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Bend committee reviews local property‑tax exemptions and the middle‑income option
Summary
Staff and developers debated changing Bend’s local property‑tax exemption programs — including adopting a middle‑income exemption — to make development more certain for builders while preserving affordability; staff flagged statutory timing, the need for 51% taxing‑district approval and administrative friction as key constraints.
Chair opened a committee discussion on local property‑tax exemptions and staff gave a detailed walkthrough of Oregon’s local‑option exemptions and how Bend has used them.
Staff member Carrie explained that the city currently offers an income‑qualified rental exemption and a nonprofit exemption and that a middle‑income exemption (targeting roughly 80–120% of area median income) is available to adopt after legislative changes. Carrie said the statute framework is in Oregon Revised Statutes, chapter 307, and noted that the city may take one of two administrative approaches: adopt an exemption as a program (securing the 51% taxing‑district approval up front) or approve exemptions case‑by‑case and ‘‘shop’’ each application to other taxing districts (schools, county, parks) to reach the 51% threshold.
City Attorney Elizabeth Oshal cautioned the statutes are written differently for each exemption and that the timing for filing applications can be restrictive: for at least some exemptions, the application must be filed ‘‘on or before December 1 of the calendar year immediately preceding the first assessment year for which the exemption is requested,’’ meaning developers often cannot apply until late in a multiyear construction schedule.
Developers and builders pressed staff for more certainty earlier in the development timeline. One builder described cases where underwriting and lender certainty required an earlier, reliable indication of tax‑exemption availability. Staff said options to reduce uncertainty include pursuing the programmatic route (so the city holds the 51% approval up front) or negotiating aligned resolutions with major taxing districts — staff said discussions with the Bend‑La Pine School District have begun.
Committee members emphasized tradeoffs: widening the exemption to middle‑income units could attract more market‑rate builders but requires careful calibration of AMI bands (committee members urged special attention to the 60–80% and 80% levels) and recognition that smaller infill projects may produce little tax increment relative to administrative costs.
The committee agreed to include property‑tax exemption work among the near‑term items it will recommend to City Council for December, with staff to bring more detailed program design and statutory timing implications back in early 2026.
The committee paused this topic to move on to other agenda items.
