A regional advisory committee recommended this week that Metro extend its tax on construction to pay for local planning.
The tax – a 0.12 percent tax on new construction within Metro's boundaries – collects about $2 million a year, which is then distributed as grants to cities and counties looking to pay for planning efforts.
At the 0.12 percent rate, the owner of a building permitted for $200,000 in improvements would pay $240 in taxes.
It expires this year – unless the Metro Council votes by the end of June to renew it. The council's advisory committee, comprised primarily of developers, government representatives and social justice advocates, recommended extending the tax until 2020.
But the committee suggested Metro take a closer look at what's funded through the grants, leaving the regional government to balance out competing calls for grant funding.
In developed areas, the grants pay for planning projects requested by cities and counties. For example, Happy Valley received $53,100 in the last grant cycle to plan for infrastructure in an employment center. Clackamas County received $221,000 to further planning on regionally significant industrial land.
Most of the construction excise tax money is generated within the existing UGB. But homebuilders argue that a notable portion of the grants should pay for planning future urban areas that aren't yet in the UGB.
In the last grant cycle, about a third of the $4.2 million awarded went to projects planning for growth outside the UGB.
The committee recommended that 25 to 30 percent of future tax money be awarded as grants to address state-mandated concept and comprehensive planning efforts, which are generally longer-term looks at community planning.
The rest, the committee said, should go toward short- and mid-term planning efforts, such as urban renewal planning, corridor planning, planning for UGB expansion areas and strategies for removing barriers to development.
"We ended up with a lot more common ground than we thought we had at the beginning," said Susan Anderson, a committee member and the Portland Bureau of Planning and Sustainability.
Anderson was presenting at Tuesday's work session with Dwight Unti, president of Tokola Properties, a development firm.
"The program has been a super valuable tool in the community," Unti told the Metro Council. "There are a lot of local jurisdictions that need this grant support to be effective."
The council didn't seem to need much convincing that the tax should be extended. The bigger question for them was how to ensure an equitable distribution of grant funds – especially when there's no clear-cut definition of equity.
"They (committee members) really felt like the dollars should go to the communities ready to implement the plans," said Metro chief operating officer Martha Bennett.
But that creates a risk of consistently awarding planning money to the same communities over and over again, warned Metro Council President Tom Hughes.
He suggested giving communities a broad opportunity to explain how they'll overcome hurdles to development as they seek grants, using Oregon City as a hypothetical example.
"You wouldn't necessarily say Oregon City didn't qualify, because they have voter-approved annexation," Hughes said. "The question becomes, if we give you the grant, what are your plans for overcoming the fact that you have voter-approved annexation?"
Anderson suggested that some money could be set aside to help struggling communities prepare for grant applications, to ensure a level playing field for the applications.
Only one member of the public attended Tuesday's work session – Dave Nielsen, CEO of the Home Builders Association of Metropolitan Portland. Nielsen represented the association on the advisory committee.
After the work session, Nielsen said his organization's members see the value of making sure development can happen, both within the current UGB and on the edge.
"Our concern all along was that this tax was started to help what was an unfunded mandate," Nielsen said, referring to Metro-required planning for potential UGB expansion areas. "We need to ensure that still happens. I believe this proposal does that, and as long as it stays true to that, ensures there's funding provided for that."
Bennett recommended one administrative change to the tax, doubling Metro's administrative fees for collecting the tax, from 2.5 percent to 5 percent. She said Metro is currently collecting about $50,000 in administrative fees but it's costing more than $150,000 a year to manage.
The Metro Policy Advisory Committee is set to review the tax proposal June 11, with the Metro Council's vote scheduled for June 19.