Portland Suburb’s Proposed Law Could Discourage Home Development

By Real Estate

A Portland suburb is poised to vote on a law that taxes anyone who demolishes a home, the latest salvo in the fight over how to create more affordable housing in the state.

Legislators in Lake Oswego, an affluent town of about 38,000, have proposed a law that would place a $15,000 tax on most home demolitions. The funds raised would go toward maintenance of local parks, according to the ordinance.

But a top state lawmaker and housing advocates said the Lake Oswego tax could discourage the sort of new housing development that a recent statewide initiative is intended to promote.

The state law passed in June seeks to address the  lack of affordable housing in Oregon by requiring cities of 25,000 or more to allow two-, three- and four-unit residential buildings in neighborhoods of single-family homes.

Tina Kotek, the speaker of the Oregon House of Representatives and sponsor of the statewide zoning bill, said the Lake Oswego tax runs counter to the state government’s goal of increasing housing supply.

“It’s disappointing that there are communities looking for ways to shirk responsibility for addressing the housing crisis… New barriers to more options is part of the problem,” she said in an email.

Lake Oswego officials said the demolition tax had first been proposed before the state zoning bill became law, however, and that the demolition tax wasn’t meant as a reaction to it.

The Oregon state zoning law was designed to create more affordable housing. Builders can profit by demolishing older, single-family homes and constructing buildings with up to four units in their place.

But the law has already caused a public backlash from Oregon residents worried about increased traffic, blocked sunlight and the effect on property values.

Since most towns and cities have more than two years to update their building codes for the new state law, imposing new taxes or regulations on development are ways local lawmakers can undermine the state law’s intent, housing advocates suggest.

Lake Oswego city council member Skip O’Neill, who works in real estate as a general contractor, said a new $15,000 tax shouldn’t make much of a difference for construction in a town where new homes go on the market for more than a million dollars.

“The people that are moving here, they are not moving here for affordable housing,” he said.


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