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My View: Tap land trusts to create affordable housing


This past summer, a Connecticut-based real estate investment trust purchased the “Big Pink” skyscraper in downtown Portland for $372 million.

The deal, while unusually large, is a marker of Portland’s hot real estate landscape and its appeal to out-of-state investors.

Too, it’s a striking sign of economic health in a market where affordable housing is becoming increasingly elusive. School teachers, firefighters, nurses and others are left to live farther from where they serve.

A Big Pink-size transaction in Seattle would have netted $6.6 million in local and state revenues through Washington’s real estate transfer tax — money that could be directed toward more affordable housing.

Oregon’s real estate industry has always hated the transfer tax and in 2012 backed a well-funded initiative (Measure 79) that amended Oregon’s Constitution to ban it.

Three years later, Oregon cities are grappling with affordable housing crises. Yet the options available to address the problem appear to be limited in terms of scope and available resources.

Is it time to reconsider the real estate transfer tax? Could a version be drafted that Oregon’s real estate industry could actually support?

The answer might be yes, if all receipts from such a tax were returned to the industry they are extracted from.

While Washington’s transfer tax directs funds to a general pot, Oregon could instead specify all revenues be invested in licensed community land trusts to help more citizens buy housing.

A CLT typically purchases properties at full market price. In turn, the trust offers qualified buyers an equity stake in housing units while they live in them. For example, the trust purchases a house or condominium for $400,000 that, in turn, is made available for $250,000.

For buyers of CLT properties the experience has many similarities to a regular home purchase. There are real estate agents, mortgage officers, forms to be completed and credit to be verified.

When it comes time to sell, the trust repurchases the buyer’s share that includes an equity payout and the property is made available to a new buyer. As the trust essentially owns the land these properties sit on, they are protected from inflationary pressures in the long run.

Because the mechanics of CLT transactions tap many of the traditional players in the housing industry — real estate agents, mortgage brokers, title services — a real estate transfer tax becomes a booster for these sectors.

In terms of affordable housing, CLTs leverage the industry’s existing resources and avoid some of the complicated mechanics associated with other models.

Meanwhile, a new pool of qualified buyers is enabled — demand that can spur new development. At the same time, CLTs also can purchase properties in mature neighborhoods where it is difficult to build new affordable housing.

No one likes a new tax. Yet the current housing crisis demands a response from government and the real estate industry alike. Community land trusts funded in part by a real estate transfer tax could be a solution that benefits multiple stakeholders.

Jeff Cole lives in the Sunnyside neighborhood of Portland, serves on the board of his neighborhood association, and is co-chair of its Land Use & Transportation Advisory Committee. He also serves as an at-large member of Southeast Uplift.