Tim O’Brien’s Urban Asset Advisors had hoped to tap into an affordable housing tax abatement program for its Multnomah Village Apartments project, a 70-unit development that recently wrapped up construction.
The program, run by the Portland Housing Bureau and known as the Multiple-Unit Limited Tax Exemption program, offers developers a 10-year property tax exemption if they make at least 20 percent of the units affordable to households earning either 60 percent or 80 percent less than the median family income.
One of the most notable projects to tap into the MULTE option was Yard, the 21-story apartment building at the east end of the Burnside Bridge, which has 57 units of affordable housing as a result of the program.
But UAA’s project, which sits at 7707 S.W. Capitol Highway, was outside the geographical bounds of the program, so the apartments moved forward as 100 percent market rate.
“Absolutely we looked at it before,” O’Brien said, “and we would have liked to use it for our Multnomah project, but unfortunately we were outside the boundary so we weren’t able to.”
It’s too late for UAA’s project now, but revisions to the MULTE program, on which the Portland City Council will vote tomorrow, could open up the program to projects anywhere within the city limits, not just in the largely close-in patchwork that had been specified by the program before.
In addition, the revisions would make the MULTE program available to hundreds of housing projects that were grandfathered in prior to the implementation of the city’s Inclusionary Housing program. That program requires new multifamily developments with 20 or more units to reserve 20 percent of those units for households making 80 percent of Area Median Income.
The Area Median Income for the Portland metro area was $74,400 as of last April.
In a rush to beat the February 2017 IH deadline, developers flooded the permitting pipeline. According to the city, some 19,000 units “became vested through land use actions or by the submission of building permits” and aren’t subject to the IH program. They are, however, also not eligible for the MULTE program, but the Council is widely expected to change that tomorrow.
The ordinance that Council will take up on Wednesday states: “PHB wants to make the MULTE Program available to housing developments not subject to the IH Program requirements in order to promote affordable units in what would otherwise become market-rate housing developments.”
Under a cap, the city would forgo no more than $3 million in tax revenue over a two-year period under the MULTE program.
O’Brien’s UAA has two new apartment projects in the works, one in Multnomah Village and one on Southeast Division Street and Southeast 33rd Avenue. Both of them came after IH, so they will be required to have affordable units and wouldn’t qualify for the MULTE program.
Even so, O’Brien said he’s overall in favor of offering the MULTE program to more projects. He would like to see the application process streamlined and perhaps projects already in the pipeline given eligibility. At present, developers need to apply for the MULTE program and be approved before a building permit can be issued.
“It’s a good approach and I’m very supportive of it,” O’Brien said. “I mean, they need to look at it and make it beneficial to developers. They really need to consider flexibility with timing. Having to get approved before permits is a limitation. I’ve heard other developers comment on that. If you already are waiting on permits and construction loans, you don’t want to have to wait around even longer for a city program.”
Other local developers question whether an expanded MULTE program will help make projects pencil in an era of rising construction costs and rents that aren’t rising as they have been in recent years. Developers may enjoy the tax breaks that come with the MULTE program, but the affordable units generate less revenue, thus making a completed project less valuable than a comparable market rate building — an unappealing opportunity for banks and investors to back.
The council is set to vote on the ordinance during its morning session tomorrow.