Developers in the 'Hood 

Company Accused of Brokering Low-Income Neighborhoods

ON THE CORNER of SE Madison and Grand Avenue, a mustard-yellow sign belonging to Phoenix Redevelopment serves as the backdrop where droves of lower middle class people wait for a bus on a cold, clear evening. The sign's simple message, "Phoenix buys houses. All cash--any condition" is delivered in blocked, bold capital letters and beams with simplicity.

For someone struggling to pay a mortgage or facing foreclosure, this offer can be extremely enticing. But critics are charging that Phoenix Redevelopment and a handful of similar companies that buy houses cheap, renovate them and sell them for a large profit are serving as stalwart engines for gentrification throughout East Portland. The profits of these companies, say critics, are coming at the expense of the individual families living in some of Portland's developing neighborhoods--and, equally as pressing, threaten to undermine the entire character of these neighborhoods.

Over the past two years, as land speculation has become more intense in many of Portland's eastside neighborhoods from the Concordia neighborhood in Northeast Portland to Belmont in Southeast, the polemic Phoenix Development has gone on a real estate buying spree. Since January 1, they have purchased nearly 90 homes in the Portland area. The largest buyer of single-family homes in the Pacific Northwest, they are an attractive option primarily because of their convenience. But community advocates charge that the ease with which homeowners can cash in on their home is a disservice to the very fabric that holds together communities.

In October, Gina Woods, an assistant at a small public relations firm, purchased a two-story house on Northeast 30th Avenue. White and young, Woods is typical of the home buyers who shop through Phoenix: She has moved into an area that five years ago would have been forbidding and, moreover, doesn't even know the name of the family who lived in the home before. Such anonymity serves as a disconnect from the continuity of one generation of homeowners to the next, severing what is often an important link in holding together a neighborhood. Community advocates also point out that such transactions radically shift the demographics of neighborhoods, as the home sellers are traditionally working class, while the home buyers--the new residents--are often younger and invariably wealthier.

Richard Melling, homeowners services coordinator for the Housing Center, is worried that Phoenix's abundant advertising lures uneducated and desperate homeowners away from more profitable methods for selling their home. "I'm concerned with the marketing message they put out. People get steered away from more legitimate ways to sell their house," Richard said. Housing Center, located in Portland's Hollywood district, provides a foreclosure prevention program and telephone information referral line. "The more educated a homeowner is, the less Phoenix will prosper," Richard said.

When contacted by the Mercury, Phoenix stood by its practices. "An easy way to view what we do is to consider that we are really in the housing recycling business," wrote Steve Kreitzberg, President of Phoenix Redevelopment, Inc., via e-mail. "Unlike new ground-up development, we make use of what is already in place and add value to it."

While there is nothing illegal about their business practices, it is the very purpose of their company that community advocates find unsavory. Sheara Cohen, policy associate for the Community Development Network, views Phoenix as predatory buyers who are displacing low-income people from their communities. To cool off Phoenix's rapid buy-and-sell turn-arounds, Cohen recommends an acute tax hike on property speculation. Such a tax would be based on the amount of profit made from a transaction and the amount of time between the buy and sale. "It would discourage people from buying and turning around to make a huge profit on the home," Cohen said.

So far, though, the housing market in Portland and the pace at which Phoenix is turning around homes is not slowing.

"It has been a runaway real estate market, and a lot of people have made a lot of money," concurs City Commissioner Erik Sten, who sits on the Bureau of Housing and Community Development. "But a lot of people have also lost their homes," Sten adds.

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