IN MARCH 2016, Portland won permission to force developers to build affordable housing. Developers struck back.
In a pell-mell period lasting nearly a year, developers clogged the city’s building permit pipeline with 19,000 proposed housing units—scrambling to get them submitted before Portland’s affordable housing mandate began in February 2017.
Some of those projects were the equivalent of spaghetti thrown at the wall. Some were legitimate proposals. But the rub for the City of Portland was that, because they were submitted prior to the cutoff date, none would be required to offer affordable units.
Now the city’s trying to convince those trigger-happy developers to get on board anyway.
According to a proposal that the Portland Housing Bureau (PHB) unveiled late last month, officials will try to entice builders to voluntarily include affordable units. To do that, PHB plans to revive a tax exemption program that’s been sitting on the shelf: the Multiple-Unit Limited Tax Exemption, or MULTE, program.
Yes, MULTE has a stultifying name, but its concept is simple: The city’s going to dangle the promise of 10 years of property tax exemptions in front of developers—if they pledge to make a percentage of their new buildings affordable for those same 10 years.
How affordable? The plan the city’s considering would require one-fifth of a project be affordable to people making between 60 and 80 percent of the area’s median family income, which ranges from $40,380 to $53,800 per year for a three-person household.
The offer would be open to developments anywhere in Portland, but the program would max out once PHB awards $3 million in tax exemptions over a two-year period.
The big question is: Will anyone bite? PHB thinks so.
As I’ve reported, the city’s new mandatory affordability policy—called inclusionary housing, or IH—has coincided with a steep downturn in the number of housing units proposed in the city.
In the year since IH was put into place, the city fielded applications for 682 units of housing. In comparison, from 2013 to 2017, the city built between 3,000 and 6,000 units per year.
The reasons for this change are disputed. Some say the IH policy has made building in Portland unappealing. Others point to different factors—like rising construction costs, a softening of rents, and the astronomical price of land in the city—that could be slowing things down.
The reality is probably a mix of those things, but the city is hoping that rising costs and cooling rents are the big factor. If that’s the case, the same developers who flooded the city with permit applications prior to IH might now be hungry for the tax exemptions the PHB plans to offer and—voila!—affordable units.
There are certainly plenty of projects that would, in theory, be eligible for this deal. According to a recent report from the Portland Bureau of Planning and Sustainability, there are thousands of units of housing sitting in the city’s permitting pipeline.
Even a fraction of those offered at below-market rates would be progress. If there’s one thing the city’s housing crisis has shown, though, it’s that in Portland, progress rarely comes easily.
