Establish 2023 sale price cap for the Homebuyer Opportunity Limited Tax Exemption Program

The Portland Housing Bureau (PHB) administers the Homebuyer Opportunity Limited Tax Exemption (HOLTE) Program, authorized under ORS 307.651 and Portland City Code 3.102. The HOLTE Program promotes first-time homeownership opportunities for income-qualified homebuyers by providing a property tax exemption on the assessed value of newly built homes for ten years. During the exemption period, homes must continue to be owner-occupied and not used as rental properties, and any new owners must income-qualify. In order to maintain compliance with state statute, PHB must establish an annual sale price cap for the HOLTE program which may not exceed 120% of the area median sale price between January 1 and November 30, 2022. The act to establish the price cap requires a resolution approved by City Council prior to January 1 each year. Based on data compiled by Multnomah County for sales between January 1 and October 17, 2022, the area median sale price was $518,000. Given the dramatic increase in home prices and that the HOLTE program is intended to promote affordable homeownership, the Housing Bureau has elected to set the 2023 sale price cap at $455,000 - 89% of the area median sale price, which is close to the maximum affordability level of a median income homebuyer with a down payment and at the 2022 median sale price for attached homes.

Although the HOLTE program itself reduces future revenue to the City in the form of forgone property taxes, this resolution does not impact the amount of foregone revenue; this resolution merely limits the sale price for units eligible to receive the property tax exemption under the program.

As the largest taxing jurisdiction affected by the tax exemption programs, Multnomah County has approved the administration of the programs in order to meet shared housing goals. County staff provided the City with data necessary to establish the annual price. The State of Housing report published annually by PHB demonstrates the community need to promote affordable homeownership opportunities. PHB held a meeting with participating homebuilders (including the Homebuilders’ Association) to discuss current market conditions and options for setting the current sale price cap on November 9, 2022.