After a brief but vociferous debate, the Eugene City Council voted 5-3 June 17 to grant Core Campus, a Chicago-based developer, approximately $4.5 million in tax exemptions over 10 years for a planned 12-story student apartment building. In response, neighborhood advocate Paul Conte announced that he would file a ballot initiative petition to abolish any Multiple-Unit Property Tax Exemptions (MUPTEs) granted after April 2013.
Opponents of the tax break point to the boom of student housing springing up around Eugene without tax breaks, and they call the Core Campus MUPTE an unnecessary solution to an imaginary problem. Eugene’s rental vacancy rate is estimated at somewhere between 4 percent and 5 percent, which is generally considered healthy.
Advocates of the MUPTE maintain that the high-rent student apartment building, which will bring in higher property taxes after the exemption is over, won’t be built without the tax exemption. The city’s financial analysis of the project includes Core Campus’ claim that its investors in the project will require a minimum rate of return of 8.96 percent in the first year, and it won’t make that much without the tax break.
Conte calls the financial analysis pathetic, and he says Core Campus’ own numbers indicate that it doesn’t need the 10-year MUPTE it was granted. “Even if you use their numbers, why are we giving them four or five more years of this tax exemption than they say they need to make it work?” he asks. Core Campus has pledged to return about $1.04 million to the city to fund affordable housing after five years, but Conte says that a shorter-term tax exemption would net more tax revenue for the cash-strapped city coffers.
Rather than allowing for a project that would otherwise not be built, Conte says the MUPTE simply allows developers to include pricy features they can’t afford without a tax exemption. “It’s unfair to developers to have to compete in a market in which Core Campus is going to be able to deliver a more attractive product at the same price because the city is helping them pay for it” by granting a tax break, he says.
Councilors Mike Clark, Greg Evans, George Poling, Chris Pryor and Claire Syrett voted in favor of the MUPTE; Councilors George Brown, Betty Taylor and Alan Zelenka opposed.
As Poling moved to vote on the tax break, Brown protested the rush toward voting in light of “lots of unanswered questions,” and said that council didn’t need to make a decision until mid-July. During council’s discussion preceding the vote, Taylor objected to the “false assumption” that no one will build on the space without a guarantee or a subsidy.
Zelenka criticized the fact that Core Campus provided a local hiring plan but would not be required to follow it, and he called the LEED silver certification planned for the building insufficient and “barely above our housing code.”