Construction of 22 apartments has started at 2901 Salem Avenue S.E., as I saw on a bike ride Monday.
Owners planning to build projects in Albany may want to file for permits before the end of the year. After that, they’ll get hit with the city of Albany’s latest new tax.
The city council voted 5-1 on Aug. 13 to adopt a “construction excise tax.” Councilwoman Marilyn Smith voted “no.”
The city staff had proposed a tax rate of 1 percent of a project’s value for residential construction and 1.5 percent for commercial buildings. But at the suggestion of newly appointed Councilman Chris Van Drimmelen, the tax rate will be less, and it will be phased in over three years, starting Jan. 1, 2026.
The council adopted Van Drimmelen’s formula: Starting at 0.25 percent on residential, and ending at 0.75 percent after three years. On commercial projects, the tax will be 0.33 percent next year, 0.66 percent in 2027, and 1 percent in 2028.
The first $50,000 of a project’s value will be exempt from the one-time tax, to be collected at the time a building permit is filed. School and church construction and the like will also be exempt.
Based on the higher tax rates initially proposed, the city staff guessed the tax might yield from $185,000 to $800,000 a year, depending on the pace of construction. City staff would retain 4 percent of the revenue for administering the tax.
The council has been pushing for “affordable” housing, and at first glance it seems odd to put a tax on construction and expect housing to cost less. But the council’s idea is to use the tax revenue to subsidize low-income housing projects. A city commission would pick the projects to get the money.
Will the tax retard housing construction? It probably depends on the project.
I happened to notice an apartment project of modest size that got started on Salem Avenue near Waverly Lake a few weeks ago.
The project, at 2901 Salem Road S.E., calls for two two-story buildings, one with 14 and the other with eight apartments for a total of 22 units. Together, the buildings are valued on the city permits at about $3.2 million. The permits list of a total of about $353,800 in fees that have to be paid.
So the additional construction tax of around $8,000 (at one-quarter of 1 percent) doesn’t seem like much in comparison. On the other hand, if the tax were already in effect, the additional expense eventually would be passed on to the 22 renters. It would cost them $364 each. (hh)
$364 each per day? Outrageous
$364 each per month? Poppycock
$364 each per year? Ummm…
$364 each per total time they’re renting? Ohhh…
TINA IS TAXING EVERYONE…CITY OF ALBANY SAME DEAL…JUST RENTERS..
The Albany City Council and staff are misguided at best. If they want housing to be more affordable they should address the underlying market conditions that continue to drive up the cost of housing in Albany. Maybe they could get an economist to come in and explain to them the rule of supply and demand. The program to tax housing so you can make housing affordable is as bizarre as it appears. At the end of the day, the city will pick a few winners and many losers with this ill advised strategy. No sugar coating this one. What’s next, city run grocery stores?
My objections and well researched data against this CET tax are part of the public record for anybody who would like to be educated.
I’ll recap some of the highlights in cliff note form:
1. We must stop calling it “affordable” housing- it is “subsidized” housing, paid for by people other than those living in it.
2. It is simply a “Robinhood” tax, paid by some to benefit others. If you want “equity” then every person should pay- not just those building housing.
3. If and when you individually choose to donate money to a non-profit like Habitat to help others in the community with housing- you get a tax deduction. This CET provides NO benefit to the person paying the money. I should say the person being “extorted” the money.
4. There is currently no shortage of “low income” housing being built in Albany, thus no need to stimulate or entice more being built.
5. The current “cabal” on the council is anti-growth, anti-development. They don’t care about low income housing, just increasing the cost to build to slow development. Comments like “how high can we raise the SDC fee” prove out this point. The real rub is that these anti-growth liberals are upset about middle housing, while failing to realize that it was their party in the state that pushed all the zoning changes to increase density.
6. Anytime the city gets to pick winners and looser by handing out money the process will be ripe for abuse.
7. Making housing cost less means reducing the financial inputs. Pretty simple. When is the city going to actually reduce any of the multitude of fees?
8. There should have been a new public hearing on the tax, since three things happened. It was 8 months since the original public hearing, there were 3 new council members not present at the previous hearing, and the city made changes to the ordinance. Combined those things should have signaled the need for a new public hearing. Oh, and maybe listen to testimony given- which was overwhelmingly against the CET tax.
That pretty much sums it up.
Mr. Robinson……you are looking at the CET through your “for profit” lense and not through the lense of a low-income housing provider. This agenda item didn’t need another public hearing to just hear your view again and Hayden Homes. It has been discussed for several years now. The City Council made the right decision to move forward with this construction tax.
The need for low-income housing has been a topic for 30 years of my city involvement. I have stated many times, if this valley was paved over with housing you have no guarantee it would serve the extremely low-income, without restrictions and financial assistance.
I know first hand what it takes to provide housing for homeless, people needing behavioral management housing and for incomes at the poverty level. Plus working households who cannot afford market rents.
All of the thousands of housing units the past five years were built at market rate, yet people seem to think that was a solution to the housing crisis. No it just added more of a financial burden on all existing residents, through higher fees, infrastructure needs, transportation impacts, schools and more. Shouldn’t the developers who added to the rising housing costs and costs associated to existing residents contribute to a fund so truly low-income housing can be built?
A few projects were built recently, but $1500 a month income requirement does not serve the incomes of most homeless.
In my experience with Albany’s non-profit, rent-restricted, low-income housing provider, you cannot build or buy existing housing without financial assistance or even have a mortgage. It takes grants to pencil out a project.
Every elected official campaigns on the need for low-income housing and this CET lives up to their campaign promises. This council is not anti-growth who you are accusing. They want well-planned managed growth and not just build, build, build to pad the pockets of developers. Our councilors have to drive through our town also. They see the impacts of out of control growth. They also see the impacts from the demands of growth through taxes and fees.
You tell me then how can you build or buy existing housing and keep the rents below the poverty level or rents at $600 a month, including utilities?
Stop increasing fees for City utilities, create living wage jobs. It takes way more than $600 a month for rent. How much wildlife habitat has been destroyed to make this city what it is today. Maybe stop developing fields and forested hillsides. Take a simple approach; no more growth.
Try providing jobs that pay a living wage. Stop building all housing until the population is employed. Bring back jobs not empty promises of a better way to provide housing to the low income.