HASSO HERING

The “Eagle Pointe” apartments were under construction in east Albany in 2022. Future projects like this will be assessed a 1.5 percent city tax when they get a building permit.

Hoping to promote less expensive housing, one of the first things the new Albany City Council will do next month is to add a city tax on new construction valued at more than $50,000.

The council would have done this on Wednesday. But outgoing Councilwoman Matilda Novak delayed the action by voting against the second reading of the tax ordinance at the Dec. 11 meeting, which was Novak’s last.

This meant the ordinance automatically comes up for final action at the next regular meeting, on Jan. 8, 2025.

Five other council members, four of whom remain on the council next year, supported the construction tax even though everyone who testified at a public hearing spoke against it. At the hearing, the opponents’ main point was that the tax will raise, not lower, the cost of housing in Albany.

The tax will be imposed on the value above $50,000 as stated on building permits. It will be 1 percent if the project is residential and 1.5 percent on everything else. Schools and similar public buildings, including subsidized low-income housing projects, are exempt.

Depending on the pace of construction within Albany, the city estimates revenue from the tax to be $300,000 to $900,000 per year. After 4 percent is withheld for administration, most of the income is intended to be spent on subsidies for housing projects for households with income below 80 percent of the median in the city.

On a new house valued at $280,000, the tax will be $2,300. On an apartment building with 33 units the tax likely will amount to about $12,000. On a commercial building of about 6,000 square feet, the tax will add about $7,000 to the construction cost.

The council in January also plans to take final action on a 20-year property tax exemption for housing projects that “provide new regulated rental housing serving low-income households.”

This would be for people with income up to 60 percent of the median for the first year, up to 80 percent after that.

Finally, in its drive to promote housing that more people in Albany can afford, the council on Dec. 11 adopted a policy to consider any surplus city land for housing before disposing of it.

The surplus land policy was approved 5-1. Novak again voted no, as she did on the construction tax and the tax exemption. But on the surplus land issue, unanimity was not required, so that policy is now in effect.

The construction tax and the tax exemption ordinances have no emergency clauses, which means they take effect 30 days after the mayor signs them. It also means they are subject to a petition to refer them to the voters. (hh)