Multi-unit Property Tax Exemption
The Multi-Unit Property Tax Exemption (MUPTE) is a tool that can shift a proposed housing development to being financially feasible. It is a state-enabled program designed to be an incentive of redevelopment of residential properties in city centers and along transit corridors. In Eugene, the City Council has authorized the use of MUPTE in the downtown area.
MUPTE allows new multi-family units (5 or more units) to avoid property taxes on the value of new residential construction for up to 10 years. The property continues to generate taxes for the land value during the exemption period.
The figure to the right shows how the costs of development and operating revenues are connected. The construction costs are all up-front and are made before the developer generates any revenue from the development. Typically, developers use a mix of equity (i.e., investor funds) and debt (i.e., bank loan). The developer estimates the future rents from the apartments and/or commercial space or sales from condominiums, to estimate if those expected revenues can cover the debt payments and provide investors with a return on their investment that is competitive with other investment opportunities. By exempting property taxes, MUPTE lowers the operating costs in the early years of a housing development so that it becomes financially feasible.
The Multi-Unit Property Tax Exemption program is enabled under state law for the purposes of stimulating the construction of multi-unit housing in the core area and to ensure use of the core area as a place where citizens have the opportunity to live as well as work. Projects eligible for the tax exemption include construction, addition or conversion of rental or ownership multi-unit housing within the MUPTE boundary (please see map below). Projects must include a minimum of five new housing units.
In July 2015 the Eugene City Council approved an ordinance Opens a New Window. revising the Multi-Unit Property Tax Exemption (MUPTE) program. Revisions included changes to the criteria, process, and boundary, and removal of student housing as an eligible project type. The Required Public Benefit Criteria are:
- Compact Urban Development
- Green Building Features (ensuring building energy performance is 10% above code)
- Local Economic Impact Plan (including support for local businesses, minority and women business enterprises, and ensuring compliance with laws)
- Moderate-Income Housing Contribution
- Project Design and Compatibility (including scale, form, and quality of the building; mixture of project elements; relationship to the street and surrounding uses; and parking and circulation)
- Historic and Existing Housing Sensitivity
- Project Need
The MUPTE program offers a property tax exemption on the new structure or incremental change in the property value of the building that comprises the project for a maximum of 10 years. Projects are required to address specific quality standards established in the program. Tax exemption requests are reviewed and approved by the Eugene City Council.
The non‐financial materials included with the application will be reviewed by staff and a 30‐day written comment period will start. The financial information will be reviewed by an independent professional consultant. The City Manager will then convene the Project Review Panel to review the application’s conformance with program criteria and the consultant’s financial conclusions.
Frequently Asked Questions About MUPTE Opens a New Window.
The administrative rules for the updated MUPTE program are available Opens a New Window. online.
The 2015 MUPTE update established a Review Panel, tasked with providing a third-party review of individual applications for the City Manager. The Review Panel:
- Reviews the project applications, including the consultant’s review of the project’s financial projections.
- Reviews the applicant’s conformance with the Required Public Benefits and making recommendations regarding approval/denial of the tax exemption to the City Manager.
- Reviews the project’s conformance with approval requirements midway through construction, at completion of construction, and during the exemption period.
- Assists the City Manager in preparing an Annual Report on progress of the approved projects, program volume cap, and reporting documentation.
The Review Panel consists of two at-large neighborhood representatives selected by neighborhood association boards, an additional two representatives selected by the board of the neighborhood association in which the proposed project is located, and six technical professionals selected by the City Manager from the following six groups: architects/green building specialists; building trades unions; developers; environmental professionals; public health professionals; and human rights representatives.
The MUPTE Review Panel started conducting annual project and program reviews in the fall of 2016. Read their review memos below:
FY17 Program Review Opens a New Window.
FY17 Project Review Opens a New Window.
FY16 Program Review Opens a New Window.
FY16 Project Review Opens a New Window.