To deal with the city’s affordable housing crunch, the Portland City Council passed a 1% construction excise tax that officials said will be used to subsidise projects in the Oregon city – and may prove a boon for public construction insurers.
Oregon recently allowed cities and counties to adopt the tax earlier this year, reversing a 17-year ban on inclusionary housing laws.
Commissioner Dan Saltzman told a local broadcaster that the tax is expected to rake in $8 million per year. The additional income will be earmarked for projects targeting families who earn 80% or less the Portland median income, as is determined by the US Department of Housing and Urban Development.
Collection of the tax will start August 1 on both commercial and residential development projects. Proceeds will be channelled to the city’s Inclusionary Housing Fund (IHF) and the Oregon Department of Housing and Community Services (OHCS).
Residential construction revenues will be split between the IHF, which will get 85% with the rest going to OHCS. Meanwhile, 100% of collections from commercial developments will go to IHF.
However, the tax will not be levied on projects with a value of less than $100,000, qualified affordable housing developments, public works, private schools, and non-profit care facilities, among others.
