The newest report on homelessness in Oregon includes several recommendations to boost housing production. One of these is a split-rate land value tax. Read this short excerpt…
Homelessness in Oregon
A Review of Trends, Causes, and Policy Options
ECONorthwest
March 2019
Prepared for: The Oregon Community Foundation
Excerpts:
We evaluated trends from 1963-2015 across the United States and estimated that national housing production fell short by as many as 7.3 million units between 2000 and 2015.
Since 2010, the national pace of building has slowed considerably, with only 0.72 units built per new household formed. The problem is particularly acute in Oregon. Housing starts have fallen well below the pace of household formation in the region since 2000 and particularly since 2010.
Conclusions and Recommendations
Oregon faces two, related homelessness crises. One involves roughly 3,400 chronically homeless individuals facing persistent barriers to Housing…
Oregon’s second crisis has two causes: an under-supplied housing market and a discretionary rental assistance program that does not rise with need.
So, where do we go from here?
Oregon’s elected leaders appear to grasp the breadth and complexity of the homeless challenge. The Governor’s Housing Policy Agenda draws an explicit link between homeless and housing-supply policies…
The following recommendations should be considered reinforcements of—and complements to—strong work that has been underway.
1. Accelerate housing supply at all price points. A dysfunctional, undersupplied housing market is the root of Oregon’s homeless crisis. If the state continues the practice of building 63 housing units for every new 100 households formed, rents would continue to rise, vacancy rates would fall, and the effectiveness of all the following recommendations in this report would be diminished.
Once the undersupply problem is broadly accepted, the work would turn to politically difficult implementation. Local politics work against accelerated housing supply responses. Current residents usually like their neighborhoods the way they are. To overcome the opposition, localities would need to hold themselves accountable to clear, broadly disseminated production goals; prune land-use regulations that don’t serve a clear health, safety, or environmental protection purpose; accelerate permit process timetables; explore little-used but promising policies such as land-value or split-rate taxes; and cede regulatory power to the state for some zoning decisions.
On the latter point, the 2019 Legislature appears poised to act with state-level concepts that could ban single-family zoning in larger communities and require higher housing density along transit corridors. State lawmakers could extend their housing policy packages to provide fiscal rewards and penalties tied to housing goals.
Comments:
This report identifies land value taxation (LVT) as a promising solution to the undersupply of housing. This form of property taxation is indeed being explored in Oregon at the urging of Common Ground OR-WA and a growing number of supporting public interest groups. SB 702, making its way through the Oregon legislature, calls for the Legislative Revenue Office to conduct a study of the anticipated effects of LVT in the state.
Theory and evidence already reveal the demonstrable fact: splitting the tax rate with a higher rate on land assessments and a lower rate on building assessments produces the dual incentive – to dampen lot price inflation, thus making residential properties more affordable, and to reward housing production by lowering the tax burden on new construction.
Towns in Pennsylvania which have adopted the land value tax consistently show a boost in building permit rates. With the help of our elected leaders, Oregon can be the first state on the West Coast to implement this progressive form of property taxation.
