Developers Just Proposed Nearly 6,000 Apartments to Evade Portland's New Affordable Housing Mandate

Nicole Cmar

Want to ensure Portland developers build more housing? Threaten to make them offer affordable units.

That's one takeaway from new data obtained by the Mercury, which shows that developers applied to build an impressive 5,900 units in the two months before the city enacted a new inclusionary housing policy this month. And that's a conservative estimate.

The IH policy went into effect on February 1, and now forces new projects of 20 units or more to set rents at or below 80 percent of the city's median family income in one-fifth of units—either that, or pay into a fund that will be used to build affordable housing in the future. The affordable units are partially subsidized through tax abatements and other incentives offered to developers.

But there was an easy way for developers to avoid the requirements: Getting their project in before the February 1 start date. And according to the city's Bureau of Development Services, plenty of them did.

In December and January alone, BDS fielded 42 land-use review applications for residential projects that the bureau's "conservative" estimates say could include 5,000 units, according to spokesperson Ross Caron. The bureau also received 18 applications for commercial building permits that could include nearly 900 dwelling units.

"They’re vested under the previous zoning code regulations and therefore don’t have to meet the inclusionary housing requirements that went into effect February 1," Caron says. He notes that while BDS can't say for sure the projects were submitted to beat out the IH policy, the bureau believes these 20+ unit projects probably were.

The bounty of proposed units is good news for supply-and-demand purists, but it's likely deflating for those who believe the fixed rents created with inclusionary housing are a more-immediate balm to the city's housing crisis.

There's no guarantee that all the units BDS fielded applications for will ultimately be built, of course, but those applications add to an already enormous list of possible projects that could forestall the need for new buildings that comply with the new affordable housing mandates.

According to a quarterly analysis [PDF] released by Portland State University in November, there were 10,000 units being constructed in the Portland metro region at the time of the study's release. The analysis noted there were "another 28,000 units proposed, but with concessions and vacancy increasing due the increased supply, it seems unlikely that a majority of these proposed units actually get constructed in the near-term."

BDS' data shows at least 5,900 units have been proposed within city limits since that study was released. (It's not a one-to-one comparison, but for some perspective, the city issued building permits for 4,120 units in all of 2014, according to census data cited by PSU. It issued permits for fewer than 3,000 units in 2013.)

Those apartments might arrive and they might not. The land-use review applications attached to the 42 residential projects come with long timelines, and so those buildings could show up years into the future, if they're ultimately approved. The applications also cost a minimum $20,000, Caron says, meaning these are more than idle fantasies.

The commercial buildings that account for something like 900 new units could be approved on a faster scale.

This isn't catching anyone off guard, by the way. In December, as council began a series of hearings on the inclusionary housing proposal, there was already word developers were vying to submit plans under the wire.

Commissioner Nick Fish said at the time: “We may very well see so many projects beat the... deadline that for the next several years, the bulk of development done in this city is not going to be inclusionary housing.”

Fish and others voiced hope at the time the city will be able to convince developers to offer affordable units voluntarily, if the city dangles enough incentives in front of them. It's unclear if that will happen.