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The Portland Housing Bureau will not be reimbursed for taxes it paid on a low-income housing facility downtown, according to a partial judgment ruling made by the Oregon Tax Court last month.

The Fairfield apartment complex 鈥� on Southwest Stark Street, between 11th and 12th avenues, was transferred from the Portland Development Commission to the PHB in 2010.

Multnomah County had changed its taxroll the previous year so that the Fairfield would no longer be exempt from property taxes. The county failed to notify the city of the change, according to court documents.

The PHB has since paid property taxes for the Fairfield, but argued it should not have paid in 2009 (a burden it inherited), claiming the PDC’s duty as a low-income housing provider should have exempted it.

The court ruled otherwise, stating that the PDC is not a designated housing authority and is not exempt under state statutes. As a result, the PHB may have to pay the county between $30,000 and $40,000.

Portland is like most other cities in that it has a single housing authority.

鈥淚 don’t think you can have more than one housing authority per jurisdiction,鈥� said Shelley Marchesi, director of public affairs for Home Forward. 鈥�(The PDC) is a city bureau. We have different roles in the community.鈥�

Even though the motion for the partial summary judgment was granted, the ruling is pending; a designated waiting period follows the ruling, according to PHB officials who declined to comment further.

Multnomah County officials also declined to comment on the matter.

This is the second phase in a lengthy legal battle between the county and the PHB. The first was a ruling on whether the county assessor followed proper protocol in changing the building’s tax exemption status; the Oregon Tax Court ruled last year that he did, though he failed to notify the city of the change.

The PHB contends that the PDC, which promotes creation and retention of multifamily housing, should not have been forced to pay property taxes for a building with Section 8 housing. It was provided through a lease agreement with Home Forward. The PHB also hopes to eventually gain tax reimbursement for the past three years 鈥� potentially around $120,000 鈥� because it maintains that agreement, according to the City Attorney’s Office.

However, simply providing low-income housing may not be enough for an exemption.

Through the Housing Act of 1937, Congress gave states the ability to create legal entities called housing authorities. For the most part, states have assigned these authorities by counties. In 1941, the Housing Authority of Portland (now Home Forward) was established in Multnomah County. Through state law, properties owned by housing authorities with units to be leased to 鈥減ersons of lower income鈥� are exempt from taxation.

Neither the PDC nor the PHB was created under the housing authority title, so neither is exempt, according to the ruling.

鈥淭he big thing that happens if you’re a housing authority is you are the conduit for federal housing funds,鈥� Marchesi said. 鈥淭he bureau would never get direct funding from (the U.S. Department of Housing and Urban Development) 鈥� that is channeled through housing authorities into local communities.鈥�

The PHB hoped that the agreement with Home Forward would justify the exemption. Under law, partnerships with housing authorities are permissible for exemption, but only for nonprofits or limited liability companies 鈥� not city agencies, according to the ruling.

The PHB also presented Oregon Revised Statute 307.090, which states that all public or corporate property 鈥渦sed or intended for corporate purposes鈥� by cities is exempt from taxation. However, the court countered that the statute does not apply to city property held under lease agreements for less than a fee simple with an entity whose property is taxable.

The next step in the dispute is unclear. The City Attorney’s Office stated that the city would pursue further litigation that would determine whether the county is 鈥渁stopped from taxing the property after its asset is not taxable,鈥� but would not give additional details.

Without knowing more details, it is impossible to determine what this litigation would entail, said Jill Schneider, a shareholder with Schwabe, Williamson and Wyatt.

鈥淚 don’t know where this case is, and if it is an administrative hearing, the rules are different,鈥� she said.

The City Attorney’s Office also mentioned that it would examine whether the county assessor’s original property valuation was correct.