Portland Fire Damage Rules: Deconstruction and the Tax Basis

What the Deconstruction Law Covers

Chapter 17.106 of the Portland City Code is known as the Deconstruction of Buildings Law. Its requirements attach to demolition permit applications made under Chapter 24.55 in two situations.

The first is a primary dwelling structure built in 1940 or earlier, established from building permit records held by Portland Permitting and Development, or where no such records exist, from county tax assessor information. The second is a primary dwelling structure designated as a historic resource subject to the demolition review or 120-day delay provisions of Title 33, regardless of when it was built.

A primary dwelling structure means one and two-family structures, detached and attached, based on the currently permitted occupancy at the time of the demolition permit application.

Why Does the Definition of Deconstruction Matter?

Because it sets the standard the work has to meet. The ordinance defines it as the systematic dismantling of a structure, typically in the opposite order it was constructed, in order to maximise the salvage of materials for reuse, in preference over salvaging for recycling, energy recovery or sending materials to landfill. Reuse first is the operative instruction, and it is why the work is done by hand.

How the Process Runs

There is no separate deconstruction permit. What is required is a demolition permit, and the application will not be considered complete unless it is accompanied by a completed Pre-Deconstruction Form. A completed Post-Deconstruction Form and the associated documentation are required before the permit can be finalled.

Since 20 January 2020 the work must be carried out by a Certified Deconstruction Contractor. Salvaged material may be sold, donated or reused on the site.

The city states plainly that the fee for a demolition permit is fixed and that how the building comes down does not change the price. The cost difference sits entirely in the work itself.

Does a Fire Change Whether the Rule Applies?

The scope provisions turn on the age of the structure and on historic designation rather than on its condition, and separate procedures can apply to buildings that present a genuine danger. That is a question for the city about your specific property. It is worth asking before commissioning any demolition, because the answer changes the cost of the whole route.

We publish no determinations about whether a particular property falls inside the ordinance, whether any exception applies, or what deconstruction would cost on a given house. Portland Permitting and Development and the Bureau of Planning and Sustainability administer the scheme and are the correct source.

Where the Rule Came From

Portland was the first city in the United States to mandate deconstruction. A resolution was adopted on 17 February 2016 directing that code language be developed. The ordinance was adopted in July 2016 and took effect on 31 October 2016, applying to houses and duplexes built in 1916 or earlier and to designated historic resources of any age.

Council adopted an amendment on 13 November 2019, taking effect on 20 January 2020 under ordinance 189761, which raised the year-built threshold from 1916 to 1940. That change brought in roughly two thirds of all residential demolition permits. Seattle, San Antonio and Hennepin County have since developed programmes of their own.

The Second Rule: What a Rebuild Does to Your Assessment

Oregon's system caps growth in assessed value rather than tracking market value. Under ORS 308.146, the maximum assessed value of property equals 103 per cent of the property's assessed value from the prior year, or 100 per cent of its maximum assessed value from the prior year, whichever is greater.

Only certain exceptions can push assessed value up by more than that. New property and new improvements are among them, alongside subdivision or partition, rezoning, omitted property, and disqualification from an exemption or special assessment. Minor construction and ongoing maintenance and repair are not added to assessed value.

So Repairing and Rebuilding Are Treated Differently?

Fundamentally so. Repairing an existing structure is maintenance and repair and does not add to assessed value. Constructing a new house is new improvements, which is an exception to the cap and is valued and added under ORS 308.153. The tax consequence follows the choice, and it lasts for as long as you own the property.

The Provision That Catches People

When a portion of property is destroyed or damaged by fire or act of God, ORS 308.146 requires that for the year in which the destruction is reflected by a reduction in real market value, the maximum assessed value be reduced to reflect the loss. There is an administrative rule dealing specifically with that reduction.

Owners reasonably assume that the value they lost can then be set against whatever they build back. ORS 308.153 says otherwise. Where maximum assessed value has been adjusted for fire or act of God, or for demolition or removal of a building, that reduction in real market value may not be considered a retirement for the purpose of calculating the value of new improvements.

What Is the Practical Effect?

The fire lowers your basis once. The rebuild is then added as new improvements without the burned building being available to offset it. An owner who rebuilds larger than what stood before compounds that, because the additional area is additional exception value carried forward at 103 per cent a year thereafter.

There is also a proration provision. Where property is destroyed or damaged during the period beginning on 1 January and ending on 1 July of an assessment year, the owner may apply to the assessor, and it is worth asking about that separately.

Both Rules Point the Same Way

Repair what stands. Avoids deconstruction entirely and does not add to assessed value. On a pre-1941 house this is the route the code favours by a wide margin.

Deconstruct and rebuild the same size. Pays for hand dismantling and adds the new house as exception value.

Deconstruct and rebuild larger. Pays for hand dismantling and adds more exception value, permanently.

Sell. Transfers all of it to a buyer, and what you receive depends heavily on whether they have priced deconstruction rather than demolition.

Outside the City the First Rule Stops

Chapter 17.106 is a Portland ordinance. It does not apply in Gresham, Beaverton, Hillsboro, Tigard, Lake Oswego, Milwaukie, Oregon City, Troutdale, Fairview or Wood Village, nor in unincorporated Multnomah, Washington and Clackamas counties, each of which handles demolition its own way.

The assessment rules are different. ORS 308.146 and ORS 308.153 are state law and apply across Oregon, so the tax consequence of rebuilding follows you wherever you are in the metro.

Across Portland and the Metro

Build year varies sharply by area, which means the first rule reaches some neighbourhoods almost entirely and others hardly at all. The older eastern neighbourhoods are covered under Northeast Portland and Southeast Portland, the north under North Portland, and the west under Northwest and Southwest Portland. Later stock is dealt with under East Portland and everything beyond the city under the metro suburbs.

The full index is on our service area index.

Rules Questions

Is My House Pre-1941?

The city works from its permit records first and county assessor information where none exist. The assessor record is the quicker of the two to check yourself.

Does Repairing Avoid All of This?

It avoids the deconstruction requirement, which attaches to demolition permits, and ordinary maintenance and repair are not added to assessed value. It is the route both rules favour.

What If I Rebuild Smaller?

Less new improvement value than rebuilding larger, and it is still new improvements rather than repair. Worth modelling with the county assessor rather than estimating.

Primary Sources

Portland City Code Chapter 17.106 — scope, definitions, forms and contractor requirements
Portland City Code Chapter 24.55 and Title 33 — demolition permits and historic demolition review
Ordinance 187876, Ordinance 189761 and the Deconstruction Resolution of 17 February 2016
Oregon Revised Statutes 308.146, 308.149 to 308.166 and 308.153
Oregon Administrative Rule 150-308-0110 — maximum assessed value after fire or act of God