Portland, Ore., City Council approves construction excise tax for affordable housing

The Portland, Ore., City Council approved a 1% construction excise tax. The tax is expected to raise $8 million a year to fund affordable housing initiatives. 

Both residential and commercial projects are subject to the tax. The Oregon Legislature repealed a 17-year-old ban on inclusionary housing rules earlier this year, opening the door for Portland’s tax. 

Portland will start collecting the tax August 1, with proceeds earmarked for the city’s Inclusionary Housing Fund and the Oregon Department of Housing and Community Services. Certain projects, those costing less than $100,000, qualified affordable housing developments, some owner-occupied residential projects, public works, private schools, religious buildings, agricultural buildings, nonprofit care facilities, and accessory dwellings, are exempt.

Portland currently has a hot housing market, with low availability of homes for sale. The excise tax collected is meant to help build housing projects targeting those who earn 80% or less of the city’s median family income.