Construction companies will not be subject to the city of Portland’s new clean energy excise tax after all.

City commissioners voted unanimously Thursday to amend city code to exempt construction companies as well as sales of residential garbage and recycling services and qualified retirement plans from paying a 1 percent surcharge on gross revenue from retail sales within Portland. The surcharge was imposed by Measure 26-201, approved by voters in 2018, and applies to Portland retailers with total annual retail revenue greater than $1 billion and Portland annual retail revenue over $500,000.

The measure created the Portland Clean Energy Fund (PCEF), which will provide both money for clean energy projects and training for workers. But commissioners admitted Thursday that the measure as approved by city voters applied to a larger portion of the business community than previously assumed.

“It wasn’t until after it passed that we found out the definition was much broader than we anticipated,” said Commissioner Jo Ann Hardesty, a longtime and staunch supporter of the PCEF, which is intended to provide economic opportunities to underprivileged communities. “I wouldn’t have supported a tax on anyone’s retirement account, period. I don’t think adding a tax to affordable housing or school construction or garbage hauling for residential homes was something we ever envisioned would take place.”

The Portland Business Alliance had lobbied City Hall, as well as a work group of PCEF stakeholders, to add the exemptions approved on Thursday. Many professionals within the construction industry had previously raised concerns about the tax’s potential impacts.

Preemptive action was taken by some parties, including Oregon Health & Science University, which in September directed general contractors working on its numerous building projects to include the tax in their proposed budgets.

Although financial data for large firms is typically kept under wraps, industry officials told the 91��Ƶ in October that without changes to the ballot measure sizable general contractors including Hoffman, Fortis, Turner, Skanska, Mortenson, JE Dunn, Howard S. Wright and others would likely be subject to the city’s tax.

Meanwhile, the amendment will mean less money for the PCEF. Thomas Lannom, director of the city’s Office of Management & Finance‘s Revenue Division, told the City Council that anticipated revenue from the clean energy surcharge could fall by as much as $10 million. That rankled several citizens who showed up Thursday to protest the amendment.

“It’s a little bit disingenuous to say exempting construction projects helps low-income and affordable housing,” Portland resident Charles Johnson said.

Johnson suggested that exemptions should be for affordable housing projects themselves, and not construction in general.

Mayor Ted Wheeler said that while he wholeheartedly supports the PCEF, he also endorses the exemptions.

“I acknowledge these changes are less than ideal,” he said, “but this program will continue to be a model for the rest of the country.”

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