Affordable housing advocates and Realtors are cheering the Oregon Legislature’s passage of a bill that doubles state funding for housing and allows tax-free savings accounts for down payments.
The affordable housing money, an estimated $61 million in the 2019-21 biennium, will come from tripling a document-recording fee collected by county clerks. On June 4, the affordable-housing fee will go from $20 to $60.
“Without a doubt, there’s a great need for additional resources in Central Oregon,” said Lynne McConnell, affordable housing manager for the city of Bend. “I’m very hopeful the additional document-recording fees will make a great impact on this community and our ability to provide housing for all income levels.”
The Oregon Association of Realtors lobbied for House Bill 4007, which allows first-time home buyers to set up tax-sheltered savings accounts. Starting with the 2019 tax year, single filers will be able to put aside up to $5,000 a year, and joint filers can save up to $10,000 a year to spend on down payments and closing costs.
Both the fee hike and the savings account were proposed in the past as stand-alone bills that failed. Combining the two measures, House Bill 4007 garnered a bipartisan vote: 40-19 in the House, 20-9 in the Senate. Rep. Knute Buehler,R-Bend, voted in favor, while Reps. Michael McLane of Powell Butte and Gene Whisnant of Sunriver, both Republicans, voted against it. Sen. Tim Knopp, R-Bend, also voted against it.
The recording-fee increase needed a three-fifths majority, and it became more appealing to Republicans once coupled with the homebuyer savings accounts, said Daniel Hauser, fiscal policy analyst at the Oregon Center for Public Policy.
A left-leaning think tank, the Oregon Center for Public Policy, opposed a homebuyer savings account bill in 2017 because the proposal had no income cap. It also would have allowed individuals other than the homebuyer, such as a parent, to reap tax benefits by putting money into the savings account, Hauser said.
Under the recently passed bill, there’s no income tax exemption for anyone but the homebuyer. The exemption is reduced for joint filers earning more than $149,000 a year and goes away at $187,000 in joint income.
The National Association of Realtors is pushing legislation in multiple states to create homebuyer savings accounts. Four states passed variations on the model bill in 2017, and Oregon was the first to pass one in 2018, association spokeswoman Sara Wiskerchen said.
Based on the results of a similar program in Montana, the Oregon Legislative Revenue Office estimates the tax-sheltered accounts will cost the state $4.1 million in the 2019-21 biennium and $6 million in the 2021-23 biennium.
It would’ve been difficult for the homebuyer savings proposal to pass without the tie to document-recording fees, which was a priority for Democratic leadership, Hauser said.
The increased recording fees will start flowing to Oregon Housing and Community Services this year. The agency, budgeted to receive $30.9 million in the current biennium, will see an additional $30.5 million through June 30, 2019.
About three-quarters of the funds go to the General Housing Account Program, which is supposed to create more housing for low-income and very low-income Oregonians. The program provides millions for new-construction projects like the Daggett and Moonlight townhomes by Housing Works in Bend.
Ten percent of the money goes to emergency housing assistance, essentially keeping renters from becoming homeless; 14 percent goes to the Home Owner Assistance Program, which provides education and down-payment assistance for first-time buyers through nonprofit partners like NeighborImpact. House Bill 4007 expanded eligibility for homeowner assistance from 80 percent of an applicant’s area median income to 100 percent.
In response to the influx of revenue, Oregon Housing and Community Services will consider some new strategies for creating affordable housing through the General Housing Account, spokeswoman Ariel Nelson said. Otherwise, existing programs will simply reach more people.
“This is ongoing, dependable funding coming in,” she said. “This is what really helps us make a difference. We’re very excited by this increase.”
The affordable housing fee applies to a wide variety of recorded documents but most commonly mortgages or deeds of trust, according to an analysis by the Oregon Association of County Clerks. In Deschutes County, the jump from $20 to $60 means mortgage recording costs will go from $53 for the first page and $5 per additional page to $93 for the first page, plus $5 per additional page, county recording supervisor Jeff Sageser said.
Homebuyers might not notice the fee hike in the context of closing costs, but it will also apply to situations where people pay recording fees out-of-pocket, such as for death certificates.
Deschutes County recorded 51,891 documents last year and sent $965,140 to the state for affordable housing in 2017, Sageser said. A few types of documents and filers are exempted from the fee, but it’s collected on a majority of documents, he said.
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