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Eugene city councilors will discuss and may vote on a 10-year, $1 million tax break Wednesday for a 50-unit apartment building on the edge of downtown Eugene.

The five-story Ferry Street Manor would provide needed rental housing for young professionals who prefer to live in walkable neighborhoods with transit access, said the local developers, Rob and Sarah Bennett.

The building would be built just north of East 11th Avenue on Ferry Street, on the overflow parking lot for Eugene Manor, a six-story apartment building the Bennett family has owned since 1979. Monthly rent for a studio apartment would run close to $1,100.

But the Bennetts say the nearly $8.3 million project can't move ahead without a tax break through the city's controversial Multi Unit Property Tax Exemption program, also known as MUPTE.

The aim of the program is to be an incentive to spur development of housing downtown. The city has other subsidy programs to bolster the construction of affordable housing. MUPTE has been praised as a tool to attract housing projects in and around downtown that otherwise wouldn't get off the ground but also reviled as a giveaway of public dollars to rich developers.

Those arguments have followed this latest request, and several people voiced support for the MUPTE application during the City Council meeting's public comment period Monday night.

Chad Barczak, chief executive officer of IDX, a downtown real estate technology firm, said housing close to his firm is critical for its future growth and urged city councilors to approve the tax break.

"If more of our employees were able to live downtown, as some already do, they would more likely not own a car and walk or take alternative transportation to work," he said. "This not only eases the demand for parking spaces long-term but also creates less congestion, pollution and promotes downtown and Eugene as a more walkable and eco-friendly community."

In written comments, detractors said the council should put its money toward affordable housing and not invest public dollars into housing that many residents can't live in.

"Instead of fancy, expensive housing and giving tax breaks to those who need it least," wrote Ellen Furstner, who has volunteered for several social service agencies in Eugene, in an email, "put your money where the real need is, and work on that. Show your humane and caring side to the world."

Under city requirements, the developer requesting a tax break must show the proposal can't be built "but for" MUPTE.

The Bennett family said it needs the MUPTE tax break for the project to generate enough annual income so that they can secure a sufficient amount of bank financing without having to put more equity into the project, according to a review by The Register-Guard of the project MUPTE application, the written recommendation of the city-appointed panel that reviewed the request, and an independent financial analysis required by the city.

The Bennetts alone are financing and putting up the equity for the proposed apartment building.

The independent analysis shows the project is estimated to generate enough net operating income — gross operating income minus operating expenses, including property taxes — without MUPTE to support $5.35 million in bank financing, requiring the Bennetts to kick in more than $2.9 million, or 35%, for the project.

With MUPTE, which increases the net operating income by eliminating property tax payments for the first 10 years, the developers can support nearly $6.5 million in bank financing, reducing the family's equity requirement to about $1.8 million, or 22%, the analysis said. The analysis noted the Bennetts assumed they would kick in 20% equity.

The analysis, prepared by Johnson Economics of Portland, said the project isn't viable without MUPTE.

"The indicated returns are below what we would consider adequate to incur the development risk for this project," it said. "Inclusion of the MUPTE over a 10-year period would likely make this project viable."

Sarah Bennett said the family doesn't have the ability to put more equity into the project.

"If we had the ability to build this building (without MUPTE), we would have done it a long time ago," she said.

The analysis does not make any conclusion about how much profit the project could generate.

The estimated value of the tax break is slightly more than $1 million over the decade. The tax applies only to the building and not the underlying land.

The majority of the citizen panel that reviewed the application recommended the 10-year tax break. One member supported an eight-year exemption with a possible extension. One member sought a five-year exemption. One member opposed any tax break.

The Bennetts estimated the land left alone would generate $414,000 in taxes over 50 years. In comparison, the proposed apartment building and land together would generate $9.5 million over 50 years with the 10-year MUPTE tax break.

To qualify for MUPTE, the Bennetts had to meet a number of other requirements, including setting aside 30% of the planned units as "workforce housing." Workforce housing is defined as dwellings with rents up to 30% of the area median income.

Overall the average rent for the 35 studio apartments, which average 449 square feet, will run an average of $1,156 a month.

The application shows the Bennetts will meet the housing requirement by setting aside 15 of the planned 35 studio apartments as workplace housing. Those rents would run from $1,077 to $1,103, slightly below the maximum rent set by the workforce housing requirement of $1,123.

Rents for the remaining 15 one-bedroom apartments, which average 574 square feet, will average $1,384.

The analysis characterized the "rent assumptions to be very aggressive in this market."

Follow Christian Hill on Twitter @RGchill. Email christian.hill@registerguard.com.