Medford council approves tax break for housing project
Medford City Council Thursday night agreed to temporarily eliminate property taxes on a property north of downtown to help secure a $48 million low-income housing project.
The proposed four-story complex would have 115 one- to three-bedroom units. It would be built adjacent to Les Schwab on a 3.25-acre Central Avenue property in the low-income Liberty Park neighborhood.
Armed with council support, the Medford Urban Renewal Agency will approach other taxing districts, including Jackson County and schools, to ask for their backing for the property tax abatement.
The property tax abatement is needed to help secure a conventional loan to cover a portion of the project costs.
“The property tax abatement will last for as long as the amortization for the loan,” said Harry Weiss, director of MURA.
The Medford Urban Renewal Agency recently approved an option agreement with Rubicon Investments and Edlen & Co. that sets the stage for a complicated round of financing from federal, state and conventional sources to get the project off the ground.
Rubicon and Edlen are trying to put together a project that would house those who earn 60% or less of area median income, or $41,000 annually for a family of four.
The rents would be $725 a month for a one-bedroom unit, $867 for a two-bedroom, and $997 for a three-bedroom.
MURA would invest $4.2 million into the project along with providing the 3.25-acre property. State dollars would bring in $12.5 million from the Local Innovation and Fast Track (LIFT) Housing Program and another $20 million in federal money. The remainder would come from a conventional bank loan for $7.5 million.
Affordable housing is expensive to build because it requires considerable federal and state requirements to qualify for the tax credits and LIFT grants.
Weiss said the cost to build a four-story building is considerably more than a three-story building. A four-story building requires elevators, which are expensive, he said.
Reducing the project size to three stories would save money, but it would also reduce the number of units by 25%, Weiss said.
“Subsidized affordable housing is more expensive,” he said. “This project is committed to a 60-year term of affordability.”
Other cities in Oregon have built affordable housing with similar grants, but they can charge higher rents, which cuts down on the federal and state support needed for the projects. The higher rents are justified because the median income is higher in other areas of the state. Loan amortization is calculated on the rental income for a particular property.
An April 22 deadline looms to get the necessary applications in for the state and federal funds, and the tax abatement was one of several steps that had to take place before that date.
If all the approvals fall into place this year, the building could be completed sometime in 2024.
Medford will have competition for the LIFT funds, but local officials think the project should score fairly well, particularly after the Almeda fire wiped out 2,500 residences in 2020.
Initially, the project was imagined as a 144-unit complex, but the demand for more family-sized apartments has increased since the project was first proposed.
Reach freelance writer Damian Mann at firstname.lastname@example.org.