The Single Property Tax Increment Financing District is a financial tool designed to encourage the development of affordable housing. It offers property tax rebates to support new construction projects that meet specific criteria. The creation of a Tax Increment Financing District follows Oregon state laws, which include a public outreach process and approval by the City Council.

The City of Salem approved its first Single Property Tax Increment Financing project, the Jory Tax Increment Financing District, in 2020. Since then, the program has grown to address the increasing need for affordable housing in the community.

Why This Program Matters

Affordable housing is a critical need in Salem. The Tax Increment Financing District program helps reduce financial barriers for developers, making it easier to create housing that is accessible to low- and moderate-income families. This program benefits the community by increasing the availability of affordable housing, which supports economic stability and improves the quality of life for residents. By understanding the program's objectives and requirements, developers can take advantage of this opportunity to contribute to Salem’s housing goals.

Program Objectives

To qualify for the Single Property Tax Increment Financing District program, projects must meet the following requirements:

• Affordable Housing Requirement: The project must include affordable housing units. At least 15% of the total units or 20 units (whichever is greater) must meet affordability standards.
• Affordability Standards: Examples include rents set at 80% of the area median income or lower, and annual rent increases capped below the legal limit.
• Location: The project must be within Salem’s municipal boundaries.
• Development Concept: A clear development plan must be provided.
• No Additional Tax Benefits: Projects already receiving other property tax exemptions are not eligible.

Developers participating in the Tax Increment Financing District program are responsible for covering certain costs, including:

• A current property survey and legal description.
• A "super notice" as required by Oregon law (Oregon Revised Statute 457.085).

Additional Benefits for Affordable Housing Projects

Affordable housing projects receive significant financial advantages compared to market-rate housing projects. For example, affordable housing developments may be fully or partially exempt from paying System Development Charges. These charges typically cost around $8,000 per unit for market-rate projects.

Steps to Qualify for System Development Charge Exemptions

To qualify for System Development Charge exemptions, developers must follow these steps:

1. Confirm Eligibility: Ensure the project meets the affordable housing definition in Salem Revised Code 41.150(a)(5).
2. Submit a Draft Deed Restriction: Provide a draft deed restriction to the City Attorney’s office for review. The exemption is based on a rate of 1/30th per year of affordability, for a period of 5 to 30 years, as chosen by the applicant.
3. Submit Development Plans: Submit plans for building permit review.
4. Record the Deed Restriction: Provide a recorded deed restriction before the development permit is approved.

Contact Information 

For more information or questions about System Development Charge exemptions, please contact Development Services at 503-584-4646 or email developmentservices@cityofsalem.net.