Portland's Not Getting A Demolition Tax—This Year

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Mayor Charlie Hales' proposed demolition tax [ pdf ] appears to have blown up.

Hales, who had to duck out of this morning's Portland City Council meeting early, did something sort of extraordinary in a council where votes are often tabulated ahead of time: He whooshed his proposal for a $25,000 tax on home demolitions to the top of the agenda, then asked his colleagues what they thought.

"It’s really at the point now where I need some guidance from council," said Hales, who has sold the tax as way to both prevent loss of "neighborhood character" and raise millions for affordable housing. "We've heard from a lot of people on this issue."

Hales quickly had his answer.

Commissioner Nick Fish spoke up first, saying he couldn't stand by the tax as written. "I'm not sure it's fully baked," he said. "I will reluctantly vote no."

Commissioner Steve Novick came next, joining Fish in expressing concerns the tax is regressive (it would slap on the $25,000 whether the development that sprang up in the place of a demolition was worth 300,000 or $3 million). He also wanted an exemption for demolitions that would help increase density on a piece of property, which Hales included in the proposal at one time, then stripped out. "I can't support anything that doesn't have either," Novick said.

Once Amanda Fritz voiced her stance—"It doesn't make sense to pay for affordable multifamily housing by making single family housing less affordable"—the matter was done.

The mayor can't have been surprised—there was clearly a reason he'd asked, after all. Since he unveiled the tax idea months ago, he ran into angry bands of developers, and homeowners concerned they'd be stopped from building their "dream" homes. But the policy also could have been a sizable booster shot for a city hurting for dedicated affordable housing cash. City revenue staff estimated it could have raised between $1.25 million and $3.75 million a year that could be spent.

Instead, it's back to the drawing board. Hales didn't scrap his proposal completely, but said he'd bring it back in new form in mid-January. One idea he floated: A city-enforced moratorium on home demolitions, while city leaders figured out what to do.

"There are other options I think the council can consider in addition to or instead of a tax," he said.