Special Committee on Ways & Means-Thursday, June 11, 2026-6:00 o'clock P.M.
Call to Order and Preliminary Business
The meeting is called to order and the committee conducts preliminary checks to ensure the audio recording is working properly. Members prepare to begin the scheduled agenda items for the session.
Ordinance Amending Chapter 21: 8-Law Qualifications
The committee discusses a proposed ordinance establishing clear municipal eligibility criteria for the state's 8% low-income housing tax treatment. Key points of discussion include income thresholds, alignment with federal housing tax credits, and preserving eligibility for existing properties.
Providence Build Act Discussion
The committee reviews the Providence Build Act, which establishes a short-term tax stabilization structure for affordable housing construction projects. Members discuss the two-year tax equalization period, streamlined application processes, and feedback incorporated from the administration.
Resolution Endorsing State House and Senate Bills
The committee considers a resolution urging the General Assembly to pass state legislation regarding property taxation. The discussion concludes with a motion to approve the item before the meeting wraps up.
Speaker 0
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Is the audio working?
Speaker 1
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Yes. Let's go. This is this for me.
Speaker 2
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An ordinance amending chapter 21 revenue and finance of the province put up ordinances to add article 19 audit eight law qualifications.
Speaker 3
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Thank
Speaker 1
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you. Hi, everybody. Lovely to be here with you all. We're talking about eight law again. It's been a while since this was first introduced in 2024.
Speaker 1
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We had, as you all will remember, a version of the eight law ordinance that applied 8% tax treatments to just the adjust the de restricted affordable units within a building. So if there were buildings with de restricted affordable units and there were market rate units, this tax treatment would have just under that ordinance applied to the low income units themselves. That ordinance, you'll remember, was vetoed by mayor Smiley. Soon after that veto, after a lot of work from the sponsors and with folks who had concerns with our nonprofit housing partners, counselors introduced a new version of the ordinance. That version of the ordinance, which an amended version is in front of you, and I'll talk about the changes rather than, like, the original one applied just to the the restricted units.
Speaker 1
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That version set a threshold for affordability. And if things were over that threshold, then the eight law would be applied to the entire building. So that was kind of the difference between the the veto version and the reintroduced version. As you all know, but just as a reminder, the eight law is a state law that allows municipalities who administer this tax treatment to tax low income housing. That's what it's called in this very, very short state law.
Speaker 1
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Tax low income housing at 8% of the gross scheduled rent rental income. So the rental income from the previous year if there was a 100% occupancy in the building. It does not define what low income housing means in this context, and so that was the problem that counselors were trying to solve with this ordinance because the state law leads it up to municipalities to administer. So working with low income housing developers themselves who get this tax treatment, the new latest version in front of you keeps the threshold that was set, adjust it slightly, and I'll walk through the specific specifics of that, But it also generally aligns this with other low income housing programs and subsidies and tax credits. Major piece of feedback we heard from the nonprofit developers was that it can be very confusing and difficult and unnecessarily cumbersome when there's different eligibilities for all these different programs.
Speaker 1
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And counselors didn't wanna add to that. Right? The counselors seem to want to align this with others so that those who are providing welcome housing were taxed appropriately. And that's really what this is, is making sure that they're taxed appropriately. So if you open the red line version of the ordinance, so that's the substitution c thing.
Speaker 1
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What's one thing that's important to note is this can be a little bit confusing. Oftentimes, when there's they're red line ordinances, it's amendments to an existing ordinance. But in this context, there is no existing ordinance. There's nothing in the books on a law in the code of ordinances. Right?
Speaker 1
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There's the state law, and then there's a proposed municipal ordinance, and this is red lines on that proposal. So what's confusing about this is all these words are new. Whether there's a red line or not, these are all a proposed ordinance. Does that make sense before okay. Yes.
Speaker 1
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Okay. So you have your standard definitions, but let's really get into the meat of it, which starts in eligible property section twenty one three one four. So what this ordinance does is absence the a state definition of low income housing for the 80% tax treatment, it sets forth exactly what the eligible properties are because we know that right now when it's without any guidance, sometimes the 80% tax treatment is given to properties that have just a few restricted units, maybe even at a 100% of the area median income, and the rest of the building may be market rate or luxury. So this has clear eligibility. So you'll see in this eligible properties, if you go to two a and b, these say that the 8% tax treatment is only going to properties that have deep restrictions where rents are being restricted to 30% of incomes, and where incomes are being restricted to the threshold set in three.
Speaker 1
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So in three here, you'll see there there are two pathways to qualify for a lot. The threshold and the having the eligibility for lie tech. So you'll see these thresholds here. If your building has 40% of units restricted to 60% or less AMI, you would qualify for the 8% tax treatment for the entire building. If your building has 51% of units at 80% or less AMI, the building would qualify.
Speaker 1
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I know that you all, I I imagine, haven't had the chance to read, but received a letter from the administration about twenty minutes before this meeting. In that letter, you'll see that 51% number mentioned. So this was a change in alignment with the letter that the administration sent because there's some programs, and two of note are HUD CDG and the r I twenty thirty small scale rental threshold. Those buildings use those programs use this threshold, 51% of units at 80% AMI. So it wants to yes.
Speaker 3
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Sorry, Just to make sure that I understood correctly. So administration mentioned it as a as a concern in their letter, but yeah. It's it's
Speaker 1
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been addressed since since they pointed out to us in a meeting. Yeah. So the letter that Emily sent is kind of a recap of a meeting that we had on Tuesday with the administration. Of course, these are this ordinance has was introduced two years ago. We met with them on Tuesday, and they provided us feedback that you received in this letter.
Speaker 1
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So that has since been incorporated. It's still in the letter, but we have incorporated it. There's other feedback in there that was not incorporated, and we can also discuss that. But that that piece was okay. And then the other way to achieve eligibility is if your property qualifies for LITEC, which is the low income housing tax credit, the main federal tax credit for the development of affordable housing.
Speaker 1
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If you meet though their criteria for eligibility, you also meet the criteria for equal. So that's meant to be a really clear pathway. It's the most common subsidy that's used. If you're using that, you'll also be able to get the the city's authorized state's tax treatment. Then this this next section here, section twenty one three one five, this is new, and it's really important because it it addresses a concern directly from counselors with the reintroduced version.
Speaker 1
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So this is an amendment to the reintroduced version that solves the following problem. The problem was that so you're setting a great new threshold in eligibility going forward for this tax treatment, but there are a lot of buildings that are receiving it now, and some of them may no longer qualify under the ordinance as you're putting it forward. There are some of those that are what counselors or sponsors of the ordinance have considered to be bad actors who are just restricting a few units and otherwise providing market rate or luxury housing. There are others where they're not meeting these thresholds, but they're properties that that that counselors and sponsors want to support. I'll give two examples that have come up a lot in discussions as we try to solve for this problem.
Speaker 1
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One is University Heights, which has about 50% of their units restricted, de restricted affordable, and about 50% of their units market rate. But preserving their eight law tax treatment, making sure something devastating doesn't happen there is really, important to counselors. Another example is 93 Cranston Street, the apartments that are right behind Irving Greens, the co op. Those units are a 100% deed restricted at a 120% AMI. Would not qualify that for a longer than new thresholds.
Speaker 1
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They're what's called workforce housing and wouldn't qualify, but the concern would be what happens with those folks there who are already living there, with the restrictions that they have. So what is in the ordinance in front of you today is a preservation of existing eligibility where any property that's receiving the 8% tax treatment right now will continue to receive it if they have and and and it's defined with the sales, but if they have some real affordability in the project. And so what that means is an either or. If at least 20% of the residential units are above 80 per sorry. 80% AMI or less or at least 40% of residential units are restricted to households earning a 120% or less than AMI, then they will continue to receive a lot going forward.
Speaker 1
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So preservation of existing eligibility for those properties.
Speaker 4
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June, we continue. I don't
Speaker 3
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recognize on the record that majority of the.
Speaker 1
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Okay. So then the the next section, twenty one three one six, this is the section that says two very important things. So the first is is that for these properties, the eligible properties, they will be taxed at that 8% of gross scheduled rent. And an important clarification here is that the 8% tax treatment will not be used on commercial properties. As you all know, if you're in litigation about it, 8% tax treatment has been few, but some cases applied to commercial properties, often a commercial first Floor of a otherwise residential building.
Speaker 1
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So this clarifies as the state law was intended. The state law is intended for low income housing. This clarifies 8% tax treatment is used for housing. The remainder is is very procedural, so the tax assessor is gonna promulgate rules. Part of that rule will be there's a deadline, March 15, to submit all the necessary documentation.
Speaker 1
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If a developer were to miss that date, the the assessor's gonna promulgate rules related to penalties for missing the date increasingly as time goes on. And then to close it out, it'll require an annual report to the council so your the council will be able to keep a close eye on all properties that are receiving this tax treatment and their compliance with your expectations support. It's all I've got.
Speaker 3
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Thank you, Shesha, Jerome.
Speaker 0
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Sure. Yeah. Thank you for that description and also for the work that you've done with the administration, Aaron, June, and our policy team, and just passing it through. And, like, the many meetings that have happened with for helping nonprofits say, ten years, they feel like there was just a big role in how we lost the work. And so the state intention was to make it not so much a development center, but really just about nonprofit or otherwise income restricted loan housing to keep the doors open.
Speaker 0
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Given that the state law is pretty wide open, there have been some cases in Providence that have allowed folks to without really paying attention to how, say, any programs that are named in the residence, due to income restriction. Right? So we know for a fact that there's students who are not themselves in any way indigent and who are declaring no income as part of their eight block houses in buildings that are not covered. So we're just try we're trying to keep that contained. And the treatment that we're trying to keep that contained is because we all know we depend on our property taxes to do all the things that are in that are.
Speaker 0
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Yesterday, we need people to get in good share, or we will be in increasing trouble. And we need for low income restricted restrictions to actually do that and not just support luxury or or otherwise commercial development. So this is the result of a lot of work, a lot of conversations, bare hardships since the original iteration, and I'm proud that we're here.
Speaker 3
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Thank you. You're welcome, brother Miller. It's something that we have all spent a lot of time and energy discussing over a year or so. Literally, I think, all four years of our our term, which is it's it's an important issue, something to talk about. I think council president Moore said, we just want people to pay their their fair share of people.
Speaker 3
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We wanna close any loopholes while also, very importantly, providing the the the people that deserve and and use the proper eligibility to to receive this shield because it is a strong tool when it comes to to affordable housing and and development and maintaining those deep restrictions for people that really need it here at Saint Paul. So I just wanna say that I'm super proud of the work that we've done to to get here, and I would love to move this forward. But, yeah, if anyone else has any questions, comments,
Speaker 0
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my main concern always lacked. This was where we wanted to make sure that we were fitting their need as well in this particular order. So I really appreciate that you took into consideration their their perspective on all of this and made it so that it's applicable for them as well.
Speaker 1
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I will say we've had great, great conversations with all of them. Some of them these conversations were two years ago, and then it was just a matter of solving some of these kind of really specific problems in the time since, but really great conversations with them and have, you know, assurances from the nonprofit developers that, for the most part, these changes won't affect them. Right? They're they received 8% tax treatment. The vast majority of them exclusively develop affordable housing.
Speaker 1
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So a 100% of the units are under even lower percentages of AMI. And so they do receive it now, but they will continue to receive it uninterrupted If for some reason they had a a property that otherwise wouldn't have have met the threshold, then it'll preserved through this change, but they are unaffected by this. And if the for profit developers, specifically the ones who are taking advantage of this, would be affected.
Speaker 0
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Thank you.
Speaker 3
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Councilor Graves? I was
Speaker 0
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just gonna say the same point. I mean, after that job that we had, they were on it with forever and ever and ever. I I can afford everybody that play anything on work on that.
Speaker 3
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You have to do councilor Davidson.
Speaker 5
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Yeah. The the section around preservation and existing eligibility, you mentioned two specific properties. I assume that many of the other existing low income properties would clearly fit into this category. But I'm curious if we either have a list of or an understanding of other properties that might have had a different treatment in the past? You know, I I'm just trying to anticipate what might
Speaker 4
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Sure.
Speaker 0
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Become that correct.
Speaker 1
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It's a great question. Unfortunately, because qualification for a law is quite laissez faire right now, they're not close the city's not closely tracking x percentage of units are under y percentage AMI for the existing property. So I can share with with you and with any other interested counselors what we do have from the tax assessor, which is the the full list of properties receiving 8% tax treatment, and then just has an AMI number. So I can share that with you all. Definitely public information, and you're welcome to take a look.
Speaker 1
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I think the intention here with these thresholds was these are pretty generous thresholds for this preservation of existing properties. So it's capturing well beyond just I mean, any property, I think, that you would if you found one and we're like, I wanna make sure that this one is in, we're very confident that these are generous enough threshold that it will be. But I think that, you know, in the next couple weeks as this moves towards passage, and and interesting thing to do would be to continue that survey of your neighbors and reach out to us, and we'll help you make sure that this actually does cover it. But I say that with confidence.
Speaker 5
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Well, appreciate that. And just just a quick follow-up. Of course. Yeah. Obviously, I'm although I was a president of the city, I certainly was aware of these conversations.
Speaker 5
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But, you know, as somebody sitting here, barely knew, so I
Speaker 2
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can say thank you. Good job. I can't really
Speaker 5
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do something that I could feel good about both both sort of supporting, but also in being able to discuss with my decisions. But I definitely have
Speaker 0
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had people come to me already.