News

ARTICLE
Date ArticleType
6/13/2018 Member News

Oregon City looks at viability of implementing a Construction Excise Tax


On June 7th, the Oregon City Commission reviewed the possibility of implementing a construction excise tax (CET) on new residential and commercial development.

State law allows cities and counties to pass a new CET designed to support affordable housing. A CET can be imposed on residential, commercial, and/or industrial construction, with certain parameters. A city or county may impose a CET set at 1% or less of the permit valuation on residential development, including both new structures and construction that results in additional square footage to an existing residential structure.

The city or county may retain up to 4% of construction excise tax revenues as an administrative fee to cover its costs incurred in implementing the tax. After the administrative fee has been deducted from total revenues, the allocation of revenue must be as followed: 50% for incentives to create affordable housing, 35% for affordable housing programs, 15% to Oregon Housing and Community Services to be used toward programs which offer down payment assistance.

The general consensus of the Commission was that staff should continue to observe other cities (including Portland, Milwaukie, Corvallis, Newport, Bend, Eugene, Astoria, Grants Pass and Lane County) to see if they are successful in creating any affordable housing through this tax. Since many of these programs are very new, they asked staff to update the commission during their annual retreat in about a year.