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Housing and transportation advocates plan to pack hearing for affordability bill

Posted by on February 18th, 2015 at 9:09 am

SE Division street scene - photo by Michael Andersen

SE Division Street has a frequent bus, two parallel neighborhood greenways and many shops within walking distance — but prices in the area are so high that many residents own cars anyway.
(Photo: M.Andersen/BikePortland)

Oregon’s 20-year ban on a common affordable-housing policy could be headed for the dustbin, based on what happens after a hearing in Salem next Monday.

The policy, known as inclusionary zoning, would allow city governments to require that new buildings within certain areas include certain ratios of lower-rent housing units. Backers call it a useful tool for preventing desirable parts of town from becoming homogeneously wealthy.

Inclusionary zoning is entirely banned in two U.S. states: Oregon and Texas. House Bill 2564 would remove Oregon’s ban.

“Everyone should have the opportunity, at least, to live in communities where there’s transportation choices, but our current pattern of development hasn’t given us that,” said Vivian Satterfield, associate director of OPAL Environmental Justice Oregon. “The people who can afford the best transportation options without needing the cheapest transportation options are getting the most choice, are getting the most variety.”

In Portland today, the exception is a neighborhood like the Pearl District. In 1997, developers and the city directly negotiated a deal that today allows 28 percent of new units in the generally posh neighborhood to be lower-rent and available only to people below certain incomes.

“Everyone should have the opportunity, at least, to live in communities where there’s transportation choices.”
— Vivian Satterfield, OPAL

Inclusionary zoning could let cities build such agreements directly into their zoning code rather than striking them on a case-by-case basis. It could also toughen the penalties should developers fail to meet the targets; as The Oregonian reported last August, the Pearl District’s ratio of lower-rent units was supposed to be 35 percent. South Waterfront developers have also failed to meet their targets, and the city has since argued for those targets to be reduced.

“What we’re going to be trying to achieve is to open up more cultural and economic diversity in our community and in the inner city,” said Diane Linn, executive director of the homeownership nonprofit Proud Ground and a former Multnomah County chair.

Since migration to the Portland region (and also biking rates) began to soar around 2005, the city has failed to build enough new homes to keep up. That’s developed into one of the nation’s worst rental housing shortages and rapidly rising rents, especially in bikeable areas.

The case against inclusionary zoning

changes on NW Marshall-1

The Pearl District has more income diversity
than many fast-growing areas, but less than its
developers pledged.
(Photo: J.Maus/BikePortland)

People who oppose inclusionary zoning don’t deny the affordability problem. But some say the public, not new developments, should bear the cost.

“They see it as the private sector’s responsibility to solve this public-policy problem,” said Jon Chandler, CEO of the Oregon Home Builders Association. “I understand that a good community has a mix of all of the above. But I just think there are fundamental ways to get there that are not the builder’s problem.”

Chandler suggested speeding up the development permit process, lowering building standards for low-cost homes and allowing larger lot sizes in suburban areas. He warned that new rules on what sort of units can be built would only further limit housing supply.

“We’ve already done a pretty good job of constraining the real estate market,” Chandler said.

Linn, the former politician now working for a homeownership nonprofit, conceded that direct tax subsidies for cheaper units might indeed seem like the best way to make housing affordable. But that’d require tax hikes, which seem impossible to sell.

“When some of those doors get shut, you go to the next door that you can open,” Linn said. “Especially as we see affordability just spiraling out of reach for people. … My job is to see the people who walk in here every day with a hope of having some way of raising their kids in a safe and stable environment. … They don’t have a high-paid lobbyist to say that.”

Linn added that the homebuilders’ association is “an honorable group” and a valuable partner for her organization.

Chandler suggested that instead of merely banning inclusionary zoning, the state might offer a list of allowable forms it might take.

“Rather than the statute says ‘you can’t unless,’ which is what we have now, you could have ‘you can if,'” he said.

Advocates hope for big turnout

vivian satterfield

Vivian Satterfield of OPAL Environmental
Justice Oregon.
(Photo: M.Andersen/BikePortland)

Satterfield, the environmental justice advocate, said the Oregon Inclusionary Zoning Coalition is working to coordinate rides to Salem for those who want to carpool to Monday’s 3 p.m. hearing.

“We’re really trying to turn out good testimony, really pack the room,” Satterfield said. “For too long there’s been this thinking that this is a Portland-metro, urban issue. But the reality is that there are communities all over this state that are seeking to have this conversation.”

Here in Portland, Satterfield said, both the city and regional government Metro have joined the lobbying effort to kill Oregon’s inclusionary zoning ban. She said Commissioner Dan Saltzman, who oversees the Portland Housing Bureau, seems likely to advance the concept over the next few years if the state allows him to do so.

“Just because we’re lifting the ban does not mean that we’re getting a mandate,” Satterfield said. “Arguably, that’s going to be the bigger conversation and the bigger fight. … The ban on inclusionary zoning is like a mute button. We actually cannot have those conversations. All we’re trying to do right now is just to unmute.”

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83 Comments
  • Avatar
    don arambula February 18, 2015 at 9:40 am

    I have worked on many projects in many states that have inclusionary zoning. While it a sensible tool for addressing affordability, my experience leads me to believe it falls far short of providing a solution. In fact, by requiring affordable units, I have witnessed many projects that have not ‘penciled out’ and were not constructed. As a result not only was affordable housing not constructed, market rate was not either. The result is the creation of a housing market where apartments are scarce and prices escalate even higher.

    The criticism of the Pearl missing the 35% target is misguided. Sure we should hold the development community’s feet to the fire and require that many of the remaining parcels meet that goal.But keep in mind that the Pearl is a national model for affordability, despite the group think perception that it is a toney neighborhood. In most redevelopment projects across the nation where inclusionary zoning is the sole tool, communities are getting nowhere near 28% affordability, let alone a 20% inclusionary requirement.

    Let’s do a better job by requiring all URA projects to have a minimum percentage above and beyond 20% and provide the gap financing to build as much housing as possible to ‘flood’ market. Consider inclusionary zoning, but don’t expect it to be a silver bullet.

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      Allan February 18, 2015 at 10:12 am

      We can’t even consider it w/ the current laws in place!

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      Todd Hudson February 18, 2015 at 10:22 am

      “it falls far short of providing a solution”

      A large impediment to affordable housing are homeowner NIMBYs who insist new housing stock be build according to their personal taste.

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        davemess February 18, 2015 at 12:21 pm

        Yet much of the lot splitting we’re seeing here in Portland (esp. in lower income/”transitioning” neighborhoods, is not increasing affordability at all. Tearing down a $250K house and building two that are $400-500K is not helping the problem.

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          Jayson February 18, 2015 at 1:35 pm

          Sure, let’s ban lot splitting. Instead you’ll see one McMansion instead of two. Pick your poison.

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            davemess February 18, 2015 at 4:32 pm

            I don’t know. The profit margin for a developer to just do a 1 for 1 is definitely nowhere near as high as splitting a lot. That would likely be less desirable for a big developer. I think you might end up with more gut and renovate houses. But yes, that would still decrease affordability (granted that is going to happen regardless just due to demand/inflation/gentrification/etc.).

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            Martin Vandepas February 24, 2015 at 1:33 pm

            How about scaling the system development charges by square footage? The developers should have to pay more to make a huge house than a small one. Here’s a list of 8 ideas from a progressive Portland developer to address these issues. http://www.orangesplot.net/blog/

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          Chris I February 18, 2015 at 1:36 pm

          It is, it just takes a while. In 30 years, that lot will now have two more adorable houses vs. one less affordable house. We know what happens when you restrict new housing. Look at San Francisco and Austin. Compare and contrast.

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            davemess February 18, 2015 at 4:28 pm

            One person’s “adorable” is another’s “eye sore”.
            That’s why we have zoning.

            And that assumes that 30 years from now people will still want these houses without any type of yard. Say what you want but most of the houses in Porltnad are 50-100 years old. Desire for yards has stood that test of time.

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              Jayson February 19, 2015 at 7:17 pm

              The size of the yard doesn’t mean single-family homes have stood the test of time. What test is it exactly when zoning has historically prohibited infill development. Only in recent years as zoning has relaxed have we seen bigger homes and smaller yards. If there wasn’t a demand for it, builders wouldn’t be constructing them. I would say the test has finally been delivered and the results are not what you suggest.

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                davemess February 20, 2015 at 9:34 am

                Except if there was a huge demand for it before, don’t you think people would have pushed to have the zoning changed? We (the people) are the government in the end.

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            DimCyclist February 18, 2015 at 10:52 pm

            Yeah: despite the summer heat (maybe because of it), Austin is still relatively affordable; no one short of a millionaire can afford property in SF-proper anymore. Thanks developers!

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        oregon111 February 20, 2015 at 3:04 pm

        trust me, if you live in neighborhood of single family homes, you do NOT want a huge apt complex going in – next door to you

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      Jayson February 18, 2015 at 1:34 pm

      Couldn’t agree more. I’ve seen projects in other states never get off the ground, because they are entirely dependent on selling or renting outrageously expensive luxury units to subsidize the “affordable” units. I’d much rather see more workforce housing built than grossly unaffordable units mixed with units limited to impoverished people. If we mandate that all projects include some form of affordable housing, I think we are severely limiting the development in places that need more housing opportunities most.

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    Adam H. February 18, 2015 at 9:53 am

    I understand that a good community has a mix of all of the above. But I just think there are fundamental ways to get there that are not the builder’s problem.

    So basically he thinks it’s a good idea, but thinks someone else should do it. Typical.

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      Stretchy February 18, 2015 at 11:03 am

      Do you have someone living in your home who is paying below-market rates? Or, are you directly subsidizing someones rent? If not, then you’re also passing the responsibility on to someone else.

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        soren February 18, 2015 at 2:48 pm

        Yes and Yes.

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    Daniel Costantino February 18, 2015 at 9:55 am

    One of the issues with the affordable housing requirements in new buildings in the Pearl and other areas near downtown is that the income caps tend to be pretty low. Essentially, rather than creating income diversity, it’s ensuring room for people with rather low incomes alongside people with high incomes, with no room for people with middle incomes.

    How can inclusionary zoning be structured so that there can be housing units at multiple points along the rent spectrum, rather than just the top and bottom ends?

    Also, what happens to someone who qualified for an income-restricted unit when their incomes grow? What are people risking? It seems a shame not to incentivize income growth. Do they have to leave their home? Can they stay on the same terms as before? Is their rent adjusted to meet their new income?

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      Chris February 18, 2015 at 10:52 am

      I’m one of those “low income” earners that lived in the Pearl. The building that I lived in had a cap per what sort of space you were looking at. A studio apartment was affordable for a certain income, a 1 bedroom another, and a 2 bedroom was the same. They also took into account how many income earners would be living in the unit and contributing to rent.

      If your income increased beyond the cap on your space while you were living in the apartment building, you wouldn’t get kicked out. The rent would not be adjusted aside from the usual increase due to utilities or what have you. It would only be if you moved out that you would be unable to rent in the building again per your current income.

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        Brian February 18, 2015 at 11:29 am

        So, I could have a high paying job lined up in the next month or so, get a low cost apartment in the meantime, then secure the high-paying job and I would be able to pay low rent for the term that I reside there?

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          maccoinnich February 18, 2015 at 11:32 am

          In theory yes, but in reality the waiting lists are months to years long for any affordable housing building.

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          Chris February 18, 2015 at 11:55 am

          Technically, yes, it is possible.

          But considering it took me 3 months to get into a studio apartment (the wait list for a 1 bedroom was 6 months), and they assessed my income upon being given the apartment, I wouldn’t bet on it.

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            Brian February 18, 2015 at 12:49 pm

            Thanks for the clarification, Chris.

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        Daniel Costantino February 18, 2015 at 12:27 pm

        Thanks for the added perspective, Chris. I’m glad that to hear that one doesn’t lose one’s housing unit just because one’s income may improve. That’s just something I’ve always wondered about.

        To be clear, I’m not in any way saying there’s anything wrong with being in the income category that qualifies for those units, or taking advantage of the opportunity to live in a new building in a central neighborhood. Nor am I arguing against inclusionary zoning or income-restricted housing.

        What I do wonder is where people who don’t meet typical income-restricted criteria, but still have limited resources, fit in an inclusionary zoning scheme. Is there room in this type of policy? How would that work? And am I massively over-simplifying by comparing current income-restricted housing in central neighborhoods in Portland to what we might see more of under a future inclusionary zoning policy?

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      davemess February 18, 2015 at 12:28 pm

      Yes, I think many are viewing inclusionary zoning as a bit of a panacea, and likely looking at it from how it might benefit themselves. But the reality is likely as you describe. This isn’t going to be housing that would allow people making $35-50K/year to live anywhere they want, would it? I guess I don’t know any specifics on the actual thresholds of income (anyone care to share?).

      I guess I am for the idea of not forcing all low income earners to the outskirts of the city. But on the other hand, I’m not in favor of subsidizing a bunch of middle income folks so they can move closer in 30-40 blocks.

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      Spiffy February 18, 2015 at 1:05 pm

      “Essentially, rather than creating income diversity, it’s ensuring room for people with rather low incomes alongside people with high incomes, with no room for people with middle incomes.”

      yes, this! I make way too much to be low-income, but not enough to live within 55 blocks of the center of town… so I live on those outskirts with roommates… I’d have to live out past I-205 to be able to afford my own place…

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        davemess February 18, 2015 at 1:11 pm

        Or go further North or South, but even then it’s getting hard to find a house west of 82nd for under $200k these days.

        Spiffy, do you expect (or would you like) inclusionary zoning to allow you to live closer in?
        I’m pretty sure I’m in the same boat as you (live really far south at 75th), but I don’t really think I’m owed a closer home.

        (This isn’t meant as an attack, just trying to create some dialogue)

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    Dave February 18, 2015 at 10:07 am

    Developers should be told to suck some things up and take them. Our emphasis on private property owners’ rights is perhaps a little too absolute.

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      Mossby Pomegrante February 18, 2015 at 7:05 pm

      That’s right…home ownership…one of the great “evils” on BikePortland.

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    Rebecca February 18, 2015 at 10:50 am

    Developers will build all top-dollar units in prime real estate areas unless they are required to do otherwise. And why wouldn’t they? That’s how you maximize profit.

    But they are able to charge top dollar in part because they are capitalizing on publicly funded assets – transit, good walking/biking infrastructure, green spaces and schools, etc. At the same time, they’re externalizing a social cost on the city by excluding the individuals most in need of those public assets from accessing them, contributing to the creation of areas of concentrated poverty, etc.

    Yes to inclusionary zoning and thanks to Satterfield, OPAL, and others working on HB 2564.

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      Adam H. February 18, 2015 at 11:19 am

      Thank you. This is a good rebuttal to the “I think it’s a good idea, but someone else should pay for it” mantra that the Oregon Home Builders Association seems to be parroting.

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      maccoinnich February 18, 2015 at 11:22 am

      “But they are able to charge top dollar in part because they are capitalizing on publicly funded assets – transit, good walking/biking infrastructure, green spaces and schools, etc.”

      Developers aren’t avoiding contributing to the cost of public services; indeed it’s quite the opposite given how high Systems Development Charges are. Per *unit* of multifamily housing built PBOT gets $2,024 (double that if in the Innovation Quadrant or North Macadam overlays), Parks gets $5,632, BES gets $3,823 and water gets something in the $10-50,000 range for the whole building. Portland Public Schools also receives $1.14 per square of residential living space built. All in all, SDCs and permit fees can add up to 20% of the construction cost.

      As an example of what this goes towards, the proposed Gateway Plaza and Beech Park in East Portland are both being largely funded with development fees.

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        shuppatsu February 18, 2015 at 12:13 pm

        Developers also have to buy the property they develop, which price incorporates the livability of the environs.

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        Gary February 18, 2015 at 12:33 pm

        But those charges apply whatever area and price point they build. Rebecca’s point was that the most profitable spots are built on existing top infrastructure, for which those generic fees aren’t paying. A few grand for parks and roads per unit, while helpful, is a pittance compared to the value (profit) added by building on a streetcar line, etc. Short of charging a “user fee” for building near certain infrastructure, inclusionary zoning does seem a reasonable way to internalize those costs in some circumstances.

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          maccoinnich February 18, 2015 at 12:51 pm

          The City couldn’t have afforded to build either of the streetcar lines had it not been for new development along its route. The original NS line was funded entirely from local funds, and 50% of the CL line came from local funds. Some of the primary sources were SDCs (which depends on development), Tax Increment Financing (which depends on development) and a Local Improvement District (which depends on development). So now we have a streetcar system, and that benefits rich, poor and middle income people alike. The idea that developers freeload off infrastructure in Portland just isn’t borne out by the numbers.

          In any case, building where investments in infrastructure have already been made is something we want to encourage.

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            Beth February 18, 2015 at 1:04 pm

            Maybe pick a better example than Portland Streetcar. Quite a few of us still aren’t convinced that it has done anything meaningful for mass transit in Portland.

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              maccoinnich February 18, 2015 at 1:08 pm

              An one person’s opinion on whether the Portland Streetcar is good or bad doesn’t change the numbers for how it was funded.

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              Reza February 19, 2015 at 7:02 pm

              Spoken as someone who probably doesn’t have to rely on it for local transit because other options range from lackluster to nonexistent.

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    J_R February 18, 2015 at 10:55 am

    I think the focus on “inclusionary zoning” is misplaced and would not solve, or maybe even help solve, the affordability problem.

    If the local government is going to require a certain portion of the development to be cheaper, that simply means the developer must increase the portion of the total project cost that is paid for by the “market rate” component of his project. It costs the same to put the streets, water system, sewer system, fire hydrants, etc. regardless of whether the subdivision has 10 houses priced at $X, or 8 at $X+ and 2 at $X-.

    Many people who comment on this forum think that developers are getting rich or are simply crooks and can get by on a less exorbitant profit. Having been a small time landlord, I can tell you there’s not huge profit in building, owning or operating housing.

    For any of you who think development business is the road to riches, I suggest there are many ways to participate financially in this supposed windfall. Check out real estate investment trusts (REITS) that own and operate residential, commercial or industrial developments. Or check out investment opportunities in homebuilders, many are publicly traded companies. Or buy a whole “basket” of homebuilders through an exchange traded fund such as ITB.

    Inclusionary zoning has the potential to boost prices for some people in exchange for lower prices for others. I think we’d be better off on focusing on efficiencies in developing our public infrastructure and making it easier for developers and property owners to develop more affordable options while still making a reasonable profit associated with the risk of their endeavor.

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      DimCyclist February 19, 2015 at 12:15 am

      “Many people who comment on this forum think that developers are getting rich or are simply crooks and can get by on a less exorbitant profit.”

      I have no problem with anyone getting fat on development; I do have a problem with developers who think it’s their god-given right to be fat cats at any cost. And unfortunately there are a lot of those around.

      That said, development of itself has never been a problem with me; generally speaking I’m all for it (after all, Haussmann ultimately built a more beautiful Paris). However, for me the problem begins with how it’s carried out, with reckless development.

      Some of the people on this forum have experience with larger European cities, a good many of which share an interesting feature: a preserved, convoluted, historical core of older districts & narrow streets, surrounded by zones modern high-rise development (Prague & Paris are good examples of this phenomenon). But here in the U.S. there aren’t any 1000-year-old castles or 2000-year-old Roman ruins; you don’t have medieval street plans to preserve; you aren’t surrounded by Baroque architecture, Gothic cathedrals, or the cultural detritus of centuries of capital-intensive warfare (and- perhaps mercifully- you don’t have to be). But do you really think it necessary- as did Haussmann, with the excuse of improving efficiency & public health- to plow under & bulldoze every scrap of your brief urban history just because someone waves a dollar bill under your noses? Do you really place so little value on your culture? Aren’t there better locations around Portland’s core where new development- with a clean slate, as it were- is easier to achieve?

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    Stretchy February 18, 2015 at 11:00 am

    I’m sure all the advocates for inclusionary zoning are first in line to provide below-market housing in their own homes and apartments.

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      Adam H. February 18, 2015 at 11:20 am

      That’s not the same thing, and I’d hope that you’d understand the difference.

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        Stretchy February 18, 2015 at 11:58 am

        You’re right, it’s not the same thing. You’re proposing a law to force people to do what you want, regardless of whether it’s in their interests to do so.

        To make it the same thing, I would have to propose a law to COMPEL you to take people into your home and onto your property under terms and conditions that I dictate.

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      shuppatsu February 18, 2015 at 11:52 am

      I’m on the fence on this one. I don’t know enough about these issues to have an opinion.

      First off, accusing people of being hypocritical because they don’t go out of their way to do something on their own isn’t very helpful. Most policy is to get people to do what they wouldn’t do on their own. If they did it on their own, there’d be no need for the policy. We all do our cost-benefit analysis depending on the ground rules of our environment.

      On the other hand, it’s important to recognize that inclusionary zoning is a way to force developers and their tenants to subsidize low-income renters. I don’t know what the split of the burden is between developers and tenants. I suppose that since high end housing is relatively elastic, the developer bears the brunt of the extra cost, which makes development riskier and less profitable, which in turn inhibits development. Is that what we want, in a city that has a housing shortage?

      Like an above commenter, I’m worried that inclusionary zoning pushes out the middle class. To the extent that the subsidization costs are pushed to the market rate tenants, the rents get pushed up. Then there’s an artificial price available only to the poor. So the people in the middle don’t have anything for them.

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    don arambula February 18, 2015 at 12:00 pm

    Discussions of affordability should not constrained to just cost of housing but include income. Keep in mind that Portland employees generally suffer the lowest average wages of major west coast cities. Pay people more and they can afford more; this is why Mayor Hales proposition for a $15/hour City wage is a good start. http://bit.ly/1vGKcjh

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      shuppatsu February 18, 2015 at 12:22 pm

      Or just increase taxes on the rich, and have a negative income tax for the poor. Rather than try to piecemeal subsidies that distort economic incentives and healthy markets at every level.

      Never thought the day would come when I’d be parroting Milton Friedman.

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        Stretchy February 18, 2015 at 1:24 pm

        Or, people who value “inclusion” could get together and buy properties in neighborhoods where they think the poor are underrepresented. Then you can rent those properties at below-market rates to whoever you want… Actually, you can’t rent them to whoever you want, you’ll need the proper waivers from the city and state to discriminate based on income (assuming that’s the only criteria you want to use to discriminate). But, in a crunchy city like Portland, I’m sure you’ll have no problem getting such a waiver.

        Or, you can just put the onus on someone else to solve the problem.

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          shuppatsu February 18, 2015 at 2:02 pm

          They won’t do this, and you know they won’t do this. So it won’t get done. I think your point is that people have no problem compelling people to act against their economic self-interest while consistently acting in their own. And you imply that that is bad, or hypocritical, or both.

          If that’s your point, I’m with you on everything, except for whether it’s bad. I’m only halfway there on that. But everything else is just human nature. Warren Buffett advocates for higher taxes, but he doesn’t pay any more than he has to. Al Gore warns us of climate disaster, but drives a big car and heats a big house. I’d like a higher gas tax, but I buy my gas at Costco.

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            Stretchy February 18, 2015 at 2:33 pm

            If they won’t do this then how much do they really value it? One question I ask anyone proposing new laws or ‘public’ policy is this, “Do you value this enough to do it yourself? Or, do you only value this enough to force others to do it?” And, by ‘do it yourself’ I don’t mean “sure, I’ll do it if they pass a law forcing everyone to do it.”

            I’ve found that for most people who “care” about things (the environment, the poor, women, minorities etc…) they only care enough to advocate, march, protest, scream and holler. They don’t really care enough to roll up their sleeves or open up their own wallets and do the hard work.

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              davemess February 18, 2015 at 4:37 pm

              that actually brings up a good question:
              If this increases YOUR rent are you still on board with it?

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              shuppatsu February 18, 2015 at 5:25 pm

              I don’t know why that is an appropriate test. I may do any number of things in my venal self-interest.

              For example, I believe in speed limits. I believe the state has authority to impose them on public roads. I believe they save lives as well as save fuel (an aspect which has enormous environmental and geopolitical importance). I believe in speed limits, and I’m glad we have them.

              And yet I speed regularly, 5 to 10 mph over the speed limit. Why do I do it? Because the benefits for me outweigh the costs. Enforcement is extremely lax in Oregon, and penalties are low. I save time, thereby saving money (since time is money). Oregon roads are well maintained, and my car is designed to run well in excess of the speed limit. Speeding has no effect on my reputation. I would happily admit it to anyone (except under limited circumstances to a policeman).

              Sure, I am a hypocrite for speeding while simultaneously supporting speed limits. I’m valuing my own benefit over the cost borne by others. I can live with that. It doesn’t make me wrong on the policy point. Furthermore, if speed limits were better policed, I might speed less, and acknowledge that as a good thing.

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              Alex Reed February 19, 2015 at 7:38 am

              I think your argument here doesn’t really hold up. Most people who are activists for some sort of cause want some sort of large, qualitative change in how society works. Additionally, pretty much every cause only has a relatively small number of people who are extremely dedicated to it. The truth is that their individual actions could not do enough to achieve their objective of a large change – and often, their actions would be at least somewhat offset by the market’s reaction to their actions.

              For example, let’s say that 2% of Portlanders are housing-affordability activists. Let’s also say that 10% of Portlanders have a really hard time finding housing that meets their needs at a price they can afford.

              If each of those 2% offered a room in their dwelling at below market rate, they would house 2% out of the 10%. That would leave 8% of Portland having a really hard time finding housing that meets their needs at a price they can afford. Going from 10% to 8% is good, sure, but it doesn’t achieve the goal of the housing activists. Their goal is something close to 0%. Why should they spend lots of energy (and it would take a lot of energy for all the activists to rent out a room!) to not even get close to achieving their goal?

              And, on the flip side, adding additional rooms to the market would add to supply, thereby reducing construction of lower-priced units on the margin – and making matters somewhat worse for the 8% would didn’t get rooms. These countervailing market forces are pretty common. To extend this concept to another realm of activism that you mentioned, making “environmentally responsible” consumer choices cannot *solve* environmental problems. Every gallon of fossil fuel that I choose not to consume makes that fossil fuel cheaper for everyone else (so they consume more). If 50% of the world population totally weaned themselves off of fossil fuels, the other 50% would have super-cheap fossil fuels and would make up much of the gap because of the cheapness.

              The fact is that government regulation is the only way to achieve these kind of societal change. I know that doesn’t sit well with American individualism, but it only makes sense that if you want society as a whole to change, you need some mechanism that affects everyone in society. The main mechanism that we have is government.

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            soren February 18, 2015 at 3:00 pm

            Could you please explain what Warren Buffet or Al Gore have to do with inclusionary zoning in Portland?

            I believe Portland is full of people/idealists who are willing to pay higher taxes, fees and housing costs in order to enhance economic and social diversity. I’d personally do so without hesitation.

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              davemess February 18, 2015 at 4:36 pm

              I think he’s complaining about people (Buffet, Gore) who won’t actually do things to help on their own, but rely on/desire government to implement it for everyone.

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              shuppatsu February 18, 2015 at 5:04 pm

              I’m not complaining about them. I put myself in the same group with the gas tax/Costco reference. My point is that you can advocate for a policy that’s against your economic self-interest, but otherwise act in your economic self-interest. Yes, it’s hypocritical, but it’s a benign and nearly universal hypocrisy.

              This was in response to Stretchy, who was implying that people for IZ are hypocrites unless they themselves are charging below-market rent for their properties.

              As I’ve stated above, I haven’t taken a stance of IZ, and I probably won’t because it’s hugely wonky and really merits a lot of study. The Buffett/Gore/me examples were just illustrations of my above point.

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      rainbike February 18, 2015 at 12:27 pm

      A $15/hour City wage is a bad start.

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        davemess February 18, 2015 at 12:36 pm

        Granted it’s only for 156 or so contractors that work for the city of Portland.

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          rainbike February 18, 2015 at 12:48 pm

          Is a city residency requirement tied to the $15/hour proposal, or could those contractors live outside the city?

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            davemess February 18, 2015 at 1:13 pm

            No idea, good question.

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      George H. February 18, 2015 at 1:33 pm

      A $15/hour minimum wage for the city is a horrible idea. You think the influx of transplants is bad now? Pass that ordinance and the influx will get much, much worse. We’ll be inundated with a bunch of unskilled slackers coming to Portland to find themselves, imagining we’re a quirky hipster mecca. Not to mention the hardship on small businesses…

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        J_R February 18, 2015 at 1:46 pm

        I agree. Also, consider what will happen to the programs offered by Portland Parks. Most of the aquatics swim instructors my kids have had were teenagers or college students. Boosting their pay to $15 per hour would necessarily result in the swim class fees going up. Yes, I can afford it for my kids, but others will be unable to afford higher fees? Will the teens teaching classes (swimming, archery, tumbling, etc.) be forced to look elsewhere for work? It’s not been well thought out.

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        davemess February 18, 2015 at 4:39 pm

        The mayor is specifically proposing this for a small group of city-employees contractors. Not as a minimum wage for the city (although I think that is kind of the general idea being floated).

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    rachel b February 18, 2015 at 12:54 pm

    FYI–thought some here may be interested in this–2015 In It Together Community Summit, Feb. 28. Hales and Fritz will be there along with other community and city leaders, and there are several (seemingly) relevant sessions:
    https://www.portlandoregon.gov/oni/65899

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    Alain February 18, 2015 at 1:47 pm

    J_R
    I think the focus on “inclusionary zoning” is misplaced and would not solve, or maybe even help solve, the affordability problem.
    If the local government is going to require a certain portion of the development to be cheaper, that simply means the developer must increase the portion of the total project cost that is paid for by the “market rate” component of his project. It costs the same to put the streets, water system, sewer system, fire hydrants, etc. regardless of whether the subdivision has 10 houses priced at $X, or 8 at $X+ and 2 at $X-.

    IZ guidelines look different in each municipality where IZ is implemented.

    There is a lot of local control in IZ, which is one of the virtues of IZ since it offers a lot of community input into how the guidelines function.

    What appears to be common with IZ is that the “costs” are not, as you indicate above, the same. Typically, developers are given incentives that lower the costs of development while at the same time the developer can be required (I say “can be” because there are forms of IZ that do not mandate) to develop X% of units of housing for households at X% of MFI.

    Lifting the ban has been difficult enough. Then there is the discussion around how IZ should look. This discussion right here, right now is showing how important the discussion is for our city, for urbanism and for establishing some kind of model for a affordability in a city that is now considered “the fastest gentrifying city” in the U.S..

    http://grist.org/cities/the-10-u-s-cities-that-are-gentrifying-the-fastest/

    Perhaps IZ is not a cure-all, but allowing the OHBA (and their lobby in Salem), developers, and city agencies to side step the affordability issue is clearly not helping the situation either. Lots of changes need to occur, changes in zoning densities, greater efficiencies in the permitting process, etc., etc. IZ can simply be another method of helping bring about affordability.

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    Chris I February 18, 2015 at 2:00 pm

    Have we finally hit the concentration of east coast transplants that they now think they can implement their flawed affordability programs like inclusionary zoning and rent control?

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      shuppatsu February 18, 2015 at 2:37 pm

      Hey, don’t forget about us Californians! San Francisco has all the answers…

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    Jim Lee February 18, 2015 at 2:54 pm

    I live in SE between Woodstock Park and Mount Scott Park. The demolition–upbild trend began here nearly 10 years ago; a decrepit house on a big lot would be destroyed and two nice houses built in its place. A couple of years ago the destroyers began to purchase good to very good houses on somewhat larger lots, rip them down and build two tacky palaces that only two professional income level couples could afford.

    “Affordable” is a “Queen of Hearts” word: it means whatever its promoters want it to mean.

    The real problem is that assortative mating produces high-earner two-income couples, many without children, that drive the market for builders. The rest of us get shafted.

    This is a fundamental social-psychological-economic problem that never will yield to facile “policy” analysis. Only confrontation of our basic social-sexual derangement can resolve this radical disequilbrium.

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    Alain February 18, 2015 at 4:55 pm

    don arambula
    Nationwide, all the IZ recommendations that you identified have resulted in an insignificant amount of affordable housing. We need a bolder approach.

    Don,

    I agree, but would add, we need bolder approaches, in the plural sense.

    IZ being one of those bold approaches. BTW, tell me what would be a significant amount of affordable housing, would it be 20%? 35%? 42%? If the state ban on IZ is lifted, then questions like this will need answers in order to help define how IZ will look here.

    IZ on its own will not fix everything, but whose saying that, I’m not. In addition to allowing (by law) IZ, I would advocate for increased density in R5, R7 and R10, pushing aside other restrictive zoning that hampers the supply of housing.

    Regardless of whether you believe or agree with the info in the link I provided, and assuming you were in Portland say 15 or more years ago, think about what you paid (market-rate) for an apartment then, and what that same apartment will run you now. The increase in rents is far higher than average CPI.

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      davemess February 18, 2015 at 6:46 pm

      “The increase in rents is far higher than average CPI.”

      Isn’t this true of most cities in the US (esp. the West Coast) though? Including many cities using IZ?

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      Jim Labbe February 19, 2015 at 6:11 pm

      We’ll stated.

      HB2564 removes a preemption on local governments that should have never been put in place in the first place. The ban was basically a political return on the lobbying investment of Oregon Homebuilders Association delivered by John Kitzhaber who signed it into law in the late 1990s. John Chandler with the Oregon Homebuilders Association- who is most responsible for the ban- talks a good game about the need to address affordable housing in other, very questionable ways, such as expanding the UGB or cutting System Development Charges, but there is absolutely not sense in taking regulatory tools off the table to address a problem that will need multiple regulatory, funding and community-based solutions.

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      don arambula February 20, 2015 at 3:31 pm

      Lessons learned for Portland? Here’s San Francisco’s approach. Note that IZ is not part of their game plan. http://bit.ly/1AdPvfs

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    Dwaine Dibbly February 18, 2015 at 5:35 pm

    “Lower building standards for low-cost homes”? What the heck? Is he asking for another Vanport?

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    Dave February 19, 2015 at 8:32 am

    rainbike
    A $15/hour City wage is a bad start.
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    Yeah; all those city employees shipping the money out of town to their Zurich bank accounts. They’re so grossly overpaid, right? Like they should get half minimum wage and be grateful for any job at all?

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      rainbike February 20, 2015 at 12:20 pm

      Well, that goes a little further than what I said and what I believe. I think that not every job is worth $15/hour and that artificially propping up that floor is a short-term, feel-good solution that actually brings some harms. We disagree and that’s okay. Enjoy the weekend.

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    Christopher Sanderson February 19, 2015 at 2:49 pm

    There’s only one solution… Zombie Apocalypse!

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    inwe February 19, 2015 at 8:47 pm

    I think some folks here are having a hard time distinguishing developers from individuals. It isn’t a fair comparison.

    I own a home that I rent out. I would LOVE to rent it for less than market rate and thereby help lower income folks live in what has become a highly desirable and increasingly expensive neighborhood. But I do not. Does that make me one of those NIMBY hypocrites advocating only so long as I don’t have to bear the cost?

    Here’s the thing: I rent out my home because I cannot afford to live there. Either I sell it (at a loss – and what would that achieve?) or I keep it rented to pay the bills. Am I living off the rental income? Hell no. Beginning in May of this year, I am hoping to break even for the first time in six years. I am charging market rate and subsidizing someone else to live there. I work two jobs and live across town where I can rent for half the cost.

    Developers, on the other hand, are not doing everything they can just to make ends meet at home. They’re looking to spend millions of dollars on a project, typically from the ground up. Laws like this merely ask them to plan accordingly, much like requiring sprinkler systems or trees planted. Some developers may spend months, even years, planning that project, only to walk away when they decide it no longer pencils out. Many of them will be none the worse for it. That’s the cost of business.

    For folks like me, it’s a cost of living.

    Where’s the self-righteous HOW DARE THEY! reaction to mandatory parking and square-footage minimums? What were you saying, Stretchy, about laws forcing people to do what you want, whether or not it’s in their interests to do so?

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      Stretchy February 20, 2015 at 8:16 am

      You’re making an assumption that I support mandatory parking requirements and square footage minimums. These assumptions are false. But, thanks for assuming I’m a hypocrite (I am, by the way, about many many things) without any evidence.

      Mandatory parking requirements socialize the costs of car ownership, increase congestion etc… If you own a car, you should be prepared to pay the cost of ownership, including the cost of storing it when you’re not using it.

      Square footage minimums restrict what an owner may do with her property. This, in effect, seizes some of the value of the property and transfers it to the neighbors who may not want to see small houses next door. If the neighbors truly value not having small houses next door, they could simply pool their money and buy the property themselves or, they could pay the owner some amount to maintain the existing house.

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      davemess February 20, 2015 at 9:39 am

      I’m curious about your selling at a loss. I had thought that almost every area of Portland has seen home prices rebound to at least the peaks of 8-10 years ago (I’m guessing you bought right at the bubble peak?).
      Is this not the case with your house?
      Did you originally buy it to be a rental property or to live in it?

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      maccoinnich February 20, 2015 at 9:56 am

      “Some developers may spend months, even years, planning that project, only to walk away when they decide it no longer pencils out. Many of them will be none the worse for it. That’s the cost of business.”

      I think you are making an assumption that there is a much higher profit margin in development than there actually is. Most developers working in Portland are actually fairly small firms, that only work on a handful of projects at a time. They don’t have massive sums of money sitting in a bank account, and typically have to borrow money to finance construction.

      If a developer works on a project for months or years, they will of course have their own administration and overhead costs to cover during that time. They will have also have paid money to consultants working on the project, which will include architects as well geotechnical, structural, mechanical and traffic engineers. Design Review alone can cost $30,000 in City fees. All those costs come long before any revenue can be realized from a project. The idea that a developer can walk and “none the worse for it” just isn’t realistic.

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        Oregon Mamacita February 20, 2015 at 3:13 pm

        Even if the developers can’t walk away from the project without having incurred some expenses, why should their desire for profit come before the neighbor’s preferences on livability?
        To put the issue in context, if a developer benefits from one political climate (anythings goes, builders) and then sees the political climate shift towards the neighbors (thank you Ms. Fritz) who cares. They don’t seem to care about the neighbors, and the neighbors don’t care about the developers.

        A climate where 1200 sq. foot starter homes are remodeled would help affordability. But the builders will thwart people remodelling their own homes by snatching them up & splitting the lots. The city likes the higher taxes that follow the 650k homes.

        Your points are supported and your analysis logical, yet they do not move me towards sympathy towards builders.

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    Dave Hogan February 19, 2015 at 9:25 pm

    davemess
    I don’t know. The profit margin for a developer to just do a 1 for 1 is definitely nowhere near as high as splitting a lot. That would likely be less desirable for a big developer. I think you might end up with more gut and renovate houses. But yes, that would still decrease affordability (granted that is going to happen regardless just due to demand/inflation/gentrification/etc.).
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    For one example, a developer in Sellwood recently replaced a house on SE 11th and went from $239k on Aug 9, 2013 to $667k March 4, 2014 without splitting the lot. It doesn’t cost $428,000 to construct a house, even a 2600 sqft one.

    You can’t do that everywhere in the city, but there are neighborhoods where it’s happening.

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      davemess February 20, 2015 at 9:45 am

      Sure, I’m not arguing that developers and flippers can’t make money on a 1 for 1 (A flipper a few blocks from us just sold a house for $325 that he bought 3 months before for about $115K).
      But would the developer your cite have made more by splitting the lot? My guess is that there were likely zoning issues/barriers they ran into.

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