Portland Mayor Wheeler Pledges to Scrap Inclusionary Zoning if It’s Not Working
More than six years after its implementation, a work group of professionals is having a fresh look at the impact of the city’s inclusionary zoning on apartment development in Portland. The mayor has pledged to tweak or dump the policy if the work group decides it’s not working. The work group’s recommendations are expected by the end of July.
KOIN-TV reports that Portland’s Inclusionary Housing Law,
a pivotal ordinance in an attempt to control the city’s escalating
housing costs, is being scrutinized. Initially introduced in 2016, the
law mandates that developers incorporate affordable housing units into
their new construction projects, primarily those containing 20 or more
units. Under the current provisions of the law, 20% of units in such
projects must adhere to affordability standards, which are then offset
by incentives such as tax exemptions offered to developers.
However, the definition of ‘affordable’ in this context is tied to
median incomes, meaning that ‘affordable’ one-bedroom units could still
cost approximately $1,598 per month, or $1,918 for a two-bedroom unit.
The law has drawn criticism from various quarters, with detractors
arguing it is one of the factors impeding overall development in the
city.
Critics within the development community, including Patrick Gilligan of Lincoln Property Company CRE,
have expressed their concerns about the legislation. “Our inclusionary
zoning, unfortunately, if the intentions were to provide more affordable
housing, has been a failure,” Gilligan said. “It’s very hard to
underwrite in regards to how you’re going to finance a project to go
forward.”
The law and other barriers to development, including the city’s slow
permitting process, were highlighted during a January symposium of the
commercial real estate group called “Revitalize Portland.” Jerry Johnson of Johnson Economics noted that the law had the unintended consequence of making housing less affordable overall.
Meanwhile, the City of Portland is grappling with a shortage of 25,000 affordable housing units, even after the construction of about 1,859 units across 169 inclusionary housing projects since 2017.
In response to the mounting criticism, the Portland City Council has formed a work group to assess the effectiveness of the Inclusionary Housing Law. The group, which includes Samuel Diaz of 1000 Friends of Oregon,
is looking into whether the balance between incentives offered to
developers and the costs of developing affordable housing is
appropriate.
The recommendations from this workgroup are highly anticipated, and
they are expected after July’s meeting. They could potentially influence
the future of housing development in Portland, as Mayor Wheeler is quoted by KOIN as saying,
“I’ve pledged that if it needs to be tweaked, we’ll tweak it. If the
conclusion is that it hasn’t worked, then we’ll scrap it.”