Okay.

Okay, just making sure.

Okay, no more echo.

Great.

So we'll get started with our Bennett City Council work session for today.

Let's start with roll calls, start on your end, uh, Councilor Platt.

Steve Platt again.

Megan Norris, she here.

Megan Perkins, she her.

Melanie Keebler, she her.

Mike Riley, he him.

Ariel Mendo to you.

Gina Franzosa, she her.

All right.

So we are all here.

And we are starting with our electrification policy process follow-up from Cassie.

And Council Norris, you wanted to put something on the record?

Yes, I just want to declare a potential conflict on this item.

And uh with a potential conflict, I'm still allowed to participate in the discussion.

Um, but because my employer is Hayden Holmes, um, I do want to declare a potential and just uh, you know, make everyone aware that I am seeking legal advice on this item and um, you know, but I'm allowed to proceed at this point.

Great.

All right, Cassie.

Okay.

Um good afternoon, counselors.

I'm Cassie Lacey, senior management analyst in the city manager's office.

I'm joined again by Danielle Walker from the Brightline Group, but she's online today if we can see her.

Hi Danielle, can you hear us?

Great, good.

Okay.

Okay.

We're here today to talk more about our electrification policy initiative and get some direction on the process ahead for actually developing these policies.

The objectives for today's presentation are to uh first to share with you the proposed approach to the fee design and then to outline and define for you all the policy questions that need to be answered for the disincentive and incentive policy package as a whole.

And then the third objective is to review and get direction from you about the scope and the process for the public engagement that will help inform those policy questions.

So I'm gonna start by passing it back off to Danielle, who's going to review the way we have evolved our equipment cost analysis a little bit based on some of the direction from the council at the last meeting in October.

Okay, you guys can hear me just fine.

It's a little hard to hear you by it.

Oh, really?

I don't know if you have a different microphone or just yeah, get close to your computer.

Yeah.

Um, I will speak loudly.

Is that sufficient?

Can we turn that up at all?

Go ahead, Danielle.

We'll try to turn you up at our end as well.

Yeah, you're in my earpiece, so it should be um okay.

So uh good afternoon, Mayor and Council members.

It's nice to be here with you again.

Hopefully, um I am loud enough.

So I have just a couple slides here at the beginning to share a few updates on what we presented back in October related to the findings on equipment costs.

Uh most um, sorry.

Uh the slide that we showed uh at the October meeting summarizes estimates of equipment costs across three scenarios that we shared.

The one on the left is the gas equipment, the baseline gas equipment.

The middle column is the inefficient electric conversion equipment, and then the column on the right are the costs for the efficient electric upgrades.

Uh just as a reminder, the cost data was based on regional sources, including the regional technical forum, which was the majority of the cost data that we received.

Uh, we did have an error that we noted back in October with the central air conditioning.

Uh this cost was pulling just from a wrong source.

It was uh the incremental cost of a smaller unit and not the full cost of the unit.

So we have corrected that.

Um we also received some feedback to uh review particularly the furnace, uh four stair furnace and heat pump cost data, look at adding the gas line extension costs, and also look into adding gas fireplace.

So this slide that you see here are the uh updated costs.

So first, as I mentioned, so starting at the top on that left side, most of the changes are on just in this left column.

So you'll see the change in the cost to the central air conditioner.

Uh that's now been corrected.

Note that that cost is now also reflected in the middle column for the central air conditioner.

So that middle column total cost went up as well because of that.

The second that we changed was adding uh the gas line extension, which was feedback that we received back in October.

Uh what we've added here is based on the proposed changings changes to a recent uh filing by Cascade Natural Gas in their most recent rate case filing.

The fee is not a specific number, it's a formula.

And so what this number represents is an average scenario of an of an estimated average extension of uh gas line extension to uh a new construction home.

The actual numbers will vary, and some of those uh numbers are included within the rate case filing if you want to look at the potential ranges.

But we got confirmation from Cascade just this week that this 2189 represents a reasonable average case scenario.

So we've added it here, but noted that this is just the proposed filing.

The current filing, that line extension would be about 416 dollars also for that average case.

So that brings the new total that we've shown here, and then below that we've added the gas fireplace costs, also based on data from the regional technical forum.

We added this as a separate line item since there isn't generally a standard equivalent efficient electric piece of equipment that you would put in as a gas fireplace insert.

Um and so we thought it might be best just to leave this separate for now.

So those have those are the changes.

Okay, thanks, Danielle.

Can I ask a quick question?

Yeah.

My understanding is that would be a good idea.

Part of the reason that the line extension number is greater now is that a Cascade Natural Gas has been asked or directed to update their methodology for calculating that because it was quite old and the other utilities have done that.

So this probably represents an updated version of more accurate current costs.

And I essentially write about that, Danielle.

Or do you know?

Sorry, I didn't mute myself.

Um that would be a great question for Cascade.

I I didn't read into the filing about the ration offering changes.

Okay.

Okay.

Um we're going to talk about the proposed approach to the fee design.

Staff worked with Fright Line Group over the last month and a half since we met in October to explore potential ways that we could approach how this fee would be structured.

We landed on using a social cost approach, is really the only viable option for this kind of fee.

A social cost approach uses the concept of a social cost, the social cost of carbon to establish a monetary value of climate change damages resulting from emitting carbon dioxide.

By using the social cost of carbon, we can develop a value that reflects the fee payment necessary to offset the harm caused by the use of natural gas equipment and appliances.

We did explore whether there were other ways that this fee could be structured, and we really do feel strongly that this is the only model that meets the policy framework needed for this kind of fee.

This is the model that Ashland uses for the um fee policy that they adopted, except it's modified a little bit to accommodate the different um house size tier structures that we discussed last time, and we did use some different data sources for some of the components of the fee.

In the memo provided for you all tonight, we've outlined this fee structure proposal.

Um, so while we only have one fee structure option, there still are a few policy questions that need to be answered before this fee would be finalized or something that the council could consider.

Um Danielle is going to explain uh the fee and the inputs into it in just a moment.

Later in the presentation, I'll talk about what those remaining policy questions are.

But another thing that I wanted to highlight is that um at our previous meeting we discussed trying to establish a fee that differentiates between the level of efficiency of electric appliances, and that was a staff recommendation, and council had indicated support for that.

As we dove into how to structure this fee, we don't actually think we can use this fee model differently based on the efficiency of the electric equipment.

And so our recommendation is that this fee would um apply to natural gas appliances.

After talking with our building codes division, um, I feel more comfortable with this approach because based on the updated building code that's currently going into effect, it should be unlikely for a builder to install electric resistance heat um without a heat pump, um, and which was the main worry.

So that's the recommendation now.

So that's the input of the fee design, and then I'm gonna pass it back to Danielle to walk through the actual components of the fee structure.

Okay, so this fee structure like uh might look familiar to you.

It's based on the uh structure that the city of Ashland used for their structure, their fee.

Um, and when we were reviewing it, we really found that it captured all the necessary inputs to be a reasonable starting place for putting this fee together.

So we're starting here.

Um, there is one slight change that I'll walk that I'll note when we walk through this.

Um, I'm just gonna walk through each of the components to that uh that are part of this fee.

Um, so to calculate a fee based on social costs, a critical component is to determine the monetary value of that social cost of the carbon that is produced.

So this is kind of one of the trickiest parts of this of this fee structure.

Um, as Cassie stated, the city is selected moving forward with looking at the social cost of carbon.

Uh, and as many of you know, the social cost of carbon is not actually just a single value, but it's rather a table that includes values across a range of both years and discount rates.

And the discount rates represent the value placed on future years versus near term impacts and how you value the future and near term relative to each other.

For this analysis, uh, we're proposing to use the EPA's 2026 central value, which is a 2% discount rate.

So using the 2026 value of a 2% discount rate equates to 215 dollars per ton of carbon produced.

So that's the first one.

Next, the carbon produced itself.

So you need to multiply that social cost of carbon by the actual number of tons of carbon produced by each piece of equipment.

The values that we use for this come from the analysis that was presented back at the October meeting.

Next, those values are multiplied by the total number of years that equipment is installed and producing emissions.

That's the life of the equipment.

And then finally, this is where we vary slightly from the city of Absalom's formula.

Uh, this amount is then multiplied by a tiering factor, where a value of one represents an average size home, and then a factor would be applied to uh have that be increase for larger homes or be less than one and decrease for smaller homes.

Uh so when you take the social cost of carbon times carbon produced times service life times tier factor, just multiplying those all of those together gets you that fee amount.

And that is shown here on the next slide, which breaks this all down into quantitative terms.

So here we've got in the carbon produce column that is the amount of carbon we have estimated that each piece of equipment produces every year.

We multiply that by the service life of that equipment.

We then multiply that times that 215 dollars that uh I just discussed in the last slide, and then by multiplying those together, in this example, we're using that tier two, which would be uh factor of one.

Uh so no increase or decrease based on that factor.

You multiply those across to get the the fee amount.

Uh each fee is based on per equipment.

So each fee, each piece of equipment would have its own separate and unique fee.

So if you were a home that were to say choose to install a gas stove but electrify everywhere else, that fee would be 785.

If it were a home that were to install gas equipment across all of these, then it would be a max fee amount of 13,857.

Um that's an overview of the actual fee structure.

I'm gonna shift into the the policy questions that need to be answered, but do we wanna do we have questions about the fee structure itself, or should we just do questions on this now?

Yeah.

Okay, I guess I'm confused.

So we're not in this is entirely looking at carbon produced by gas appliances in this the coming up with this fee and this complicated equation.

Are you looking at the origin of our um electric utilities right now and the carbon cost that you know, like the Sierra Club is saying 27%?

They don't the the Pacific Core is only 27% to their goal of reducing coal by 2030.

Like I feel like that's a huge thing that's missing here is the origin of electric.

Well, and that's so that's one of the reasons why we don't so the this policy initiative from the beginning has been an electrification fee, so it's been oriented on a fee on the gas appliances, and so that's why, as we started to look in like how would you apply this differently on electric equipment and the difference in electric equipment, really as we started to like unwind that it's just fundamentally an entirely different policy question.

It would be more like a uh carbon tax, yeah, like just a different, it's it would be a fee based on the efficiency of all types of equipment in there.

So if that was um the direction we wanted to go, one it just it opens up a lot of other questions.

So we don't actually know if there's like a pathway to differentiate in that way, and it's something that we could explore, but we would need more time to explore that.

So really when it came down to it, we those were the same questions we came up with when we were sort of like, okay, how would you apply this to um electric resistance heat versus a heat pump?

And those are exactly the questions that sort of came up with that, and it uh it just what what I reflected on is like that that really is just a different policy question.

That this whole kind of the the whole thing is is not based on carbon dioxide, it's based on getting people from electric to gas or gas to electric, so that's why it's focused on the gas, which is should not be the intent of this, in my opinion.

The intent should be to reduce the impacts of fossil fuels.

And if we don't have a clean grid, then what are we doing this more?

But that's just and I think in the bigger picture, and we've kind of talked about why electrification, a lot of it does hinge on Pacific Power.

Um, you know, our Central Electric Cooperative is um largely clean electricity, they you know, serve a segment of our community.

Pacific power serves a larger segment.

They do not have a lot of clean electricity now, and uh I think that's something that is well established and I can and a concern in this, but they are under state law that they will have to be 80% decarbonized by 2030 and 100% decarbonized by 2040.

And and to date, Pacific Power is still um you know very firm in saying that that they're on track to meet those targets.

So when you look at the um the lifespan of um putting in gas today versus putting an electric today, if electric is dirtier today for the next three years until the that emissions profile switches, the net carbon benefit is is positive over the life cycle of that equipment, but it does hinge upon Pacific Power meeting those targets, but we don't have we don't really have you know data or anything to that we can rely on to say that they're not gonna do that because that's the information they're still sharing that they will hit those.

So our analysis is based on that.

The CR club still says that by 2035, Pacific Corps will still be using gas.

So just wanted to share that.

Steve is it is it uh fair to say that you sort of the marching orders that we've we've given staff on this is to consider the things that we can that are within our control.

Um and and that we as you as you talk about the the grid is is is changing over time and it's mandated by law to change over time.

But the things that we can control are are the emissions that are generated locally, and so this carbon that's produced is an emission generated locally from a residence, right?

And so that's where we're focusing on our efforts.

Is that is that kind of your understanding?

I think uh that's true, but when we look at like how we track our greenhouse gas emissions, we do factor in uh the emissions intensity of the electricity, even though that electricity is uh those emissions happen elsewhere, but so that that scope of our electricity service in particular is within the scope of our climate goals, for example.

Um, but I do think this fee, one of the one of the reasons um that people are supportive of electrification is because it does eliminate like combustion of fossil fuels within your geographic boundary, right?

You know, so it's just a different ways to look at it, I guess.

And it's a it's it's a policy goal choice, yeah.

So is what we're trying to control.

Okay, thank you.

Yeah, I just um maybe sort of building on what counselor platt just said is that you know the goal of our climate action plan is to reduce fossil fuel use and bend right into his point of what we have control over.

So it seems to me that this approach is very consistent with that, knowing that there are bigger system challenges.

Um, but you know, we're trying to move things in that direction.

So I think it's very aligned with the climate action plan that the council has adopted in the past.

My question is about this slide here.

So at some point in the future, I believe that we would add another line onto this, which would be a hybrid system where somebody is using some combination of a gas furnace and electric um heat pump, and that that would have a lower carbon production number or carbon intensity number, therefore, in the situation where somebody because we're not eliminating natural gas in the community.

That I mean, I've continued to hear that in emails that we get.

This policy in no way does that, it retains choice for people.

Um so people would have a choice to put in a hybrid system, and we know Cascade Natural Gas is already looking in our community at the opportunity for those.

So we would have another line in here that would have a different carbon produced and therefore a different tier two fee amount in the right-hand column.

I'm just confirming that that's accurate.

We're not there yet, because we have to look, I think, at another data source to get the right data for that.

That's correct.

I think one of the flexible things about this is that as technologies evolve, because this is based on like a per appliance calculation, we could update the list of technologies that are subject to the fee, and then in the example of a hybrid dual fuel hybrid heat pump that has a gas furnace and electric heat pump.

The the um the carbon produced column would have like a much lower CO2 estimate per year, so that would result in the correspondingly lower fee.

And it was not included in the data sources that we have here because since it is a more emergent technology, that we this uh numbers were using that RBSA database, and they just don't have data for it because it's a newer technology.

We do think that if people were putting those in today and we needed to figure out how to assess that, we we could find other data sources to try to get the calculation for those or figure out an interim solution for the emergent technologies, and then kind of uh phase those in as those technologies become more prevalent.

Okay.

Any other questions on the fee before we get into some of the policy questions?

One question is just because you had mentioned that uh using the social cost, which I think is uh a good approach, and the staggering numbers that you see up here are indicative of just how high that social cost is.

I think that's the real one of the real takeaways here is that this is a tremendous cost that is not being accounted for, and this is one mechanism to account for them at the local level.

I I see the upstream problem as a separate problem, and so I think I'm I'm okay with looking at this from what our scope as a municipal government can can focus on.

My question was about the since a social cost approach doesn't just differentiate between high efficiency and low efficiency.

Would the revenue from a program like this be able to, would we have the discretion still to say we want to focus that on high efficiency electrification, for example, as one of the factors?

I think there are, I think there are questions that we have not looked at yet that we would need to look into about how the revenue can be spent.

So I don't think I can answer that one way or another right now.

Um, but but it's a good question.

Okay.

Yeah.

Thank you.

Okay, let's keep going.

Okay.

Um so now that we understand how the fee would be structured, I want to walk through the policy questions that still need to be answered for this whole electrification disincentive and incentive policy initiative.

These are not policy questions that we need feedback on today.

These are policy questions that we are proposing, we get feedback on through a public engagement process, and recommendations would come to you all on each of these policy questions in order to help you inform your decision making on them.

So I've identified three different buckets of policy questions that need to be answered.

The first bucket is about the fee design.

These are the two questions that we have on the fee design that we would need direction on in order to get the fee policy to a point where it could be considered by the council.

Um so the first question for the fee is just what should the fee level be set at.

The fee example that we showed you is the maximum fee amount that the city um would charge based on the social cost of carbon, but there is a decision to be made about whether we would charge the maximum amount or if there's a policy reason to charge a lower amount, and if so, by how much.

As we talked about at the October meeting, where the fee level is set, will have an implication for how many people pay the fee versus how many people electrify.

Um, so in the memo, we have some estimates about what we think that number of people that would choose to electrify it versus pay the fee are and what the revenue generation would be at um three different fee level scenarios.

That information is just provided just to give you a sense of scale of what the different fee amounts could be and what the revenue generation implications would be of that.

And then the other policy question for the fee is what building types or situations or technology should be exempt from the fee.

So those are the two questions in the fee design bucket, it's fee level and exemptions, and then we have the topic of financial incentives, and the policy question is how should the fee revenue be used to establish financial incentives for electrification?

And then the third bucket is non-financial incentives.

The policy question is what non-financial incentives can we offer to incentivize electrification.

This topic is a little bit separate from the fee discussion.

Um, but we heard at the last few council meetings that the council is really interested in exploring non-financial incentives too.

We have started to explore what kinds of nonfan non financial incentive levers we have.

The two main ones that we've discussed as staff is that we could offer incentives in the form of time, such as expedited permitting, or in the form of greater the ability to use land to a greater intensity, such as density bonuses.

Of those two, our staff believe that there's more room to explore within land intensity, expedited permitting is seen as a less viable option for electrification.

So when we start talking about non-financial incentives, our intent is to explore the land use and land intensity incentives.

We can also hear from our developer community if there are other creative ideas that we haven't thought about.

And so that's the non-financial bucket.

So those are the three uh buckets of policy questions that we need to work through.

And then what I'm going to talk about next are some options for the public engagement approach to work through each of these policy questions and the implications that each has for when the key council decision points are.

So first I'll uh talk about the different components of the public engagement process and sort of what the scope and purpose is for each.

Then I'll talk through the process options.

So the primary public engagement tool is uh we're proposing is the use of the joint committee that we convened back in February and have been referencing in the last few council meetings.

The joint committee would be made up of three representatives each from the Bend Economic Development Advisory Board, the Affordable Housing Advisory Committee, and the Environment and Climate Committee.

The three energy utilities, Pacific Power, Cascade Natural Gas, and Central Electric Cooperative would each have an ex officio seat.

The joint committee would be tasked with developing recommendations for each of those policy questions from the previous slide.

So they would be coming to you with a recommendation about the fee level and exemptions, about the financial incentives and how to use the revenue, and then also about the non-financial incentives.

The ex officio members would be non-voting, but they would be present throughout the entire joint committee process to give good information to the joint committee about things such as technology feasibility, implementation considerations, grid constraints, all of those kind of technical questions that have been raised.

And then the other pub, the other component of the public engagement is that we would hold public round tables or broader stakeholder roundtables at a few key moments that would engage additional important stakeholders such as the builder and developer industry, labor and environmental organization representatives.

The purpose of the round tables is that they would be an opportunity for the broader stakeholder groups to directly inform the joint committee so that the joint committee can use input from those stakeholders to inform the recommendations that they bring to you.

The proposed process options that I'll outline next include round tables focused on exemptions and also ones focused on incentives.

And then last we anticipate engaging in informal interviews as needed as the process unfolds.

So that might be with builders and developers to inform the implementation process of the fee or to that the data that we're collecting.

The groups that we might want to interview may evolve with the process, but I just wanted to highlight that we do still have an opportunity to engage groups as needed and kind of as the topics evolve outside of the joint committee in the public round tables.

So now I'll walk through some options for how we can sequence the public engagement process to get you re to get you all recommendations for each of those questions.

Each of the options has some considerations for you to think about and implications for when the key council decisions would be.

On these slides, I have just the key council decision dates, but I've also provided a memo that has a month-by-month breakdown of what the meeting schedule would be to give you more information about sort of how those discussions would happen and what the timing would be and when the proposed round tables would be for each.

Option one includes establishing the fee policy first and focusing on the incentive development later for both financial and non-financial incentives.

In this option, we would be working with the joint committee and doing round tables to answer the those first two policy questions about the fee, and then bringing you a recommendation about the fee in April or May.

And then we would initiate the discussion around both financial incentives and non-financial incentives beginning in the summer.

We would do a round table focused on non-financial incentives in the late summer or early fall, and we would bring you a recommendation about those two topics in the later fall.

Some things to consider with this approach is that it would get the fee development accomplished sooner, which would provide certainty and clarity around the fee.

The implementation date of the fee can still be set to go into effect at a later date.

That's what the city of Ashland did.

And then the incentive programs would be built around the disincentive as the foundation.

So the fee decisions would be complete by the time we're working on the incentive.

So there would be less opportunity for iteration between the two as they relate to each other, which I think has pros and cons associated with it.

Option two would involve focusing on non-financial incentives first and then working on the fee and the financial incentive together later.

So in this option, we would be working with the joint committee and holding uh joint committee and holding public round tables in the near term, focused specifically on non-financial incentives, and then we would be coming to the council with a recommendation about non-financial incentives in April or May.

And after that, we would initiate the joint committee and the public roundtable meetings on the fee policy questions and the financial incentive questions starting in the summer.

Um the fee and the financial incentive would be coming as recommendations to you all closer to the end of the year, like November, December.

In this approach, the fee discussions and the fee adoption would be delayed a little bit.

It would provide less certainty in the short term about the fee, and but the focus for the community discussion in the near term would be on those non-financial incentives, which would still be moving forward with the electrification policy goals as a whole.

This option allows the fee and the financial incentives to be made in coordination with each other, which might be helpful as we consider the holistic policy approach.

And then the third option involves developing the fee first, but developing both the fee and the financial incentive program together, and then the recommendation coming to you as a package and council adopting those and considering them together as a package in uh sometime in the summer.

Um, this option allows for the fee and the financial incentive to be developed in coordination with each other, just like option two, but it would just take place before the non-financial incentive discussion.

Um in this option, the fee decision comes later than option one, but sooner than option two.

Um, non-financial incentives will still be discussed and developed, but it we would not be starting the discussion on those until the fall.

Um so those are the options, and then um before I review our council discussion questions.

I will add that our planned next step is that we would come back to you with a resolution establishing the joint committee and their charge and their process and everything, and we need to get that executed so that we can actually start the process.

So the information you give us tonight will feed directly into that, and then we have that on the schedule to bring back to you by January 7th, um, if we are ready to do that.

So, as far as the council direction, um, the questions are first um are there additional policy questions you want recommendations on from the joint committee or the other public stakeholders?

So those those buckets of policy questions, is that the right scope of information that you want recommendations on?

And I can go back to that slide if that's helpful to look at those.

Um, the second question is with respect to uh beyond the joint committee, those public round tables is what you're seeing in those proposed options.

Is that the right level of broader public engagement, or were you looking for anything different on exemptions and incentives, or are there other topics you wanted some of that broader public engagement on?

And then the third question is which policy development approach option you would like us to pursue.

And then the fourth question is sort of separate.

I wanted to just circle back to the discussion about this fee only applying to the natural gas equipment and not differentiating between efficiency levels.

I did also want to check in since that is different than we talked about last time, last meeting.

I wanted to just make sure that council supports that direction.

So I don't know if it makes sense to like maybe talk about that one.

Yeah, I think we should start with that last question and just make sure that there's a majority of council that wants to keep moving forward with this fee on the natural gas equipment, understanding using the social costs of carbon and understanding that we're not gonna be able to differentiate the fee based on the um efficiency levels of the electric equipment that goes into the home.

So thoughts?

I know um council Perkins, you disagree.

We've heard that, but just want to make sure that there is support from a majority to move forward that way or any other discussion on that.

Just one question about the discussion of the high, medium, and low tiers.

If you could say a little bit about that, because I feel like that might be an opportunity to talk about either a phased-in approach or what differentiates the different tiers.

Yeah, I think we have options to do all of those things.

I think we just want to make sure we we all agree at least a majority of us to move forward with this fee, and then I think there's gonna be some discussion on the policy questions around how to do the exemptions or do tiers or do other um changes or policy decisions around the fee.

I think that makes sense.

And the intent for the tiers, I can just explain quickly is um like for the SDC tiers for the water STC, for example, we used water consumption data and we're able to figure out like the average water impact at those different square footage amounts.

And so um the best case scenario is that we can get that same data for gas use at those different square footage uh tiers, and that the multiplier would be proportional to those.

We think we can get that data using the um RBSA data that we've been getting our other data from.

Okay.

All right, we could discuss that.

Yeah, next, if you wouldn't mind going back to the slide that talks about the joint committee.

Yeah.

This one.

No, the one after this, just the makeup of the committee, because I would like to have council input on this joint committee if we think that's the right makeup.

If anyone is missing from this, and then the idea of the round tables and interviews, if that is what council thinks is going to be good for the public engagement with this committee going forward.

And Cassie, we we talked about this at one of our meetings, but um just for the room to know it, you know, uh BDAB did suggest that um uh representative from building trades beyond the joint committee, but we talked about maybe that um that would be a better place at the public round tables to provide that sort of industry expertise.

I just wanted to make sure that the room with that.

Yeah, the one of the main purposes of the round tables is to make sure we can get you know good really good representation from the builder and developer community since they will be heavily impacted by this, and they have a lot of information on you know the implementation and what might work.

So those round tables were definitely uh sort of thought of with that, those stakeholders in mind, and I do think it makes sense to extend that to other stakeholders as well.

But but that was the main place where we would have um their broader input.

And just to be clear for people who are watching, we're talking about public round tables, those would be invited guests to sit at the table and discuss, but they would be open public meetings that anyone can attend and watch.

So that's sort of the public aspect of them, but they would not be sort of like a town hall format, it would be we want to invite particular stakeholders to the table.

Yeah, okay.

All right, other thoughts on this.

Well, I guess I mean the two concerns that I think I have that might not be captured on here.

One is I I am concerned about grid reliability, and I'm also concerned about the effect of our policy on uh household affordability.

And so I'm wondering whether we think equity and industry expertise is adequately represented there.

And I'm kind of wondering what the rationale for BDAB's representation there is.

I think that's more on the um the building side and the development side, and then I think AHAC is sort of capturing that affordability in the and also build also builders, but um, as we know a lot of our home affordable home builders are building electric now, which is great.

So I think that's gonna have um an impact on how AH kind of sees this issue.

And and BDAB are people who are uh in the business world who have employees who have to live in this community.

So I think that they're they should absolutely be, you know, should be a part of this district committee.

Yeah.

Anything else is what there was a more direct way to, you know, we don't have uh a tenants union, but some representation of you know tenants' voices directly or something rather than through their employers is what I would think would be more appropriate.

Um is that what you're trying to get at when you bring the word up, the word equity up?

So yeah, I think that's that's been a difficult thing for us on a lot of levels for engagement since we don't have an organized tenants union or tenants organization, but um, I'm wondering if we might talk to because we have um we have AH members that live in affordable housing, um, that maybe we could focus on having them be on those uh as a representative from AHAC to try to get that voice.

Yeah, okay.

I mean, I think it's important to remember that anybody who's on this, including like the ECC, for example, those are all people who work in organizations and have jobs and have to live here and pay rent and buy homes.

I I mean pretty much anybody who's gonna serve on this committee brings that their perspective of living and working in then.

So it's not just the BDAB member that that does that.

Um it's just important to make sure we remind ourselves about that.

Okay.

I would like to see, you know, and I don't know exactly where this is appropriate, but folks who install some of the kind of energy efficient stuff that we're talking about being engaged at least through the round tables.

Right.

Um, folks who do that sort of work and bring that back that kind of expertise as well.

Not just traditional uh building technology, but the stuff that's newer.

Yeah.

I think the the trades could help us find those folks.

Um okay, any other thoughts on the makeup of this committee?

Okay.

Okay, so then I think let's turn to the policy questions for that committee.

And this is gonna dovetail a little bit with I think which option we pick, right?

Yeah, but um I what do people think about these questions as far as things that the committee can help us with?

Yeah, Steve.

So I think this dovetails or lays into the option that I think I I I want to is that all right if I can combine that.

They're gonna kind of go together.

So go ahead.

Yeah.

Um so Cassie, um, you know, we've talked in the pre-brief on this that um I'm very much someone who believes that a paired discussion on both the fees and the revenues that that come from that fee uh go together nicely, I think, and makes sense to explain that to the community.

However, that option is the far and away the longest option to get there.

And so been chewing over how how can I can help compress the timeline.

Um my thoughts on that are if I think back to before I was on this council, um, the council had to wrestle with the tough and coming up with the fee for that, and and and that was a really tough, hard discussion that the that the council went through.

And I think if if memory serves as I understand, the council ultimate ultimately decided to make the fee decision uh from the dais um with staff support to make that.

And I believe that that is a model that we should consider uh here.

And so how that relates to the joint committee assignment is I suggest that we remove that discussion from them, the fee level and the fee exemptions from the joint committee, and that we take that on ourselves from the dias.

Um and so the way that would look is we would ask you, Cassie, to go back with the staff and and try to flesh out two to three fee level options for us.

Um that would come back to us, and we would choose we would choose that here.

Um given that choice, what do you think that would do to the level of task if we remove the fee discussion from the joint committee?

What would that do to the level of task for the joint committee?

I assume it would shrink it a fair amount.

It would, because I was sort of like when I was looking at these different, and I don't I wish I had in front of me the um the longer schedule, but each of these three different policy buckets was sort of like three to four meetings, three to four months, but then on top of that, there's one or two meetings to bring it to the council too.

And so I think if you um if we did that fee design directly with the council, that could just be you know maybe two to three meetings because the council there'd be less of kind of the foundational work to do, it'd be less meetings and be directly with the council, and then it would feed into the decision quicker than having to come and make the recommendation.

So I do think it would shrink the fee level portion um, you know, from four to five months in an optimistic scenario with the public engagement to two to three months.

Um, so it would bring up the time.

So here's here's my my specific ask to you, Cassie.

Is if can you think it's feasible within the staff bandwidth that you have right here, that if we take that fee discussion and and decide from the dais, can you get us something to chew on for a decision point by the end of February, maybe for us to look us to look at?

I think so.

I think it would be helpful to know what kind of information would be like in terms of the analysis, what kind of information would be helpful for you to guide that decision.

You know, we have in the memo already different fee levels and the how many homes we think they would convert, because I think that's sort of like a key piece of it, is like how many people would you know how effective would that fee be in you know incentivizing?

Um so there's there's that, and it uh and then the revenue generated.

We could sort of easily provide some additional, like this is how much CO2 and that kind of thing.

Um so that would be easy, it would just depend if there was like another element of it that you really wanted to inform your discussion.

Um that that that's helpful, and so the the way this we're experts that so the the way that this would look then is is that that fee discussion would be you know had on the on the council, and then what I would propose is that the joint committee still starts up in January with the rest of the discussion, which would be the fee level is going to be set.

So now let's talk about with that fee level, the revenue that you can do with it and the non-financial incentives that go along with that, and give them the time to work through that possible that that process.

So that is my proposal, and I guess that's what I'm offering here is that on hybrid option three.

Okay, so reactions from other counselors on that.

It's not one of the ones that Cassie laid out, but something a little bit different.

I actually think it's a great idea.

I I um I think the fee is fundamental to the whole policy package, and I I'm I don't really know how we go forward on the discussion without knowing what the fee is.

So I mean, if we're not choosing this one, I I choose to do the fee first.

We can't really talk effectively about incentives and what we have available.

I think it looks really different depending on how much revenue you know they're gonna generate.

Um I also think, frankly, that the fee discussion is the hardest decision to be made.

And I don't really think we're we should be trying to pass that off to other parts of the community.

I think in the end, you know, we have to make these difficult decisions.

And and I'm honestly persuaded at this point that we have really divergent views of this in the community, and I don't think we're gonna get consensus back from the um from the committee.

Um we're gonna be faced with a really hard decision.

So for those reasons, I would say let's make the hard decision first.

Um set that as the benchmark that we're using to shape the rest of the policy.

It may be that we'll learn some other information during the process that we adjust that sum.

But then we go forward and we know how the financial incentives work and the non-financial incentives and what those look like.

Um I really think we need to get that part done first and get it, you know, and then move forward.

So um, and I think it's it's up to us to make this difficult decision.

Yeah, but it's up, it's up to us.

We should be listening to that people in our community.

And listen over the next couple of months.

Yeah, yeah.

I mean, I I you look, I know I'm I know I'm the minority in this room, but I guarantee I am the majority outside of this room.

Um, and if we are talking about getting rid of public engagement and the importance like committee work for this fee, I have a huge problem with doing that.

These are people who are experts, they build houses, they employ people, they have ideas we haven't thought of, and we should be leaning on them.

And if we're taking that away and we're just making we we don't employ people, no one up here employs people, and and that includes myself.

We have to be thinking about the impact of this on the community.

And I I just I don't understand why we're not where we wouldn't start with non-monetary incentives.

They don't make housing more expensive, they're low-hanging fruit.

There's something, you know, like so I it it it kind of baffles me that we're we're we're not considering the the easy thing first that can encourage electrification, but not cost us more money, not cost more money for us to build homes in our community.

And um, so I'm I'm a little distressed by the way this conversation is going.

Well, if I can offer something that's making it's reminding me of because Steve mentioned the transportation fee, is that council made a decision at the beginning of that discussion that we were looking for X, you know, this amount of revenue, and then everything flowed from that to show what should the fee be set off at, how should it be phased in over what amount of time?

What will that allow us to pay for or not pay for?

So for me, I can understand the desire to say we need to kind of know where we're starting.

Um, and it's not that the fee would be implemented or in place, it's just a decision point that would be made, right?

To say what is the level we're starting at, and then we can say um what are the things that we can pay for with that, or what are the incentives that could flow from that, understanding what the number actually is, what we're targeting.

And that target could change as we go through the conversation, but I think we gotta define something to start.

I do disagree.

I would I would I would want council to start with that high that that sort of revenue or like fee level, but um the exemptions and things, I would like the committee to think about that and to offer their expertise on where this is gonna we have to set a level and then see where the impacts are gonna be, right?

So I think you have to say if it's gonna cost this much, that can give people something to say, okay.

Well, then that means this for me, right?

This means you know, um, that's gonna cost me this much because I have this inventory of gas stoves that I'm gonna be putting into houses.

I'd like to know those numbers.

If we if we don't let the fee level be set at some point early on in the process, um it's gonna be harder to have those real world implications brought to us, I think.

So that's just so I can understand why you know there might be an argument to go for that first.

And mayor, I think the timeline could definitely be something that the committee decides on.

Timeline for implementation.

It's performative though, then what's the point?

I mean, if if we're doing like performative engagement, I just I don't think it's performing.

It's not informative, that gives people time to get ready.

If so, are we in your in solution, your hybrid solution here?

Are we gonna have um an opportunity to have a deep dive discussion on grid reliability on the fact that you know the Redmond spokesman just yesterday or did a did a huge story on the fact that we have like a serious problem right now with with shortages and in our community?

Are we gonna have that conversation or are we just gonna set some arbitrary number and then say well we'll figure out all the rest of it out later, which to me just seems like we need to have those discussions before we set a number?

That's in my mind.

Do you know?

Um yeah, I haven't spoken yet.

I um I just want to say I really appreciate um the comments that all of you have made.

I I agree um with counselors Platt and Riley that we should make the hard decision here and set the fee level.

Um we should that we should shoulder that burden.

That's why we're in this office.

Um the one thing that hasn't been mentioned yet that was really impactful for me, um, is that the state recently published their energy strategy.

Um and I don't know, it came it was discussed in one letter that we received, but um what was really impactful for me is that the state looked at over the long term what is the most responsible use of our different power sources, gas and electricity, how should those sources be used?

Um, and what they to the economic benefit of the state overall.

Power our economic growth, power how new homes, new businesses, and the conclusion essentially was was that the most cost-effective path was for electrification of cars and buildings and reserving gas, frankly, for electricity generation, believe it or not, which is counterintuitive, but there is a lot of electricity generated by gas these days, and there will be more, and that's kind of what's needed.

So, in my mind, um, while our policy is is uh is a carbon impact fee, um, it is also in line with the direction that you know societally for our state and for the region really we need to go in.

Um so I that kind of gives me confidence to move forward with this policy the way that is.

Um, and uh and I think I think that said I'm not really worried.

I think we'll still get a lot of really good feedback from all the um the groups that meet.

Um and I'm and uh the I guess the other thing it's been said, but um, it is very clearly stated in our community climate action plan that this is one of the strategies that we're gonna be pursuing.

So I'm um um it was pursued a little bit quicker than I was expecting in my tenure on council, but um, but here we are, and I'm I'm glad we're doing something because the community repined on the community climate action plan.

So we also said we'd like to make housing more affordable too.

So yeah, Ariel.

Well, part of that climate action goal is uh to cut fossil fuel use by 40% by 2030 and 70 percent by 2050.

And to me, that sounds like sort of a natural step towards phasing in.

I don't see the question as should we do something or nothing.

It's the question the question is what should we do?

It's not do we do nothing or you know, I feel like it's I'm sympathetic to councillor Platt's comments about you know, we're not trying to form this out.

I think that's you know, it would be optimistic to say there's some perfect solution that is just going to be ready-made.

This is this is hard work.

I I like the idea.

I was leaning towards more of option two or option three personally, because I think there is a tremendous amount of uncertainty that warrants a phase-in approach that would say, let's let's look at things like non-financial incentives first, um, and be mindful and be cautious, and but still do something and uh make sure that we keep those goals of decarbonization in mind.

Um and so I worry a little bit about saying let's if we're talking about expanding the timeline or saying let's have you know uh I don't think that's on the table for me.

Um but uh I I I like the approach here, and and I think I want the discussion to be on what what does it look like uh in terms of the phase, the amount, um, the basis.

Yes.

So in terms of counselor platt's proposal, what do you think about that as an alternative?

I'm not opposed to it.

I think you're right that uh there is tremendous division on on this issue, and uh I'm willing to make that hard decision about what kind of what what it would be what the shape of it would be, but that's not to say that um you know we yeah, I guess we'd have to have a discussion about what the expectations of the committee are um which I'm open to.

Yeah, and I think that's this right here, and so I think what council platt has said is that we take that first question at least.

Yeah, set the fee level, but the rest of these questions and then other things that maybe that other people want to add, like do if you want to add other things that you think this committee should consider, now is the time to say that.

Um that but those would be the committee's work that they would come back to us with a recommendation on.

Okay.

Um, Councilor Norris, anything you want to weigh in?

Well, so then does that just mean you're not doing option two right off the bat?

You just option two.

Folded in, I feel like in the hybrid option and the non financial incentives are are folded in to all of these with the joint committee.

At least that's what I was intending to propose.

Right, they would still be working on these questions.

Yes.

All of those minus the fee.

And I think the committee could still get started relatively quickly if they focused first on the non-financial incentives because they don't need to know the fee to be able to have that discussion.

That's true.

So the committee could get started quite quickly still.

So that would be option two.

Well, I think there's you know, maybe it's a new option if I'm understanding what Council Pott has proposed, which is that the council deals with the fee.

That's it's going to answer that question.

Um and some you know, over the next couple months, so there's time for input from the community.

Um, and then um get the committee started and get them started.

Uh, I'd suggest they get started on the non-financial because they don't need to know the fee to do that, and then once the fees established, then they can lean into the how would the revenue be used, as well as questions about exemptions.

Um I think there might be, you know, when when is the fee assessed?

There might be a lot of things.

I think implementation maybe one that isn't there, Cassie is implementation timeline for the fee.

Yeah that that's something that the committee could also talk about like the roll out of just when it's right.

When does it apply?

When does it start?

Okay.

So okay, just to summarize.

So, under this kind of what's on the table right now, that first question of what the fee level would be set at, we would ask staff to bring that directly to council to finish that hopefully by the end of February.

Um, with us working directly on that.

Um, but that also in the first month uh first meeting of January.

Could you bring us the resolution for the committee so that that committee could get started on the work that they're going to do, which would be answering basically every other question here except for that what that fee level will be.

Yep, and then non-financial incentives would be first in the sequencing of that committee to give the council time to establish the fee level, right?

And then after they do the non-financial incentives, the uh we would they would do both exemptions and how do we use the revenue.

Yes, I think that's correct.

Um okay, so that's the proposal that's on the table.

Where's grid reliability and I think we would need to bring that up if we want to have that be part of what the committee is also bringing to us, then let's add that to this list of policy questions.

Absolutely.

So if I could just sorry, just about grid reliability.

I mean, it really is a totally separate animal.

It's it's it's an it's and I'm happy if but if we're adding growth to it, you want to make a agenda request for council to deal with grid reliable grid reliability to put that on staff to work on.

Like I am all I will vote in favor of that many times over.

Um, but it's a different, it's a different animal.

And I do agree with you that it is something that we should get on our agenda really quickly because it is an issue, and it's something that cities around the state are paying attention to right now.

Yeah, I think I'd be open for this committee to be receiving information about that as part of their work.

I mean, that does so one of the ways we were planning on where that would come up actually was at the fee level question because we were gonna have Pacific power with different fee levels.

We have estimates on like how many how many homes would this because the grid reliability uh issues really vary depending on if we're talking about 50 homes, 100 homes versus thousands of homes per year.

So that scale um is really critical is a really crucial piece.

And so we were planning having having Pacific Power come to the joint committee and say, okay, based on our estimates, um, Danielle is able to come up with estimates based on sort of economic principles of like at this fee level, how many people would electrify how many homes would we expect per year, and then have Pacific power provide information about like what additional what would that additional demand be, and like how does that fit.

So that's how when we were planning on having that discussion in the joint committee, it was definitely gonna be a part of it.

So that could be something that comes to you instead.

Yeah, so the power present to us.

Yeah, okay.

So with council, it feels like we're kind of moving in that direction of having council take on the fee.

We have a packed work session schedule between now and April.

So I'd like some direction now.

I would propose that we need then need to move that transportation standards conversation, or I need some direction.

Are we gonna do this over that transportation?

We're gonna push that transportation standards conversation back.

Um, the other option is we have a joint meeting with parks, then we push that back, or we have our economic development strategy and we push that back.

Okay.

So I need some direction of how this because we can't do all the things all at once.

I need some prioritization from you all.

So what am I gonna push back if you're gonna take some uh body of work on a little bit faster?

Yeah.

I would propose economic development gets slid.

Second, I was thinking the standards, I really think yeah, not the economic development.

Any other thoughts?

What's the agenda for the parks?

We're so we're developing it February 11th.

We're using repurposing a work session for that joint meeting with parks.

Um we've kind of settled on that date, and it's really the this broader discussion around growth and housing policy and engagement with some of these incentive programs that we have for housing, and we've had some conflict with parks that we want to work through uh at this meeting, along with our trail or work on trail maintenance and how we can improve that.

So I mean that's a rough sketch.

There's more items, but I mean, I I would, especially after having read through all the home stuff and thinking about the various incentive programs and some of which we're going to talk about in a few minutes here, others that are gonna come up later.

Um have been taken off the table that because that is ripe for discussion if we haven't resolved sort of our direction and pathway as a city on some of those, and then we're going to other jurisdiction partners to talk about how we can partner on that stuff together.

I can see that.

I I'd say that one would be parks.

Yeah, the parks meeting would be the one that I would maybe that frees up a whole work session then and then we can still make sure I I don't want to delay economic development.

No, I don't so um that's a better choice.

Okay.

Okay.

All right.

So just yeah.

So that would be then we would um February 11th could be kind of a dedicated work session to the design.

That works.

Yeah, and I guess I'm assuming if there's a little more, you need a little more time to digest all this and come back with both of you, I guess, around the schedule of it a bit.

Yeah, but I think that's the openable okay, yeah.

Okay.

Well, I think we have a majority of folks that want to move in that direction at this point.

Um, and so then again, we would have that first meeting in January would be the resolution on the committee with additional notes that you had from tonight, I think.

Um, and then that council would be discussing directly that fee level at the February 11th, and in maybe at a touch point in a business meeting before that.

I don't know, but we'll figure that out, and that will be happening in the early part of the year next year.

Okay, okay.

All right, was there any other question unresolved?

I don't think so.

Okay.

On the direction.

Okay.

Um, and I want to thank everyone who's here in the room and who's been engaging on this.

Um, we have a lot of folks interested, a lot of people engaging.

We're gonna continue to provide those opportunities for engagement, and that includes engaging with us on this fee decision.

Um, and we're still gonna be able to hear from you, and we want to hear from you.

So um, please stay tuned, and we will make sure that we let you know when our next meetings and all those things are on this topic so you can pay attention and keep giving us your input.

Thanks.

Sorry, doesn't make room for personal.

Room empties.

I know.

The transition to our home committee presentation.

All right, come on up, Chris.

We saw it, Emily.

Thank you.

No, I'm gonna just let folks appear out here.

Yeah, yeah.

Yeah, I know.

Stand up if you feel like it.

Transitioning over.

I don't think this is gonna take necessarily a whole hour, so maybe we'll get it.

That's not a good thing.

Yeah.

Here we go.

Okay.

Good evening, Council.

Uh my name is Chris Ogren.

I am the city's grants coordinator, and I'm helping support the process of facilitating the home committee.

Matt Stewart Real Estate Facility Housing Director.

And Rachel Baker, the housing division manager.

And we will have Jonathan Taylor with Urban Renewal as and then I think we'll have Carly and Sarah join us as well.

Yes, we've uh and go ahead.

I actually need to declare a potential on this out of an abundance of caution.

Um, this item could have a financial impact on my employer, although it's very unknown at this time.

I just want to declare potential.

I'm still allowed to engage in the discussion.

Thank you.

So, really the purpose of today's meeting is to discuss the home committee's work today, the process we've been through over the past six or so months, um, as well as convey their initial recommendations for housing incentive programs that the city could implement.

Um, so we'll provide some context about the council goal around housing, we'll talk about background of the committee, who's on it, how we got to where we are today.

You'll hear from the chair and vice chair, Sarah Odendahl and Carly Colgan about the committee's recommendations, and then we'll have um staff come and provide uh context for each of the specific recommendations and what next steps might look like.

Great.

So, as part of our your 25 to 27 housing goal, one of them was to form this housing funding work group known as the home committee.

The other one was to address the goals set out in the OHA, the Orion Housing Needs Assessment, around 3,900 homes or 3900 permits over the next two years.

So this is just a screenshot of what you we have on our council dashboard.

So to date, we have per just over 1,000 about 1,100 housing units have actually been permitted to date.

Um that about uh that's about 25%.

So if we break it down into quarters of going around, we're actually on track.

As well as that, we've had about 25% that are actually for deed restricted affordable housing.

So we are doing well on our goal, and this is something that we're focusing on as we look ahead to year 26 and year 27.

So, just a reminder of what is deed restricted and AMI levels really look like for a family of four.

100% AMI is somewhere around 123,000.

So we're talking about those who are earning middle income or even deed restricted below 80%.

You can see that here.

That's still quite a significant income for the city of Bend.

For family four, that's 91,000 at an 80% AMI.

So just we've seen this before, but just a breakdown of kind of where in that AMI range we're expecting units to be produced from the Oregon housing needs assessment.

Um as you can tell, a about uh just over 50% are within the deed restricted and the middle income while we have that kind of chunk there for market.

And this we are beginning to start tracking more or less what are we seeing out in the market and what are we seeing that we're incentivizing and how are we achieving each of these sort of um columns or brackets that we're filling in?

So we've had a pretty good year here in 2025, and we've actually been seeing a lot of permits come in.

So, along with a Jonathan, we'll speak to the site-specific TIFF program.

Of the programs we've incentivized and we've seen produced this year, we've actually done really well in that middle income between the 80 to 120 AMI, almost achieving our goal.

We do have to remember that not all of that has come to market yet, so that's something we're waiting to look at, and I am I levels can obviously change.

So we want to be as cautious as we can and not say check that's done, but necessarily keep an eye on this as we move forward.

John, just one thing on that.

That is most of those those TIFS have to be occupied within three years on that five-year time screen.

Yeah, so we should know well we're gonna be able to do that.

Yeah, we'll yeah, we'll know for sure if there is.

Thank you.

So I want to talk about the home committee timeline a little bit.

So early in 2025 or mid-25, um, council directed staff to create a temporary committee to explore incentive programs to stimulate housing development in Bend.

Um, and then in August, council appointed nine community members to the home committee to serve as subject matter experts.

Council at that point asked staff to return in December with recommendations on programs that could be developed or implemented in the near term while the committee continues to vet additional programs in the first half of 2026.

Um so far the home committee has met three times in 2025 and they've evaluated six different programs.

We're here tonight to share the results of the process thus far, but before I invite Sarah and Carly, the chair and vice chair up to share the committee's recommendations.

I wanted to provide some background on the process we used to get here.

Um so my goal for the temporary committee has been to ensure that all members have a baseline understanding of the proposed program and then provide an opportunity for the committee members to make an informed decision about which programs or policies will have the desired impact or effect on housing production in Bend.

Um, and in order to do that, we put a lot of time and preparation into the materials that we're providing to committee members and a lot of intentionality into the design of the committee meetings.

And so we kind of start this process a few weeks before the meeting.

We provide committee members with an informational packet that summarizes the proposed programs, um, it summarizes uh some really key details like uh benefits and risks of a program, case studies from other communities, and we evaluate the programs across some consistent metrics so that we're able to compare and contrast them against each other, things like how many units the program might create, um, what the cost of the city might be, how quickly we think we could get the program established, etc.

Um a few days prior to the meeting.

We send out a survey to committee members, we ask them if they have any questions or they have any really strong feelings about what we're proposing, and that way we're able to kind of come to the meeting prepared, address those questions in real time.

Um, and they get an opportunity to ask questions as well.

Um the meeting, the meetings themselves, as Mayor Keebler and Councillor Platt can attest to are pretty lengthy.

They're like three hours.

Um, and we cover several topics per meeting.

We have a neutral facilitator, uh Jen Rusk, who helps guide the group through discussions.

Um for most of the topics, we have a staff person present, and we also invite um a subject matter expert from another community to come share their perspective as well.

Um it's really been great to have so much support from staff.

It's also been really great to hear from others about how they view the programs and their potential for success in our community.

Um we've been really intentional about providing objective information and letting the committee members decide for themselves what programs will be most effective.

And on the screen here, you see uh the topics we've covered so far in 2025, that being the revolving loan fund, the infrastructure evolving loan fund, credit enhancement, property tax exemptions, moderate income revolving loan fund offered through the state and site specific TIFF.

Um and then we have eight programs that we're planning to cover in the first half of 2026.

And so here um you see a matrix that we've put together.

This is informed from the information that's gleaned out of those informational packets I mentioned.

Um during our most recent meeting on November 13th, we concluded the meeting with um a guided discussion to kind of identify the committee's preferences on which group of programs um we would recommend to council today.

Um and so here you see the matrix, it compares programs against these categories.

We're looking at unit creation potential, program readiness timeline, um whether or not additional staff might be required.

We're looking at area median income and population targets, the types of housing, the magnitude of initial investment.

So really trying to compare and contrast these programs against like a wide variety of metrics.

Um this uh information has been comprised from staff, and then the committee members have had an opportunity to see it, provide feedback, um, alter anything that they feel needs altered, and so this has really been a group effort.

Um, and you can expect to see a more complete version of this when we come back in um mid-2026 July, hopefully, um, that will compare all the programs we were looking at across these categories.

So I wanted to, before I invite Sarah and Carly up, see if there's any other questions about the process.

Fantastic.

I have one question.

Um, if you go back a couple of slides to the one that shows incentivized and produced to date.

Yes.

Can you remind me on the greater than 120% AMI that's suggesting that we incentivized non-apartments of about 300?

There is what exactly tell me the details of that.

Yeah, that we combine the two.

We didn't incentivize anything, non-apartments in that category.

We combined the incentive produced just to show up a whole graphic.

The grain is actually related to how single-family housing produced produced.

That's actually produced.

So that's single family housing that's been produced that falls within that range.

So each of these.

So this is what adds up to the 1,000 number.

Correct.

Yeah, yeah.

Sorry.

We combine them just to kind of show where we're at.

Right.

Because I was like we could bring it in.

I know.

Right, and that that's why I was trying to say to Matt that in three years, though, that that 120 number, we may very well have that filled up.

Yeah, so through the site, green.

Yeah, right.

Jonathan has about 1,300 units here in 2025.

The calendar year, we did about a thousand apartment units that actually got produced.

Um, can't remember what it was actually from July over.

So we're kind of looking at as there's a swinging window, right?

So we can see what we're permitting, and then we try to get the backside and see actually what has come to market and where it's actually at coming to market.

So we kind of like swing back and forth.

So that's intent here.

Is kind of show like we're making progress in what we're doing.

It's gonna kind of change as things actually come out of the ground, and we'll kind of make that adjustment as we go.

And you see a lot of gray in the incentive.

For the low for low ends there, right?

For sure.

And we actually are seeing, we're anticipating actually a larger swing back to that.

We have a lot of projects in the queue that are gonna be deed restricted coming into 2026.

We're seeing a reduction perhaps in the number of at-market multifamily that may be coming on.

So we're gonna be able to do that.

On the affordable side, these are estimates, right?

So um, this is just numbers I looked at today.

We have 449 deed restricted affordable homes or apartments permitted.

So for our since July.

What's that?

Or since July or since July since July.

So we'll see those coming on market.

At 80% AMI or below.

80% below.

Okay, so that's not in this.

That's not reflected here.

No.

Okay.

And Jack's draw reflected here.

Yes.

It's in the 81 to 120, the majority of it.

This is kind of a static data.

So we're working with our data team to how do we kind of make this better within our dashboard, but because a lot of this we can't tell which AMI it is until it comes to market.

Right.

We are kind of working off of the other database system.

So we it's it's static now.

Our hope is trying to get it more updated, but we're always lagging behind in this because the data is lagging behind what we can do.

So permitting is easy.

Trying to get market data is a little bit harder.

Okay.

Let's hear from the committee members.

Okay, cool.

Thanks.

Hi.

Good evening, Mayor, Counselors.

For the record, I'm Sarah Odendahl, and I'm the chair of the home committee before you tonight with my partner in crime here, Carly.

Um, thank you for convening this committee first and foremost, um, and for your continued focus on your North Star of housing, meeting our needs that you've seen through the ONA numbers through this data-driven process, and looking at a variety of different funding solutions.

Um, the home committee met three times and evaluated six financial tools using consistent framework, impact, required investment, readiness, and what types of housing and income levels each tool can help support.

We tried to find a very balanced balanced approach and considered all the different options in that in that master graph.

Tonight's recommendations reflect the committee's deliberations and discussions over that time.

There were very meaty discussions for those of you that were there, um, mayor and counselor flatt.

Um, they focus on the most immediate actions the city can implement, kind of the low-hanging fruit of all those different policy options, but they certainly don't preclude other tools that we just talked about from being considered in the future.

I think some of the tools that you see that are not recommended are perhaps ripe for conversation for a longer term conversation or may need some tweaks at some level to be applicable for our community here.

So the committee is recommending the three tools up here on the screen for near-term direction.

The first is the site specific tax increment assistance for affordable housing or Tiaha, as it's lovingly called, and later.

We're gonna get crowns when you just go with that.

Um so we recommended this because it's relatively ready to implement, right?

We have success with a site specific TIFF program right now.

Um, and it can meaningfully impact unit creation.

Um, as it's designed, it supports multifamily projects and targets units affordable at or below 90% AMI to help out with that graph.

The committee supported additional staff analysis and refinements to the program based on lessons learned from the existing site specific TIP program to be considered as part of the consideration moving forward.

Um the second is an infrastructure revolving loan fund or an ERL.

Um I love the acronyms, we've got to talk in the acronyms.

Um infrastructure is often a very real barrier.

You all are well aware of that in terms of housing production.

So this type of revolving loan fund can provide below market repayable financing for right-of-way infrastructure that supports housing and then recycle and reuse those dollars as the loans are repaid.

The committee heard several compelling examples from members based on real life projects that have either been completed or are in the queue, um, and that was really compelling towards recommending this moving forward.

The third is credit enhancement, and so this tool is a little bit of a different kind of concept, I think, for us to all to take a look at.

Um, it helps the projects pencil by using the city's credit to reduce the borrowing costs for the developer.

Typically it's for larger multi-family projects, but it can be used, um, it can be cost effective.

Um, however, it does require some start strong guardrails and some very careful underwriting, and I think we had some good deep discussions around what that could look like and how we could support a really narrow um use of this tool for appropriate projects.

So this is definitely a novel program.

We have not explored it in our community, um, and it would require additional upfront time and staff cost and effort to launch.

So finally, before I turn it over to Carly to actually speak about the details and some of the conversations as an expert, um, I do want to underscore that these recommendations are a starting point.

Um we we had three months together, so it's like the tip of the iceberg in terms of what we can do towards recommending solutions for our community.

They represent the most immediate actions that can demonstrate a solid return on investment measured in housing units.

The committee also identified tools for possible consideration in 2026 and beyond, and we'll look forward to discussing some of those options more in depth with the help of Chris and the team.

Um, and making some follow-up recommendations next year.

So before we move into questions, um, introduce Carly, my co-chair, who's gonna share some additional context and some practical details on these three recommendations from her perspective as an affordable housing developer.

So from the developer side, these tools were selected because each one really removes a structural barrier in Ben's housing production pipeline.

So barriers the committee directly identified through its own analysis and project experience.

The committee consistently highlighted three challenges.

High and unpredictable infrastructure costs that make small and mid-size infill projects financially impossible.

Volatile financing conditions that have eroded feasibility for larger workforce and mixed income projects, and the need to reduce annual operating costs to make rent affordable.

Each recommended tool addresses one of these friction points.

So the infrastructure revolving loan fund really tackles the earliest and oftentimes most prohibitive cost barrier.

Many small and mid-sized infill projects collapse before design even begins because off-site requirements can total 300 to 500,000 by providing below market repayable capital at the riskiest phase.

This fund unlocks sites around town that otherwise cannot absorb the costs and it will recycle the dollars as the loans are repaid.

It's particularly well suited for fourplexes, townhouses, and cottage cluster projects that will deliver gentle density but can't carry outsized infrastructure expenses on their pro forma.

Credit enhancement will reduce the borrowing cost for larger developments with interest rates at current levels.

A lot of times are 80 to 120 AMI workforce and mixed income projects.

They're no longer penciling.

The cost of capital has reduced loan proceeds and increased debt service to the point of infeasibility.

So by leveraging the city's credit strength to secure favorable loan terms, credit enhancement is going to deliver the highest unit impact per dollar invested.

It's really a powerful way to revive stalled project projects and increase production at scale.

And then the site-specific tax increment assistance is going to stabilize long-term operating costs.

So together, these tools support a full spectrum of housing types and income levels.

No single tool is going to solve the production gap, but these create a coherent stage system that addresses early, mid, and long-term barriers for production.

They also leverage and don't replace state and federal programs that we have.

It's going to allow Bend to stretch public dollars further and tie investment to demonstratable unit outcomes.

In short, these tools are going to directly target the production barriers that the committee has identified, deliver meaningful affordability impact, and are feasible for the city to implement in the near term.

And those are our recommendations for you to consider.

Awesome.

Thank you.

And I want to say, like having attended the meetings in Council Platt did too that the this committee really dived into these topics, and this is like pretty detailed work.

So really pleased that and then the committee had a good good kind of consensus at the end that this was pretty clear that these were the top three favorites to move forward at this point.

So yeah, thank you for all your work.

Absolutely.

They were wonky discussions, but it was fun.

And continued work coming up.

Yeah.

Yeah, I just wanted to echo that.

I appreciate how much time and effort it takes to put into to prepare for these committee meetings and then to digest the material and come and have a robust conversation.

Thank you for that.

Well, I have to say the team that was supporting this effort really are the stars of the show because the amount of detail that went into, as you saw, the like 200-page packet of information you all received as background information.

Um it was a lot.

And so as the as the housing lay person on the committee, I really appreciated the thoughtfulness about how the materials were preparing.

So great.

Just one thing before you go as well.

We're looking at the AMIs that these programs are kind of targeting, and it's kind of all and below 120.

I'm really my pain point is the gray bars on that chart, which are the lower stuff.

When you look forward at the topics that are coming in front of you, can you tell me what you think are the most fruitful ones to get at?

Just I'm just asking for your personal opinion.

Can you go to the remaining topics?

That's where they're gonna have a bunch of meetings on the other.

Well, I know, but I'm just gonna do that.

No spoilers.

Can you just give me a preview?

What do you think is the best one of those?

This is a little beyond what we asked for.

It's a preparation.

I don't comment.

Okay.

What they actually talked about is in that top box.

I know.

Right.

So I just I don't want to put them on the spot without having been around.

That's fair to repair.

And I I think realistically, most of what we talked about was financing related and like finding ways to have cash flow for a project.

Right.

And to get to the lower AMIs, it's subsidy and finding more subsidies.

So it's down payment assistance, it's having bonding or uh, you know, having some type of funding that is going to stack the subsidy for the lower AMIs that is going to make the difference.

It's not having you know a lower interest rate on yeah, that's helpful for context.

Thank you.

Yeah, thank you.

Other questions for other committee members, and then we're gonna have staff take us through the three policies.

I just I one quick question, I think.

Um the infrastructure revolving loan fund said low unit creation potential.

Was that really I I wonder about that because um I there are a lot of infill properties that you know aren't aren't tapped largely because of this infrastructure barrier, and so I was just curious if there was any number Iran about the impact potential there, if it was just like kind of a ballpark.

The examples we saw were like in the the duplex quadplex um uh region.

So I I think overall unit I think is different than the per project unit.

Oh, okay.

Yeah, that was the so the examples, everything in that report was based on quadplexes.

Um of the real life examples, we ran some habitat infill projects through that uh revolving loan, and so you know, 12 units, 15 units, 18 units through that um and the repayment process of that as well.

So I think there is potential, depend I think it depends on the the lot size and um what that density would look like, but can I ask a question too?

Sure.

So the thing that I so I I'm really grateful for all the work and I I read the report, I loved it.

It thought it was a great report, and there's obviously a tremendous amount of work that went through all of this.

Um the question that I'm struggling with is you know, we want the the most housing for the least cost.

And the biggest variable here is in you know, when we're looking at credit credit enhancement and the the loan funds, whether revolving or infrastructure, um it's this question of developer default.

And I was having a really hard time trying to assess like what is that risk or probability like because the the challenge that I have with both the site specific uh tax increment uh housing programs and the property tax exemptions is that we know what the magnitude of the cost is, and it's substantial.

It's it's a lot of money, and it's it's directly transferred.

So we can say with certainty almost certainty, a high degree of certainty, that we know what the cost is gonna be, and we also know what we're getting in exchange.

But for these other programs, there's this element of uncertainty that's it's risk exposure.

We don't know what what developer default probability is like, but I like those because it seems like we can still do a lot, and most of the time, I think we're not gonna see developer defaults, but in the scenarios where it is a developer default, the city is pretty the city is the first one that loses.

It's it's it's the first one that has to pay before the other investors, before the other uh creditors.

Um if you could I'm if I had to pick three, I would have picked the revolving loan fund, infrastructure loan fund, and credit enhancement because I like I mean they're new, but I like that the city gets to still earn interest on on its funds, if not in the case of the the loan funds, but it's uh it's it seems like a bigger bang for less money.

So is it did you talk about that risk exposure?

Because that was in here for a lot of these, but are we talking like how do we in 10 years from now, how do we compare the result of these programs in terms of cost to the city?

Because some of these are gonna we will probably see some defaults, but it I don't think it would be very common.

I don't know.

What do you think?

Did you get a sense of that?

There's a lot of questions.

Where to go?

So I don't know if you want to like distill down because we are gonna talk about each of these programs in detail, which some of your questions go to, but maybe I could distill that into how did you end with these three and not and not think about maybe the other loan funds that were there?

Why were these why was this loan fund better?

And maybe trying to incorporate some of what Ariel said about risk.

Um I'll take a stab at it and then feel free.

Um so I think when we're looking at the two loan funds, um we were looking at where the biggest need was, and it was around the infrastructure.

And so I think we kind of leaned into knowing there's a limited pot of money to invest potentially in these solutions.

There was um a compelling case made by the examples that Carly provided and then one of the other committee members provided about like the return on investment for those dollars, specifically with regard to the infill projects and um the infrastructure needs of those projects.

Now the revolving loan fund, and I guess I would declare a conflict because the vent chamber has the revolving loan fund, but um, which we discussed was that was a bit broader and certainly could be paired together, but that was that that was um maybe not as targeted as the the need um that we were trying to address there.

Um, with regard to risk, there were other tools that we talked about that had significant more risk to the city that I think we as a committee opted to say let's put that aside and look at ways to perhaps mitigate or reduce those risks and choose an option for the interim that might have a lower risk analysis for the city.

Okay, I capture that.

Yeah, okay, yeah.

Okay, Mike, yeah.

You may have already answered this question, but I think the recommendation for the infrastructure loan fund is to focus on projects that are four units or smaller, right?

So why not six, eight, or ten?

What I mean, maybe you can just talk a little bit more about that.

I think those were not the those were not.

Oh, that's more coming from staff.

Yes.

Oh, okay.

That's so if you can answer that question, please when you do your presentation.

Yeah, I think our recommendations were the tools.

And then I think staff took it a deeper dive based on the conversation on like how to what are some considerations for implementation?

Thanks.

Okay, great.

Thank you so much.

And then I'll have staff take us through these three tools with some considerations.

Okay.

Oh, is it just me?

Okay.

Yeah, I don't know.

All right.

I'm really not gonna belabor this one.

I think you've seen me about 24 times this year.

Yes, we have.

We're gonna see you again next year.

And you will see me plenty uh moving forward, I'm sure.

Uh so just real quick for the public.

Tax increment financing is a tool authorized by ORS 457 that allows future increment to be reinvested back into whatever borough at the time decides that they'd like to use it for.

This is a brief graph that you've seen.

Um, what we do is we establish a frozen base, the project is approved, and then basically what you do over through the course of 20 to 30 years is you buy the affordability annually through a tax rebate in order for them to qualify, they have to at least meet the base minimum requirement of 12 years of affordability.

It applies to three or more residential units.

The current program is restricted for 15% of units to rent to households at 90% or below for the entire duration, as well as annual rent increases must be less than the statutory maximum rent increase currently allowed by state statute.

They also can apply for what we call the enhanced program, which is up to 30 years of annual tax reimbursements.

They must comply with the base program, but then provide at least one or more of the following at least 15% of units at or below 90% with the lower statutory maximum rent increase, and or more than 15% of units.

They must obtain an energy efficiency certification for the project and a minimum of 23% of contracts for local project assistance.

Um, in addition, uh, this is also a tax increment assistance for an annual rebate, but they also may include that annual value for their SDC payments up front.

I did not do this slide, so I'm learning as we go.

Um so basically what we're talking about, and we've heard over the last eight months is there's some policy considerations that borough would like to consider moving forward if you do intend to use this program.

Is that geography, minimum development requirements, the plan length, a clawback provision, and we'll get into that here in a second, a third-party financial analysis, and also evaluate home ownership option.

When we were talking about the initial site-specific program in 2024, we did indicate that we would like to explore a home ownership option in the future, similar to Madras, but a little bit more specific and targeted, and we still have that in the queue.

We just wanted to focus on the apartment unit creation first.

Yeah.

Um minimum development requirements means what I think that like the criteria.

Yeah, changing some of the criteria.

And I think when when the home committee talked about this, and the slide was in front of them, there was not a lot of concern about geography.

It was continue to have the citywide.

A point that was brought up was that this is currently set at 90% AMI, and maybe we should be looking at lowering that to try to get under 80% and that the homeownership would be a good option.

And so those were some of the notes from the from the committee as they were saying, let's move this forward.

They were not recommending major changes, but maybe some of these changes are on the screen here that I think Borough will ultimately get the last say on.

But that was sort of the recommendation from them.

And we'll get into it at the very end, but staff has included the clawback provision.

We actually believe that we should codify in the policy of what the clawback provision is, because we are having some conversations with all of the development agreement participants for what a clawback provision is.

We've got a couple of suggestions we would like to bring back to Borough for consideration.

So if Borough decides to move forward with the site-specific TIFF, we use our current examples as we're going through the development agreements with our current developers.

And then codify that development clawback provision.

So it's just in that document, and there is no subjectivity to it.

So that makes sense.

Jonathan, correct me if I'm wrong, but it's in my memory, if my memory serves, the vast majority of stuff's coming in at 90% and not a lot's coming in so from what I'm remembering on par a lot.

On par, yes, but one thing about that is we did get 20% of all units at 90% and or below.

So they did some did not say it's a horrible thing.

I'm just I'm just correct.

If we did change that lower, I'm curious to I think that that whatever we put it to is what the people are gonna hit.

Yeah, so I think that's yeah, makes sense.

Yeah, if we said 90 dollars, they're gonna give us 90.

And so and just so you know for full disclosure and our conversations when when we were having these conversations with the applicant, the question was what would happen if the market required us to rent below because they could I said you rent below.

So that's that's what the market is going to do, and this is just preserving the affordability long term.

So it's basically your annually buying affordability.

Yeah, right.

Okay.

Uh home ownership option.

Are you proposing that that would be like because I believe the recommendation from home committee is move this forward pretty quickly if you're gonna make some changes and let's keep it going?

We have a at the end of this presentation the timeline of how to update the policy.

But is the ownership like a like it's gonna be a next phase, like we get what we have now and then evaluate and then maybe revise again?

Yes, and the reason being is because homeownership would require a little bit more of a broader approach because you have to subsidize one unit versus another.

So there's a there's a little bit of complexity with that one.

I mean, I'm very supportive of evaluating that just curious about the time.

Okay, thanks, Jonathan.

Uh-huh.

Okay.

Talk about the infrastructure revolving loan fund.

Um, I believe uh counselor Franzosa had a question about regarding why four units, or was that that was me?

That was you, Councilor Raddy.

Um, and that probably is primarily about prevailing wage.

Um there's a $750,000 limit or cap or trigger that um requires prevailing wage um for public funded projects, which this infrastructure loan fund would be.

And so we were trying to keep it at a range where prevailing wage would not necessarily be triggered, and so that's why it was kind of keeping those housing unit sizes down to where we would think infrastructure would be at a that captures the need, and it's not the bigger projects need 1.2 million or 9,000 or correct.

But couldn't bigger projects just borrow you could set cap it at 650,000 in case you could just cap it and just say if you have 1.5 million of infrastructure, they could still borrow 650 from the city, and maybe that helps potentially like those details are all to be discussed.

I think it sounds like you're saying if we're giving out 750k, that's maybe gonna help a quadplex.

Yeah, if that's all that they need, but to your point, it could be partial help with the infrastructure for a bigger project, and I don't think I think the number is what matters, right?

Right.

Okay.

That's got it possible units developed.

Um, so as any kind of revolving loan fund, the city has one under our um affordable housing fund, and the city would you know take whatever money is put into that loan fund and put it out for proposals and applications, and then that would result in hopefully the development that we are seeking, and then once those homes could potentially be sold, that that would be paid back.

Um, of course, we would love to see kind of a three to five year turnaround for home sales, but if it's a rental, that might look something like that might look something a little different.

And so, again, these are kind of like the details that we can work out later and in the future, but just to kind of realize that rental would have probably a longer term and not as much money coming back.

So, again, um, we're just kind of putting the concept out, and this would require further program design of would that one time fund be reliant on repayment, or would there be regular additions to the fund from some type of resource, or would there be some type of ongoing revenue set up?

Um, we would still need to determine what the eligibility criteria would be and all those like details of a program that we already administer in other ways for revolving loan funds, but we would look to you all to help us kind of create that for this program.

Okay, was this supposed to be based on Ryan Starr's research?

Because this seems a little bit that was definitely part of the that was brought to the committee and discussed.

So is this because his present his suggestion his findings were if the city were to actually finance infrastructure for small scale infill projects, that financing would be paid back with increased tax revenue in under eight years, basically is what he came up with.

But this sounds like it's really just a bridge loan, correct?

So they would be so we would have increased tax revenue and they would be paying back the loan separately.

Does that increase tax revenue?

Oh, you mean because of the development, yes, right?

Um does that and that actually pencils for the developers of small infill projects.

Ryan was pretty excited about this one.

Yeah, and Ryan's proposal was that the city would accept an additional tax revenue and pay to pay back the loan and not impose an additional loan.

Ryan saw that's tax owner finance.

I mean, that's urban renewal to do that.

So and that's so as Jonathan's talking about exploring site specific TIFF in a home martial role, that could be another way of supporting this in that capacity.

So when we kind of clarify that with Ryan as the limitations around for uh urban renewal, the cost actually enter in a program, those kind of things.

We started getting a much more robust conversation about the bridge loan.

The challenge with a single lot under TIFF is the amount of effort to go in to create a plan for that is massively costly, I think.

Our mailings were 12 to 14 17,000 to do a citywide mailing.

So we have a way to do it without it's that's all state statute.

So I think when we look at these smaller individuals, and again, as part of the evaluation for site specificity for home ownership, we need to take in consideration that cost, and also for these infill lots, and John will correct me if I'm wrong, but those typically have a higher already frozen like tax base.

So the amount of increment that ends up during tends not to be enough to sort of offset that in a short period of time.

So once we kind of have that conversation with Ryan and analyzing a thing, it's like yes, we get that tax money back through our things, but our ability to give any money up front, we can really only do it through this kind of bridge loan program for these small amounts.

But again, like that's part of like what we look at the site specific for homeownership is there another way can that help with that as well?

So it's kind of a two-pronged approach.

But that's because of the state mandated overhead that goes into the all risk project.

Okay, okay.

There was a mention of there being a risk of um incomplete infrastructure.

That's basically just if there is a default scenario, they've built half but not the rest, then we're you know, we have a problem with repayment and all that, but we also have like the infrastructures halfway done.

How are we gonna solve that problem?

So just making sure we're aware that that's a sort of unique wrinkle to this one in terms of the risk.

Yeah, and I think that's a risk with any project that starts and could stop.

No, right, I don't want to disagree.

It just we'll have we'll have we'll have money sort of involved in it.

And we might not otherwise okay.

On to uh credit enhancement, all right.

So I think Carly and uh Sierra did great job kind of teeing this up, but essentially it is a tool that we can use to reduce the interest expense for a housing developer, and that utilizes our full faith in credit here at the city, which typically uh gets us fair fair interest rates with um other lenders.

What would happen is we would essentially co-sign a loan with the lender and the developer, which then allows us to step in should the developer default on any of those obligations of payments.

So there's no cash necessarily going out up front, which I think uh council Mendez was alluding to earlier, but there is the risk on the back end of how do we have to step in should I developer people.

The key thing here is we don't see this a lot in Oregon because our uh state statute here in Oregon kind of restricts the dollars we can use to support this type of project, which is why we see bonding so popular with housing projects in the Metro Bond coming out.

We don't have we can't use our property tax revenue, we can't really use our enterprise funds.

So we really need to identify a sort of non-revenue stream that we can utilize, and I'll talk about that in a little bit.

It does have a lot of benefits and risks to it, as they mentioned earlier.

Uh, one, it can really help a project secure the financing and really come favorite terms.

Again, lower those borrowing costs.

That's as the capital that needs to come out of early on in a project, improves that project viability, which we're all looking for too.

For the city itself, we can it's another way for us to support those housing objectives and goals.

It can be cost effective.

So again, we're not actually putting cash out, it can stay in a in a reserve account, it can and interest as long as everything's going to plan.

There's no default, this money can kind of keep returning and turning itself out.

And then it really kind of encourages the private sector to stay in the game.

So if we can get them to keep lending money out, that then creates a return for them.

We get more coming out of the private side to keep projects going.

Risk wise, I talked about it earlier, the unrestricted revenue streams that we have to identify.

There is that kind of financial screening.

So how do we or reduce the amount of risk or who are we going to approve and what kind of items do they have to bring forward for us to vet them appropriately from a finance perspective?

That is something that we'll have to work on as we develop this program.

Um again, lender confidence, the rates.

So as we're out there, the market, where are they feeling?

So that just because we step forward and we might be at a 5% interest, their good credit might get them five and a half or six.

Is that enough of a gap to really move that project forward?

We sort of kind of have to play that game.

Again, we assume some of that risk if there is a default, and then we can't use that money.

If it's set aside in reserve to pay that debt service credit ratio, the DSSR, we can't then use that money elsewhere.

So it just has to sit in the reserve.

So that's something to think about when we talk about uh where do we tap sort of these dollars from?

So kind of the considerations we're sort of putting on it or kind of our recommendations.

We think that this would be a great program we utilize in the construction loan phase.

The latter is a lot because it's a shorter time frame, a from 12 to 36 months.

Those loans roll over into permanent loans for the entire development, more long-term mortgages to think about.

Uh so typically they are either interest-only payments or those payments can be delayed.

So that amount that is owed by that developer tends to be lower.

So the we can get a little more bang for our buck by supporting a project, reducing a developer's upfront capital endeavor by not having to pay as much interest only payments, but then we're not absorbing an entire 30-year note on the back end.

Again, I think we talked about this was a little more ideal for larger projects, larger developers who may be stepping forward that just because they tend to have the credit worthiness and the relationships with the lending institutions.

Um, and then the one thing to really consider is the size of that reserve fund and where in that development loan cycle we want to place that.

So again, if we're up front, the construction loan, we can make our dollars stretch a little bit further.

Those are also shorter time frames for us to be able to turn it over.

If we decide we want to look at something more permanent or go longer term with that loan, obviously we're locking those dollars in for longer, and we have a little bit more uh risk on the side that we're in a project for much longer if it does decide to default.

Any question on that?

And then I'm gonna kind of tuck.

Could you say you said two things?

One, you were gonna talk about the funding restriction, property tax revenue cannot be used to fund this.

And then the other question is in the event of a default, does the city get any assets in return, or is it just a payment?

Yeah, and I think that's something we're gonna have to explore a little bit where we we rank.

We see a lot of this between uh urban renewal and TIFF, so the agency will use the city's full payment credit to go get a loan.

So we see that a lot.

The only other real example we could find in a housing context was out of Washington, which has different rules.

So kind of looking at those agreements, it depends on how we structure that loan with the lender and where we at on the hook.

Um, is it the full amount of the loan, or is it just those payments and the lender steps in and sort of like a bankruptcy and kind of takes over and they find a suitable partner?

Um, that's something we work with like OHCS, that's kind of our relationship with them through Lyft is OHCS typically steps in on that loan, even though we're kind of a part of it on the back end.

So that's something we're gonna have to kind of navigate, and then that'll obviously change the risk profile when we come back with how that program might be.

What about the funding source?

Oh, no.

Can I just answer the question here?

So um the the state, I didn't hear you mention this.

So the state has a credit enhancement program that is operating now and is available for, as I understand it, uh, permanent loans, but not for construction loans.

Correct.

That's right.

So did you guys talk about the city maybe stepping in to do the credit enhancement for the construction period?

Um, which would be shorter.

That's what we're that's what we're alluding to.

Is we that would probably be our recommendation would start with the construction loan phase because it is shorter in those interest only payments.

So we're not paying both principal lenders, so we can reduce it.

So the example is if we have a five million dollar reserve, I may only need a million and a half, whereas if I have to do principal interest, I may have to put away four and a half.

So we might be able to get more out of the limited dollars that we put towards the program and support of the project.

And has anyone talked to the state to see how their program is going?

So far, we there's been one project that's gotten approved for the new program.

It's brand new.

So they're the first ones who've been awarded the dollars in it.

I'm pretty sure I can't remember because it's relatively new.

They're so far the first ones that got it on the and that's on the back end.

So that helps them a lot on the back end of the operating costs, similar to how TIFF can help.

Uh and this we're looking for.

How do we kind of help more on the upfront and get the project out of the ground?

Is that a project in Ben?

Uh the jewel, yes.

So they got to the colour.

I wasn't sure if we were saying that out loud.

Sorry.

All right, funding.

Okay.

So next slide.

Uh yeah, we've touched on this.

So we, you know, we the infrastructure program and the credit enhancement require some upfront dollars, so we do need to invest in that to create the fund to sort of launch those programs.

Um, in order for us to pay that back, we have to have non-profit tax revenue.

So we need to identify a source for us to do that.

It can't be restricted to other funds like enterprise funds that are already uh restricted uses.

So thinking about water sewer or any of those kind of funds as well.

So we've talked, I think you've we've talked about this probably a lot, but since May we did budget, we have a Juniper Ridge land reserve fund from the properties that we've sold in Juniper Ridge over the last 10 to 15 years that sits at about 10 million today.

We do use some of that money to support our household efforts through the TSSA and other uh work that we've done to promote sales in Juniper Ridge, but today we have about 10 million, and we'll talk about that more as we go forward.

In January and February, you're gonna hear more conversations around our general fund users and uh where this reserve fund could possibly touch.

So today we're just we're not asking you to give us direction on how much money to use or tapping this fund or not to have this fund.

We're really looking for direction on should we proceed with developing the program and the policy themselves, and we'll come back after these discussions around the house list, the general fund supported, and we've already kind of had the city hall discussion, but we'll have more of that uh and then we can identify there where these dollars should really go as part of it.

So today, no pressure, but we'll deal with that later.

But it's basically the potential revenue sources for both of the evolving loan and the credit enhancement are the general bridge.

That's the largest chunk.

I mean, we obviously have other smaller funds that we can look at, but this is kind of the the bulk that we would look at the tap into is here, and then we can navigate some of those smaller ones as we go through budget cycles.

Yeah, Matt, I know you indicated that you felt like there were some projects or there were that had indicated they could really benefit from using this enhancement.

So yeah, I think we've we've we've heard a lot of projects they they they go through, they get permitting, they then start checking back in with their lenders, and all of a sudden they're getting kind of shock uh around what that cost is that they're receiving and how much up front they're gonna have to put in.

We talk a lot about what the ratio is between capital and debt.

Um, it can kind of range, but as as interest rates go up, most lenders they want more capital or upfront and equity from the developer, so that brings they're only loaning out 50% of the project or 60% of the project.

So these construction loans that can really save you know a million or two million a year off their costs and interest only payments, that goes a long way for them then being able to support the back end with the lender and kind of get the full permit loan and move for the project board because then they're not having to pay taking so much out of their pocket or going out to find other investors.

Um so that's that's really where we think this those are the kind of clients we'd see who come forward with this one.

So I'll kind of summarize, but I can invite other staff up if we need to get into it.

Uh but the direction would be to come back to Borough with the revised um site-specific policy, as Jonathan mentioned, kind of address that clawback language.

And I think part of the discussion is do you want to increase um in parentheses decrease any of the units providing affordability?

Do you want to adjust that AMI affordability movement anywhere?

Um, do you want to cap on any of the number of rebate years?

And then I think we had geography up there as well.

So kind of direction for Jonathan on that one.

Let's pause here because I think I saw a lot of head nods around taking that affordability down from 90%.

So I think we should see some examples of that.

Um and then I think to Mike's point, not on here was the exploring homeownership, but that's we understand that would be maybe a later round of revision for this policy, but I think I saw support for that as well.

So I just want to express just a little concern.

Well, a couple concerns actually about moving forward with the um the site-specific TIFF.

Um, one is Jonathan is Mr.

Urban Renewal for the city of Bend.

And as we're gonna it's true, and as we're gonna hear next week, um, we've got some pretty ambitious plans for the core area, and I'm I'm it makes me really nervous uh to put this back on his plate right now.

I don't know when it was kind of forecast to come back on your plate because we paused the program and we're gonna come back and revisit it.

So I don't know when it was gonna come back.

So I'm a little bit nervous about distracting from the core area which really really needs some attention right now.

I'm also um wanting to be sensitive to our um the fellow taxing districts that are really burdened by this policy um and it would be nice to kind of give it frankly a couple of years or at least a year to see have these projects kind of come to fruition that we have decided to award TIF TIF to already and be able to go to our neighboring taxing districts and say look at this great program and all the housing that we've created that's actually affordable for your employees.

We don't we have one project in construction I think right now I just looked at like Veridian and Century and it looks like their applications have expired.

They're not active right now so you know I'm a little bit nervous we we've already selected some projects and they're not moving forward yet so I um I feel like it needs more more time to kind of prove it's working I'll touch on the we we do have here is evaluator staff need and capacity analysis and that goes across I think a lot of the housing stuff he is the compliance effort that goes into that we have experience in the housing department and we'll have the tools be able to sort of run that on the back end.

So I absolutely from an urban there's a need and then how do we operate these programs because there are similarities and how we bring it back.

So our goal is other recommendations come back with that sort of staffing things if we want to do all these programs what is it we need to do and what capacity do we have to actually administer them so for all of them.

Yeah but um go ahead sorry yeah just want to first okay any other thoughts on site specific tip I just was curious why this one got rated at the higher like staffing need is it related to this conversation that we're having right now because it's not a new program it's one we already have in place I understand it's pause so maybe that's partly why it's that way um you mean this the other ones are brand new and so they seem like the staffing requirement would be even heavier um not on Jonathan yeah but I guess it didn't specify where the staffing need really was in the organization for each of these I mean in general I've been already asking the question with Katie like when are you going to present the increased staffing needs that we need because the ambitions here are huge but it doesn't seem like we have adequate adequate staff to support it.

And I think we're gonna hear about that through budget adjustment stuff.

So but I I didn't understand why this was rated higher basically because I'm Mr.

Urban so the reason that you in terms of staffing capacity that it was rated higher counselor Francis is correct I am the one that said the staffing need is high for this to the home committee because there are three urban renewal districts and the site specific site specific is a heavy lift because we're establishing new urban or null districts which takes about three months and there's a whole host of things that go into it.

That being said working with the city manager's office and Katie now we are putting together an actual urban renewal program that will look at a whole host of staffing needs from Juniper Ridge Murphy core area site specific so forth so on but it is high because it it does take a lot of staff time both financial analysis and and then that's why there was the third party financial review.

We're trying to if if borough council wants to go forward with this it's we do have some policy adjustments that we can make to the policy that would make it easier on staff as I've identified but you are correct in your assessment of like it is a it is a lift but the one thing that we do need to kind of address more quickly than most is the callback provision because that is something that we're having our conversations with the developers and then talking with legal and Matt we would much rather have borough determine that policy and then just put that in so there is no subjectivity so that could come back to you fairly quickly.

Right.

Irrespective of this yeah I mean I'm comfortable moving forward with this as something the home committee recommended that we keep and we come back to and I think we can discuss some of these um concerns as we try to redevelop the policy a little bit.

Are we seeing the head nods can is there a reason why we're on the 6 p.m good for time about the affordable housing assistance loan program sort of a borough revolving loan instead of tax increment I mean it's funded with tax increment financing but not tax exemptions.

Correct that's something that we already have in Murphy is going to talk more about I think next week.

I mean I think I share counselor Franzosa's concern I was surprised to see it come back this quickly too but it sounds like if we are going to move forward with it that would be a conversation then about moving forward or shaping it.

Is that right?

Yep right okay Rachel one quick question I know that you was the overall home committee recommendation to lower to 80% but I remember there were a couple or maybe one project where it was at 90 but then there were some units maybe at 30 could there be is there any value in keeping it at a at a higher like at 90 but then require that there's a lower like at 30 just trying to get it somebody calls or can create whatever policy they want um whatever they want to target.

Just trying to get it through 40 different calls.

Whatever they want to target.

So I'm just curious like if that if they feel like that's feasible for a developer, and if it's there wasn't a subset.

Yeah, there wasn't a consensus at the home committee.

It was just that maybe we should come off of 90 because that's getting closer to we're kind of fulfilling that a little bit more.

So I think that's something that staff could talk to us about.

Like what are some different schemes of how to get different types of affordability?

But when you're talking about zero to 30, you're talking about levels of housing that require on-site services and pretty intensive stuff.

So we just have to be careful about how we think about that.

Well, most of the projects have actually used the enhanced um track.

So I think that's the mix of like what's the minimum entry level criteria, right?

Percentage that either AMI and number of units, percentage of units.

Um you could also look at um it could be different between the two tiers, the enhanced tier and the other one.

Yeah.

Um I think that's the other part of it.

Is the original policy that you all saw in June of last year?

Was we actually had prescribed unit amounts.

Um, like you had to do X amount of 90%, X amount of 80%.

Yes, we can we've already done that.

You guys Burrus said let's be simple for the first year.

And so yeah, we're ready to go on those conversations.

Okay, we're almost out of, well, we are out of time here, but um, and that's gonna this is gonna be a further borough conversation.

So if we can just if unless there are further questions, kind of about what are on these slides, and let's try to dig into the we don't have to have a limit again.

That was more of just like an expectation of who would use the infrastructure loan to be smaller and fill around the 750k, keep it lower, do try to do sub-market interest rates and do small short-term loans, so three to five years, so we can actually create revolving credit enhancement, uh, just bring it back.

So we would probably focus this on larger projects, um, and again, initially a limit it to construction loan phases, and there's just a little more work to do on that.

We'll probably engage with Oracle or bond council and try to develop that program and policies, make sure we're fitting within the law.

So just a little more work from staff on that one, and then we'd come back with that sort of staffing needs analysis if you want to move these forward.

What does that look like and how do we kind of administer that effectively?

Um, from a timeline perspective, yes.

I think uh Jonathan come back with Tipura sometime towards the end of the first quarter, it's early spring.

Uh, I think was what we've got kind of temporary on the calendar in the spring summer.

Uh we could return with that revolving loan fund and the credit enhancement policy for consideration uh along with that staff needs analysis again, and while at the same time we could do that with the home committee's full recommendation so we can kind of stack those together as we get into summer and then uh into the fall from there.

We would the home committee's gonna bring back to you their recommendations.

You're gonna kind of turn to staff and like turn this into a work plan.

So we would look at bringing that back before the end of the year and kind of say, like, here's our five-year housing funding work plan, taking all this consideration and how we're gonna go about implementing H1.

And then obviously we'd look for the late late time of the year, early 27, sort of finishing that implementation of everything that we have on the books.

Um it's the concern about revolving loan and infrastructure loan that we can't we don't have enough funds to do both, or that they're so different that it they're just really separate programs.

I I think Carly and Sarah talked about that, but I think they the kind of like the revolving loan fund and credit enhancement have very similarities, whereas the infrastructure had a very specific sort of could be addressing this.

I I think for the committee I'll let Sarah and if they want to chime in, but there was definitely discussion of how do we expand on the chambers program and do we put more money to that and allow to that to kind of expand and what are those kind of buffers?

But I think thought was the infrastructure tackled each of these tackled a little bit more specific, uh whereas the revolving loan fund itself had could be a very wide brush to paint, but might eat up all the resources because that brush is so wide.

Okay.

I mean the infrastructure ones just sort of like a narrower sub special case of a remote moment.

Right, right.

Yeah, that's essentially what we're doing.

With more money coming back quicker to put back out.

And it sort of assists a certain kind of project and scale of project, which there's been a need for.

We're hearing that there's a role.

Right.

Okay.

Well, there is the timeline.

Thank you to again to the home committee for helping um bring these forward.

Again, there are they're gonna keep discussing a lot of other policies and options and tools, so more to come, I think, on what else we can be doing, but these were the three that we're gonna start with.

So um appreciate the discussion and information, and we'll see you back soon in all of these.

And when is the next home committee meeting, Chris?

February 12th.

February 12th.

Great.

Okay.

So everybody and I think um next we don't know.

We're work session for the rest of the year.

We have the one more business meeting on the 17th with the January 7th.

Shifting the meeting schedule business meeting.

Right.

Protecting complete communities, let's sit down and see the use of financial side.

Okay.

So we're doing four meetings in January.

They just shifted back to the side.

All right, we are adjourned.

Thank you.

How do you see like the meeting maybe?