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Thursday, October 21, 2010

"Urban renewal," cop pensions lead Portland property tax increases

Our property tax bill is here, and so it's time for our annual analysis to see which branches of local government are taking what from us for the year 2010-2011. Overall, our property taxes increased 2.69% over last year, and on a compounded basis over the last three years, our property taxes have risen 2.96% a year.

As ever, the City of Portland gets most of the money -- this year, $43.50 of every $100 we pay. Last year, it was $43.37. And of this year's $43.50, $11.12 goes for "urban renewal," and $10.92 goes to the police and fire pension "system." Those two items alone add up to more than half (50.78%) of what the city takes in. Multnomah County is getting $22.34 out of $100 this year, down from $22.41 last year. And so the city gets 13 cents more from our Benjamin while the county is losing 8 cents. The Portland public schools get $26.84 out of $100 this year, which is down 3 cents from last year.

On a percentage basis, the biggest increases were Portland "urban renewal," up 4.47% for the year; Tri-Met bonds, up 4.44%; Portland Community College construction bonds, up 3.69%; and Portland police and fire pension, up 3.06%. But in the larger scope of things, the Portland "urban renewal" and safety officer pension hits are much greater than the other two. The "urban renewal" increase works out to 48 cents out of $100 of tax, and the pension increase is 32 cents out of $100 of tax, whereas the PCC increase is only a nickel out of $100 of tax, and the Tri-Met increase is only 2 cents out of $100 of tax. Indeed, the "urban renewal" tax increase was greater than the total amount charged on the Tri-Met bonds.

Here's the tale of the tape for the current year. Check out where your money is going, Portlanders:

Previous years' analyses: 2009-2010, 2008-2009, 2007-2008, 2006-2007, 2005-2006, 2004-2005.

And now, on to our annual ritual. To pre-empt an obvious comment exchange:

Red: "How can property taxes go up when the value of my house went down?"

Blue: "You can thank Bill Sizemore for that one."

Red: "If it weren't for Bill Sizemore, I would have been taxed out of my house a long time ago."

Readers can take it from there.

Comments (18)

Say what you want about prop 5 and Sizemore but if my house were taxed using the methods before prop 5 my taxes would be double today.

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I can't believe the chunk that Urban Renewal now takes out of the pie. Completely unacceptable. It just p*sses me off.

Appreciate this analysis, Jack. Very interesting.

Jack, you going into the fitness business in the UK now? ;)

Anger keeps me fit. Jumping up and down while screaming can be good therapy.

Clearly, we are insufficiently taxed.

More debt, supported by higher property taxes, are the only solution.

I'm only surprised there isn't a voluntary check-off to help McCreepy catch up on his house payments.

Jack, or someone...

Help me out with this, please... I understand the whole UR deal... but you're NOT in a URA, right? So how are some of your taxes going there? I'm a renter, so I don't see property tax statements... are EVERYONE in the city of Portland having property taxes diverted into UR?

Everyone living in Portland pays for urban renewal, even those of us not in an urban renewal district. It's a long story, but that's the bottom line.

You realize you're paying almost as much for police pensions and urban renewal ae you are for schools. This is one screwed-up town.

Complex as it may be, it would be helpful to see a crude analysis of how much property tax paid in urban renewal areas--presumably to pay off bonds--has, in effect, been diverted from what would otherwise have been general revenue for the city and county. In short, would allowing the market to develop in those areas have increased valuations, and consequently revenue directly to support both the city and county? Slower? Sure. Fairer? Absolutely!

We found one document that appears to come up with the numbers you're looking for:


What about all of those properties that either don't pay taxes or pay a reduced rate?

The city of Harrisburg, PA just defaulted on their bonds in large part (according to the NY Times) because half the property is controlled by non-profits and is not taxed.

Also when someone gets a tax exemption the amount of money going to government doesn't go down...The amount everybody else pays goes up.

"it would be helpful to see a crude analysis of how much property tax paid in urban renewal areas"

Pretty simple. Take all of the prop tax paid in 2010 (for example) and freeze it. That's all the schools will get for the next 20 (or perpetuity since they never kill URDs) years.

The URD gets 3% of the 2010 bill in 2011. THen each year following it gets another 3% (how much prop taxes can increase each year) of that base number. So in roughly 15 years, they get half the 2010 prop tax number to squander on whatever they want without much acctng.

Now you can see why they never cancel these - It's just too damn easy.

Then each year following it gets another 3% (how much prop taxes can increase each year)

Don't forget, Steve, they get the 3% increase PLUS the value of new development. That's where the real money in URAs comes from. The 3% creates a steady income stream, but they get 100% of taxes from new office towers/condos/retail buildings.

Here's another simplified explaination of urban renewal taxes, we pay PDC in two ways:

The 44% of your prop. tax dollars on your bill is going to UR, primarily funds the "administration" cost of PDC running 11 URA's, according to their budget.

But you also need to add the tax dollars that we pay indirectly by the TIF dollar formula. The "frozen tax base" of each URA depletes the pool of tax dollars going to general fund. As Britt says above,"the amount of money going to government doesn't go down...The amount everyone else pays goes up.", because the smaller paying pool still has to pay the ever increasing tax budget.

But, but, but - the schools, the kids, we love our precious little ones...

But the numbers tell the real story.

No longer do you have to send Bruno and Jake to elicit payment to the crime bosses. No more smashed knees and broken windows.

No now we simply call it Urban Renewal.

I'm a landlord. This year all my tenants are getting copies of the property tax bills. They help pay for property taxes through their rent, so they should know where some of their money goes.

It is not true however, that if taxes go up rents will follow. My property has to be competitive with nearby housing, so if my city has higher taxes than nearby towns, I cannot raise rents any higher than the properties nearby. The result is that tenants can still vote to raise taxes but not feel the brunt of higher expenses. The more rental housing is in an area, the more profound this will be. And if the tax load gets very bad in some places necessitating higher rents, the tenant can just move on.

A concern I have is that if more people are deciding to rent rather than own, the disconnect from voting for more services and actually paying higher taxes will be greate. The cycle will continue because the cost to own one's home and not be able to easily move away will get worse. Higher taxes all around - who cares if one doesn't pay the bill or feel the pain?

PS: How many people do you know who are talking about or planning to move out of Portland because the property taxes (and fees) are so much higher relative to the value of their home than surrounding towns?

Do people really think Measure 5 limits property tax increases? Really? Give me a break. Can't they re-assess property whenever they want? My property taxes increased 44.6% in a single year (from $2897 to $4190) after a 2007 re-assessment. Maybe I shouldn't have put in those nice kitchen cabinets or remodeled my bathrooms. Or at least shouldn't have told them about it. Their inspections are a joke anyway, and do little to ensure the quality/safety of construction work. My tax bill for a 50x140 lot with a single family residence on it is now quickly approaching $5000. And that's in North Portland (no, not Mississippi, the REAL North Portland- St Johns), which has lost its police precinct and is largely ignored by the City for even basic maintenance and public safety.

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