Wednesday, February 20, 2013

Metro's Construction Excise Tax Reporting and Grant Making Has Some Significant Issues.

I have reviewed Metro's reporting of local construction excise tax collection and permitting activity as well as their evaluation criteria for grant making (that uses collected excise taxes) and have discovered some significant issues: 
  • Metro is not collecting and aggregating required information from local governments.
  • Metro's grant evaluation committee does not have the information necessary to evaluate the variable rate of local affordable housing production, a seemingly key factor that directly relates to the "The benefits and burdens of growth and change are distributed equitably" evaluation criteria. 
  • The Metro grant evaluation committee meeting is not on the Metro calendar and presumably is not open to the public. 
  • There has never been a full audit of the Metro construction tax excise tax program, including reporting by Metro.
  • The current $12,000 fee cap at the $10 million construction permit value level for individual projects has not been reevaluated. (Note that local SDC charges on a per unit basis can easily exceed $6k).
Metro's administrative rules CURRENTLY require quarterly reporting by local governments of key construction excise tax metrics: 
  1. The number of building permits issued that quarter;
  2. The aggregate value of construction;
  3. The number of building permits for which CET exemptions were given;
  4. The aggregate value of construction for the exempted construction;
  5. The aggregate amount of CET paid;
  6. The amount of CET administrative fee retained by the local government

Metro receives monthly or quarterly reports from local governments, but :
  • Does NOT require reporting on the number of permits.
  • Does NOT aggregate the data for all of the required reporting metrics. 

Metro's only reporting of construction excise tax local activity is in a quarterly $$ collected report that does NOT include local detail on the:
  1. Total number of permits or total $$ of construction.
  2. Number of permits granted and $$ exempted for projects greater than $10 million, where the current excise tax is frozen at $12,000.
  3. Total number of permits and $$ exempted for affordable housing.(Search the quarterly report using "affordable" as a keyword and there are no results).
The failure to aggregate local reporting data for all CURRENTLY required data elements means there is no way for the evaluation committee or Metro Council to consider the variable rate of affordable housing production by local governments that directly relates to the "The benefits and burdens of growth and change are distributed equitably” evaluation criteria. 

Recommended Corrective Actions:

  1. Metro staff should regularly assemble and publish a quarterly Excel spreadsheet showing data for ALL the metrics required by their CURRENT Admin rule. 
  2. Metro's quarterly report should spell out the variable local level of the number and amount of construction permit $$ for exemptions granted for affordable housing. (Affordable housing unit counts should also be added to the data elements required by their admin rule). 
  3. Metro's evaluation committee should consider the variable rate of local affordable housing permitting and construction $$ in it's grant making cycle. 
  4. The membership of the evaluation committee should include an affordable housing industry representative, and the meetings of the committee should be open to the public.  
  5. Metro staff should reevaluate the current $12,000 fee cap at the $10 million construction permit value level for individual projects. 
  6. The Metro Auditor should consider conducting a full audit of the program, including the publication of complete comparative local historical data on the number and value of affordable housing construction exempted from the CET.

 Originally created and posted on the Oregon Housing Blog.

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