Housing is so tight in the city of Medford, Oregon, that the municipal government sometimes has trouble recruiting employees.

Residential vacancy is low, says Matt Brinkley, planning director for the city of 80,000, which is nestled along Interstate 5 about halfway between Portland and Sacramento. Local construction industry reports put the rate somewhere between 1 and 2 percent, he says. There’s just not that much room for people to live, let alone at rates that civil servants can afford.

So last week, Medford did what a growing number of Oregon cities have been doing over the last two years: It adopted an excise tax on new construction to help fund new affordable housing. In Medford, the tax will be equal to one third of 1 percent of building permit fees on major residential, commercial, and industrial development projects. Brinkley says the city estimates it could generate around $500,000 a year to be reinvested in affordable housing.

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