PUBLIC HEARING & WORK SESSION

SB 718 A, SB 302 A, SB 839 A

 

TAPES 151-152 A-B, 153 A

 

HOUSE REVENUE COMMITTEE

MAY 9, 2005   2:30 PM   STATE CAPITOL BUILDING

 

Members Present:                      Rep. Tom Butler, Chair

                                                Rep. Vicki Berger, Vice-Chair

                                                Rep. Mark Hass, Vice-Chair

                                                Rep. Brian Boquist

                                                Rep. Sal Esquivel

                                                Rep. Larry Galizio

                                                Rep. Betty Komp

                                                Rep. Andy Olson

                                                Rep. Chuck Riley

                       

Witnesses Present:                      Sen. Vicki Walker, District 7

                                                Kate Richardson, Dept. of Treasury

                                                Rep. Debi Farr, District 14

                                                Richie Weinman, City of Eugene

                                                Hugh Prichard, Developer, Broadway Place (Eugene)

                                                Barbara Sack, City of Portland Planning Bureau

                                                John Warner, Portland Development Commission

                                                Marge Kafoury, City of Portland

                                                Dennis Mulvahill, Washington County

 

Staff Present:                          Paul Warner, Legislative Revenue Officer                                    

                                                Mazen Malik, Economist

                                                Mary Ayala, Economist                                         

                                                Kristi Bowman, Committee Assistant

                                               

 

TAPE 151, SIDE A

002

Chair Butler

Calls meeting to order at 2:30 p.m.

 

 

 

OPENS PUBLIC HEARING FOR SENATE BILL 718 A

 

 

 

007

Mazen Malik

Gives update on SB 718 (Exhibits 1 and 2). This bill directs members of the Oregon Investment Council (OIC) to declare conflicts of interest in writing not later than three business days after discovering the conflict. This bill deals with the “potential” conflict of interest.

 

 

 

033

Sen. Vicki Walker

Explains the background of SB 718. The bill arises out of the conflict of interest issue pertaining to the Diana Goldschmidt case and the Oregon Investment Council (OIC). There is a need to know within 3 days that there is a potential conflict of interest. Supports SB 718 because the Council deals with billions of dollars for investment in Oregon.

 

 

 

077

Kate Richardson

Comments that declaring a conflict of interest currently does not exist until there is a vote in front of the Council. This bill requires an OIC member to notify the Council of a “potential” conflict of interest in advance, and it provides an extra layer of disclosure.

095

Chair Butler

Asks  about executive meetings that are held behind closed doors.

 

 

 

103

Richardson

Responds that current statutes cover notification of an actual conflict of interest. This bill would require a written notification to the Treasurer to make the Treasury Dept. aware of a potential conflict of interest. There is a $250 penalty proposed in SB 718 A for failure to disclose the information. Discussion with Chair Butler about membership of the PERS board.

 

 

 

146

Chair Butler

Clarifies the term “potential” in SB 718 A.

 

 

 

CLOSES PUBLIC HEARING FOR SB 718 A

 

 

 

OPENS WORK SESSION FOR SB 718 A

 

 

 

149

Rep. Komp

MOTION: MOVES SB 718 A TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

151

Chair Butler

ORDER: HEARING NO OBJECTION, THE CHAIR SO ORDERS. THE MOTION PASSES 9-0-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER.

 

 

 

CLOSES WORK SESSION FOR SENATE BILL 718 A

 

 

 

OPENS PUBLIC HEARING FOR SENATE BILL 302 A

 

 

 

185

Paul Warner

Gives overview of SB 302 A (Exhibit 3). The bill clarifies the number of members of the OIC. Discusses the SB 302-1 amendment (Exhibit 4) that deletes the monthly meeting requirement.

 

 

 

200

Sen. Walker

Testifies in support of SB 302 A to require the Oregon Investment Council to have full disclosure of their meetings. Discusses the current Standard of Ethics that was implemented and developed by the OIC. Discusses the waiver clause that the OIC put in to their own Standard of Ethics. Submits letter from Mr. Drummond to Gov. Kitzhaber (Exhibit 5).  Sen. Walker sponsored SB 302 because she wanted to ensure that the OIC would not overturn their own rules.

 

 

 

273

Richardson

Discusses recording policies of on-site and off-site OIC meetings.  Discusses issue regarding the Governor’s appointments of OIC members. SB 302 would limit a Governor’s appointment of the chair to an OIC member.

 

 

 

329

Rep. Riley

Expresses concern about imposing legislation on who the Governor can appoint to the OIC board.

 

 

 

339

Chair Butler

Comments that the Chair position should be rotated more frequently.

 

 

 

 

355

Richardson

Responds that the Council votes for the OIC Board chair, and that rule is still in statute.

 

 

 

359

Sen. Walker

Reads from correspondence verbatim from Drummond (Exhibit 5). It is important that the OIC chair positions not be entrenched or allow anyone be allowed to trump that rule.

 

 

 

400

Chair Butler

Comments on ethics and allowing the OIC board to choose its own chair.

 

 

 

408

Rep. Riley

Comments that he does not see what ethics has to do with length of service. Comments that it is not uncommon for legislators to have their “arm twisted” by legislative leadership.

 

 

 

TAPE 152, SIDE A

008

Chair Butler

General comments about the OIC Board and the State Treasurer’s Office.

 

 

 

023

Rep. Boquist

Clarifies that SB 302 only deals with term limits of the OIC members.

 

 

 

033

Sen. Walker

Responds that the intent of SB 302 is to honor the standard of ethics that the Board developed itself. It keeps the Council above reproach and keeps experienced people in those positions.

 

 

 

040

Richardson

Responds to Rep. Riley’s concerns. The bill pertains to disclosure requirements and terms, but not necessarily to ethics. The Council serves at the pleasure of the Governor.

 

 

 

050

Chair Butler

Comments that the Council’s ability to choose its own leadership may have been circumvented by the previous Governor.

 

 

 

052

Richardson

Explains how members are elected to the OIC.

 

 

 

CLOSES PUBLIC HEARING SB 302 A

 

 

 

OPENS WORK SESSION FOR SB 302 A

 

 

 

064

Rep. Komp

MOTION: MOVES SB 302 A TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

076

Chair Butler

Asks for roll-call vote.

 

 

 

083

Chair Butler

ORDER: THE MOTION PASSES 8-1-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, BERGER, HASS, BUTLER. VOTING NO: RILEY.

 

 

 

CLOSES WORK SESSION FOR SENATE BILL 302 A

 

 

 

 

 

OPENS PUBLIC HEARING FOR SENATE BILL 839 A

 

 

 

095

Mary Ayala

Gives overview of SB 839 A (Exhibit 6). The bill extends the sunset provision on the tax exemption for multi-family rental units in specific areas. Refers to the revenue impact statement (Exhibit 8).

 

 

 

107

Rep. Berger

Asks why Salem’s exemption expired last year.

 

 

 

111

Ayala

Responds that Salem has active programs, but their 10-year exemptions expired. This bill is an extended sunset provision and  won’t impact current projects in Salem. Existing exemptions would expire, but it does not prohibit Salem from considering future projects.

 

 

 

127

Rep. Debi Farr

Comments that the multi-unit tax exemption has done wonderful things to revitalize downtown Eugene, e.g., Broadway Place.

 

 

 

141

Richie Weinman

Testifies in support of SB 839 A and submits written testimony (Exhibit 11). This bill supports Eugene’s land use goals and invigorate the downtown area. This bill is enabling legislation and does not require cities to participate. Comments that the projects would not happen without the tax exemption.

 

 

 

189

Hugh Prichard

Testifies in support of SB 839 A. Discusses the Broadway Place project in Eugene and the return on investment. The exemption encouraged the developers to build this progressive project. Discusses the specifics of the project with Chair Butler.

 

 

 

263

Rep. Berger

Clarifies that the purpose of SB 839 A is to extend the sunset date of the tax exemption to 2012.

 

 

 

273

Marge Kafoury

Testifies in support of SB 839 A and submits a handout that describes the program (Exhibit 13). The program is to revitalize density of housing around light rail stations.  

 

 

 

308

Barbara Sack

Testifies in support of SB 839 A and submits written testimony (Exhibit 14).  Discusses the background and benefits of the program. The property tax exemption is for the improvement on the land only. The City asks for public benefits from developers in exchange for tax exemptions, and the benefits do justify the credits. Discusses two City of Portland programs. These programs have provided low to moderate housing units in the downtown area.

 

 

 

TAPE 151, SIDE B

026

Dennis Mulvahill

Testifies in support of SB 839 A. Although Washington County has no projects like this currently, the County Commissioners would like to have the program available to develop housing around commuter light rail stations.

 

 

 

 

046

Sack

In response to Chair Butler’s question, Sack says that a multi-family project must have at least 10 units.

 

 

 

054

Chair Butler

Discussion with Kafoury about specifics of urban high-density housing that she lives in.

 

 

 

062

Rep. Boquist

Asks about the cost of building multi-unit  housing.

 

 

 

066

John Warner

Responds that cost can vary according to the size and density of the unit. Over 10 stories gets much more expensive, e.g., $140 per square foot. Production costs are significant due to safety and seismic issues. The average development cost per dwelling unit is  $135,000-$145,000.

 

 

 

092

Rep. Boquist

Asks what the average rent is for a multi-unit dwelling.

 

 

 

099

Sack

Responds that some projects will have additional subsidies, making rents very affordable. Discusses a specific project in the Portland area. Some projects are mixed-income units.

 

 

 

127

Warner

Comments that a one bedroom unit would be in the low $800 range. The property tax exemption doesn’t allow deep levels of affordability, but with other subsidies added to projects, rents can be affordable.

 

 

 

158

Chair Butler

Asks if people who exceed income levels required for the subsidies have to move out.

 

 

 

160

Warner

Responds that it depends on the nature of the subsidies.

 

 

 

166

Chair Butler

Asks Sack who sets the affordability guidelines.

 

 

 

168

Sack

Responds that affordability guidelines are set city-by-city.

 

 

 

170

Warner

Adds that allowing local control to set guidelines has been good for communities who want to tailor programs to their own interests.

 

 

 

179

Rep. Hass

Asks about projects for owners of condominiums

 

 

 

181

Sack

Responds that there has been low use of the subsidy with condominiums because there is owner income and price cap. The price cap of the condominium must be 95% of FHA mortgage limit, and whoever buys the unit must be at 100% or below for median income.

 

 

 

190

Warner

Discusses condominium units in Portland and the tax abatement program. The program is usually used for first-time homebuyers.

 

 

 

209

Rep. Hass

Asks if an owner qualifies, do they receive the property tax abatement?

 

 

 

 

211

Warner

Responds that the abatement is passed through the developer to the homeowner. The taxes would be abated on the costs of the owner’s improvement. The owners can shift their disposable income to pay the mortgage instead of paying property tax. As their income grows, they are able to pay property taxes at the end of the abatement period.

 

 

 

233

Rep. Boquist

Asks what is the current median income in Portland.

 

 

 

235

Sack

Responds that for a family of four it is $67,900.

 

 

 

242

Rep. Galizio

Discusses revitalization of downtown Tigard and mixed-use development potential. It will benefit people living in the units, the business community, and it will create jobs. This program would be very useful to future Tigard development.

 

 

 

268

Rep. Berger

Asks Ayala for more information about the revenue impact.

 

 

 

270

Ayala

Responds that the $.31 M for the current biennium are for existing projects. The $2.07 M for the next biennium would be for the projects that will come online in the future.

 

 

 

CLOSES PUBLIC HEARING FOR SENATE BILL 839 A

 

 

 

OPENS WORK SESSION FOR SENATE BILL 839 A

 

 

 

298

Rep. Berger

MOTION: MOVES SB 839 A TO THE HOUSE FLOOR WITH A DO PASS RECOMMENDATION.

 

 

 

302

Chair Butler

ORDER: THERE BEING NO OBJECTION, THE CHAIR SO ORDERS. MOTION PASSES 9-0-0. VOTING AYE: BOQUIST, ESQUIVEL, GALIZIO, KOMP, OLSON, RILEY, BERGER, HASS, BUTLER.

 

 

 

CLOSES WORK SESSION FOR SENATE BILL 839 A

 

 

 

305

Chair Butler

Adjourns meeting at 3:46 p.m.

 

 

Tape Log Submitted by:

Reviewed by:

 

 

 

Kristi Bowman, Committee Assistant

Kim Taylor James, Committee Coordinator

 

 

 

 

 

Exhibit Summary:

  1. 1.      SB 718, Staff Measure Summary, Malik, 1 pg., 03/17/05
  2. 2.      SB 718, Staff Measure Summary, Malik, 1 pg., 05/06/05
  3. 3.      SB 302, Staff Measure Summary, Warner, 1 pg., 03/14/05
  4. 4.      SB 302, Amendment SB 302-1, Leg. Counsel, 1 pg., 03/14/05
  5. 5.      SB 302, Handout: Letter to Gov. Kitzhaber, Walker, 1 pg., 04/26/01
  6. 6.      SB 839, Staff Measure Summary, Ayala, 1 pg., 05/06/05
  7. 7.      SB 839, Staff Measure Summary, Ayala, 1 pg., 04/01/05
  8. 8.      SB 839, Revenue Impact Statement, Ayala, 1 pg., 05/06/05
  9. 9.      SB 839, Revenue Impact Statement, Ayala, 1 pg., 04/01/05
  10. 10.  SB 839, Amendment SB 839-1, Leg. Counsel, 1 pg., 04/04/05
  11. 11.  SB 839, Testimony, Weinman, 2 pp., 05/09/05
  12. 12.  SB 839, Testimony, Tucker, 1 pg., 05/09/05
  13. 13.  SB 839, Testimony, Kafoury, 2 pp., 05/09/05
  14. 14.  SB 839, Testimony, Sack, 3 pp., 05/09/05