Sten proposes statewide real estate tax

Portland City Commissioner Erik Sten has a plan to increase the amount of affordable housing in Portland by implementing a statewide real estate tax and by putting a fee on documents used in real estate deals.

Sten is proposing that the state place a 0.5 percent tax on real estate sales and is endorsing a bill that would include a $15 document transfer fee on all real estate deals. Oregon does not currently have any real estate taxes in place, one of the few states in the nation lacking such taxes.

Sten said that the city of Portland is currently spending $60 million on affordable housing. He said that a real estate tax on housing sales in Portland could double the amount of available funds.

Sten said he hopes that the city of Portland will be able to increase the number of affordable housing units in Portland by about 20,000 units in the coming years. Sten said the city currently has around 30,000 units, and that he hopes to see that number increase to about 50,000 units. He said that Portland is currently adding about 2,000 affordable housing units per year.

“We’d love to see some federal funding for this issue, but it’ll mostly be a local effort that will make the necessary changes,” Sten said.

Affordable housing is housing space that is dedicated to low-income residents and homeless people trying to transition into permanent housing units.

Sten discussed his ideas for affordable housing at Portland State’s Urban Center Building Thursday in an event put on by the Planning Includes Equity (PIE) group. The group served pie to a crowd of about 35 people who attended the hour-long conference.

Without a sales tax, Oregon residents are forced to pay a high income tax each year, Sten said. Because of the income tax, some people even live in Vancouver, Wash., to avoid paying Oregon’s high income taxes and save money on housing, he said.

“Even the middle class is having a hard time finding apartments downtown,” Sten said. “If we had had a real estate tax in place during our recent housing boom, we’d have plenty of funding for affordable housing for everyone who lives in the city.”

The bill that would implement the $15 document fee would require 36 legislative votes to pass during this year’s legislative session. According to Sten, the vote is heavily supported by Democrats, who hold 31 positions in the House of Representatives. He urged attendees of the conference to ask for Republican support of the transfer fee.

“We just need the five extra votes, so write letters to your representatives and help out the affordable housing market,” Sten said.

Sten said that affordable housing is vital to the infrastructure of Portland’s growing population. He said that the cost of housing in Portland is increasing faster than working wages and that he is working to address the low rate of affordable housing in the city.

“The housing industry has failed people seeking homes in Portland,” Sten said, “and we need to do something about it.”

The city of Portland recently passed a bill that requires the Portland Development Commission (PDC) to spend at least 30 percent of its budget on affordable housing, according to Sten. The PDC is currently developing the housing market in the South Waterfront District, an area in Southwest Portland that is focused on increasing the number of affordable housing units in the downtown area.

The key demographic for affordable housing is recovering drug addicts and poor families with no money for a place to live, according to Sten. He said that there is an 80 percent success rate for addicts to rehabilitate when they move into affordable housing units. Sten said the addition of low-income housing buildings, such as the structure at 8 N.W. Eighth Ave. in the Pearl District, is beneficial to the housing market.

The number of homeless people in the downtown area has decreased from 2,500 in 2005 to 1,500 this year, Sten said.

“There’s a real psychological difference for recovering addicts when they move into a place to call their own,” Sten said. “Even if it’s just a room and a toilet down the hall, having a place of your own makes a big difference for the chronically homeless.”

The hundreds of millions of dollars required to fund the Portland Police Bureau would be better placed in developing affordable housing that would offer people a place to live and avoid crime, Sten said. Sten said large cuts in city planning for the housing industry are to blame for rising housing costs, adding that more funding ought to have been dedicated to housing over the last decade.

Sten said that the current homeownership rate in Portland is 60 percent, and that he expects that figure to decrease dramatically over the next 10 years. He said he thinks that careful planning and the inclusion of affordable housing could increase homeownership to 80 percent within 10 or 15 years.

“It’s time to start thinking about ways to solve a dumb problem,” Sten said. “People need places to live, so let’s give them a place to live.”