It's a small step, but one that could provide some of the boost that's needed to accelerate construction of workforce housing in Medford.
The Medford City Council is considering a tax on new construction intended to spur even more new construction. Specifically, the city's new Housing Advisory Committee is recommending a one-third of 1 percent tax on construction permits. Permit fees and system development charges — which help pay for expanded utilities and road construction to serve new housing — add up to $12,000 on a $300,000 house at current levels. The new tax would add $1,000 to that cost.
The tax would generate a little over half a million dollars annually. Using it to leverage state and federal housing assistance grants would boost the amount available to between $4 million and $5 million. The city would use that money to help developers build affordable housing.
The city of Bend enacted a 0.3 percent tax in 2006, and as of a year ago had loaned out approximately $11 million, resulting in more than 600 housing units, most of them multifamily projects. Bend officials say developers have confirmed that most of those units would not have been built without the help of the city's housing fund.
Of 539 multifamily units in Bend, two-thirds were affordable by people earning less than 60 percent of the area median income, and the rest were priced for workers earning up to 80 percent of the local median. Workers in that 80 percent income category include teachers, firefighters and nurses. That's not a demographic usually associated with "affordable housing" efforts, but one that is increasingly finding it difficult to obtain housing.
The Oregon Employment Department says employers in the Rogue Valley are having trouble filling available jobs because workers are unwilling to move here when they research the cost of housing, or they don't stay long once they arrive.
The Legislature in 2016 passed a bill allowing cities other than Bend to levy construction excise taxes specifically for affordable housing. Portland has followed Bend's lead, as have Hood River and Cannon Beach. Other cities are considering the tax.
Medford faces the same housing crunch as the rest of the state and the entire West Coast. Anything that can help alleviate the housing shortage should be considered, including this construction excise tax.