PUBLIC HEARING ON HB 2168, HB 2171

 

TAPE 101, 102, A-B

 

HOUSE REVENUE COMMITTEE

MARCH 31, 2003   8:30 AM   STATE CAPITOL BUILDING

 

Members Present:                        Representative Lane Shetterly, Chair

                                                Representative Wayne Scott, Vice Chair

                                                Representative Joanne Verger, Vice Chair

                                                Representative Vicki Berger

                                                Representative Mark Hass

                                                Representative Max Williams

 

Members Excused:                      Representative Phil Barnhart

                                                Representative Pat Farr

                                                Representative Elaine Hopson

 

Witness Present:                        Jack Kenny, Oregon Housing and Community Services Department

                                                John Blatt, Association of Community Development Organizations

                                                            Housing Lobby Coalition

                                                Sheila Greenlaw-Fink, Community Partners for Affordable Housing,

                                                Rita Grady, Polk Community Development Corporation

                                                Bill Van Vliet, Network for Oregon Affordable Housing

                                                Bob Repine, Director of Housing and Community Services

 

Staff Present:                            Paul Warner, Legislative Revenue Officer

                                                Lizbeth Martin-Mahar, Legislative Revenue Office

                                                Kathy Tooley, Committee Assistant

 

TAPE 101, SIDE A

 

004

Chair Shetterly

Calls meeting to order as a subcommittee at 8:35 a.m. until such time as a quorum was reached.

 

 

PUBLIC HEARING HB 2168, HB 2171

 

006

Lizbeth Martin-Mahar

Provided description of HB 2168, (Exhibit 1) with revenue impact (Exhibit 2); and HB 2171, (Exhibit 3, 4) with fiscal (Exhibit 5) and revenue impacts, (Exhibit 6).

 

030

Chair Shetterly

Revenue impact HB 2168 is that because of increase the cap?

 

032

Martin-Mahar

Answered affirmatively.  Increase in the cap for both bills is from $6 million to $8.2 million annually for the Department of Human Development to issue in credit.  HB 2171 adds pre-development charges for corporate income tax credit and places a limit on pre-development annual credit.

 

066

 

 

 

121

 

138

 

 

 

155

Jack Kenny

 

 

 

Kenny

 

Kenny

 

 

 

Kenny

Testified in favor of HB 2168 and HB 2171.  Described tax credit as passed through in 1:1 rent savings to tenants; described need for increase in the cap; clientele. 

 

Described application and competitive requirements to receive credits.

 

Described difference between the two bills.  Discussed pre-development loan in HB 2171, does not pass through rents during building phase and has shorter loan duration.

 

Discussed qualified loan assignees in HB 2168.

 

166

Kenny

Discussed importance to at risk populations.

 

170

Kenny

Without credit there will be a reduction in affordable housing, would improve surrounding property values.

 

180

 

 

190

Kenny

Discussed questions and concerns previously received from Committee regarding benefit to banks from this credit. 

 

Discussed Oregon Revenue Coalition who identified affordable public housing as an identified public purpose and believes this bill would be consistent with that organization’s goals.

 

199

Kenny

Discussed venture capital, did not have information on multiplier affect?

 

220

Rep. Verger

In HB 2171 the reduced interest rate is not required to be passed on is that any different than former development that you have had?

 

215

Kenny

Answered affirmatively, the interest rate savings do not have to be passed on, only for $200,000 pre-development portion.  For the $8 million cap, the savings would have to pass through.  It is a new component to the bill.

 

240

Rep. Verger

Has difficulty with a bill that does not address the need for new housing; communities with high vacancy rates have to pay regardless and can not reduce rents.

 

270

 

 

 

290

 

301

 

 

311

Kenny

 

 

 

Kenny

 

Kenny

 

 

Kenny

Described competitive process as including community support element; populations affected are developmentally disabled, seniors, populations where housing is not affordable without a subsidy.

 

Discussed public notification process.

 

Discussed tenant readiness training program, matching people that come out of the program with private housing.

 

Discussed unmet need.

 

317

Rep. Verger

Do you create jobs for Oregonians or some other state?

 

324

Kenny

Would leave to someone else. Have anecdotal information, can get information for the Committee.

 

330

John Blatt

Spoke in favor of HB 2171, (Exhibit 9), supportive of affordable housing development.  His organizations have used credit 130 times in last 12 years.

 

353

Sheila Greenlaw-Fink

Spoke in favor of HB 2171, (Exhibit 10), described “The Village at Washington Square” project as work force housing for those in low paying retail sales sector; not trying to duplicate private sector. Described developmental programs for residents to help them contribute to economy.

 

 

TAPE 100, SIDE A

 

030

Rita Grady

Testified in favor of HB 2171.  Discussed rental and home ownership properties that have been able to use tax credit financing.  Some families were able to save money and move on to home ownership.

 

070

Grady

Discussed family assistance fund, have helped families purchase homes.  Discussed unmet needs for 280 families in Dallas area.

 

098

Chair Shetterly

Who do you contract with typically on the job creation side?

 

101

Grady

Through competitive bid process, local builders, electricians, plumbers, strengthens local economy.

 

105

Greenlaw-Fink

Ask contractors to hire Tigard-based subs.  Can’t think of any contractor, banker, that wasn’t from Oregon.  Discussed community based nature.

 

91

Rep. Verger

Do you have high or low vacancy rate in private sector?

 

115

Grady

Not sure, wouldn’t say that it was high.  Vacancy rate for affordable housing units is low. Surrounding investors and homeowners often upgrade their homes.

 

119

Rep. Verger

Discussed North Bend situation where housing authority will have a long waiting list, but the private sector has a high vacancy rate.

 

130

Blatt

Discussed federal program where extensive market surveys are done to demonstrate market need for that kind of housing. Discussed competitor rents and absorption rate indicator.  Doesn’t help a market that is overbuilt.

 

161

Rep. Verger

Don’t think it is because they don’t qualify, cited senior and needy population.  Problem is cookie cutter approach in Oregon, there needs to be triggers for affordable housing, including government subsidies.  Not enthusiastic for creating jobs for other than Oregonians.  If there is existing housing that should be used rather than development of new housing.

 

187

Rep. Scott

How will tax credit for pre-development enhance future projects?

 

200

Blatt

Discussed major source in Oregon is the Housing Trust Fund.  Money available for development hasn’t changed since 1991, but prices have gone up, looking at a way to leverage state funds.

 

210

Rep. Scott

How do we determine that that is a reduction in rents to qualify?

 

214

Blatt

Proposal is not to require showing pass through dollar since it is difficult to track; limitation to $200,000.

 

225

Greenlaw-Fink

Discussed private pre-development money and when it can be available.

 

258

Rep. Scott

Who ends up owning?

 

260

Greenlaw-Fink

.01% general managing partner such as Community Partners; most money comes in from private investors such as Key Bank and other investors.

 

267

Rep. Scott

Does the local owner receive the pre-development incentives also?

 

270

Greenlaw-Fink

Discussed expense of acquiring land or project does not happen.

 

277

Rep. Scott

SDC’s are they included in pre-development?

 

281

Greenlaw-Fink

In some areas, one of the highest costs is new construction.

 

292

Chair Shetterly

For the record, received written testimony from the Oregon Revenue Coalition, (Exhibit 11).

 

390

Bill Van Vliet

Testified in favor of HB 2171, (Exhibit 12). Described efficiency of program. The program solely benefits the tenants, with no profit to the banks.  Described how pre-development lending encourages private investment.  Availability of funding will determine whether the project can continue. Discussed affordability of housing.

 

 

TAPE 101, SIDE B

 

006

 

021

Van Vliet

 

Van Vliet

 

Discussed shortage of pre-development financing. 

 

Discussed local economic development and job creation element.

 

0

Van Vliet

Discussed competition with private sector property, cited rent burden, can’t afford private sector projects.

 

077

Van Vliet

Look for “capture rate”, in determining feasibility of project.  Look at how many potential income-qualified renters are in a community.  As a rule of thumb look for a 10% capture as a buffer for demand on a project.

 

094

 

 

 

 

124

Bob Repine

 

 

 

 

Bob Repine

Discussed “Site Based Voucher”, and “Sticky Voucher” system; which travels with the renter.  Trying to set up partnership with private sector “Ready to Rent” Portland, “2nd Chance” Eugene, “Fresh Start” Salem, for people that could not find housing on the open market due to barriers.

 

Discussed monies set aside for people that go through training program on how to be a good renter.  Program underwrites up to $1000 damages or unpaid bills by resident that graduated from program with private sector for up to a 6 month probation period. 

 

191

Bob Repine

Discussed apartment renovation, rehabilitation program as spur for community investment and improvements.

 

213

Rep. Verger

Do you have residency requirements and working history, what’s the highest income to qualify?

 

235

 

 

240

Bob Repine

 

 

Bob Repine

Income eligibility depends on unit, can be 50% median income and below, 60-80% of national poverty level.

 

Discussion of income levels set county by county. Chart available to answer that question.

 

245

Rep. Verger

Is there a residency requirement?

 

249

Bob Repine

Varies from program to program.

 

253

Chair Shetterly

Are these federal requirements?

 

254

Bob Repine

I suspect it is.

 

255

Rep. Verger

And working history?

 

255

Bob Repine

In the application process that shows income or offset.  Generally these are working Oregonians, need extra reduction in rent to fit budget.

 

282

Chair Shetterly

Closed Public Hearing on HB 2168, HB 2171.

 

 

 

 

 

 

284

Chair Shetterly

Meeting adjourned at 9:50 a.m.

 

 

 

 

 

Tape Log Submitted by,

 

 

 

Kathy Tooley, Committee Assistant Reviewed by Kim Taylor James

 

Exhibit Summary:

1.       Martin-Mahar, “Staff Measure Summary HB 2168”, 1 page

2.       Martin-Mahar, “Revenue Impact HB 2168”, 1 page

3.       Martin-Mahar, “Staff Measure Summary HB 2171, 1 page

4.       House Committee on Health and Human Services, “Staff Measure Summary HB 2171”, 1 page

5.       Martin-Mahar, “Fiscal Analysis HB 2171, 1 page

6.       Martin-Mahar, “Revenue Impact of HB 2171”, 1 page

7.       Kenny, “Testimony HB 2168”, 2 pages

8.       Kenny, “Testimony HB 2171”, 2 pages

9.       Blatt, “Testimony HB 2171”, 2 pages

10.   Greenlaw-Fink, “Testimony HB 2171”, 2 pages

11.   Oregon Revenue Coalition, “Testimony HB 2168 and HB 2171”, 3 pages

12.   Van Vliet, “Testimony on HB 2171”, 5 pages