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Downtown project may hinge on 10-year property tax break.

Byline: The Register-Guard

Mayor Kitty Piercy hopes the City Council won't have to play hardball with the property tax break for Capstone Collegiate Communities.

Some residents are suggesting that the council require Capstone to finance off-site public amenities, such as improved bike routes, in exchange for a 10-year property tax break, estimated at about $1 million a year, or about $10 million total.

The council grants the tax waivers to developers of apartments and condos in the downtown area through the so-called Multi-Unit Property Tax Exemption.

Piercy said the council could let Capstone know what it wants in the way of community benefits well before the council decides whether to grant the tax break, most likely in May. "We wouldn't necessarily have to impose conditions as part of MUPTE if, in fact, Capstone agreed to do them on their own," Piercy said. "That is a kind of negotiation."

In its application to city officials, Capstone said the project wouldn't be profitable enough to pursue without the tax waiver.

Capstone consultant Conrad Sick said that "laying on more costs" through such things as a two-way bike lane on East 13th Avenue wouldn't help the project proceed.

Even if the council wanted to use MUPTE to force Capstone to make off-site improvements, it's unclear whether city attorneys would advise that strategy.

City Attorney Glenn Klein said the council has in the past imposed conditions of approval on MUPTE applications that were "related to the appearance and construction of the development."

Klein said he has not researched whether the council could impose other kinds of conditions, such as requiring a developer to provide off-site improvements.

Jefferson Westside Neighbors chairman Paul Conte said it's important for the council to clarify what it can ask developers to do in exchange for the tax waivers.

The council, for example, should determine whether it can give a partial tax exemption as a way to finance public improvements, he said.

Under MUPTE, Capstone's buildings would not be taxed for 10 years. The land would remain taxed, at an estimated $147,376 a year.

But if a portion of Capstone's newly built complex was taxed, the city could use some of the additional revenues to pay for related improvements, Conte said.

Such improvements could include new bike lanes or traffic changes on area streets that minimize the amount of "cut through driving" from the apartment complex through adjoining neighborhoods, he said.

Mike Sullivan, the city's community development manager, said the city cannot give partial exemptions, but it doesn't have to provide the tax waiver for the entire 10 years.

"It appears the council could approve an exemption that was less than 10 years," he said.

However, the city would have to give full waivers in each of the years the exemption is granted, Sullivan said.

During the past five years, developer Dan Neal has used MUPTE to build attractive and energy efficient apartment buildings in the neighborhoods near the University of Oregon.

Neal said he's uncomfortable with the council using the tax waivers to force developers to make off-site improvements.

"MUPTE has been used to hold developers to their promises and that, to me, is entirely appropriate," he said.

"The City Council can make whatever demands they think are reasonable in exchange for the tax exemption on the site itself," Neal said. "But whenever you require the developer to do something off the property that he doesn't own or controls, that is moving into the realm of inadvisable and poor public policy."

Ultimately, Capstone will have to decide whether to accept the council's requests, Neal said.

"If the city wants to say, 'You will get a MUPTE only if you do those things outside the plan,' then the developer has to decide how badly they want MUPTE," he said.

- Edward Russo

WHAT'S NEXT

In a series of upcoming meetings, the Eugene City Council will consider Capstone Collegiate Communities' request for a tax exemption and the purchase of an alley.

Work session: 5:30 p.m. April 9, McNutt Room, City Hall, 777 Pearl St.

Public hearings on tax exemption/alley purchase: 7:30 p.m. April 23, Council Chamber, City Hall.

Work session: Noon April 25, McNutt Room.

Work session, possible action: Noon May 9, McNutt Room.

Watch: Metrovision Comcast channel 21; city website, www.eugene-or.gov
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Title Annotation:Local News
Publication:The Register-Guard (Eugene, OR)
Date:Mar 25, 2012
Words:718
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