City Council, September 27th - Renew the MUHTIP?

After Monday's formal Work Session on the satisfaction survey and bond thinking, on the regular agenda are some items of interest, led by the prospect of renewing the MUHTIP, the Multiple Unit Housing Incentive Program.

The City's memo, written as a Q and A, is helpful, and contains a level of detail we rarely see in the quarterly economic and business development updates. The City should do more of this!

The start of the Q and A memo

It was interesting to learn that the program was shaped and constrained by state statute, so there are limits to the ways the City might reconfigure an incentive program.

In general, the City proposes a 10 year renewal and says

Staff reviewed the program criteria for potential updates and is not recommending any changes at this time.

They underscore the recent use of the program as evidence it works correctly:

Since the City adopted the MUHTIP program in 1976, nine developments have received the MUHTIP tax exemption incentive. In the program’s first thirty-nine years, only four developments applied for and received the MUHTIP incentive. Since 2015 however, the City has had five projects apply for and receive this incentive for infill development.

In defending the analysis for "no change," the City highlighted the role of parking requirements in hindering development:

In the past, a lot of projects looked at development opportunities within the MUHTIP boundary and found that even with the tax incentive they couldn’t make the project profitable due to parking requirements and other factors. As the City has implemented more flexible parking standards, this cost burden has been removed from projects and they have become more feasible.

They also discuss banking and interest rates, rental rates, land supply and costs. The discussion is realistic and detailed, and it will be interesting to see if there is any comment from developers or architects or realtors, whose criticism would be especially informed.

But there are still some questions left unaddressed:

• What role does the newish Federal Opportunity Zone play? The case studies in the City's  Q and A memo are silent on it, and it is possible that the MUHTIP overlaps with it in a redundant way. (Also here on the rejection of State Street and Lancaster for Opportunity Zone designation.)
  
• Two of the case studies are for the Court Yard (Court and Front) and the Nishioka building (State and Commercial), the former built under parking requirements, the second without. We should have a more visibility for the discussion of the way parking shaped the two projects and affected final rents.
• The Q and A does not discuss 990 Broadway as a case study, and more attention should be given to the time line on its application to us the MUHTIP. It used the program, but it did not seem to require it as an incentive to start development and construction. It seemed to be used instead as sweetener well after the project commenced.
  

In the end, the Q and A does not seem as definite as it might be. Here is the conclusion on the Nishioka building:

Would the project have happened without the URA grant or the MUHTIP exemption. The long history of no-to-low development in this area prior to the URA grant program indicates that these programs are critical in making infill multi-family housing projects feasible in the downtown core.

That's correlation, not causation.

Council should ask for more definite causal analysis in order to ensure the program is not an extra give-away and is actually securing the public benefit that is desired.

The City has landed on a proposal on the fee structure for outdoor dining platforms. They propose the annual cost of the parking tax per stall:

[S]taff is recommending the fee for this program be the equivalent of the annual minimum tax within the Downtown Parking District, per space used. This is currently $442.16.

Maybe this will add to the incipient momentum to end the parking tax for businesses and shift to a user-pay model for downtown curbside parking. It will be interesting to read what restaurateurs have to say about the proposal. Several have pointed to the Kitchen's platform on Court near High as the City's best, and maybe they will have comment on how that does or does not make continuing their dining area viable.

There is a proposal for a structured camping site with microshelters next to the Wallace Road Park and Ride, which ODOT owns, as it is on a State Highway.

That's close to transit, right at an important stop, so it's not like the residents would be totally exiled to Siberia, but it does seem distant from important services. The City suggests there are very few options and this is the best:

Without new capital expenditure of budget authority, this is the only parcel feasible for managed temporary camping that is not currently utilized for another purpose known to staff.

It will be interesting what ODOT and Cherriots might have to say. Probably nearby residents will not support it no matter what.

And in the Administrative Purchases there is one for $27,299 for "Historical Survey Services for Grant Neighborhood." The misuse of Historic Districts and Historical designation for exclusionary purposes, using them for crypto-NIMBY ends, is something to watch out for. There is in Portland an attempt to use new Historic Districts as a way to get around HB 2001 middle housing requirements, and this new project in Grant follows the debate over the German Baptist Church project. So it will be interesting to see how this survey goes.