Eugene considers ways to increase affordable housing, including tax incentives

According to a report produced for state officials in 2020, Eugene had a shortage of 10,284 housing units at the time. Eugene city councilors later approved the Housing Implementation Pipeline as their guiding document for addressing this shortage.

The riverfront, downtown and subsidized affordable housing have become three key pieces of the city council's plan to increase housing supply. City councilors took new steps toward all of them on Monday.

Eugene's new riverfront neighborhood

For years, Eugene city leadership has been working towards transforming the formerly industrial riverfront area along the Willamette River's southern bank into an extension of downtown.

The riverfront and downtown areas are both designated as Urban Renewal districts, zones where a city council uses debt to fund development and pays that with a share of property taxes that are diverted from the city and other governments in the district. Urban Renewal districts must have designated spending limits and the riverfront district was projected to reach its limit this June.

Citing the amount of work to be done and support for the district at the public hearing held for it, city councilors voted 6-2 to increase the riverfront's debt limit by $75 million Monday, for a total limit of $109.8 million. This new limit extends the district by 25 years to 2049, pending concurrence from the Eugene School District 4J Board.

"I'm excited, interested, and impressed," said Councilor Matt Keating, who focused on the affordable housing project planned for the corner of 4th Avenue and Mill Street. He said he would rather see affordable and market-rate housing in the same building, "but I'm happy to see 75 affordable housing units within the district."

Emily Semple and Alan Zelenka, the two councilors who were opposed to the plan, voiced concern that the current draft allotted too little money to housing and catered too much to the desires of rich residents.

"I've not been a fan of tax-increment financing or urban renewal districts," Zelenka said. "The way this stands, only about 40% of it is dedicated to housing and that's too low of a bar for me."

If councilors follow the current draft plan, approximately $25.1 million of the new spending limit will go to market-rate housing and $5 million will go to affordable housing. Still, the council has the authority to shift money so long as it doesn't exceed the $75 million total.

Most of the riverfront development incentivized by the city council has been by Portland developer Atkins Dame, which has so far planned 618 units of housing and has begun pre-leasing for its first apartment complex, Heartwood, where homes will go for between $1,555 to $2,405 for a studio to $2,740 to $4,635 for a 2-bedroom unit.

Housing in downtown Eugene

One goal the city outlined in the Housing Implementation Pipeline is to increase housing downtown by 50% compared to 2021, which would add approximately 1,000 units by the end of June 2027. The city is on track to meet this goal, but only if counting student housing and if counting the development on the edge of "downtown." The "downtown core" hasn't added housing in 12 years.

Councilors and staff have said they see prioritizing downtown housing as a way to address three problems at once: alleviating the housing shortage, reducing carbon emissions by putting more people within walking distance of their needs, and improving "downtown vibrancy" by populating downtown sidewalks and supporting downtown businesses.

The last apartments that opened in downtown Eugene were the Union on Broadway student housing complex (357 units) and the Ketanji Court affordable housing complex (59 units) in 2022. The last housing to be developed in the "downtown core" of the 16 blocks bound by 7th Avenue, Pearl Street, 11th Avenue and Charnelton Street, opened in 2012.

Planning staff proposed two solutions: an accelerated version of the city's Multi-Unit Property Tax Exemption (a program where developers building dense housing apply and can be granted a property tax exemption for the construction's first ten years) that would apply to the downtown core, and a program to cover government fees related to construction.

The "Accelerated MUPTE" could remove the requirement that the city council approves the applications, remove the community review panel that is currently established to review each application, remove the requirement that developers demonstrate they need the MUPTE for projects to pencil out or lower the minimum units required to qualify for a MUPTE.

The "Downtown Fee Assistance" program would let developers apply for money from the city's downtown urban renewal district to pay for their permitting fees and system development charges, the fees the city charges developers to offset the cost of bringing infrastructure and services to new housing.

Both ideas are still conceptual, but councilors voted to schedule another work session to discuss them.

"I think that the MUPTE simplified is a really good idea," Semple said. She said that since the city council has never rejected a MUPTE application "a more streamlined (process) that doesn't require a work session from us wouldn't really be a change."

Affordable housing

In a 2022 analysis of Oregon's housing shortage prepared for the state legislature, researchers said at least 30% of the homes to be constructed before 2040 should be affordable to people making less than 60% of the median income for their area: up to $35,460 for an individual or $50,580 for a family of four in Eugene-Springfield, according to the City of Eugene's income limit page.

In Eugene's housing implementation pipeline, councilors set goals of preserving 95 units of affordable housing and creating 310 by June 2024. One city tool for this is the Low-Income Rental Housing Property Tax Exemption, a 20-year property tax waiver for affordable housing developments. In October, councilors voted to extend the program to co-ops in addition to rental housing and Monday they unanimously granted the tax exemption to three projects.

"These are so important because of the low-income feature of them," Zelenka said. Councilors granted the tax exemption to three projects on Monday, totaling 149 preserved units and 136 new ones.

Councilors gave a tax exemption to Olive Plaza, a 149-unit affordable apartment complex for seniors in downtown Eugene, to cover part of the renovations for the building, which was built in 1980.

They also gave a tax exemption to Peace Village, a 70-unit affordable housing co-operative in Santa Clara that opened in December, and to Reveille on Sixth, a 66-unit hotel-to-affordable-housing conversion in the Whiteaker neighborhood that prioritizes veterans and opened in December.

Peace Village said it would have had to increase monthly costs to residents by $57.60 without the tax exemption. Reveille said it would have had to increase monthly rent by $56.

Alan Torres covers local government for the Register-Guard. He can be reached over email at atorres@registerguard.com or on X @alanfryetorres.

This article originally appeared on Register-Guard: Eugene considers ways to increase affordable housing