Albany council adopts phased construction excise tax; low‑income rental exemption fails for lack of motion

The Albany City Council on Aug. 13 adopted an ordinance creating a housing construction excise tax and followed that with a resolution to phase in tax rates over three years, starting Jan. 1, 2026. A separate ordinance to adopt the state low‑income rental housing property tax exemption did not receive a motion at second reading and was not adopted.

Council members voted to establish the CET ordinance after a brief public comment period that included vocal opposition from local residents and the building industry. Heather Efremson, senior construction manager for Hayden Homes and vice president of the Western Oregon Builders Association, told the council, “We oppose the construction excise tax, and we oppose the low income rental housing property tax exemption.” She urged the council instead to approve a municipal option to defer systems development charges (SDCs), which she said “brings more flexibility to the market.”

City Attorney Anne (name as provided in the record) told the council the low‑income rental housing property tax exemption would be adopted under state law and clarified eligibility and retroactivity. “The low income rental housing tax exemption program ... doesn't require approval of other taxing jurisdictions. So the city could — it can just be the city's taxes,” she said, and noted the exemption applies only to housing constructed after the city adopts the enabling provision of the state statute.

Why it matters: the CET creates a new local revenue source that the city can direct toward housing programs and related incentives; how the city shapes those programs determines who benefits and how quickly revenue is available. On procedural points, the council was told the CET's residential rate is capped by state law at 1 percent and that the city can set commercial rates within statutory limits.

Key actions and votes - CET ordinance: The council moved and seconded adoption of the ordinance creating Chapter 3.09 of the Albany Municipal Code to establish a housing construction excise tax. The ordinance was adopted (motion and roll call recorded in the meeting).

- CET rates resolution (amended): Councilor Van Gemelin moved an amendment to phase in rates over three years beginning Jan. 1, 2026. Under the amendment the residential CET will increase by 0.25 percentage points per year to reach 0.75 percent in year three; the commercial CET will increase 0.33 percentage points in years one and two and 0.34 percentage points in year three to reach 1.00 percent. The council voted to adopt the amended resolution. (Motion and second recorded; roll call in the minutes.)

- Low‑income rental housing property tax exemption ordinance (second reading): The city attorney read an ordinance adopting ORS 303.515 through 307.535 to establish the statute's low‑income rental housing property tax exemption. The council did not make a motion to adopt the ordinance at second reading; the city attorney noted there was no motion and said the item was "dead."

What supporters and opponents said Proponents of the CET and staged implementation argued the revenue would help unlock larger state and other grants and could be used to fill financing gaps on deeply affordable projects. Councilor Van Gemelin, who proposed the phased rates, said phasing “seems like we'd be doing a disservice to our community to not do this” while also acknowledging concerns about layering new fees on builders.

Opponents argued the tax increases construction costs that are passed to homebuyers. Heather Efremson said adding the CET “increases the cost of building a home, a cost that inevitably gets passed on to our buyers.” Public commenter John Robinson urged the council not to adopt the CET and alleged off‑record deliberations by council members; Councilor Thompson later responded that the earlier council vote on the matter had been 5–1 and rejected Robinson's implication that he had violated meeting rules.

Context and next steps The city attorney told the council there had already been a public hearing on the topic on Dec. 11, 2024, and that the current meeting was a second reading for the ordinances. The council will next implement program design and administrative rules for how CET revenue is used; staff said those details and potential programs (including incentives for developments targeting households at or below specified area median income levels) would be worked out with council and potentially the community development commission.

The low‑income rental housing property tax exemption remains available for future consideration; the city attorney read the relevant ORS sections but no adoption motion was made at second reading. The CET ordinance takes effect as provided in the adopted ordinance and the phased rates ordinance specifies Jan. 1, 2026, as the start for the first phase.

Details to watch: how the city designs the housing fund and incentive programs, whether council later revisits the tax exemption ordinance, and whether the CET revenue is used to leverage state funding as proponents described.