County adopts 1 percent tax on construction

Building that wing on your home is going to cost a little more come August.

By Jordan Wolfe

To help with the county’s housing crisis and create a new county position to aid in developing workforce housing, the Construction Excise Tax (CET) is a 1 percent tax added to building and remodel permits based on assessed value of the upgrade (or development) – the Tillamook County Board of Commissioners adopted the ordinance on May 17.
“We have a problem,” Tillamook County Commissioner Bill Baertlein said. “How many businesses are being affected by [the housing crisis]? It’s the creamery. It’s the hospital. It’s the school district.”
According to Baertlein, the CET will be permanent fixture in the county.
“This is not a property tax, it’s a one-time deal,” he said. “People can afford to pay 1 percent.”
And that 1 percent is expected to generate $300,000 every year, according to Baertlein. But it could be even more if the example Bend, Ore. has set continues to be the trend for Tillamook County.
“For every dollar they get, they get $7 – $10 from the federal government.”
The county could potentially be receiving upward of $3 million toward affordable housing aid, annually.
Baertlein said he would like to see that money go toward programs and incentives to developers to create more low-income housing, especially for the workforce in the tourism industry.
“There are more than 2,000 people employed in the tourist industry that make less than $20,000 a year,” he said.
Affordable housing is 30 percent or less of income, so adding more $500 or $1,000 per month rentals would allow more of the local workforce to spend more of their money toward other necessities in life – including food.
“I’d like to see living conditions improve,” he said.
Following the passage of Senate Bill 1533 (SB 1533), allowing all counties in the state of Oregon to enact a 1 percent tax on new building and remodel permits that increase the square footage of the building and the comprehensive housing study conducted by czb, LLC, a Virginia-based community development firm, Baertlein said it may be the county’s only solution for affordable housing.
“It’s an opportunity for us like we’ve never had before,” he said, “Otherwise, we have an entire housing study just sitting on the shelf.”
Where does the money go?
According to Baertlein, there will be two “buckets,” one for residential housing permits and another for commercial permits.
The revenue generated from residential permits will go into the General Fund and the county, following a 4 percent deduction for administrative costs and breaks down as follows:
• 35 percent goes to fund the support of production and preservation of affordable housing units at and below 80 percent of median family income.
• 50 percent goes to developer incentives for programs that require affordable housing, such as helping with system development charges.
• 15 percent goes to the Oregon Department of Housing and Community Services to fund home ownership programs that provide down payment assistance. A Tillamook based non-profit (such as Habitat for Humanity or CARE) may apply for these funds to use for local down payment assistance.
Following the 4 percent deduction for administrative costs, 100 percent of commercial permits will help fund the support of production and preservation of affordable housing units at and below 80 percent of median family income.
The revenue will fund a housing coordinator by using $100,000 of the money annually (including wages and benefits).
“We’ve never before had a person like this,” Baertlein said. “It’ll be kind of like having a cheerleader for housing.”
The housing coordinator will, as Baertlein said, be “boots on the ground,” work in the Community Development Department and work with Northwest Oregon Housing Authority and the Community Action Team.
According to recommendations from czb, LLC in the housing study, a housing coordinator would develop and implement programs to help maintain and preserve the county’s aging housing stock; assist individual developers and organize public-private partnerships conceive of and solicit funds for housing construction or rehabilitation projects and assist employers seeking solution to provide or find housing for their employees.
“We need to get ahead of the tourism,” Baertlein said. “We’re losing so many homes to second homes or short term rentals.”
And he believes it’s having an impact on the feeling of community in the county’s villages.
“Sixty-five percent of the homes in Pacific City are these and we’re starting to see that in Netarts,” he said.
Baertlein said a seven-member Housing Commission will be created to provide oversight to the workforce housing program and will be comprised of two representatives from non-profits based in the county whose mission is to serve low-income populations; two representatives from the banking, construction or realty industries; a city mayor; a member from one of the Community Advisory Committees and a citizen representative
“I’d like to see an active housing commission,” he said, “They will see how we’re spending and make recommendations.”
However, not every single construction project will come with the 1 percent tax.
There are some exceptions of the CET who will not have to pay: Residential housing units guaranteed to be affordable (for households that earn no more than 80 percent of the median household income), private school improvements, public or private hospital improvements, improvements to religious facilities primarily used for worship or education associated with worship, agricultural buildings as defined in ORS 455.315(2)(a) and facilites owned and operated by a 501(c)(3) not-for-profit corporation.
“I don’t see this 1 percent slowing things down,” Baertlein said.
The second hearing and adoption of the Construction Excise Tax ordinance occurred on May 17 during the weekly Commissioners meeting in Tillamook.