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Simpson, Anne-Marie <br /> From: Peter and Lynne SpirMutrie <> <br /> Sent: Tuesday, September 17, 2019 11:47 AM <br /> To: Council Distribution <br /> Subject: Proposed demolition tax (letter of opposition) <br /> To: Mayor Studebaker and City Councilors <br /> From: Peter Spir, 449 C Avenue, Lake Oswego <br /> Date: September 17, 2019 <br /> Subject: Proposed Home Demolition Tax <br /> Is affordable housing needed in Lake Oswego'? <br /> As a former City Planner, the answer is an emphatic "Yes".' <br /> Is this proposed home demolition tax an effective, fair and equitable means to achieve affordable housing? The answer is an equally <br /> emphatic "No". <br /> Will the tax be effective? <br /> The demolition of older homes will not be discouraged by the tax so long as a one bedroom/ one bathroom house sells for <br /> $475,000. According to Clackamas County Assessor's data, the home at 553 Sixth Street sold on March 27, 2019 for $475,000. It is also <br /> $95,341 over the "affordable home price" at 80% of median family income (MFI). Most older homes sell for much more. <br /> A demolition fee will not amount to anything more than a temporary slowdown or speed bump in demolitions. As Councilor Wendland <br /> stated at the April 16, 2019 Council work session, "...a lot of people want to keep old homes, but market forces prevail. It's part of <br /> recycling of life. It's a reality." <br /> It is, in part, why the City of Portland scrapped the idea of a demolition tax.2 <br /> The effectiveness of the tax is further diminished by the proposal to direct the collected tax not to affordable housing programs but to <br /> parks and recreation. There is no nexus or proportionality here. (If you need money for parks and recreation then Council should propose <br /> an increase in City wide taxes so the burden is fairly distributed.) <br /> Will the tax be fair and equitable? <br /> The narrative supporting the demolition tax will argue that some older homes, that might be demolished, are being used, or could be used, <br /> as affordable rentals. According to the Census Bureau's 2017 American Community Survey for Lake Oswego only 20 percent of <br /> occupied single-family detached homes are rentals. The majority, 80 percent, are owner occupied. A Zillow search of available rentals in <br /> Lake Oswego showed only two homes are priced at "affordable" rents (80% of MFI). <br /> Question: is it equitable or fair to impose a tax on a small group of homeowners whose homes were never in the rental pool to begin with <br /> and have market values far in excess of the "affordable housing" definition? <br /> Planning Director Scot Siegel did a great job speaking to this issue in his September 17, 2019 report: <br /> "Potential impacts of the tax include increased construction costs, which would likely be passed on to sellers of land and/or buyers of <br /> new homes. If the cost is borne by sellers, it could disproportionately impact older residents whose retirement savings is in the value of <br /> their property. In addition, the tax would target neighborhoods that are redeveloping rather than the city as a whole, which could be <br /> viewed as unfair if the tax is used solely for parks maintenance. " <br /> i <br />