The fat lady may not sing
Tomorrow will be an interesting day in the saga of the proposed property tax abatement for the luxury rental apartment tower slated for the South Waterfront district (a.k.a. SoWhat). Last week, I bemoaned the fact that this steamin' pile of bad policy was headed for easy passage through the Portland City Council. I even accused Fireman Randy of pulling a Damon Stoudamire and racking up points during garbage time, since we all knew the abatement was going to sail through, the way they all did in Vera and Homer's salad days.
Not so fast, Batman! Commissioner Dan Saltzman, who's got to run for re-election next year and doubtlessly already has his ear to the rail, has apparently joined the Straight Shooter from Felony Flats in opposing the giveaway. And now reports are that Commissioner Sam Adams is going to vote no as well, sending the developer, Trammell Crow, back to... well... eat crow.
If Adams actually votes against the abatement, I'll be quite pleasantly surprised. He has to sit with all the Graggsters on the Aerial Tram Board [rim shot], and there will be some daggers in some eyes over there if the abatement goes down. Good for him if he has the nerve to do it.
If it indeed loses, Trammell Crow will probably just turn the building into another luxury condo eyesore. But at least the goofballs who pay $1 million for a unit in a highrise apartment building on swampland in an economically depressed corner of earthquake country will be paying property taxes just like the rest of us. Damn right.
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Comments (10)
If denied the abatement, Trammel Crow will still build the apartments.
TC said their investor specifically wants long term income rental property.
In last weeks hearing Trammel Crow stated that their Boston insurance company investor is not interested in condos and that they are both worried about a saturation of condos in the area.
The apartment tower will be built. Some changes will be made to the 48 proposed so-called "affordable" studio apartments and all of the rents will be market rate.
The tower will draw more rent, be valued higher and pay more property taxes resulting in the $7.5 million estimated abatement being wrong as can be.
Simple math shows that tax exemption estimate to be low balled as Portland's tax rate is 2.14%.
The tower is said to cost around 70 million to build. It would take an assessed value of only $35 million to equal that low balled abatement estimate.
Funny math has delivered this "scheme" to a council vote. Funny other stuff too.
There are no parking spaces included with the 48 studios "affordable" rent as proposed and if the city wanted they could buy 48 condos at $156,000 each and give them away for the same $7.5 million they are considering handing Trammel Crow and get nothing.
The vote to watch is Sten's who gave strong signals he blindly supports this developer's windfall.
Not so funny is that the City will literally get nothing for it.
Posted by Steve Schopp | August 24, 2005 8:47 AM
Sorry for the double post but a troubling aspect is the PDC support for this.
Last week they sat along side Trammle Crow at the testimony table talking about how this deal makes the tower pencil out for the developer.
A PDC letter to the editor is in today's O.
The PDC did not tell the council about the lack of parking included with the units and has failed miserably to note there is no "penciling out" for the taxpayers or the city.
Posted by Steve Schopp | August 24, 2005 8:54 AM
Steve, great points. I'm still wondering who all is going to live there, long-term, I mean.
Posted by Scott-in-Japan | August 24, 2005 9:40 AM
Steve writes: The tower is said to cost around 70 million to build. It would take an assessed value of only $35 million to equal that low balled abatement estimate.
New buildings are not assessed at construction cost, or real market value, but substantially less. It may well be that the assessed value could be set at half real market value. And then only increase 3% per year after that. Yet another reason the property tax system doesn't work very well.
Posted by Frank Dufay | August 24, 2005 2:24 PM
The tax abatement was struck down today on a 3-2 vote with Potter and Sten voting in favor of giving away $10 million with NOTHING in return for the public or taxpayers.
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Posted by Steve Schopp | August 24, 2005 7:14 PM
Frank Dufay at August 24, 2005 02:24 PM :
New buildings are not assessed at construction cost, or real market value, but substantially less. It may well be that the assessed value could be set at half real market value. And then only increase 3% per year after that. Yet another reason the property tax system doesn't work very well.
JK:
Can you describe how are they assessed? Where can I find more on this practice? How wide spread is it?
Thanks
JK
Posted by jim karlock | August 24, 2005 10:51 PM
Jim asks: Can you describe how are (new buildings)assessed? Where can I find more on this practice? How wide spread is it?
Widespread? Almost nobody is assessed close to "Real Market Value" anymore. The 3% cap per year on increased "Assessed Value" ensures that while property values are skyrocketing, what "value" they are actually assessed on becomes increasingly out of alignment. Buy a house in a gentrifying neighborhood and you're paying property taxes at a half or third of your "actual" value.
For new construction, Multnomah County tries to factor this in...how they do that I don't know (it may have something to do with reading goat entrails?) But its why, for instance, Fox Tower downtown is assessed tens of millions of dollars below is "real market value." (Which, of course, translates to massive property tax reductions.)
A consequnce, unintended or otherwise, of ballot measures that have added inequity and illogic to the property tax system.
Posted by Frank Dufay | August 25, 2005 12:50 AM
Frank,
You said, """Almost nobody is assessed close to "Real Market Value""""
Of course not, who didn't know that.
The "3% cap" per year on increased assessed value has become an automatic increase at the assessors offices.
Urban Renewal, unfortunately skims off every one of those increases in thousands of acres of the city.
Property values are being inflated because of the chaos planning and artificial shortage of land.
If one buys a house the new assessment is based on the purchase price establishing the market value and subsequent new assessed value.
The old assessed value is not retained when property changes hands, renovated or gets and addition attached.
You obviously don't know have an answer to how the assessed value is established for new buildings since you don't know.
The under assessed value of new, prime commercial buildings is not a "consequence, unintended or otherwise, of ballot measures."
You better go back to the "goat entrails". You were closer there.
I have examples of unexplainable low assessments which the Mult. Co. assessor could not explain.
It is my contention that there is a widespread massive subsidy across the city hidden in low-balled assessed values.
Posted by Steve Schopp | August 25, 2005 9:10 AM
Side note re tram: Construction begins next month on the upper tram terminal at OHSU.
Posted by RAH | August 28, 2005 2:24 PM
Frank,
If you get the time, can you send me something on email (paul.gronke@gmail.com) or post here if Jack allows, explaining the property tax system a bit better?
I write this as your typical aging not-quite baby boomer with children, moderate liberal, in Pdx just a few years, and getting more and more tax sensitive.
I didn't feel that in NC where I moved and where my taxes seemed reasonable, balanced, and the government responsive. Here, I can't figure the system out and I'm very wary of both state and county government. City govt, I'd make some changes but I think salvageable.
Just these examples and I'll stop:
House one street from mine, listed at $639,000, taxes listed at $4600.
My house, bought in 2003 for $285,000, taxes currently $4000.
One more house, one street away, listed at $270,000, taxes at $2600.
All in the same Eastmoreland neighborhood.
How can this be?
Posted by paul gronke | August 28, 2005 4:18 PM