Business & Development, City & Government, Community, Springfield

Developer incentives may be a boost for Springfield housing

SPRINGFIELD — Like most Oregon cities, increasing housing inventory is a top conversation among councils — including at Springfield City Council, which met on Monday to discuss new ways to make Springfield more development-friendly, with a goal of adding more multiple-unit housing to its inventory. 

According to Katie Carroll, housing analyst, Springfield lacks housing diversity. While several multiple-unit housing projects have been built in recent years, Springfield still does not have sufficient housing to meet demand.

According to the 2022 census, the rental vacancy rate in Springfield was just 1.6%. Comparatively, Carroll said a healthy rental vacancy rate is generally considered to be around 5%.

“Not enough housing means that demand is going up, prices are going up, and we’re seeing that in Springfield. Forty-three percent of renters in Springfield are considered to be ‘cost burdened’, which means they pay 30% or more of their income on housing,” Carroll said.

Data shows that multiple-unit housing has not grown during the last decade. At the time, only 17% of the City’s housing units were multiple-units. In 2022, only 16% of housing units made up multiple-unit housing.

This had long been an issue. In 2011, the City conducted a Residential Land and Housing Needs Analysis to forecast the community’s housing needs through 2030, which estimated that 40% of new multiple-unit housing would be needed to have sufficient housing inventory. 

Carroll said that supporting new multiple-unit housing will provide more options for community members to find housing at a price and size that meets their needs.

But developers need to be able to afford the means to do so. 

Carroll cited an example in which an 84-unit mixed-use residential project in Downtown Springfield recently failed to move forward — even with significant public investment in the project — due to market conditions which impacted the developer’s ability to secure construction financing. 

Without incentives like this tax exemption, Carroll said that developers have had a difficult time agreeing to high interest rates and high construction and land costs for multiple-unit residential development. 

That’s where a Housing Diversity Tax Exemption (HDTE) may come in. 

Property tax exemptions are being considered by council as one tool to help inspire further housing development in the City — particularly in parts of downtown, Glenwood, East Main Street, Mohawk, and Q Street. A property tax exemption for multiple-unit housing could also incentivize development of more diverse housing types, Carroll said. 

Property tax exemption could impact the City’s property tax revenues by exempting qualifying residential multiple-unit projects from paying some property taxes for 10 years, according to a memo penned by Carroll and Jeff Paschall, community development director. The duo also noted that, by adding housing that otherwise wouldn’t be built, the City could see a long-term revenue gain by adding improvement value to the City’s property tax rolls. 

For Phil Farrington, director of planning and real estate development for CDC Management Corp, a real estate company, he believes this program is sorely needed. 

“It’s going to hopefully provide lots and lots more new housing in this community that wouldn’t have otherwise been constructed,” Farrington said. “You’ve also threaded the needle of what I would call ‘the developers’ paradox.’ It’s like you’re asking for flexibility and certainty at the same time, and you’ve been able to craft a program that really provides those two things at the same time.” 

Paige Walters, director of advocacy and economic development at the Springfield Chamber, said the HDTE “is a critical tool for addressing Springfield’s pressing housing scarcity: an issue that not only burdens our residents, but also impacts our local businesses of all sizes.” 

She brought up two areas of consideration which the Chamber believes would increase flexibility: to reconsider the exclusion of parking — especially for mixed-use zone projects — and to extend the application timeline beyond the permitting phase, which would allow developers more time to apply to the program.

Councilor Beth Blackwell was the first to question why parking was excluded from the HDTE. Carroll said this change was made to follow the direction which council gave staff last fall because the state recently said the City cannot require parking.

Further regarding parking, Farrington echoed the sentiment for it to be included in the HDTE, stating that the program should “include the entirety of the improvement value from a project.

“I can tell you from personal experience, half a mustache is not a good look, so I think you would do well by saying the improvement value of a new project, especially a mixed-use development project, should either all or not be subject and eligible to the HDTE,” Farrington said.

Mayor Sean VanGordon advised Carroll to come back for the HDTE’s second reading, which may be slated for April 1, with information including parking in the program while also providing more information on questions regarding commercial use.



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