Financial details and impacts: The county-provided estimate for the city’s portion of the annual tax exemption is $28,500. Hacienda said the total property tax exemption across taxing districts would be about $118,000 annually. Hacienda explained that the exemption is important to make the project’s financing “pencil out” and to ensure sufficient long-term operating dollars; Fonseca said omission of the exemption would jeopardize equity and construction financing.

Action taken: Councilor Wollens moved to adopt Resolution 25-26; Councilor Raff seconded. The motion passed 6-0.

Why it matters: The exemption reduces property tax obligations for an affordable housing project that aims to add 55 income-restricted units in Lake Oswego, including a limited number of permanent supportive housing units. Council and Hacienda emphasized that the project’s success depends on coordinated referrals and wraparound services provided by county and regional partners, not solely by the housing provider.

What’s next: Hacienda will pursue tax exemptions from other taxing districts as authorized by the council and continue coordinating with county and health partners on resident services and referrals. Councilors indicated they will assist in conversations with Clackamas County and state partners to align services and referral criteria.