Bend staff review state tax‑exemption options as tool to spur affordable and middle‑income housing
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Summary
City staff explained how local‑option property‑tax exemptions work, including Bend’s existing deed‑restricted rental and nonprofit exemptions and the state’s revised middle‑income exemption; members pressed for measures that would give developers earlier certainty and reduce interagency delays.
Carrie Bell, Bend’s affordable housing coordinator, told the Housing Production Strategy Committee that local‑option property‑tax exemptions are a customizable state tool the city can use to lower the cost of building affordable housing. She reviewed Bend’s two commonly used exemptions — an income‑qualified rental exemption and a nonprofit exemption — and described a middle‑income exemption that the Legislature recently adjusted to be more usable by market developers.
Bell said the statutes governing exemptions are listed in the Oregon Revised Statutes, Chapter 307, and explained a key logistical constraint: to secure a full exemption a project typically needs approval from taxing districts representing 51 percent of the tax base. "The school district and the city of Bend make up 51%," she said, adding that other taxing districts can also be organized to reach the threshold. Bend can adopt programmatic approvals that spare every individual project from re‑shopping approval in multiple districts, or continue to process each application separately.
City Attorney Elizabeth Osho added a statutory clarification that affects developer timing: some exemptions require applications “on or before Dec. 1 of the calendar year immediately preceding the first assessment year requested.” In practice, that means developers often cannot apply until late in the construction timeline — a point several developers said makes underwriting and lender commitments risky.
Committee members and private developers pressed staff on how to make exemptions more useful. Developers sought earlier certainty in the approvals timeline so they would not be months into construction before eligibility could be confirmed; staff noted two program approaches: (1) adopt a program that secures the 51 percent of taxing‑district approvals at adoption, or (2) leave approvals case‑by‑case and continue assisting applicants in getting district sign‑offs. Staff also discussed customization options such as tying local criteria to electrification or other community benefits when statutes allow.
Why this matters: local property‑tax exemptions can substantially reduce long‑term operating costs or near‑term developer expenses, but their value depends on statutory timing, taxing‑district participation and predictable administration. The committee asked staff to include these tradeoffs when they recommend near‑term priorities to City Council.
What’s next: staff will use the committee’s prioritization to draft a recommended set of near‑term measures for Council review, including whether to pursue a programmatic (one‑time sign‑on) approach that would reduce project‑by‑project uncertainty.
