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Portland Commissioner Saltzman Proposes New 1% Construction Excise Tax

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Today Portland Commissioner Dan Saltzman, whose bureau assignments include the Portland Housing Bureau and the Bureau of Development Services, proposed a new excise tax on residential and commercial development equal to one percent of the total permit valuation, revenue from which would be dedicated to build and preserve affordable housing.

The tax is estimated to raise approximately $8 million per year—approximately $5.4 million per year from construction excise taxes on residential projects and approximately $2.6 million per year from taxes on commercial projects. According to OregonLive, however, budget officials have estimated the commercial tax could be as high as $11.5 million annually.

According to an infographic published by Commissioner Saltzman, the proposed excise tax on an example new single family home would be $3,636, on an example new multi-family project would be $114,032, on an example new big box retail building would be $110,568, and on an example new commercial building would be $60,000. With respect to the specific example of a new 42,610 square foot commercial building, according to the infographic, total fees paid by the developer would rise by about 60 percent.

Under the proposal, certain new projects would be exempted from the construction excise tax, including affordable housing projects, accessory dwelling units (for a two-year period), improvements valued less than $100,000, and improvements to religious facilities, private schools, and hospitals.

OregonLive reports that the proposed new tax will be before the City Council in mid-June.

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