The City of John Day created a unique housing incentive program to address seemingly intractable challenges facing its housing market. Using Oregon’s Urban Renewal legislation in Oregon Revised Statute 457, the City created two of the most aggressive housing rebate programs in the nation. The New Home Incentive Program provides a 7% cash rebate on new home construction (based on the increase in the property’s assessed value) plus payment of all system development charges on behalf of the property owner (currently $7,400) for a net financial rebate of approximately 10-11%. The Existing Home Remodel Incentive Program offers a 15% cash rebate (based on the increase in the property’s assessed value) on substantial improvements to home facades, structural repairs, major remodels and new additions that add additional rooms and living space. The minimum AV increase to qualify for this incentive is $10,000. All incentive payments are made in cash at the conclusion of the project, once the new assessed value is realized on the tax rolls.
Socioeconomic Challenges
Like many rural communities in eastern Oregon, John Day and Grant County are facing unique housing problems that are protracted by nearly thirty years of population and socioeconomic decline, including the state’s highest unemployment rate, third highest rate of outmigration, second lowest real market property values and fourth lowest assessed values. In the ten years prior to the start of the housing incentive program, only three site-built homes were constructed in John Day even though Oregon was ranked in the top ten fastest growing states in the nation during much of that period. The John Day city council, city advisory committees and city consultants wrestled with how to create a housing program that would be as inclusive as possible. They wanted to incentivize new housing growth and improvements to existing homes to drive private sector investment to their housing market in order to stop the population decline and to address blighted property conditions that were discouraging business growth and deterring potential new residents from choosing to live in their community.
Solution
The council and city staff met with realtors, developers, lenders, contractors, public officials and residents to try and understand why people weren’t building. After extensive deliberations, they created the new home incentive programs under ORS 457 and the new John Day Urban Renewal Agency became effective on June 12, 2018. Over 175 acres were included in the urban renewal area with the goal of generating 100 new homes in a 20-year investment period. Within the first 18 months, the incentive program led to nine new dwelling units and two major renovations in John Day – a three-fold increase over the prior decade. More than $500,000 in new assessed value was created in the first year of the program. The City is on track to achieve its goal of 100 new homes, arresting the population decline and bringing them to an average annual growth rate of 0.5%.