What is the construction excise tax?
This is a tax assessed on construction permits issued by local cities and counties in the Metro region. The tax is assessed at 0.12 percent of the value of the improvements for which a permit is sought, unless the project is exempted from the tax. For example, for improvements valued at $250,000, the tax will be $300.
Planning grants available
The construction excise tax funds a competitive grant program to provide cities and counties with the planning resources necessary to prepare land for development.
Who pays the tax?
With some exceptions, anyone applying for a building permit for construction on property located inside Metro's jurisdictional boundary pays this tax. The tax is collected at the time the fees for a permit are paid.
Why did Metro impose the tax?
Metro is the directly elected regional government that serves 1.4 million residents in Clackamas, Multnomah and Washington counties, and the 25 cities in the Portland metropolitan area. Metro is responsible, among other things, for regional land use and transportation planning.
Metro is responsible for managing the urban growth boundary and is required, by state law, to maintain a 20-year supply of land for future residential development inside the boundary. Every five years, the Metro Council is required to conduct a review of the land supply and, if necessary, change policy inside the existing UGB, expand the UGB, or both, to meet that requirement.
The UGB contains more than 250,000 acres, over 23,000 of which were added by the Metro Council since 1998. Cities and counties within the metropolitan region are required by state law to implement the Regional Framework Plan and the Urban Growth Management Functional Plan (Chapter 3.07 of the Metro Code). However, many areas within the UGB remain unplanned and/or undeveloped due to a lack of funding for required planning. In 2005 Metro was approached by developers, local government officials, business groups and others to identify possible funding sources to pay for required planning within UGB expansion areas. A study committee, consisting of representatives from the development community, land use experts, local government officials and other concerned citizens, was appointed by the Metro Council to study the need for funding and identify a revenue source to pay for the required planning. The study committee recommended a limited-duration excise tax on construction permits throughout the region.
In June 2009, after a recommendation from an advisory group of local government officials, representatives of various business organizations and other interested parties, the Metro Council voted to extend the tax for an additional five years to provide funding for planning of future expansion areas, future urban reserves, and planning that enables redevelopment of centers, corridors and employment areas within the existing UGB, in keeping with the region's blueprint for managing growth, the 2040 Growth Concept. The policy and purpose of the Construction Excise Tax remains to provide funding for regional and local planning that is required to make land ready for development after its inclusion in the UGB.
Does this tax apply to all construction permits?
No. Permits for construction projects valued at $100,000 or less are exempted from this tax as well as permits for development of affordable housing units and permits issued to 501(c)(3) nonprofit organizations for other projects aimed at serving low-income populations. Permits for construction valued at more than $10 million are assessed a flat $12,000 fee (0.12 percent of $10 million).
Is my property located within Metro's jurisdiction?
Metro's jurisdiction includes the 25 incorporated cities and unincorporated portions of Multnomah, Clackamas, and Washington counties that lie within the Portland metropolitan region, stretching from Forest Grove to Troutdale and south to Wilsonville. Cities outside of Metro's jurisdiction include North Plains, Banks, Gaston, Canby, Estacada and Sandy. Sauvie Island is also outside Metro's boundaries, as is Corbett.
To determine whether your property lies within Metro's jurisdiction, enter your property address into the Find your councilor tool. If the results provide you with a Metro Councilor, then your property is within Metro's jurisdiction and may be subject to the construction excise tax.
How long will the tax be in effect?
The tax went into effect July 1, 2006. With its June 2009 vote, the Metro Council has extended the tax program for an additional five years to 2014, at which time the Metro Council will reconsider its future use.
Updates on Construction Excise Tax Collections
Staff reports to the Metro Council the status of Construction Excise Tax collections quarterly. The report is an appendix in the quarterly financial report.