Last week, City Auditor Gary Blackmer released the report of a months-long investigation done on the PDC and Bureau of Planning’s policies surrounding tax breaks given to developers who build affordable housing. The report is serious. It points out the poor follow-up process that has resulted in some developers snagging tax breaks by promising to build affordable housing in the City’s needy areas, then building not-so-affordable housing instead. This means the City and County are effectively paying for affordable housing that doesn’t exist.
The Portland Tribune and Portland Business Journal wrote about the report, but their language is pretty dense and the housing law going on here is complicated. I want to make sure everyone in Portland understands what Blackmer has dug up. In really simple language, here’s what the audit uncovered:
The PDC and Bureau of Planning grant property tax breaks called “Housing Tax Abatements” to developers who promise to build affordable housing in places that need it, like Urban Renewal Areas. But after giving the tax break, the City does not effectively watch projects to make sure the affordable housing actually gets built and used by low-income people. Instead, numerous condos and apartments receiving thousands of dollars in affordable housing tax breaks have been sold at non-affordable prices.
What does that mean for Portland? Gary Blackmer and the gang lay out a couple examples of development projects going unchecked (wade through the report‘s housing-wonk language yourself if you want):
– The posh 246-unit Louisa next to Whole Foods on NW Davis gets to skip paying $638,000 annually in property taxes in exchange for selling 24 of its condos at an affordable price. When the auditor reviewed the project, all of the condos were selling for more than the required affordable price.
– While the tax break is supposed to be an incentive to build, the City granted one condo developer the break after construction was completed. And then, when the auditor investigated, they found that five of the six units granted the tax breaks were being sold for over the affordable price that the city and developer agreed on.
Two of the four condo projects reviewed were selling units for more than allowed. A far cry from being affordable, The Louisa’s website gloats, “Reside on the high side of life, living among sixteen floors of luxury apartment homes located in the center of the prestigious Brewery Blocks of the Pearl District.”
This should not be happening. More after the cut.
Housing tax abatement is an important tool cities can use to get developers to put money into building housing that’s less-than-ideal from a market perspective. In Portland, people willing to develop affordable housing in the Central City and Urban Renewal Areas can negotiate to not have to pay some property taxes. In 2006-2007, properties got out of taxes totalling $2.8 million to the City and $8 million to the County–money which would have gone to support schools and roads and all sorts of good things. Essentially, municipal planners decided it’s good to make that monetary sacrifice so Portland’s tight housing market can get more affordable apartments, condos and homes.
BUT, the auditor found that while the PDC and Bureau of Planning have been focusing on getting new housing built, the agencies haven’t been effectively checking up to make sure the housing is actually what they’ve agreed it’ll be. Splintered responsibility between PDC and Planning and unclear follow-up processes means developers effectively might have been able to build whatever they wanted after initial agreements.
“On the one hand it’s the money, on the other hand it’s the purpose,” says Director of Audit Services Drummond Kahn, “The big question is are we getting what we paid for and without the City monitoring the projects, we can’t really answer that question.”
Portland Gentrification spells out what seems to be going on:
In sum, on one side we have multimillion dollar development corporations with offices full of experts, and on the other we have city commissioners and a development commission that have only enough manpower to let everyone look the other way when these juggernauts hold their hands out, swearing they’ll make good. In the middle we have City Auditor Gary Blackmer, Portland Gentrification’s subtle hero of the moment.
This report raises all kinds of suspicious questions. How could a monitoring plan to watchdog the results–something obviously essential to the development process that’s routinely followed by federal housing programs–not exist here?
Did the whole monitoring plan get lost in the paper shuffle between PDC and the Bureau of Planning? It seems strange that the idea that big development projects should be closely monitored could just slip past planners at the two agencies. Maybe some condo builders have good friends in the City?
Clawback (or indict).
Ms. S.Mirk:
Please don’t think me hard-hearted. . . well, actually, I am. I’m too old and cranky to be anything but a curmudgeon.
Why anyone not terminally naive finds this sort of thing surprising is beyond me. Especially in one of the most corrupt cites in the U.S., both historically and today.
As I have indicated in various blogs on this website before, to be successful in comedy, satire, parody and journalism, and this includes the “gonzo-journalism” that the Mercury pretends to, the correspondent has to be cynical and suspicious to the point of paranoia. Otherwise, you will spend your career re-cycling press releases on Faux News and its ilk.
People, and especially politicians, are motivated by only two things: Greed and fear of exposure, and Maslov be damned.
Here’s how life works:
People want money.
Politicians are people.
Therefore, politicians want money.
This is the basic syllogism of life. Period. You will never prevent this sort of nonsense, and you should never be surprised by it because it is all around you. All you can hope to do is stop it before it rapes everyone. It appears obvious to me that someone in your story is on the take. Probably more than one someone. It’s your job, if you decide to pursue it, to hang their fuzzy asses if you can.
So, good work — so far.
I remain your humble servant,
Jacomus
P.S. You want a huge bump in the circulation and credibility of the Mercury? Bust one of these people. It’s how Willamette Week established itself.
Fairly standard MO for the City… good intent, no follow-through.
Good post – I hope people will move past the sort of “what do you expect” reaction – this is actually surprising and worth our dismay. With the internet, PortlandMaps, MLS etc, it only takes seconds to see how much a condo sells for. All that information is public.
The fact is, you wouldn’t just assume that a developer could get away with promising a certain price range of housing and then sell it for more $$ without getting caught. The obvious assumption is that certain developers must have known that this would be the case — who were tipped off, somehow, or assured that any penalty for fudging would be trivial. As it is.
just charge them the back taxes they owe and everything should be ok right? of course, a lump sum payment of whatever 638K times however many years they have been there may screw them… but they tried to screw us, so what the hey!
To what degree can anyone actually do anything about this, though? PDC commissioners are unelected and accountable to no one. Sam Adams was just elected after espousing what amounts, in many respects, to an anti-affordable housing platform. The one person we could probably have trusted at one point to at least initiate a discussion of this outrageous thievery, Eric Sten, inherits a buttload of cash and drops out in the West Hills.
Meanwhile, mayor Whiskey Nose chooses to identify these repeated acts of theft as an “evolution of goals” and “tools adapted to changing city dynamics.”
You said a mouthful there, you old smelly sod.
Wow. I really had no idea. You always suspect such criminal theft of tax payer monies but never really hear about it. Could the author (Sarah Mirk) find out what is going to be done, if anything? Can the City take them to court for back taxes and not following an (i assume and hope) contractual agreement? Press for some answers!
Good work, Sarah! Here’s hoping you get a full time gig somewhere after your internship!
sarah mirk > matt davis
Take it BACK, and FIRE those who were complicit!!!
We’ve been praying for this to come out.
SARAH, a heroine of THE PEOPLE
Rather than fire them, find out who took the pay offs to accept this, and slam their asses in jail.
Tthis is a great article, but Sarah, if I’m not mistaken you seem to be talking about condos and apartments interchangably. The Louisa project you mentioned, for example, is rental apartments, not for-sale condos. Still, the larger point of the article is very well taken. Appalling!
Oh, I say, Ms. Mirk. I was wrong that this is a slow news day. Nicely translated.
Half a mo’ — this was posted yesterday. So the news feeds today aren’t very interesting.
Ms. Mirk. You are to be commended. Jolly good show, and all that. Not funny, of course, but quite insightful.
People are idiots. I can gurantee you that the developers, if pressed, can, and will, sell the condos in question at “affordable” rates. It’s just that they will be sold to the developers brother, cousin, mother-in-law, Mayor’s kid brother, Assessor’s office secretary… You get where I am going here. There is nothing in the wording of the legal requirement that the so called ‘affordable’ units are actually sold to any specific induvidual. They will be sold at affordable prices and immediatly flipped to sell at the higher price, the ‘poor’ will still get screwed, and a whole bunch of In-the-know freinds and family of the developer will get free money.
Srewing your fellow human beings is part of the human condition, nothing will change that.
they are apartments for rent, TonyInTheCouve. but you’re right, people ARE idiots.
“Srewing your fellow human beings is part of the human condition, nothing will change that.”
Nothing short of braking down the systems that allow said screwing.
Here a thought : All the expensive condos that cheated should have to lower there rent to the ‘affordable’ level from here on out.
S. Mirk,
There’s more to this than meets the eye.
This report is vague and anecdotal. Why is that? The report lists all sorts of problems with the program by appearing to provide details about the shortfalls. But notice that it doesn’t list which buildings fail to meet the standards and specifically how. Maybe because the report relies on the same two buildings for most of its (anecdotal) data. Why would the auditor’s office want to do this?
Where’s the appendix showing exactly how much the units sold for, rent for, percent above the median income, which have amenities, etc?
If you read the responses, you’ll see that the Louisa, which is the poster child project the report mentions over and over again, actually DOES provide the required affordable units and the public meeting room.
S. Mirk,
There’s more to this than meets the eye.
This report is vague and anecdotal. Why is that? The report lists all sorts of problems with the program by appearing to provide details about the shortfalls. But notice that it doesn’t list which buildings fail to meet the standards and specifically how. Maybe because the report relies on the same two buildings for most of its (anecdotal) data. Why would the auditor’s office want to do this?
Where’s the appendix showing exactly how much the units sold for, rent for, percent above the median income, which have amenities, etc?
If you read the responses, you’ll see that the Louisa, which is the poster child project the report mentions over and over again, actually DOES provide the required affordable units and the public meeting room.
Actually, the response is:
“Subsequent to your (Auditor’s) visit in January, the owner has demonstrated”
that the units are at the required level. In other words, we made it look good for you – but we only bothered because we knew we were caught cheating.
Nice try, Skinny City Girl. Of course, anyone reading this blog can guess that nobody would post a comment like yours (2x even!) who didn’t have some interest or other. So out with it: who do you work for?
Skinny City Girl:
You are quite right in your comments.
S. Mirk:
Reports like this are written to let citizens express outrage while hiding what is truly happening behind. This isn’t the first time this situation has been exposed in the media, nor will it be the last unless. . .
Remember, somewhere in city government, is a bureaucrat actively engaged in this program, on the take, hoping citizens blow off steam without being exposed as for the criminal he or she is.
Wm.TM:
Look at the number of comments on this issue. Compare this number to the average number of comments on other postings.
See where the Mercury’s future lies?
I remain, etc.,
Jacomus
oh, the intrigue! PG-I wanted to know how and why developers were stealing my tax dollars. I thought the report would tell me, but it didn’t. Then I started thinking are politics in this town really SO boring that the auditor releases a report and says what he means and means what he says and everything is perfectly straight-forward and everybody nods and says thank you and sends over a polite response? These are elected officials, you know.
A lot of unscrupulous scumbags will take advantage of you if you are ill-informed or vulnerable in anyway. Don’t let Jacomus or Tony from Vancouver make you believe you should give up because corruption is normal. Dog shit is normal, but most people will clean it up. These people who tell you to abandon hope are either weak or low life leeches themselves. Good post!
Dumpster:
No, Unlike you, I believe in picking my fights, and focusing on fights that can be won. What you want is to solve a problem that bothers you and very few others. You’re pissing into the wind.
I, on the other hand, want to know who is getting rich at public expense — out of my pocket as well as yours.
It’s a difference of perspective and apparently, maturity.
If you choose to tilt at windmills, have at it.
I, in my humble manner, want to make things better for all.
I remain your humble servant,
Jacomus
I assume the appendix Skinny City Girl is talking about is the letter of response from the PDC director, which is in the back of the report. In his letter, the PDC director says the “In reference to the Louisa… subsequent to your visit in January, the owner has demonstrated that the required 24 unites are being rented at or below the required level.”
So, yes, the units are now being sold for the affordable price, but I took this to mean the change only came about after the auditor poked into it.
Actually Jacomus I pick the fights that I’m interested in and even have the slightest chance of making a change. This actually involves a lot more than a few people. The city attorney’s office just re-wrote the rules and violation codes for town cars. Small change in your eyes, big one($$$) for the town car driver that gets caught. There is a meeting this week amongst various taxi companies and the city concerning this issue. Some of the big hotels have decided to run their front door honestly and some of the gypsys have disappeared(for the time being anyways). I’m sorry Jacommentator, but some things are changing in our favor. I know it upsets you.
Maturity to you constitutes a lack of balls. You sir are definitely neutered. I have been an actual activist for many years. I have taken on war, racism, poverty, working class issues, pro-active resistance, campaign organizing and even matters that most people do not give a crap about.
What have you focused on Jacommentator? Did anything change for the better?
I think you are just blowing a lot of smoke. You are good at trying to drag people down to your negative level. You’re are also good at making real activists stronger and more focused with their arguments. Thank you for that. That actually does do a lot of people a lot of good.
Again, Jacommentator, what have you done to bring about change for the issues you focus on and hold dear? Or are you just a whiner who critiques others actions because your to lazy or negative to actually do something yourself? I believe you are just what my dad would call a “talky,
talker”. Lots of talk and critique of others, zero action on your part. Thank you Jacommentator.
Eyes wide open, At least they are all corrupt together. Did you think gentrification was magic.
Corporate Realtors / Developer’s, mission plan was strategic across the board. One lie got them free tax money for #2, 3 , 4, Properties built for a market that didn’t even exist. How many of these $22 sq. ft. properties are leasing???
They did the same thing with low income housing, as soon as the unregulated monies were passed down to the oh so honest mover’s and shaker’s. There they developed their five year plan, based on how much they can get off the tax payer’s money under the guise of low income housing to develope properties, that were beyond what the Portland market could even afford. Holding there breath long and hard for Californian’a to move North,to feed the rise. They pursued CA, WA, buyer’s, this was the place to invest. This has happen everywhere…now there is a glut of property, and the loans were sold over and over again. Now the USA Banks have zero cash…Real Estate every where is siiting there. Yet they all got paid, early on, not once were they checked on, rather they did what they said they would with our tax money. People living in low income situations, aren’t doing so, because they have alternatives. Yet you have a manager harassing tenats, because they want their rights as a tenant.
Many women separated from their husbands, get old mail adressed to their husbands. Even after you put a change of address in. Ask the PO office, this happens all the time. Believe me if the lady living there on low income which is not more than $600. month (likely less), if she had a opportunity to move and increase her situation, just like you big mover’s and shaker’s do on the backs of tax payer’s money…do you think she would? Who’s more corrupt???