Editorial: State's tax incentive for middle income housing needs help

It should be changed. And the city of Bend has worked with state Rep. Jason Kropf, D-Bend, to come up with legislation. He has a draft bill ready for the next legislative session.

Oregon needs more of all types of housing. Low-income people may struggle the most. Middle-income families need housing, too. There’s even a relative shortage of housing for upper income families in Oregon.

Bend has tried a lot of policies and tools to build more lower-income housing. But we can’t neglect teachers and others who earn middle incomes and can’t find housing.

One state solution was House Bill 2377 in 2017. Local legislators, at the time, Reps. Knute Buehler and Gene Whisnant were sponsors. It was a good idea.

The idea was to create a property tax exemption for multiunit housing for 10 years. It was targeted to help people who are at or below 120% of area median income. It applies to new rental housing and renovated rental housing.

Let’s say you build an apartment building with 10 units. Under the bill, the property tax exemption scales up based on the number of units with low enough rent to qualify. If one of the units had low enough rent to qualify, you would get a 100% property tax exemption for one year. If 10 qualified, you would get the full exemption of 100% for 10 years.

That may sound good, but developers say it’s not good enough to make it work for them. The proposal is to add another more lucrative option. Basically, the city summarized, if we go back to that same apartment building with 10 units, if one unit qualifies, a developer could get a 10% exemption for 10 years.

There is a downside. Making the tax exemption more attractive could mean developers will use it and that means those tax dollars won’t be collected. But when the market is not producing enough units of housing, property tax exemptions are one tool the state can use to try to encourage more.

You can tell Kropf what you think at Rep.JasonKropf@oregonlegislature.gov.