Portland’s Trying to Prepare Brick Buildings for an Earthquake—But at What Cost?

Sarah Yeoman

When Virginia Hankins and her father bought a commercial building on Northeast Martin Luther King Jr. in 1990, business in the area was far from booming.

“Times were hard,” Hankins says. “We couldn’t find anybody to rent in that building.”

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Nearly 30 years later, that’s no longer the case. Hankins’ building is occupied by what she calls three “mom and pop” local and independent businesses: a beauty salon, a record shop, and an art supply store. She calls the location, just north of where Northeast MLK intersects with Fremont, “an upcoming spot.” Hankins has watched as shiny new condos, hip restaurants, and boutiques have taken over her neighborhood; now, the two closest grocery stores are New Seasons and Whole Foods.

Hankins and her husband have long been looking forward to living off the property’s rental income when they retire. But now Hankins fears that plan is in jeopardy.

That’s because of a city ordinance that’s intended to increase Portland’s earthquake preparedness, but that also has the potential to displace hundreds of property owners and tenants from the central city—many of whom, like Hankins, are African American.

While Portland City Council is currently attempting to rework the ordinance to address these concerns, the way things have progressed thus far hasn’t inspired confidence in building owners like Hankins. If anything, it’s exacerbated the deep mistrust in city government that’s already felt by many Black Portlanders.

“To be honest,” Hankins says, “I think all of this boils down to a land grab.”

“I believe we put the cart before the horse, and we got a lot of it wrong. We’re only now seeing the unintended consequences of that decision."

By now, most Portlanders know the city is overdue for a major, devastating earthquake. Sooner rather than later, the Cascadia subduction zone will rupture, buildings across Portland will collapse, and people will die.

Unreinforced masonry buildings (URMs)—old brick buildings that haven’t been seismically reinforced with steel bars—would be particularly vulnerable in the event of an earthquake. Portland’s 1,600 URMs can be found throughout the city, but are especially concentrated in downtown, the Pearl District, the Central Eastside, and the Rose Quarter.

Built between the late 1800s and the 1960s—before the disastrous scale of a Portland-area earthquake was fully understood, and before local builders and owners were required to comply with modern safety codes and standards—many Portland URMs now serve as Black-owned businesses and churches, host independent music venues, and provide affordable housing units.

For years, Portland has been aware of the risks that URMs pose in earthquakes: According to FEMA, URMs are among the most seismically vulnerable building types. In 2014, the council formed the URM Building Policy Committee.

In its final report in December 2017, the committee proposed new seismic upgrade requirements for URMs. They also urged the city to find funding sources to help private building owners afford the updates, which, depending on the size of the building, can cost hundreds of thousands or even millions of dollars.

In October 2018, Portland City Council passed an ordinance that took those recommendations into consideration, and also set a requirement that any URMs not in compliance with city standards would need to display a placard declaring them unsafe in the event of an earthquake.

City council approved the ordinance with three votes in favor and none opposing. Commissioners Chloe Eudaly and Nick Fish were present at the meeting—but rather than participating, they chose to leave the room for the URM ordinance vote.

Despite declining to vote against it, Fish and Eudaly now say they don’t support the ordinance.

“I believe we put the cart before the horse, and we got a lot of it wrong. We’re only now seeing the unintended consequences of that decision,” says Fish, who believes the placard requirement unfairly places a “scarlet letter” on URM properties. “No one is cavalier about threats of earthquakes. But instead of doubling down on what we have, I think it’s better we back off and take the time to do it right.”

The ordinance’s focus on placarding came as a surprise to Peggy Moretti, who sat on Portland’s URM Building Policy Committee and is the director of the historic preservation society Restore Oregon. The committee’s final report, she says, didn’t recommend any signage, except for potentially labeling URMs after they’d been seismically upgraded.

“My understanding of the placarding was that it was supposed to be more of a positive placarding,” Moretti says, “rather than what one might call a punitive one.”

Portland’s URM ordinance is currently in limbo. A federal judge recently ordered the city to suspend enforcement for 60 days while a lawsuit between building owners and the city plays out in court, and Commissioner Jo Ann Hardesty has introduced proposed amendments that would push back the March 2019 enforcement date to November 2020.

Hardesty’s changes are backed by both Fish and Eudaly and are expected to pass at a February 27 city council vote. But even the updated ordinance doesn’t completely address community concerns.

“There are always unintended consequences when you fool around with the title of the property."

Most of the ordinance’s language centers around requiring placards on Portland’s potentially lethal URMs, so that those entering are aware of the dangers posed by the buildings in an earthquake. But the original policy does more than just mandate a warning sign—it also calls for URM owners to sign an agreement to comply with the placarding rules. That agreement, drafted by Portland’s Bureau of Development Services (BDS) and to be filed at the county recorder’s office, contains some legalese that appears to place a “title encumbrance” on the URM—a mark similar to a lien that could devalue the property and scare away potential lenders and buyers.

Mayor Ted Wheeler says city lawyers guarantee that the agreement does not place any encumbrance on the buildings in question and claims opponents to the ordinance misunderstand the phrasing.

But Alan Brickley, a real estate attorney and a faculty member at Portland State University’s Center for Real Estate, says there’s “no question [the agreement] would create an encumbrance on the title of the property.”

Brickley says it’s difficult to predict how such an encumbrance might affect a URM owner’s ability to refinance or sell their property for a fair value, and that adding it to the URM agreement was an unusual and risky move on the city’s part.

“There are always unintended consequences when you fool around with the title of the property,” Brickley says. “And in this case... that could make it more difficult to sell or to finance.”

Hankins, the owner of the URM on Northeast MLK, says that adding the appropriate upgrades to make her building safer in an earthquake would cost about $400,000, a price that would require her to take out a loan. She fears the agreement she has to sign will hurt her chances of getting one.

“And on top of that, it’s going to lower the value of my building, plus I’m going to be at risk of my insurance probably going up,” Hankins says. “That is, if they continue to insure me.”

E. D. Mondainé, the president of the NAACP’s Portland chapter, finds the city’s insistence that the encumbrance does not exist “extremely alarming.” The NAACP is leading a coalition of groups opposed to the ordinance.

“[The city is] continuing to use the language that says, [the encumbrance] doesn’t really exist, move along, there’s nothing to see here,” he says. “It’s right there in black and white, and you can see it for yourself.”

Along with extending the placarding deadline, Hardesty’s proposed changes to the original ordinance would remove the requirement for a compliance agreement filed with the county’ recorder’s office, which could ease concerns about a title encumbrance.

“I don’t believe that we need to record the URM issue on the title,” Hardesty said at a February 20 council meeting. “We did not provide enough information early enough to ensure that people thought that this was a joint effort rather than something that was being shoved down their throat.”

“Now you’ve created genocide of a whole community. You’ve wiped them out.”

Even as owners of URMs stand to lose money and property due to ramifications from the ordinance, developers could win big—especially if those owners are forced to sell their properties. When Donald Trump passed a new tax plan in 2017, it included the creation of “opportunity zones,” or neighborhoods where developers can benefit from significant tax breaks in exchange for building in areas that are supposedly in need of investment. Governor Kate Brown’s administration chose to designate much of downtown Portland and the Central Eastside as opportunity zones.

Those parts of Portland contain hundreds of URMs—a fact that’s particularly noteworthy because a developer can’t reap tax benefits in an opportunity zone unless their project is either a new building on a vacant lot or if their investment “substantially improves” the property—i.e., knocking down a building deemed unsafe by the city and replacing it with a new development.

Several prominent Portland developers stand to benefit considerably from investments in opportunity zones.

Paul Brenneke is a Portland investor who frequently partners with his brother Tom, the owner and president of local development firm Guardian Real Estate. Paul recently launched a $100 million investment fund for opportunity zone developments.

Mark and Greg Goodman are the brothers behind Downtown Development Group, which owns iconic downtown Portland buildings like the Power & Light Building and the Kress Building, which houses Nike’s downtown store. The Goodmans were featured in a January Bloomberg Businessweek article about developers who planned to take advantage of Portland’s opportunity zones.

For the NAACP’s Mondainé, the ongoing URM saga feels like history repeating itself. He sees parallels to Portland’s long history of “redlining”— the use of discriminatory real estate practices to drive African Americans out of the city. In the middle of the 20th century, the Albina neighborhood had a majority African American population, but the city used eminent domain and redlining to push most Black residents out of the neighborhood. Mondainé sees the placarding ordinance as a continuation of Portland’s racist real estate policies.

“Now you’re telling us that the remainder of all of that is pertinent to African American culture is going to be annihilated through this placarding,” Mondainé says. “Now you’ve created genocide of a whole community. You’ve wiped them out.”

In addition to the African American community and advocates for affordable housing, the URM policy is facing opposition from owners of the city’s independent music venues, many of whom belong to the advocacy group Music Portland. Meara McLaughlin, the organization’s director, told the Mercury the ordinance is “fundamentally flawed” and notes that about 30 percent of Portland concerts are held in URMs. It remains to be seen how much Commissioner Hardesty’s proposed amendments will ease their concerns. Wheeler has indicated he’s open to removing the part of the ordinance that creates an encumbrance, and all of Portland’s city commissioners support a bill currently in the Oregon Legislature that would provide public funding to private building owners in order to seismically upgrade their URMs.

Still, the effect that even a single sign on a URM could have on things like financing and insurance is unclear at best—and even if they receive financial assistance to upgrade their buildings, many URM owners may still decide to sell.

The proposed changes to the ordinance also might not be enough to satisfy the NAACP-led coalition. At a rally held outside Portland City Council’s February 20 meeting, Mondainé called for the original URM ordinance to be completely repealed. He and his fellow coalition members are reluctant to trust the city on URM policy, due in part to what they see as lackluster communication and outreach efforts.

One issue the coalition points to is the city’s URM database, which they say was hastily put together and includes many buildings that, due to upgrades, should no longer be classified as URMs. For building owners to confirm that they’ve adequately improved the safety of their URMs, it can cost an estimated $14,000 to have an engineer assess the property—another price tag working against building owners.

Meanwhile, poor communication on the city’s part has left many URM owners confused about what the ordinance means for them and what they need to do in order to comply. Several URM owners told the Mercury they have yet to receive any formal notice from the city about the new ordinance. Hankins notes that she received a letter from the city about her URM, but it s addressed to her father—who has been dead since 2005—suggesting that her property hadn’t been updated in the city’s URM database since it was first created in 1995.

When asked what will happen if the city continues to pursue a placarding-based approach to URMs, Mondainé’s answer is clear.

“We’re not going to rest until it’s repealed, and the contract language is changed,” he says. “We’re going to scream at the top of our lungs, and we’re not going to stop. This is important.”