Eugene officials approve $20.7M tax break to help developers build riverfront housing
Eugene officials unanimously approved a multimillion-dollar tax break that a Portland-based developer says makes all the difference in building housing for a new downtown riverfront neighborhood.
The City Council on Wednesday approved 10-year multi-unit property tax exemptions for Atkins Dame on three parcels, giving the developer an estimated $20.7 million tax break. Because the tax exemption only covers improvements, Atkins Dame still will pay around $831,000 in taxes on the land itself over the 10-year period.
The vote is a key step in helping the city meet long-term goals of increasing housing options downtown and reconnecting downtown to the Willamette River, staff told officials during the work session before the vote.
As people walk into the new neighborhood, they’ll still move with the rhythm and feel of downtown, said Will Dowdy, the city’s community development director.
“In two years, you’ll be able to tell what’s new and what’s not,” he said. “But if you’re out 50 years from now and you walk through this site, it won’t be clear to you where you hit the project, where you crossed this imaginary line that you see right now.”
Staff added that a review panel found the housing project meets required public benefit criteria, including a $2.1 million contribution to moderate-income housing efforts, with at least half of the multimillion-dollar budget for construction going to local firms and energy-efficiency measures.
Atkins Dame has said construction should start soon on two of the three parcels.
Projects must show public benefit
Eugene’s multi-unit property tax exemption, or MUPTE, program allows developers to avoid paying property taxes on the value of new construction on multifamily residential units for up to 10 years.
The program is a tool that “can shift a proposed housing development to being financially feasible,” according to the city’s website.
In order to receive a MUPTE, developments must meet seven public benefit criteria:
Compact urban development: Proposed buildings on all three parcels are within the required density range.
Green building features: Developers are seeking to demonstrate energy efficiency that’s 10% better than required by baseline code and are pursuing Earth Advantage certification for construction and FitWell certification, which involves encouraging active transport and access to transit options.
Local economic impact plan: Plans call for around 55% of dollars spent on professional services and construction to go to firms located within Lane County, and the developers will promote competitive opportunities for minority-owned, women-owned and emerging small businesses to participate.
Moderate-income housing contribution: Developers must pay 10% of the total exemption as a fee dedicated to moderate-income housing or ensure rent for least 30% of the units is based on moderate-income. Atkins Dame is paying the fee, a total of $2.07 million, from years three to 10 of the MUPTE.
Project design and compatibility: All three projects address basic design concepts, including scale, form and quality, and are “intended to harmonize with the scale, form, and quality of onsite and adjacent development,” according to staff’s memo to officials.
Historic and existing housing sensitivity: None of the projects will negatively impact nearby residential areas, and the development hasn’t involved the destruction of historic structures or existing housing within the two years before Atkins Dame applied for the MUPTE.
Project need: Atkins Dame asserted it cannot feasibly afford to construct the projects without an exemption, and an independent real estate economics firm agreed.
All 3 'challenging development projects'
Between the projects on the three parcels, Atkins Dame plans to build 381 units, staff said.
The developer initially submitted two scenarios — a lower-density and a higher-density option — but withdrew the application for the higher-density option because of costs, said Dylan Huber-Heidorn, a development analyst for the city.
Atkins Dame expects to invest more than $160 million constructing the apartment buildings, which will have a mix of studio and one-, two- and three-bedroom units.
The developer is taking on a demanding project with all three parcels, said Anne Fifield, the city’s economic strategies manager.
“All of these three projects are challenging development projects under any circumstances, much less the inflation that we’re experiencing today,” she said. “This site is a former brownfield, and there’s a risk that Atkins Dame will find unexpected contamination.”
The city, the Eugene Water & Electric Board, developers and the state of Oregon have worked to minimize risk, Fifield added, but it still could happen.
Denny Braud, the city’s executive director of planning development, said there are additional challenges, such as bringing on 381 units at once, building below-ground parking and the quality of materials, which include brick.
'Satisfied that there is public benefit here'
While councilors expressed some reservations about the MUPTE program overall during Wednesday’s meeting and a previous work session on the applications, they unanimously supported the developer’s requests.
Councilors Emily Semple and Alan Zelenka haven’t voted in favor of a MUPTE in a while but supported these projects.
“I’m satisfied that there is public benefit here and that the independent financial analysis was very credible, I thought, and showed there was insufficient rate of return without the MUPTE for this project to move forward,” Zelenka said.
Councilor Mike Clark gave kudos to everyone who has contributed to making “a real gem on the banks of our river” a reality.
By the numbers
Total estimated value of exemption: $20.7 million
Estimated total of taxes paid during MUPTE: $830,722
Estimated investment: $160.3 million
Units: 381
Studio: 91
One-bedroom: 89
Two-bedroom: 186
Three-bedroom: 15
Contact city government watchdog Megan Banta at mbanta@registerguard.com. Follow her on Twitter @MeganBanta_1.
This article originally appeared on Register-Guard: Riverfront housing developers to receive multimillion-dollar tax break
