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City too loose with tax breaks

Tax breaks intended to encourage homeownership within the city of Portland shouldn’t be redirected to people who don’t qualify for the abatements or don’t need the incentives. Nor should the city of Portland and the Portland Development Commission, which operate property tax abatement programs for housing, be allowed to improperly siphon tax dollars away from other jurisdictions — such as school districts — to provide these property tax reductions. But both of those things have happened in Portland — and Multnomah County leaders are to be commended for shining a bright light on these hidden practices. Sloppy oversight mars programs The county certainly has a right to care about sloppy enforcement of the city of Portland’s tax abatement regulations — the city’s failures are costing the county real money. The city has five programs — four run by the PDC — that have the noble purpose of promoting homeownership and encouraging housing development in distressed neighborhoods, core areas or along transit lines. But an analysis released Thursday by the Multnomah County auditor shows that the PDC and the city have failed to collect millions of dollars in tax revenue from people who either don’t qualify at all for the tax breaks or who should have been granted only partial relief. An ire-raising example of poor oversight of the program is the Cornerstone Condominiums development near Portland State University, where 40 units came with 10-year tax abatements for low-income buyers living in the units. It turns out that some of those condo owners live in places like Palm Springs, Calif., and Jupiter, Fla., but they were getting tax breaks intended for lower-income Oregonians. Such practices leave the impression that fat cats are profiting at the expense of other local taxpayers. Altogether, the mistakes made with these abatement programs amounted to $4.5 million in the two-year time period studied by county auditors. The five programs combined allow $12.5 million a year in property tax breaks, which means the monetary error rate was 18 percent. New standards needed As county Chairman Ted Wheeler, who asked county Auditor LaVonne Griffin-Valade to conduct this audit, points out, every dollar lost through abatements “reduces public services by a dollar.” Multnomah County, local school districts and other government jurisdictions operating within Portland help subsidize these programs as they give up tax revenue for the cause of encouraging homeownership or promoting economic development within certain neighborhoods. And other property owners — the ones paying full freight taxes on their homes or businesses — have every reason to expect that if someone else is given a tax break, it should be justified and well-documented. The Portland Development Commission and city must recognize that, in addition to meeting the housing goals of these programs, they have a duty to ensure that the abatements are fairly approved and accurately accounted for. Already, the PDC, city and county are making changes in response to the county audit. Individual properties are being reviewed for compliance and clearer standards are being adopted. Such reforms, however, must be sustained for the long run — well after the current scrutiny subsides. Even with the improvements, the credibility of these tax abatement programs has been irrevocably damaged by the city’s careless record keeping and its tolerance of apparent abuses.