Link to Owner Dr. Robert B. Pamplin Jr.

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If you were disappointed to see a modest increase in your home’s property taxes when annual tax bills arrived in the mail recently, just think how Randal Groves felt to see his bill jump by an unbelievable 500 percent.


As reported in the Oct. 22 Portland Tribune, Groves and his wife, who live in Northeast Portland’s Sabin neighborhood, received this shocking increase because Multnomah County had reassessed their entire property after they built a small cottage on their lot. As a result, a home and lot with a previous property tax bill of $1,225 per year is now costing its owners $7,286 in annual taxes.

The Groves family isn’t the only one in this predicament.

The city of Portland has been encouraging hundreds of homeowners to build accessory dwelling units — or “granny flats” — because officials think they provide a relatively benign way to increase density in the city and forestall the need to expand the region’s urban growth boundary. These accessory units also are a source of low-income housing in a city where rents are escalating beyond the reach of many working-class wage earners.

In light of these potential advantages, Portland’s push for more accessory dwelling units makes sense, except the city’s efforts to encourage density will quickly be undermined by the county’s onerous tax policies. The two governments must come together and develop a consistent approach to this form of housing. If the county continues its current practice of reassessing an entire property when a detached accessory unit is added, it will kill any incentives the city might offer.

Portland has been granting fee waivers to encourage construction of accessory dwelling units — or ADUs. However, those savings will be meaningless to property owners if they also face massive increases in tax bills. Homeowners will either choose to forgo building ADUs, or they will evade the city process altogether and build them without permits.

Neither outcome is desirable, particularly if dwellings are constructed without the proper health and safety inspections.

At the root of this tax problem is the language of two property-tax limitation measures approved by voters almost 20 years ago. Those measures reduced assessments for homes and only allowed a 3 percent increase each year in assessed value — no matter how much the home’s actual value increased.

As previously reported by the Portland Tribune’s Steve Law (Similar properties, unequal taxes, Jan. 10, 2013), the property tax limitation measures created particular inequities between homeowners who live east of 82nd Avenue and those who live in more affluent neighborhoods to the west. People east of 82nd are paying higher taxes for cheaper houses than their neighbors to the west — many of whom get off light on property taxes.

These inequities help explain why the county assessor’s office might want to grab every chance it can get to reassess properties when an owner makes a major change. The assessor’s current interpretation of the law is that adding a detached ADU triggers reassessment of the whole property, including the main house. However, it does not appear the assessor’s office has been consistent in that interpretation over the years. Nor is its current practice in keeping with a state Department of Revenue opinion requested by the Tribune.

The Department of Revenue, after consulting with state Department of Justice attorneys, concluded that construction of an ADU should trigger a reassessment of the land where the ADU is built, but not the main house. That seems like a fair conclusion, and it’s one the county should consider.

Portland has enough difficulties with home demolitions, sky-high rents and general affordability. The county should not, inadvertently or otherwise, actively punish people who can provide some small form of relief. Yes, it’s true that some of the ADUs become a source of income for people who rent them out to tourists. It also is true that many of the people who can afford to build an ADU already may be getting a deal on their taxes.

However, the larger property tax issue can’t be fixed with a policy limited to ADUs. Multnomah County officials should work to align their stance with that of the city and encourage the development of housing alternatives in Portland.

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