The 2017 State Legislature gave administration of Vertical Housing
Development Zones (VHDZs) to cities and counties with the passage
of Senate Bill 310. The bill lays out more standards to address equity
and prescribe a broad implementation outline for cities and counties.
Ultimately, cities and counties have the authority to administer the
program differently than the Oregon Department of Housing and Community
Services, however the law is specific about certain aspects of zone
creation and project approval. New zones may be created and administered
by the city or county in which it lies. Any VHDZ projects currently
administered by the state have sent their compliance letters to the
cities or counties.
(Ord. 6264 § 1, 2018)
The following definitions apply unless inconsistent with the
context:
the area median income, accounting for family size, for the
city of Hillsboro as defined by the United States Department of Housing
and Urban Development as adjusted and published periodically.
a multi-story development within a VHDZ that the city certifies
as a vertical housing development project qualifying for a vertical
housing partial property tax exemption under this chapter based on
a proposal and description from a project applicant that conforms
to city requirements.
the development of land and the new construction of improvements
to land as further described in this chapter.
the Washington County assessor.
the city of Hillsboro.
the director of the economic development department or someone
within the city authorized to act on behalf of the director for purposes
of the program.
a situation in which a household is forced to move from its
current residence due to conditions that affect the residence or the
immediate surroundings of the residence and that:
a local taxing district.
the quotient that results from the division of the total
square footage of a certified project, excluding the uses listed below,
by the number of actual floors of the non-ancillary improvements of
the project that are at least 500 square feet per floor unless the
city, in its discretion, increases the minimum square footage or otherwise
qualifies the actual floors of a project eligible to be used as a
divisor in determining the equalized floor quotient. Factors that
the city may consider in determining whether or not to increase the
square footage minimum or to impose other conditions for a qualifying
divisor floor include, but are not limited to, the following:
The proximity of the actual floor under consideration to other
floors in the project;
The extent of construction or rehabilitation on the actual floor
under consideration;
The use intended for the actual floor under consideration;
The availability of the actual floor under consideration for
use by prospective project tenants;
Patios, porches, and parking will not be included by the city
in the determination of equalized floors. The city may include any
or all of such space in its determination of equalized floors if it
concludes that such space is critical for the viability of the project.
Factors that the city may consider in reaching such a conclusion
include, but are not limited to, the following:
The effect of such spaces upon the economic viability of the
project;
The degree to which such spaces are integral to the habitability
of residential housing in the project;
The benefit of such spaces with respect to the revitalization
of the community in which the project is located; and
The degree to which inclusion of such spaces modifies the calculation
of equalized floors.
housing that is restricted to occupancy by persons or families
whose initial income at occupancy is no greater than 80 percent of
's area median income.
square footage within a certified project used other than
primarily for residential use or as common areas available for residential
use.
an owner of property or their designee (e.g., a prospective
developer) within a VHDZ, who applies in a manner consistent with
this chapter, to have any or all such property approved by the city
as a certified project.
repair or replacement of improvements, including fixtures,
or land developments, the cost of which equals at least 20 percent
of the real market value of the improvements or land developments
being repaired or replaced. In determining whether or not a repair
or replacement of improvements qualifies as a rehabilitation under
this chapter, the city may consider factors including, but not limited
to:
The quality and adequacy of design, materials, and workmanship;
The quantity of rehabilitation in proportion to the total cost
of the project and between the area devoted to residential use and
area devoted to non-residential use;
The distribution of rehabilitation throughout the project, including
as it relates to the habitability of residential areas, and particularly
low-income residential housing areas; and
The value of the improvements on a project. The value of the
improvements must be at least 20 percent of the real market value
of the entire project on the last certified assessment roll before
the city, in consideration of other factors, will deem rehabilitation
to be "substantial" in nature.
regular, sustained occupancy of a residential unit in the
project by a person or family as the person's or family's primary
residence, including residential units used primarily for transitional
housing purposes, but not units and related areas used primarily as:
the construction or rehabilitation of a multiple-story building,
or a group of buildings, including at least one multiple-story building,
so that a portion of the project is reserved for residential uses
and a portion of the project is reserved for use as non-residential
areas.
an area that has been and remains designated by the city
as a vertical housing development zone or an area that was officially
designated by the state of Oregon as a vertical housing development
zone and which remains so designated.
(Ord. 6264 § 1, 2018)
The director or designee is responsible for the implementation,
administration, and enforcement of this chapter. The director may
adopt such policies and procedures as are necessary to efficiently
and effectively carry out that responsibility, consistent with the
provisions of this chapter.
(Ord. 6264 § 1, 2018)
A.
The
city may designate an area within the city as a VHDZ.
B.
Before designating a VHDZ, the city must notify the local taxing districts that have territory in the proposed VHDZ of the city's intention to designate a VHDZ pursuant to the requirements of Section 3.12.040.
C.
A local
taxing district may elect not to participate in a VHDZ. A local taxing
district that elects not to participate may continue to impose taxes
on property otherwise exempt from ad valorem property tax under ORS
307.864.
D.
The
city must consider the potential for displacement of households within
a proposed VHDZ before designating the zone.
E.
The city may designate a VHDZ by resolution. The resolution may not be adopted sooner than 60 days after sending the notice required by subsection B above. The ordinance or resolution shall:
1.
Contain
a description of the area sought to be designated as a VHDZ, including
proposed zone boundaries;
2.
Contain a statement attesting that the notification described in subsection B was sent by regular mail to each local taxing district listed pursuant to Section 3.19.040(A)(1), below;
3.
Contain
a list of the local taxing districts that elected not to participate
in the VHDZ.
F.
Once
designated, a VHDZ shall continue to exist indefinitely, except as
provided otherwise in this chapter.
G.
The
city may approve multiple VHDZs within its jurisdiction.
H.
The
boundaries of VHDZs may not overlap. A property may only be in one
VHDZ.
(Ord. 6264 § 1, 2018)
A.
B.
To elect
not to participate in a VHDZ, a district shall, within 30 days after
the date on which proper written notification is received by the district
from the city:
D.
A district
that forms after the approval of a VHDZ may opt out of participating
in a VHDZ. To opt out, the district must provide:
1.
Written
notice post-marked to the county assessor and the city on or before
July 1 of the first tax year in which it would impose a tax on the
project; and
2.
A
copy of a resolution or other appropriate official instrument duly
adopted and issued by the governing body of the district affirming
its decision to opt out of the VHDZ designation.
E.
The decision by a district to opt out of a VHDZ will be effective for the tax year that begins on the July 1, after notification to the county assessor by the city pursuant to Section 3.19.050(A), or by a new district pursuant to subsection D.
(Ord. 6264 § 1, 2018)
A.
The
city will send a copy of any designation of a VHDZ to the Department
of Revenue and to the county assessor's office. The city will include
with the notification to the county assessor:
B.
Copies
of materials delineating the area of the VHDZ; and
C.
The
name of any district that opted out of the VHDZ.
(Ord. 6264 § 1, 2018)
A.
The
city may terminate all or part of the VHDZ at any time. Any such termination
determination will not affect existing certified projects and is not
subject to administrative or judicial review.
B.
The
city may approve a certified project after VHDZ termination if the
application for certification of the project was pending with the
city prior to the city terminating the VHDZ.
C.
The
city will send notice of its termination of a VHDZ to any pending
applicant, the county assessor, and owners of certified projects,
of whom the city is aware.
D.
Subsequent
VHDZs may include areas from a terminated VHDZ. A new VHDZ may be
designated, or an existing VHDZ expanded or reduced, so that there
is no discontinuance of a VHDZ designation for any areas where the
VHDZ designation is intended to endure.
(Ord. 6264 § 1, 2018)
A.
The
city may acquire or dispose of real property located in a VHDZ for
the purpose of developing projects. Property acquired by the city
within a VHDZ may be sold by the city at real market value or, if
it will prudently encourage the development of a project, at a lesser
value. This authority is in addition and without prejudice to any
authority by the city that otherwise exists under the laws of this
state or an act of this city to acquire or dispose of property.
B.
Development
of projects may be undertaken by the city, jointly or in partnership
with a private person or entity.
C.
Development
of projects also may be undertaken by private persons or entities
acting independently of the city ownership.
(Ord. 6264 § 1, 2018)
A.
A project
applicant may file an application for certification of a project by
completing the vertical housing project application form, as prescribed
by and available from the city, and by delivering it during normal
business hours or by mail to: City of Hillsboro, Economic Development
Department, 150 East Main Street, 5th Floor, Hillsboro, OR 97123.
lots.
B.
Projects
must be described in terms of entire tax lots. Projects may not include
partial tax
C.
To be
for 'residential use' or for 'non-residential use' does not mean that
a building floor is actually being occupied accordingly, but rather
that it is constructed for such use and is not converted or occupied
for a contrary use.
D.
Low-income
residential housing floors or units must be set-aside as such for
the entire tax year and occupied only by people who are income eligible
in order for the project to qualify for the low income vertical housing
exemptions on land.
E.
The
non-residential use of a particular floor or floors may be satisfied
even if the entire floor is not devoted to that use.
F.
The
city will review applications upon their appropriate delivery, subject
to:
1.
Applications
being complete and consistent with city requirements; and
2.
Delivery
to the city of appropriate fees.
a.
In determining fees for each project applicant, the city may consider
factors including, but not limited to, known and expected costs in
processing the application, effecting appropriate monitoring of the
project and otherwise administering the program with respect to the
project.
b.
The fees authorized by this subsection may be established by resolution
of the city council. Payment of fees may be made by check or money
order payable to the city and must be submitted along with the project
application or as otherwise required by the city.
G.
For
new construction projects to qualify for certification, the application
must be delivered to the city before the relevant permitting authority
has issued a permanent certificate of occupancy for the completed
building(s).
H.
For
rehabilitation projects to qualify for certification, the application
must be delivered to the city at any stage during rehabilitation.
However, the city may provide a preliminary certification of the project
pending completion of the rehabilitation of the project. Notification
of the project's completion, together with appropriate documentation
of the actual costs of the rehabilitation and the real market value
of the pre-rehabilitated project must be forwarded by the project
applicant to the city within 90 days of project completion. The city
may certify all or part of a rehabilitated project or of a project
where the rehabilitation is still in progress as a certified project.
I.
For
rehabilitation projects to qualify for certification, the application
must be delivered to the city before the final building inspection.
J.
Project
applicants must provide the following information in a manner satisfactory
to the city:
1.
The
address and boundaries of the proposed project including the tax lot
numbers, a legible and scaled site plan of the proposed project, and
a legal description of the land involved in the project for which
a partial tax exemption is sought by the project applicant;
2.
A
description of the existing condition of the proposed project property;
3.
A
description of the proposed project construction or rehabilitation,
including, but not limited to:
a.
The design of the project,
b.
The architectural plans that include verifiable square footage measurements,
c.
The detailed hard and soft costs, including associated documentation,
d.
The number of floors, by intended use as residential or non-residential,
and
e.
The number of residential units to be constructed;
4.
A
description of all non-residential areas with related and total square
footages, and identification of all non-residential uses;
5.
A
description of all residential areas with related and total square
footages, number of units, and identification of all residential uses;
6.
A
description of the all low-income residential areas with related and
total square footages, number of units, and identification of all
low-income residential uses;
7.
For
purposes of this section, square footage does not include areas used
for patios, porches, and parking, unless these areas are demonstrated
to the satisfaction of the city to be economically necessary to the
project or the city otherwise determines that it is appropriate to
include the areas in the square footage;
8.
A
commitment from the project applicant, acceptable to the city, that
the project will be maintained and operated in a manner consistent
with the project application for the total duration of the partial
property tax exemption;
9.
A
calculation quantifying the residential and non-residential uses of
the project, including allocations to low-income residential housing
uses; and
10.
Such other information as the city, in its discretion, may require.
K.
By filing
an application, a project applicant irrevocably agrees to allow the
city reasonable access to the project and to project-related documents,
including the right to enter onto and inspect the project property
and to copy any project-related documents during the period of application
review and if approve, the entire duration of the partial property
tax exemption.
L.
Unless
an exception is granted by the city, projects "in progress" at the
time of application may include only costs incurred within six months
of the application date. Factors that the city may consider in determining
whether or not to grant an exception to the six-month limitation on
costs include, but are not limited to, the following:
M.
For
applications filed before project completion, the city may provide
a conditional letter of prospective certification of the project pending
its completion. To obtain a final certification of the project, the
project applicant must provide timely notification to the city of
the project's completion, together with a copy of the certificate
of occupancy and other information as the city may require. A project
applicant must provide the notice and required documentation to the
city within 90 days of project completion which is typically the date
of the certificate of occupancy unless the city determines that another
date is more appropriate.
N.
If an
application is rejected for failure to meet city review requirements,
then:
1.
The
city will notify the project applicant that the application has been
rejected; and
2.
The
city, at its own discretion, may allow the resubmission of a rejected
application for project certification ("as is" or with appropriate
corrections or supplementations) or may reconsider a determination
by it to reject an application. Factors that the city may consider
in allowing a resubmission of a rejected application or the reconsideration
of a determination by it to reject an application include, but are
not limited to, the following:
a.
Whether or not rejection results in undue hardship to the project
applicant,
b.
The best interests of the community,
c.
The level of cooperation from the project applicant,
d.
The level and materiality of initial non-compliance by the project
applicant, and
e.
Mitigation of any initial non-compliance by the project applicant;
3.
If
the city accepts for review a previously rejected application, it
may do so, at its discretion, on a prospective basis or based upon
the original date of filing. Factors that the city may consider in
determining the date to apply to a previously rejected application
include, but are not limited to, the following:
a.
Whether or not occupancy or readiness to occupy residential units
in the project has occurred since the original application,
b.
Whether or not undue hardship would result to the project applicant,
c.
The best interests of the community, and d The level and materiality
of non-compliance in the initial application.
(Ord. 6264 § 1, 2018)
A.
The
city will evaluate each accepted application to determine whether
or not to certify the proposed project. A project, to qualify for
city certification, must satisfy each of the following criteria:
1.
The
project must be entirely located within an approved VHDZ located within
the city's jurisdiction;
2.
The
project must include one or more equalized floors, as calculated by
the city's calculator;
3.
Construction
or rehabilitation must have been started on each building included
in the project; and
4.
A
minimum of 50 percent of the project's ground floor that fronts on
the primary public street must be constructed to building code standards
for commercial use or planned for commercial use upon completion.
If a project has access to only one public street, the square footage
of driveways, loading docks, bike storage, garbage receptacles, and
building entryways shall be excluded before applying the 50 percent
test.
B.
Certified
projects with at least one equalized floor of low-income residential
housing may qualify for a partial property tax exemption with respect
to the land contained within the tax lot upon which the certified
project stands for a period not less than 10 years, but will not qualify
for a partial property tax exemption under the program for land not
necessary for the low-income residential housing units to be built.
(Ord. 6264 § 1, 2018)
A.
The
city will endeavor to process each accepted application and make a
determination whether or not to approve such application, in whole
or in part, within 60 days of when the accepted application is received
by the city.
B.
The
determination of the city to certify or deny certification is a discretionary
determination and is not subject to judicial or administrative review.
D.
The
owner of a certified project must execute and record a project use
agreement, including restrictive covenants running with the land and
equitable servitudes, satisfactory to the city in the Washington County
records. Recordation of such instruments satisfactory to the city
constitutes a condition precedent to the approval of the certified
project taking legal effect. The city may void any certified project
approval for failure to timely record and provide the city with a
copy of any such instruments. The owner shall be responsible for the
cost of recording and providing satisfactory evidence to the city
that such instruments have been properly recorded.
E.
If the application is denied, the city will send written notice of the denial to the project applicant. At its option, the city may allow reapplication by the project applicant consistent with Section 3.19.080(N).
F.
Certification
by the city of a project may be partial in scope. The city's letter
of approval will identify what portions of the property and improvements
included in the project application constitute the certified project.
1.
No
partial property tax exemption will be awarded for a partial equalized
floor of residential housing and the maximum number of equalized floors
in a project is four;
2.
Accordingly,
the city will determine the number of residential equalized floors
in a project available for calculating a corresponding property tax
exemption by capping potential equalized floors at four and by rounding
down to the next complete equalized floor of residential housing.
In other words, a certified project will contain exactly one, two,
three or four residential equalized floors reflecting the number of
complete equalized floors of residential housing in a project up to
the maximum four equalized floors.
G.
The
letter of approval from the city also may include such information
and instructions as the city deems appropriate.
(Ord. 6264 § 1, 2018)
A.
A monitoring
fee shall be paid by the project applicant to the city at the time
of project application, or as otherwise directed by the city, to cover
the city's actual and anticipated costs of monitoring and otherwise
addressing compliance by the certified project with program requirements,
including, without limitation, ORS 307.841 to 307.861 and other applicable
law. The city may consider factors including, but not limited to,
the following in determining the amount of this monitoring fee:
1.
The
size of the project;
2.
The
number of residential housing units;
3.
The
amount of commercial space;
4.
Project
uses;
5.
Project
location;
6.
The
duration and complexity of compliance requirements;
7.
The
level and amount of staff or other services involved;
8.
The
use of supplies, equipment or fuel; and
9.
The
number of separate sites and/or buildings.
B.
The city may condition its approval of a certified project upon payment by project applicant of the applicable fee described above in subsection A. The city may void or terminate the certification of all or a portion of a certified project if such fees, or any part thereof, are not timely paid.
C.
Modifications
to or transfers of ownership of a certified project must receive prior
written approval from the city. The city will not unreasonably withhold
its approval of such modifications to or transfers of ownership. The
city may void or terminate the certification of all or a portion of
a certified project if modifications to or transfers of ownership
are made without its prior written approval except where such modifications
or transfers occur by operation of law following death or divorce.
D.
If there
are proposed or actual modifications to or transfers of ownership
of the certified project, the certified project owner shall notify
both the county assessor and the city of the new owner's name, contact
person, mailing address and phone number within 30 days of the change.
E.
The
city may require the certified project owner to pay an administrative
fee to cover the city's actual and anticipated costs of reviewing
and processing such modification or transfer including, without limitation,
effecting the legal review, amendment, execution or recording of related
documents.
F.
The city may condition its approval of a modification to or transfer of ownership in a certified project upon payment by the certified project owner of the administrative fee described above in subsection E. The city may void or terminate the certification of all or a portion of a certified project if such an administrative fee, or any part thereof, is not timely paid.
(Ord. 6264 § 1, 2018)
A.
In order
to receive a partial property tax exemption under this chapter, the
certified project owner, the project applicant or other person responsible
for the payment of property taxes on the certified project must notify
the county assessor that the project has been approved by the city
as a certified project and qualifies for a partial property tax exemption.
B.
The notification described above in subsection A must be delivered to the county assessor in writing on or before April 1 preceding the first tax year for which the partial property tax exemption is sought.
C.
Except as clarified by subsections D and E of this section, the exemption applies to the construction or rehabilitation of real property improvements associated with the certified project and land, if there is an inclusion of low-income housing on the certified project, in each of the tax years for which the exemption is available.
D.
The
property exemption rate equals 20 percent (0.2) multiplied by the
number of fully equalized floors (among all associated buildings exempt
in that year), up to but not exceeding four such equalized floors,
that are:
E.
The
partial property tax exemption on a certified project is available
for ten consecutive tax years beginning with the first tax year in
which, as of the assessment date, the project is occupied or ready
for occupancy following it approval by the city as a certified project.
F.
If during
the period of partial tax exemption, any part of a project dedicated
for residential use is converted to or used as non-residential area,
the county assessor and the city shall be notified by the project
owner of such change within 90 days of submission of the proposed
use change. Similarly, the county assessor and the city shall be notified
in writing by the project owner if any part of a project dedicated
to low-income residential housing is converted to other purposes or
otherwise used in a manner that does not comply with low-income residential
housing requirements. Failure to comply with either of these notifications
could result in decertification of a part or the whole certified project.
G.
In order
to receive partial property tax exemption with respect to a certified
project, the certified project owner shall apply to the county assessor.
Upon written application for partial exemption to the county assessor,
the certified project owner will provide the county assessor:
1.
A
letter specifically requesting the partial tax exemption in accordance
with the certified project approval certification;
2.
A
copy of the final project application for certification;
3.
A
copy of the certified project approval certificate issued by the city;
4.
A
copy of the certificate(s) of occupancy for the entire certified project;
and
5.
Such
fee(s), if any, as the county assessor may require.
H.
The
certificate of occupancy or temporary certificate of occupancy must
be dated prior to January 1 of the assessment year for which the exemption
is requested.
I.
The
written application for exemption must be made to the county assessor
on or before April 1 of the assessment year for which the exemption
is sought and the exemption will be effective for the first year for
which the partial property tax exemption is available and for the
next nine consecutive tax years.
J.
If all
or a portion of a certified project is decertified by the city, that
portion of the certified project shall be disqualified from partial
property tax exemption as set forth in the notice of decertification.
(Ord. 6264 § 1, 2018)
A.
The
city may monitor and investigate certified projects for compliance
with program requirements and other applicable law as it deems appropriate.
Owners or operators of certified projects shall prepare an annual
report to the city on the number of residential and low-income residential
housing units and the amount of space being used for commercial use
and for residential use.
B.
The
city may undertake any remedial action that it determines to be necessary
or appropriate to enforce city interests or program requirements including,
without limitation, commitments provided by project applicants in
the final application and certification. Remedial actions may include,
but are not limited to:
1.
The
requesting of project documentation including, but not limited to,
current rents on an annual basis and lease agreements with redacted
personal information;
2.
The
issuance of orders and directives with respect to the project or otherwise;
3.
The
initiation and prosecution of claims or causes of action, whether
by administrative hearing, civil action or otherwise (including, without
limitation, actions for specific performance, appointment of a receiver
for the certified project, injunction, temporary restraining order,
recovery of damages, collection of fees, etc.); and
4.
The
decertification of all or a portion of a certified project.
C.
Prior
to decertifying all or part of a certified project and directing the
county assessor to disqualify all or part of the project for partial
property tax exemption treatment, the city shall issue a decertification
notice to the certified project owner identifying the following information:
1.
The
property decertified from the project;
2.
The
number of equalized floors that have ceased qualifying as residential
or low-income residential housing for purposes of the program and
a description of the remaining equalized floors and their specific
use;
3.
If
the project no longer includes commercial space consistent with the
intent of the program; and
4.
Such
other information as the city may determine to provide.
D.
Prior
to issuance of a notice of decertification, the city will provide
the certified project owner with notice of an opportunity to correct
noncompliance within a reasonable amount of time as determined by
the city. In determining the amount of time to provide the certified
project owner to correct noncompliance, the city may consider factors,
including, but not limited to:
1.
The
severity of the non-compliance;
2.
The
impact of non-compliance upon project tenants and patrons;
3.
The
cost and time reasonably necessary to correct program non-compliance;
4.
The
past history of compliance and non-compliance by the project owner;
and
5.
Such
other factors as the city, in its discretion, may deem relevant.
E.
If the
city determines that the certified project owner has failed to correct
any noticed program non-compliance within the time allowed by the
city in its notice, the city may issue the notice of decertification
and direct the county assessor to disqualify all or a portion of the
project from property tax exemption under the program.
F.
The
city also may issue a notice of decertification and direct the county
assessor to disqualify all or a portion of a project from property
tax exemption under the program with respect to program non-compliance
for which it determines not to provide prior notice and an opportunity
for non-compliance correction.
G.
The effective date of a decertification is the effective date of same provided in the notice of decertification identified above in subsection C. The effective date of a decertification may be retroactive from the date of the actual notice of decertification only to the commencement of the non-compliance for which the decertification is issued as determined by the city. In determining whether or not to make the decertification retroactive, the city may consider factors including, but not limited to, those identified above in subsection D, the intentional nature of the non-compliance, and when the owner or its agents became aware or reasonably should have become aware of the non-compliance.
(Ord. 6264 § 1, 2018)
The city may waive or modify any requirements of this chapter
unless such waiver or modification would violate applicable federal
or state statutes or regulations.
(Ord. 6264 § 1, 2018)
