After some discussion, the City Council turned down an ordinance proposal that would have allowed nonprofit organizations supporting low-income housing to acquire property tax exemptions.
During its Jan. 8 meeting, the council reviewed what was initially a request by Crossroads Communities last year that would allow nonprofit affordable housing projects to receive property tax exemptions, which would allow the organizations to help keep rent and other costs low.
Community Development Director Kelly Hart mentioned there are many different exemptions available to nonprofits through the State of Oregon, including this particular one that cities can opt into.
Last October, staff estimated the exemption would cost the city around $12,000 a year if the city’s qualifying properties took advantage of the opportunity. Lebanon currently has three properties that would qualify for the exemption – all owned by the same nonprofit – but only two are expected to use the city exemption because the third property is using a different exemption.
More recently, Finance Director Brandon Neish determined that, with two properties using this program, the city’s general fund would lose about $69,000 after five years, or $350,000 after 20 years. It could be more if new low income housing properties pop up and use the program.
Councilor Michelle Steinhebel voiced support for the ordinance, noting that the current organization that would use the exemption is a “valuable” organization that does a lot for the community. Councilmen David McClain and Dave Workman voiced their opposition to the ordinance.
Workman indicated he was uncomfortable with the notion that one particular organization in Lebanon would “directly profit” from it, and questioned how it benefits Lebanon. McClain didn’t agree the ordinance would be good for the taxpayers who would be “picking up the tab.”
“Here we are increasing our water fees (city service fee added this year to water bills); now we want to decrease our income, and our expenses are going up all the time,” McClain said.
Councilor Steinhebel and Carl Mann voted in favor of the ordinance, while councilmen McClain, Workman, Dominic Conti and Jeremy Salvage opposed it.
Some anticipated city revenues showing a decline
Neish presented an unofficial 2024 Fiscal Year year-end finance update for the city.
He said the city generated about $40 million in revenue and spent about $37 million. Interest earnings were “off the charts,” largely due to an increase in rates from 4% to 5%. The city spent about 35% less than what was budgeted.
“A lot of our budget is capital projects, a huge chunk of our overall budget, and if projects don’t kick off right away or we have to set money aside in reserve for that purpose, then it gets set into the fund balances for future projects,” he said.
In the general fund, the city generated $11.7 million in new revenue, and spent $11.8 million, leaving a $120,000 deficit. In the prior year, 2023, the deficit was at about $103,000. The city received $6.7 million in property taxes.
Looking at the current 2025 fiscal year, Neish noted assessed home values for property taxes came in at 2.7% when the city anticipated it to be 4%, and state liquor tax revenue is also down nearly 50%.
“This is generally a fairly solid revenue source and, as silly as that may sound, it has always been all-reliable as far as you can ping that pretty close to what we had planned for,” Neish said. “Additional research shows that apparently this is a national trend. The liquor sales across the country is declining fairly rapidly, so that may be a revenue source we won’t be able to rely on for much longer.”
The city does expect an increase in franchise fees as utility companies raise their rates and colder weather hits, he noted.
In other business:
- New and returning councilmen Conti, McClain and Salvage, and Kenneth Jackola as mayor, were sworn in for the new terms;
- The council nominated Michelle Steinhebel as council president for the new term;
- The council approved an amendment to the Comprehensive Plan and Zoning maps designations to change a residential block between Oak and East A streets on the west side of Hiatt Street from Residential Low Density to Mixed-Density Residential and High Density Residential. Hart said this will allow a homeowner to add a unit over their garage.
- Resident Linda Ziedrich told the council she does not believe the city should sell the Santiam Station, but instead should lease it. Ziedrich said she heard the city intends to sell the building after they move their chambers elsewhere. As a building of historical significance, she believes the building should belong to the people, not a private business.
- City Manager Ron Whitlatch responded to a question from Workman about complaints regarding Ziply Fiber installations throughout the city. He said a contractor who was doing the work is no longer associated with the project, and a city staff person is monitoring the work now. Also, the city is finding that many residents don’t realize the work is being conducted on public utility easements, which oftentimes many believe are private property. The city is still getting complaints about the project, Whitlatch said.