What is the Affordable Housing Construction Excise Tax (CET)?
Effective Aug. 1, 2016, the City of Portland collects a tax on residential and commercial building projects with improvements valued at $100,000 or more. The tax is calculated as 1% of the permit valuation. The Portland Housing Bureau proposed the tax to help fund affordable housing programs, and Portland City Council approved it in June 2016.
What does this tax pay for?
The tax pays for affordable housing programs, including:
- Production and preservation of housing for people with incomes at or below 60% of median family incomes (MFI) in the Portland metro area
- Developer incentives for inclusionary zoning
- State of Oregon homeownership programs
Why is this tax needed?
Affordable housing, inclusionary housing, and potential construction excise taxes were a significant policy issues leading up to and during the 2016 session of the Oregon Legislature. After significant discussion, numerous hearings, and extensive outreach by community organizations, industry representatives, and local governments, the Oregon Legislature passed a compromise bill authorizing the development of a mandatory inclusionary zoning program and a local construction excise tax for affordable housing. The adoption of a Portland construction excise tax is the first step in implementing various policies and programs agreed to and authorized during the 2016 legislative session.
Who has to pay this tax? Am I exempt from paying the tax?
The tax applies to construction permits on properties located within the City of Portland when the improvement value is $100,000 or more. Exemptions are provided for the following:
- Improvements valued at less than $100,000
- Accessory dwelling units (through June 30, 2018)
- Affordable housing for people at or below 80% median family incomes (MFI)
- Private school improvements
- Public improvements
- Public or private hospital improvements
- Improvements to religious facilities
- Agricultural buildings
- Certain not‐for‐profit care facilities
- Residential housing to replace housing that was destroyed or damaged by an event or circumstance that is the basis for a state of emergency declared under ORS 401.165 or 401.309, or for the exercise of authority under ORS 476.510 to 476.610 on or after Jan. 1, 2020.
To demonstrate that a project is exempt from this CET, an Affordable Housing Construction Excise Tax Exemption Form must be completed, signed and submitted with your building permit application identifying what exemptions are applicable to the project.
What is Phase 2 of the tax implementation?
Implementation of the construction excise tax on Facility Permit Program commercial alterations and mobile home park permits are effective as of Oct. 31, 2016. These permit types account for approximately 2% of all projects subject to the Affordable Housing CET. This phased approach is necessary to allow for CET fee calculation software programming to be completed.
Who can I contact for assistance?
For questions about what the tax pays for, please contact the Portland Housing Bureau at Inclusionary‐Housing@portlandoregon.gov or 503‐823‐9042.
For questions about how the tax is calculated or about exemptions, please contact Kyle O’Brien at Portland Permitting & Development at Kyle.Obrien@portlandoregon.gov or 503‐823‐7323.