IMAGE: THOMAS COBB

A new state law went into effect last week, allowing cities to grant an additional 15-year property-tax freeze for the owners of residences designated historic. Previously, historic properties lost that tax break after 15 years and were then assessed like other properties.

House Bill 2776 comes at an opportune time for some Portlanders. Records show nearly half of the 208 single-family Portland residences currently getting the break began receiving it in 1991, which means their 15-year tax holiday expires this year.

Among those facing a hefty property-tax hike next year are property heir Jordan Schnitzer, top criminal defense lawyer Steve Houze and über-lobbyist Len Bergstein (see chart).

Owners of historic homes can qualify for an additional 15-year freeze simply by applying to the State Historic Preservation Office. But there's a catch: Property owners may receive the extended benefits only after their city approves the new law.

"We're supportive of the extension, but we're not going to pressure cities to pass this," says Susan Haylock of the Historic Preservation Office.

If Portland City Council ratifies the extension, the homes whose breaks expire in 2006 would be revalued to reflect some, but not all, of the increase in market value since 1991. Depending on the home, taxes could double or even quadruple but would then be frozen again for 15 years. All that's needed to qualify for the freeze is to pay an application fee of one-third of 1 percent of the property's real market value, file a maintenance plan, and hold an annual public open house.

House Minority Leader Jeff Merkley, D-Portland, voted against extending the program because the deductions appear to be going to a small group of affluent and influential people. "I suspect that none of these residences would be destroyed anyway," Merkley says, "so we're giving a break to those most able to pay taxes, for no additional benefit.''

City planner Nicholas Starin is researching the fiscal and policy impact of an extension. The estimated cost of the single-family historic-property tax benefit was not immediately available, but The Oregonian reported in November that historic tax breaks cost Multnomah County about $6.5 million annually. Starin wants to finish his work in time to get on the Feb. 27 agenda of the city's Historical Landmarks Commission, which will then present a recommendation to the City Council.

Mayor Tom Potter has made supplemental school funding a top priority. And since he ran a low-budget election campaign without much help from those who own pricy, historic residences, he's in position to put kids ahead of tax breaks. Mayoral spokesman John Doussard says his boss will wait for the research before commenting. But Commissioner Erik Sten, a longtime advocate for more spending on low-income housing, says,"I don't think this extension should be a priority for the council."