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City Council votes to give tax break to developers who asked the city to approve projects before the Inclusionary Housing policy took effect.

PORTLAND TRIBUNE FILE PHOTO - The City Council wants to create more affordable housing units as soon as possible.Developers were given a new incentive to include affordable units in their new Portland housing projects on Wednesday.

The City Council approved a proposal by Ted Wheeler to give developers a property tax break for including affordable units in developments that were submitted to the city for approval before the mandatory Inclusionary Housing policy took effect.

Although that policy requires projects over 20 units to include affordable ones, projects totally over 19,000 units were submitted before it took effect. Relative few projects have been submitted for approval since then.

"Those units are going to come online at market rates unless we do something to incentive them to include affordability. This is the only way to reach back into the pipeline and do that," said Wheeler.

The Multiple-Unit Limited Tax Exemption approved by the council is expected to provide a 10-year tax abatement of around $100,000 for each affordable unit. No project will receive a tax abatement greater than $500,000, and the total abatement is capped at $3 million a year.

According to a letter Wheeler sent to the rest of the council on March 16, the abatement will allow a developer to rent a $2,000 a month unit to a lower-income family for $1,000 a month, making it affordable to a household earning 80 percent of the areas's median family income.

"As elected leaders, we have declared a housing emergency and we must take aggressive action to address the current crisis. We must make use of every available tool to ensure that housing remains accessible and affordable," Wheeler wrote.

The vote was unanimous with Commissioner Amanda Fritz, who did not support the proposal, leaving the room before the vote so that it could effect immediately. Fritz preferred taxing the new developments at full rates and using the money for other rent subsidy programs. But she understood the rest of the council supported the proposal and did not want to delay it from taking effect.

Commissioners Chloe Eudaly, Nick Fish and Dan Saltzman all agreed the proposal was not perfect, but said it was better than doing nothing, given the affordable housing crisis.

Officials with the Portland Housing Bureau predicted the abatement will produce 300 affordable units over the next two years, when it will expire. Wheeler thought the total will be higher.

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