A new tool for local jurisdictions

In 2016, the Oregon State Legislature passed SB 1533, which enabled local jurisdictions to implement a construction excise tax for affordable housing and allowed inclusionary zoning. Both a construction excise tax and inclusionary zoning are powerful tools to help local jurisdictions address their communities’ housing needs and ensure everyone has a safe, stable place to call home.

A local jurisdiction may now levy a tax of up to 1 percent of the permit value on residential construction. They may also levy a tax on the permit value of commercial and industrial taxes, and there is no cap to the rate for commercial and industrial tax. The revenue from a residential construction excise tax must go to incentives for developers  to create affordable housing (50 percent), affordable housing programs (35 percent), and to Oregon Housing and Community Services to be used for programs providing down payment assistance (15 percent). The amount for down payment assistance will be returned to existing programs within the jurisdiction that adopted the tax. For a commercial or industrial construction excise tax, at least half of revenues must go toward the jurisdiction’s housing-related programs. For more information, see the Housing Alliance’s FAQ on the construction excise tax and inclusionary zoning here.

Seven jurisdictions (Portland, Corvallis, Tillamook County, Cannon Beach, Hood River County, Hood River City, and Newport) have passed local construction excise taxes to date, and many others are considering adopting this important tool.  The Housing Alliance is maintaining a spreadsheet to track local construction excise taxes for affordable housing. You can find the latest on which jurisdictions have adopted a construction excise tax for affordable housing, with details on the ordinances and links to more resources. Please contact Alison McIntosh at amcintosh@neighborhoodpartnerships.org with any corrections, additions, or questions.