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Date ArticleType
4/19/2022 Member News

HBA Meets with McMinnville to Discuss Proposed Construction Excise Tax


HBA staff recently met with McMinnville Council President Remy Drabkin and planning staff to discuss a proposed construction excise tax (CET) to support affordable housing efforts.

We discussed McMinnville’s need to address housing affordability for its most cost burdened residents and the CET is one of the few tools they have been given by the state. Although we don’t like to see increases in housing cost inputs, we appreciate that staff have included us in the discussion on this issue.

During the meeting HBA staff pushed for consideration of delaying SDCs to offset some of the cost created by a CET which staff agreed to look into. However, after outreach to stakeholders and internal deliberation staff realized they would not be able to research and draft SDC delay policy required within the CET ordinance process timeframe but committed to further discussions.

In 2016, the Oregon Legislature approved the use of a CET as a means to fund affordable housing (SB 1533). The tax may not exceed one percent of the permit valuation for residential construction permits issued by a city or a county. CET is not required but is instead an optional affordable housing revenue source that is decided at a local government level.

Although a 1% (of permit valuation) CET is a small part of the overall cost of a home there are numerous other cost drivers that the city controls like SDCs, permitting and inspection fees, regulatory compliance and delays inherent in the government process. As the city moves forward with SDC fee increase discussions and other things that have an effect on home cost, we will continue to have discussions on ways to mitigate the ever increasing cost of housing production.