Taxing demolitions will hurt homebuyers and homeowners
On Dec. 3, the Lake Oswego City Council voted to approve a $15,000 home demolition tax on single family homes and duplexes for use on park maintenance. The tax stands egregiously at odds with House Bill 2001 — Oregon's 2019 middle housing bill, which encourages duplexes, triplexes and quads.
Lake Oswego desperately needs new and diverse housing options. Families across the region are desperately seeking right-sized homes with new amenities. Because they are inherently smaller, these homes are attainable to a greater number of Oregonians. By erecting a financial blockade to missing middle replacement housing the city is saying no to these families. As drafted, the proposed demolition tax acts in opposition to House Bill 2001 and the incredible housing opportunities it offers.
In addition to dampening the market for new middle housing, the tax would disproportionately impact current homeowners and new homebuyers. First, it will punish redevelopment and slash equity in older homes. Alternatively, the tax will be passed on to the consumer and increase the cost of new housing. In both instances, the tax saddles two small segments of the Lake Oswego population with the obligation to pay for a city-wide public service.
On top of it all, the tax is fundamentally arbitrary. Over the past year, the City Council has expressed multiple rationales for the tax, signaling a naked search for revenue. At their November 2019 City Council hearing, council revised the tax ordinance to direct demolition funds solely to parks maintenance. However, they completely failed to draw a logical link between these two activities. Rather than arbitrarily taxing redevelopment, the City should clearly articulate its needs and justify a means to pay for them.
Lake Oswego's parks exist for all city residents to enjoy and as such, the city should consider a parks maintenance utility fee or option levy that spreads these costs equitably across all park users, as cities like Corvallis, Hillsboro, Tigard and West Linn have done. Both of these funding options properly spread the obligation of parks maintenance instead of penalizing discreet groups.
Consider the tax's true price tag: higher housing costs and lower property values for older homes. These somber implications demonstrate that taxing housing in the midst of a regional housing crisis is simply bad policy, and Lake Oswego deserves better.
Roseann Johnson is the assistant director of government affairs for the Home Builders Association of Metropolitan Portland.
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