Lake Oswego council approves property tax exemption program for affordable housing

The city of Lake Oswego approved a property tax exemption program for affordable housing developments during a meeting Tuesday, May 7.

Based on the new policy, developers of housing for people earning 60% or less of the area median income would receive an exemption from paying taxes levied by the city government; the city could seek approval from other taxing districts for a larger exemption.

This program was established as part of the city’s ongoing Housing Production Strategy and could apply to projects at the former Marylhurst University campus and a Hacienda CDC project along SW Boones Ferry Road. Mercy Housing, which is developing the Marylhurst project, requested that the city consider applying this exemption.

The city has noted that more than one-third of needed housing in Lake Oswego in the next 20 years will be for low-income residents. Staff also said developments for this demographic are not usually feasible through the private market.

“The private market will not deliver housing that is needed by low-income households on its own. Housing that is affordable to those earning below 80% MFI (median family income) typically require government subsidy and partnerships with affordable housing providers,” the city staff report reads. “The proposed Nonprofit Tax Exemption can have a large impact on making low income affordable housing more feasible to develop and operate in the City. The open-ended nature of the abatement (as long as the project maintains affordability) can offer significant savings to the nonprofit corporation over time and increase the viability of offering affordable rents indefinitely.”