The project site is on Northeast 100th Avenue, between Northeast Glisan and Burnside streets. The exemption is a perk for transit oriented developments, or projects located within walking distance of multiple mass transit options. In this case, the development site is within four blocks of two light rail stations and two bus stops serving four separate bus lines.
The exemption means that buyers of the units won't have to pay property taxes based on the value of their unit for 10 years, only on the value of their share of the underlying land. To be eligible for the abatement, the developer must make units affordable to buyers earning less than $68,000, which is the median family income for a family of four.
Another restriction for eligibility is that the owner must not sell the units for more than 95% of the FHA average for the area, which is about $270,000. In this instance, a source at the city tells GlobeSt.com the developer plans to price the homes to be affordable to those earning between 45% and 68% of the median family income, which means the units would range in price from $100,000 and $162,000.
In addition to pricing, eligibility hinges how much profit the developer could make without the exemption. In this case, the city determined that without the exemption, it would take the developer two years to sell the units and the internal rate of return on the project would be less than 1%. With the exemption, the units will sell out in less than one year, the city predicts, providing the developer a 7.8% IRR.
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