What would the Moda Center pay if it paid taxes?
Version 3.0 · Updated September 28, 2026 · measured against the August 12 term sheet, as amended · Sources & corrections ↗
When the Moda Center moved into City ownership it left the tax rolls. A defensible payment in lieu of taxes answers one question: what would the building owe if it were taxable? Three tiers answer it. The August 12 term sheet, as amended, proposes a $3 million initial annual tax offset growing 5% a year: genuine value, roughly two to two and a half times the documented pre-exemption floor, and below the county’s own construction formula once the renovation is built. It is proposed, not signed.
$5.1–9.4M/yr Calculated is the county’s own construction formula applied to the $573M package at an assumed 50 to 100% conversion of renovation cost into assessable value. That assumption, not the arithmetic, is what the range turns on, and an appraiser could land below it. Construction cost multiplied by a levy rate is not an actual tax bill; it is the comparison a real appraisal has to justify or rebut. The pre-exemption floor is $1.2–1.5M pending parcel confirmation; full appraisal equivalency reaches the low-to-mid teens.
The drafting fix is one covenant: pay the greatest of the three, every year, to named recipients, with no offsets and collectible security.
How these numbers fit together
Verified describes what a source says, not that a proposed obligation is signed or funded. The reconciled ledger and sources →
The three tiers
The question. The roughly $1.2M a year cited in public materials is what the exemption costs the tax rolls under the old, capped assessment, not what the property is worth. A payment in lieu of taxes (PILOT) answers a different question: what the covered property would owe if it were privately taxable.
The principle. A defensible PILOT pays what the covered property would owe if it were privately taxable: Oregon law’s own default rule, switched off for this one building by a one-sentence statute.
The status. Council adopted the amended term sheet 8–4 on August 12, 2026, as a nonbinding framework. It names a $3M initial annual offset and 5% growth. Commencement, recipients, credits and security are still to be drafted; the binding documents are due to Council by December 31, with a vote targeted for December 17. Current proposal
1 · Why $1.2 million is a floor, not a PILOT
City materials estimate the transfer into City ownership reduces property taxes by approximately $1.2 million annually. The same materials record the adjacent Kosei parcel acquired for $7.13 million at fair-market vacant-land value, and the arena improvements transferring for $1 under the lease-reversion structure. Verified
Three different kinds of numbers:
| 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 permanently embed an assessment that Measure 50 capped far below market, that a 2005–09 tax-court appeal cut from $139 million to $66 million (Willamette Week, 2022) Modeled, and that the exemption has now taken to zero. The rest of this paper answers the baseline question three ways, in ascending order of valuation judgment.
2 · The legal background: taxation is the default; the exemption is one sentence
Oregon’s default rule taxes private operators of public buildings. ORS 307.110(1) subjects state or city property, held under a lease or any interest less than fee simple by a person whose property is taxable, to assessment and taxation uniformly with nonexempt property. The Oregon Tax Court has held 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
The arena’s exemption is a specific carve-out. The statutory exceptions in ORS 307.110(3) cover student housing, fairgrounds, affordable housing and similar categories, not arenas. The Moda Center’s exemption comes 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, possessory interests in exempt municipal dock and port property owe payments in lieu of taxes to their school districts, and lose the exemption if they fail to pay. Verified
The regional pattern is the same. Washington’s default for private lessees of public property is a leasehold excise tax; its stadium exemption is likewise a carve-out, extended to Climate Pledge Arena’s leaseholders in 2023 with a sunset. Modeled Even so, Seattle’s operator privately financed the entire roughly $1.15 billion arena, bears all operating and overrun risk, and pays rent sized to keep Seattle Center’s prior revenues whole. Verified California taxes private use of public property as a possessory interest, the basis for the payments Sacramento receives on city-owned Golden 1 Center (Section 5). Verified
Because ORS 307.171 is unconditional, no assessor can restore tax equivalency; only the transaction documents can. A PILOT covenant is a condition of public participation that restores, by contract, the treatment Oregon law applies by default everywhere else.
3 · Tier 1, the documented floor: what the property actually paid
This tier requires no valuation: it is the certified record of what the arena paid as taxable commercial property.
- Reported property-tax bill for the arena, 2021: $1.52 million. Modeled: Willamette Week, July 2022
- Team-stated annual property taxes, 2024: approximately $1.2 million, matching the City’s foregone-tax estimate. Modeled: Willamette Week, February 2024; City materials
The spread reflects account scope and year; the certified parcel history will resolve it (Section 9, 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. The public should not receive less from a renovated, publicly owned arena than the tax rolls received from the old, privately owned one.
4 · Tier 2, the renovation increment under the county’s own published mechanics
This tier asks: 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: added real market value times the changed property ratio (CPR) gives added assessed value, taxed at the consolidated levy rate. Verified: statute It is the formula the county publishes as guidance for any owner who pulls a permit. Verified: Multnomah County, “Estimating Taxes on Changed Property”
- 2025–26 commercial changed property ratio: 0.512 Verified; confirm current-year figure for the arena’s property class
- Consolidated levy rate, levy code area 001: $26.9199 per $1,000 of assessed value Verified; arena’s exact code area to be confirmed
- Effective annual rate on added real market value: 0.512 × 26.9199 ÷ 1,000 = 1.3783% Calculated
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. The table prices the increment across a realization range, including a 50% scenario that concedes half the package produces no taxable value at all:
| Value realization of the $573M package | Added RMV | Added AV (× 0.512) | Annual tax equivalent Calculated |
|---|---|---|---|
| 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 modeled post-renovation figure is approximately $5.1 million to $9.4 million per year. Two cautions on that range. It is not a minimum: it brackets a 50–100% realization rate, and a special-purpose venue appraised below 50% would produce less. And the arithmetic is only as good as inputs nobody has published: the actual parcel scope, the applicable consolidated rate, and the assessor’s appraisal treatment. It turns on the realization rate, which the substantial-completion appraisal determines.
What the tax comparison must include
Use parcel-level assessment and the actual ownership and lease structure. Account for Oregon exemption law, assessed-value limits, changed-property treatment, applicable rates and compression. Construction cost is not automatically real market value or taxable assessed value, and construction cost multiplied by a levy rate is not an actual tax bill. A contractual payment may deliberately exceed hypothetical taxes, but that is a priced bargain rather than a statutory tax calculation.
Sources: ORS chapter 307 · August 12 City term sheet
Two technical notes. Measure 5: the 1.3783% effective rate sits beneath the constitutional 1.5%-of-RMV limits (voter-approved bonds outside them), so the formula is structurally consistent with compression; category-level review belongs in the appraisal true-up. Calculated from verified county guidance Consistency: the realization rate that prices the PILOT also quantifies the renovation’s value creation. A finding that $573M of spending produces substantially less than $573M in building value would itself be material for the bodies asked to fund it.
5 · Tier 3, full fair-market equivalency: the method and the brackets
The complete form of the question, what would the entire covered property owe if taxable, requires a valuation. The June 12 draft 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) is the supporting benchmark for specialized structures that rarely trade; sales comparison is tertiary. The covenant (Section 8) sets the appraisal schedule.
A transparency benefit worth stating plainly: the income approach puts the arena’s net operating income, the actual economics of the publicly owned building, on the appraisal record: the same information the public-financing question has so far proceeded without.
Brackets from comparable venues
- Chase Center (San Francisco). The city assesses the arena and adjacent development at $1.7 billion for tax purposes, roughly $20M/year at San Francisco’s 1.18% rate, while the Warriors have appealed to reduce the assessment to $706 million, worth about $11.6M/year to the team. Modeled: SF Examiner; SF Treasurer rate table Even the team-side valuation, at Portland’s 1.3783% effective rate, yields roughly $9.7M/year Calculated, and the appeal shows why Tier 3 needs a covenant with an independent appraisal and a floor: assessment contests by arena ownership are routine, and Portland’s own 2005–09 appeal halved the prior assessment.
- Golden 1 Center (Sacramento). Publicly owned; the operator pays possessory-interest taxes plus lease payments beginning at $6.5M/year and escalating toward $16.7M; the county valued the arena at $353M in 2017. Verified financing report; reported figures
- Lenovo Center (Raleigh). Publicly owned by the Centennial Authority; operated by the Carolina Hurricanes, whose owner now also owns the Trail Blazers. The Authority’s own published facts: the arena pays more than $3.5 million annually in combined PILOTs to the City of Raleigh and Wake County. A comparison, not a template. Verified: Centennial Authority
- Philadelphia (Market East, abandoned January 2025). The negotiated PILOT for the proposed $1.3B privately financed arena averaged roughly $6M/year. Modeled: WHYY, NBC10, Axios Even a discounted PILOT on a privately financed building was several times Portland’s $1.2M figure.
- New York (Barclays Center, Yankee Stadium, Citi Field, Madison Square Garden). Large nominal PILOTs ($39M/$84M/$44M in 2023) that largely service venue debt rather than reaching public revenue, against estimated tax equivalents near $99M/$115M/$121M; MSG holds a permanent full exemption estimated above $42M/year. Modeled: NYC IBO analysis; re-verification noted in Section 9 These are the cautionary structures, and the reason the covenant below routes payment directly to taxing jurisdictions and prohibits offsets.
Tier 3 position: the true-up target is whatever the independent appraisal finds. The comparables make a post-renovation equivalency in the low-to-mid teens of millions annually the reasonable expectation, with roughly $9.7M/year, implied by the league’s most owner-favorable valuation position, a hard-to-dispute lower reference. If the appraisal comes in lower, the Tier 1 + Tier 2 floor holds regardless.
6 · Summary of the reasonable range
| 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, modeled range | Floor + ORS 308.153 exception-value formula at an assumed 50–100% realization | $5.1–9.4M/yr | Arithmetic from published statute and county rates; a comparison, not a bill |
| 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 payment below roughly $5 million a year would sit under what the county’s own formula yields at even 50% realization, and the comparable evidence points well above that. That is a comparison for an appraisal to justify or rebut, not a tax bill the operator owes; the open items in Section 9 determine position within these ranges, not below the documented floor.
Against the August 12 term sheet, as amended: the proposed $3M/yr initial tax offset starts at roughly 2–2.5× the documented Tier 1 floor, genuine credit pre-renovation. Post-renovation it falls short: at 5% growth the payment enters the modeled county-formula band ($5.1–9.4M/yr) only around year 12, never reaches the band’s top inside a twenty-year term, and never approaches appraised equivalency. And it is proposed, not signed: commencement, recipients, credits and security are unresolved. The City’s package, scored →
7 · Who receives it: the governments need a consistent offer
The City’s August 12 package assumes franchise-sale Business Income Tax funding that the County’s final resolution excludes. The County also requires arena-related receipts sufficient for its bond payments. A shared initial $3 million tax offset cannot simply be promised in full to every claimant. The combined plan needs a reconciled source-and-distribution schedule before the private obligations are priced.
The City wants retention and a manageable public asset; the County seeks protection of its budget, repayment and community conditions; the State controls a financing route and statutory conditions. These are distinct institutional incentives. A County remedy against the City can move risk within government unless the City obtains matching direct rights against a capable private obligor.
Sources: August 12 City term sheet · County Resolution 2026-050 · City CFO financing memo
8 · Recommended covenant structure
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; parking facilities the operator economically controls or monetizes; and plaza, event, sponsorship, concession, naming-rights and development rights over public property held 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 | Bars crediting the PILOT against rent, user fees, or capital obligations the public is owed independently |
| Direct payment to affected taxing jurisdictions | Ensures the PILOT functions as public revenue, not venue-debt recycling (the New York failure mode) |
| Annual reporting and audit rights | Keeps the valuation inputs, including covered-property revenues, on the public record |
The drafting test
Whatever number the final documents carry, the tax-offset clause passes only if it does all five of these:
- Specify payment commencement and escalation during construction and operation.
- Name every recipient and ensure County debt coverage and school allocations are reconciled.
- Credit actual taxes only for the same property and period under an express formula.
- Do not allow offsets against unrelated rent, capital or community obligations.
- Require independent revaluation, reporting, dispute rules and collectible security.
9 · Data still needed, and what it can and cannot change
- 1. Certified parcel history for the arena accounts (RMV, MAV, AV, tax billed, by year), from Multnomah County records; begin with account R182162, the parcel named in the 2024 closing documents. Resolves: the exact Tier 1 floor and the $1.2M-vs-$1.52M account-scope question. Cannot change: the existence of a documented floor in this band. Unpriced
- 2. The arena parcels’ levy code area and current-year commercial CPR from the county’s published tables. Resolves: the second decimal of the 1.38% effective rate. Cannot change: the formula or its order of magnitude. Unpriced
- 3. The realization rate of the renovation package: an appraisal question, answerable only near substantial completion; the 50–100% band brackets it in advance. Unpriced
- 4. Primary-source re-verification of the New York figures against the NYC Independent Budget Office’s published analysis before any standalone use; here they serve only as structural cautions. Unpriced
A fifth item is a policy fact rather than a data gap: whether the transaction documents contain any tax-equivalency mechanism. The August 12 term sheet, as amended, names a $3M/yr initial offset and 5% growth. We have not found an appraisal, a reset at completion or an equivalency formula in the adopted framework, and commencement, recipients, credits and security are still to be drafted in the binding documents.
One certified figure now exists. The 2024 closing statement records the property tax on account R182162 at $53,604.55 a year, and the purchase agreement states the parcel moved “from assessable to non-assessable status… by virtue of Purchaser’s status as a municipal corporation.” Verified
Read its scope carefully. R182162 is the Kosei land parcel the City bought, not the arena improvements. It neither confirms nor contradicts the $1.2–1.5M figures reported for the broader arena tax burden; it is a narrower, different thing. Its value is that it is certified by the County, and that it gives the records request above an account number to start from.
And the City has promised to protect the exemption. The lease binds it: “Landlord will take no action which would have the effect of Landlord or Tenant losing the tax exemption granted by ORS 307.171” (§4.2). That does not block the covenant this paper recommends: a payment in lieu of taxes is a contract term, not a tax. It is the reason a PILOT is the right instrument rather than an assessment fight. Existing agreement
10 · Bottom line
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 comparable venues, including the publicly owned arena operated by the Trail Blazers owner’s NHL franchise.
The exemption that removes the Moda Center from that rule is one sentence, written in 2001, for exactly one city, and because it 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 mechanics put a modeled post-renovation comparison at $5.1–9.4 million per year at an assumed 50–100% value realization, a comparison rather than a bill; the comparables place full equivalency in the low-to-mid teens of millions. The proposed $3 million offset growing 5% is genuine value that stops well short of that. The recommended instrument, greatest-of-three, independently appraised, no offsets, paid to named jurisdictions, sets the final number by evidence, and evidence can only argue it upward from a floor that is already fact.
Sources
Deal documents: August 12 City term sheet, as amended; County Resolution 2026-050; City CFO financing memo; the executed 2024 Arena Operating Lease (exhibit). 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).