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Schools Taxing New Construction (CET)

This was just sent to me in an email:

LOCAL SCHOOL DISTRICTS ADOPTING NEW TAX ON CONSTRUCTION –Be prepared for this new tax when picking up permits now and in the future. Several school districts have implemented the $1.00 maximum per square foot construction excise tax made possible by SB1036. The following have instituted the tax or are currently reviewing it:

• North Clackamas School Dist. #12
• Oregon City School District
• West Linn/Wilsonville School District
• Oregon Trail School District (Sandy)
• Beaverton School District
• Hillsboro School District
• Canby School District
• Molalla School District
• Tigard/Tualatin School District
• Forest Grove School District

In addition, Gresham, Barlow, Reynolds and Centennial School Districts began collecting the tax through IGA agreement with the impacted cities on July 1. The tax is intended to be calculated on
livable space only, although the City of McMinnville is attempting to add garage space into the
calculation. Stay tuned for future details.

Rather than waiting for future details, let’s see what we can find with some help from Google…

The text of OR SB1036. This version is a PDF summary. It appears to have been written prior to passage. It mentions an exemption for projects under $100,000. I don’t see that in the HTML version.

It looks like the bulk of the email I received was from the Home Builder’s Association Of Metropolitan Portland website.

Portland’s Bureau of Development Services has this fact sheet which includes:

Q What is the School Construction Excise Tax (CET)?
A In the 2007 Regular Session, the Oregon State Legislature passed a law (Senate Bill 1036) that will help
Oregon school districts pay for a portion of the cost of new or expanded school facilities. The bill allows
school boards, in cooperation with cities and counties, to tax new residential and non-residential
development. School CET may be imposed only on improvements to real property that result in a new
structure or additional square footage in an existing structure. The tax may be assessed at up to $1 per
square foot on structures or portions of structures intended for residential use and up to $0.50 per square
foot on structures or portions of structures intended for nonresidential use. In addition, school CET
imposed on structures intended for nonresidential use may not exceed $25,000 per building permit or
$25,000 per structure, whichever is less.

It looks to me like the tax hits new construction and additions, not remodels where the square footage remains the same.

This story was published in the Tigard Times prior to the bill’s passage. It does appear that changes were made in the bill after the story was written and before it’s passage; hospitals are exempt like the article suggests.

If this bill might impact your project please consult the appropriate agencies before relying on information presented here!

3 Comments on “Schools Taxing New Construction (CET)

  1. I’ve been working on a number of residential projects in Washington County for the past 18 months. As of Jul 1rst, there have been about $10,000 in additional permit fees for new single family residential homes, bringing the total from around 15k for a building permit(water, sewer, building, parks, schools, etc) to 25k for the same thing. TVWD increased meter costs 60%, TVPR increased from $2500 to $6000, this tax and an increase in the state surcharge.

    My theory is that this additional cost will only contribute to depreciating land cost. The house cannot be sold for more, the house does not cost any less, the builder will likely not take much less profit, the only place is the land.

  2. Congratulations to everyone who took action on my advice to pick up some Fannie Mae at the beginning of the week. Next week should be more of the same until it hits say $12 a share. So much for the nationalization jitters.

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