Grant to fund study of affordable housing options

The city has received a $40,335 Department of Land Conservation and Development grant to study current mechanisms and suggest potential options regarding Cottage Grove’s affordable housing needs.

Consulting firm ECONorthwest will conduct the analysis and give reports to an advisory committee.

“The hope is that they will see if there’s any additional programs that the city council could consider adopting that would focus on and target encouragement to build affordable housing,” said Public Works and Development Director Faye Stewart.

The Affordable Housing Implementation Plan Advisory Committee will be made up of a dozen or more representatives from stakeholders such as the Cottage Grove City Council, Planning Commission, Lane County, St. Vincent DePaul, local developers and property managers to guide the planning process. 

City councilors Mike Fleck, Kenneth Michael Roberts and Chalice Savage were appointed to the advisory committee on Monday (Jan. 24) night.

Advisory committee meetings will begin in March and conclude in November this year.

A 2018 Cottage Grove Housing Needs Analysis pointed to an extremely low vacancy rate in the city (under two percent at the time, though thought to be lower currently) and a need for housing at all levels. The analysis stated that Cottage Grove must add 69 dwelling units annually to meet the projected need of 1,379 more units by 2038.

Since the analysis, a number of unique housing strategies have arisen in Cottage Grove.

In August 2020, nonprofit DevNW developed six affordable homes on Arthur Avenue. The homes were developed as a community land trust, which legally separates the land from the houses, allowing DevNW to retain stewardship over the land. Home-buyers thus acquire full ownership of the home without having to cover the cost of the land, providing opportunities for more moderate-income buyers.

In December the same year, Legion Cottages welcomed its first tenants to a new site behind the American Legion building. The four tiny homes were developed as a Homes for Good project for veterans coming out of homelessness and included housing aid through a voucher program.

Then in July 2021, the SquareOne project Cottage Village celebrated the completion of its 13-house development. Also consisting of tiny homes, Cottage Village is a leasehold cooperative, meaning the co-op members lease the property from SquareOne. The cooperative itself, however, is owned and operated by the members who act as landlords and have control over elements such as pricing and vetting applicants, essentially democratizing the tiny home community.

The City of Cottage Grove had been a key partner in greasing the skids for these projects and has enacted its own programs to address housing needs as well.

In December 2019, the city council voted to establish the Multiple-Unit Property Tax Exemption (MUPTE) program which allows new multi-unit housing developments of three or more units to avoid property taxes on the value of new residential construction for up to 10 years, though the property continues to generate taxes on the land value and any commercial portion of the property.

MUPTE applicants must meet several requirements in order to be approved for the program including that the location be along a transit route, the development of three or more units, provision of a public benefit and an agreement to maintain residential use throughout the duration of the tax abatement.

Each applicant is subject to a public hearing and must be considered by the council.

The first use of the MUPTE program wasn’t approved until September 2020, but several other developments have taken advantage of it since.

Additionally, in January 2020, councilors voted to establish the Housing Development Cost Assistance Program. The program enables the city to provide relief on system development charges and building fees to nonprofit or government agency developers with projects which help the city meet its broad array of housing needs.

Despite these projects and programs, however, Cottage Grove is still feeling the pressure of housing scarcity, an issue that has overlapped with recent debates about how to handle the local homeless population.

As for ECONorthwest’s part, the consulting firm will present the advisory committee with its analysis of existing programs and, it’s hoped, viable alternative solutions.

In particular, city councilors have asked for a review and possible update of the MUPTE program. The ECONorthwest analysis will look at the program’s effectiveness in the community.

The MUPTE program’s core theory rests on the idea that its tax exemption will generate more tax revenue in the long run by making projects financially feasible. Without financial feasibility, the projects may not be built and the city would ultimately miss out on the potential tax revenue.

Ideally, the program would help reduce the opportunity cost of a stagnating development rate.

However, one issue that has been raised by the public and in council is the “public benefit” requirement of the program.

The application for Cottage Grove’s MUPTE program lists 17 criteria to choose from in meeting public benefit qualifications, which include facilities for the handicapped, child care facilities, open spaces, recreation facilities and dedication of land for public use. Only one of these must be met to satisfy the public benefit requirement and some have questioned just how beneficial to the public this requirement has been.

The program’s efficacy in encouraging affordable housing is another question.

The City of Eugene’s own MUPTE program has seen apparent success with market-rate housing. According to the city’s website, it has incentivized the creation of about 1,500 units in the city center.

For affordable housing, however, Eugene also makes use of a LIRHPTE (Low Income Rental Housing Property Tax Exemption) program which offers a 20-year exemption for rental properties constructed after February 12, 1990, or rental properties owned by nonprofits. The program focuses on low-income rental housing, setting an income limit for the program at 60 percent of the area median income.

The possibility of adding a LIRHPTE program to Cottage Grove’s toolkit has been floated in previous city council meetings as is likely to come up again by the time ECONorthwest finishes its analysis later this year.

Public comment on the proposals will be possible as they are presented to the city council.

Additionally, the city council will meet in a public work session on Jan. 31, 2022, from 6 to 8 p.m. to discuss options regarding homelessness.

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