Version 2.1 — July 17, 2026 · Supersedes the June 12, 2026 working draft · ripcitynotripoff.com
The question. When the Moda Center moved into City ownership, it left the property-tax rolls. The figure cited in public materials for that loss — roughly $1.2 million per year — measures what the exemption costs the tax rolls under the old assessment. It does not measure what the property is worth, and it is not a payment-in-lieu-of-taxes (PILOT). The City’s July 17 draft term sheet contains the deal’s first offset payment — $3M/yr — but no tax-equivalency mechanism.
The principle. A defensible PILOT answers one question: what would the covered property owe if it were privately taxable? That is the standard other jurisdictions use, and — as documented below — it is the default rule of Oregon law itself, switched off for this one building by a one-sentence statute.
The recommendation. A contractual PILOT covenant — not a negotiated lump sum — as a condition of City and County participation: the operator pays the greatest of (a) the pre-exemption tax bill, CPI-indexed; (b) the exception-value formula on the renovation at completion; (c) full tax equivalency per independent appraisal, five-year cycle, no offsets, paid directly to the affected taxing jurisdictions.
Stated once, plainly: on the information already public, a post-renovation PILOT below roughly $5 million per year cannot be reconciled with the county’s own treatment of new construction — and the comparable evidence points well above that. The open data items in Section 8 determine position within these ranges; none of them can move the conclusion below its floor.
City materials estimate that transferring the Moda Center into City ownership reduces property taxes by approximately $1.2 million annually, because a state statute exempts city-owned sports facilities. The same materials record that the City acquired the adjacent Kosei parcel for $7.13 million at fair-market vacant-land value, while the arena improvements transferred for $1 under the lease-reversion structure. verified — City of Portland published materials
These are three different kinds of numbers, and the analysis fails if they are confused:
| Figure | What it is | What it is not |
|---|---|---|
| ~$1.2M/year | The estimated tax loss under the pre-existing assessment | A fair-market tax equivalent |
| $7.13M (Kosei) | A local, appraised, arm’s-length land-value data point | The value of the arena property |
| $1 (arena transfer) | A transactional price under the lease-reversion | An economic valuation of a functioning NBA arena |
A PILOT calculated from the $1.2M figure would embed, permanently, an assessment that (a) was capped far below market by Oregon’s Measure 50 system, (b) was further reduced by more than half — from $139 million to $66 million — following a tax-court appeal filed by the arena’s then-ownership in 2005 and resolved by 2009 reported — Willamette Week, 2022, and (c) has now been taken to zero by exemption. The proper baseline question is not “what did the exemption cost the rolls?” but “what would the property owe if it were taxable?” The remainder of this paper answers that question three ways, in ascending order of the valuation judgment required.
Oregon’s default rule taxes private operators of public buildings. ORS 307.110(1) provides that real and personal property of the state or any city, held under a lease or any interest less than fee simple by a person whose property is taxable, is subject to assessment and taxation uniformly with nonexempt property. The Oregon Tax Court has held under this statute that the assessment falls on the value of the fee interest — the whole property — not merely the leasehold (Pollin v. Dept. of Revenue, 13 OTR 478 (1996), aff’d 326 Or 427 (1998)). verified — statute and annotations
The arena’s exemption is a specific carve-out, not the natural order. The statutory exceptions in ORS 307.110(3) cover student housing, agricultural leases, fairgrounds, university parking, affordable housing, and similar categories. Arenas are not among them. The Moda Center’s exemption comes instead from ORS 307.171, enacted in 2001, whose full text is a single sentence:
“Any sports facility owned by a city with a population of at least 500,000 is exempt from taxation, even if leased to or operated by a taxpaying entity.” verified
One city in Oregon meets that population threshold.
Oregon law already pairs exemption with PILOT elsewhere. Under ORS 307.120, holders of possessory interests in exempt municipal dock and port property must make payments in lieu of taxes to the school districts where the property sits — and the exemption is lost if they fail to pay. verified A PILOT conditioned on public-property exemption is thus native Oregon tax design, not an imported concept.
The regional pattern is the same. Washington’s default for private lessees of public property is a leasehold excise tax in lieu of property tax; its stadium exemption is likewise a legislative carve-out, extended to Climate Pledge Arena’s leaseholders in 2023 over recorded objections and with a sunset provision. reported Even with that exemption, the Seattle arrangement differs categorically from Portland’s proposal: the operator privately financed the entire ~$1.15 billion arena, bears all operating and overrun risk, and pays the City rent sized to keep Seattle Center’s prior revenues whole. verified — City of Seattle MOU; arena’s published FAQ In California, private use of public property triggers possessory-interest taxation; Sacramento’s own arena-financing report describes the City receiving payments from the Kings in the form of lease payments and possessory-interest taxes on city-owned Golden 1 Center. verified — City of Sacramento financing report
The implication is structural: because ORS 307.171 is unconditional, no assessor can restore tax equivalency here. Only the transaction documents can. A PILOT covenant is therefore properly understood as a condition of public participation that restores, by contract, the treatment Oregon law applies by default everywhere else.
This tier requires no valuation methodology. It is the certified record of what the arena paid as taxable commercial property.
The spread between these figures most likely reflects account scope (arena, garages, personal-property accounts) and year; the certified parcel history will resolve it (Section 8, Item 1).
Tier 1 position: the PILOT should never be less than the final certified pre-exemption tax amount for the covered accounts, escalated by CPI — a floor of $1.2–1.5 million per year pending confirmation. This is the minimum on which the record already closes: whatever the correct fair-market number proves to be, the public should not receive less from a renovated, publicly owned arena than the tax rolls received from the old, privately owned one.
This tier asks one question: should a $573 million renovation be treated the way Multnomah County treats every other improvement?
Under ORS 308.153, new improvements enter the tax rolls as “exception value,” outside the 3% annual cap: the added real market value is multiplied by the applicable changed property ratio (CPR) to produce added assessed value, which is then taxed at the consolidated levy rate. verified — statute This is not a proposal; it is the formula the county itself publishes as guidance for any owner who pulls a permit. verified — Multnomah County, “Estimating Taxes on Changed Property”
A dollar of renovation cost is not automatically a dollar of market value; the conversion rate for a special-purpose venue is an appraisal question. This paper therefore prices the increment across a realization range rather than assuming any particular answer — including a 50% scenario that deliberately concedes half the package producing no taxable value at all:
| Value realization of the $573M package | Added RMV | Added AV (× 0.512) | Annual tax equivalent computed |
|---|---|---|---|
| 50% | $286.5M | $146.7M | $3.95M |
| 60% | $343.8M | $176.0M | $4.74M |
| 70% | $401.1M | $205.4M | $5.53M |
| 100% | $573.0M | $293.4M | $7.90M |
Combined with the Tier 1 floor, the mechanical post-renovation minimum is approximately $5.1 million to $9.4 million per year — a range that depends on no valuation opinion beyond the realization rate, which the substantial-completion appraisal exists to determine.
Two technical notes for completeness. Measure 5: the 1.3783% effective rate sits beneath the constitutional limits of 1.5% of real market value (education plus general government, with voter-approved bonds outside the limits), so the formula is structurally consistent with compression; category-level review belongs in the appraisal true-up. computed from verified county guidance Consistency: whatever realization rate the appraisal finds will simultaneously price the PILOT and quantify the renovation’s actual value creation. A finding that public and project spending of $573M produces substantially less than $573M in building value would itself be material information for the bodies asked to fund it. The two questions are the same question, and both are answered by the same appraisal.
The complete form of the question — what would the entire covered property owe if taxable — requires a valuation, and the June 12 draft of this paper erred by asserting one. This version specifies the method and lets the method supply the number.
Method. For an income-producing special-purpose venue, standard appraisal practice makes the income approach primary: capitalize the stabilized net operating income of the covered property. The cost approach — replacement cost new, less depreciation, plus land — serves as the supporting benchmark appropriate to specialized structures that rarely trade. Sales comparison is tertiary, because modern arenas are highly customized and almost never change hands. The June 12 draft’s land-plus-improvements construction was, in substance, a cost approach with insufficiently supported inputs; it is retained here only in its proper role as a cross-check.
Process. An independent MAI appraisal at covenant execution and again at substantial completion; methodology reviewed in consultation with the Multnomah County Assessor’s office; reappraisal every five years and upon major capital or transfer events.
A transparency benefit worth stating plainly: the income approach requires the arena’s net operating income — the actual economics of the publicly owned building — to be stated on the appraisal record. The valuation the tax question requires is the same information the public-financing question has so far proceeded without. A valuation position taken for tax purposes will also, necessarily, inform the public record on the building’s revenue capacity.
Tier 3 position: the covenant’s true-up target is whatever the independent appraisal finds. The comparables above make a post-renovation equivalency in the low-to-mid teens of millions annually the reasonable expectation, with ~$9.7M — the number implied by the most owner-favorable arena valuation position in the league — as a hard-to-dispute lower reference. If the appraisal comes in below expectations, the Tier 1 + Tier 2 floor holds regardless, and the appraisal record itself will have delivered the first public accounting of the building’s economics.
| Period | Basis | Range | Confidence |
|---|---|---|---|
| Now (pre-renovation) | Certified pre-exemption tax bill, CPI-indexed | $1.2–1.5M/yr | Documented fact, pending parcel confirmation |
| Post-renovation, mechanical minimum | Floor + ORS 308.153 exception-value formula at 50–100% realization | $5.1–9.4M/yr | Arithmetic from published statute and county rates |
| Post-renovation, full equivalency | Independent income-approach appraisal | ~$10–20M/yr reference band; low-to-mid teens the central expectation | Bracketed by comparables; appraisal-determined |
Stated once, plainly: on the information already public, a post-renovation PILOT below roughly $5 million per year cannot be reconciled with the county’s own treatment of new construction, and the comparable evidence points well above that. The open data items in Section 8 determine position within these ranges; none of them can move the conclusion below the floor.
Against the City’s July 17 draft: the draft’s $3M/yr Property Tax Offset starts at roughly 2–2.5× the documented Tier 1 floor — genuine credit, pre-renovation. Post-renovation is where it falls short: at 5% escalation the payment enters the county-formula minimum band ($5.1–9.4M) only around year 12, never reaches the band’s top inside the term, and never approaches appraised equivalency. The draft, scored →
The recommendation is a formula in a contract, adopted as a condition of City and County participation — not a negotiated lump sum. Operative term:
The Arena Operator shall pay an annual payment in lieu of taxes, without offset, equal to the greatest of:
(a) the final certified pre-exemption property-tax amount for the Covered Property, escalated annually by CPI;
(b) upon substantial completion of the renovation, the amount in (a) plus the tax equivalent of the renovation’s appraised added real market value, computed per ORS 308.153 mechanics (added RMV × current changed property ratio × applicable consolidated levy rate); and
(c) the full tax-equivalent amount that would be payable if the Covered Property were privately taxable, per independent MAI appraisal (income approach primary, cost approach benchmark) at execution, at substantial completion, upon major capital or transfer events, and at least every five years.
Covered Property: arena land and improvements; the Kosei parcel; renovation improvements; public parking facilities where economically controlled or monetized by the operator; and plaza, event, sponsorship, concession, naming-rights, and development rights over public property transferred to or controlled by the operator — any public asset generating private operator revenue, unless separately taxed or bearing market ground rent.
| Protection | Purpose |
|---|---|
| Independent MAI appraisal with assessor consultation | Prevents the $1 transfer price or legacy assessments from controlling value |
| Substantial-completion reset | Ensures publicly financed value enters the payment base |
| Five-year reappraisal + capital-event resets | Keeps the payment tied to market conditions between events |
| No-offset clause | Prevents the PILOT from being credited against rent, user fees, or capital obligations — payments the public is owed independently |
| Direct payment to affected taxing jurisdictions | Ensures the PILOT functions as public revenue, not venue-debt recycling (the documented New York failure mode) |
| Annual reporting and audit rights | Keeps the valuation inputs — including covered-property revenues — on the public record |
A fifth item is a policy fact rather than a data gap: whether the transaction documents contain any tax-equivalency mechanism. The July 17 draft term sheet contains a $3M/yr offset payment; it contains no appraisal, no reset at completion, and no equivalency formula.
The operator of a publicly owned Moda Center should pay what the property would owe if it were privately taxable. That is Oregon’s own default rule for private operators of public property, the working rule of every neighboring West Coast state, and the practice at directly comparable venues — including the publicly owned arena operated by the prospective Trail Blazers owner’s own NHL franchise.
The exemption that removes the Moda Center from that rule is one sentence long, was written in 2001, and applies to exactly one city. Nothing in it prevents the City and County from restoring equivalency by contract — and because the statute is unconditional, contract is the only place equivalency can be restored.
The documented floor is $1.2–1.5 million per year today. The county’s own construction-tax mechanics put the post-renovation minimum at $5.1–9.4 million per year. The comparable evidence and standard appraisal method place full equivalency in the low-to-mid teens of millions, with even the most owner-favorable valuation logic in the league implying roughly $10 million. The recommended instrument — greatest-of-three, independently appraised, no offsets, paid to the taxing jurisdictions — ensures the final number is set by evidence rather than negotiation, and can only be argued upward from a floor that is already fact.
Statutes and case law: ORS 307.110 and annotations incl. Pollin v. Dept. of Revenue, 13 OTR 478 (1996), aff’d 326 Or 427 (1998); ORS 307.171 (2001 c.931 §2); ORS 307.120; ORS 308.153 — oregonlegislature.gov. Multnomah County: Changed Property Ratios (2025–26); Levy Code Rates (2025–26); “Estimating Taxes on Changed Property”; “How Your Property Taxes Are Calculated” — multco.us. City of Portland: published Moda Center transaction materials (Kosei acquisition $7.13M; $1 arena transfer; ~$1.2M annual tax-reduction estimate; $573M renovation package). Arena tax history: Willamette Week, July 13, 2022 and Feb. 28, 2024. Chase Center: San Francisco Examiner (assessment $1.7B; appeal to $706M); SF Treasurer & Tax Collector (FY2025–26 secured rate 1.18268%). Seattle: City of Seattle Arena MOU; Climate Pledge Arena published FAQ; contemporaneous Washington press coverage of the 2023 leasehold-excise legislation. Sacramento: City of Sacramento, Golden 1 Center Debt Financings report; contemporaneous reporting on lease terms; Comstock’s (2017 county valuation). Raleigh: Centennial Authority, published facts page. Philadelphia: WHYY, NBC10, Axios (January 2025). New York: NYC Independent Budget Office sports-facility analysis (re-verification pending as noted).