Portland’s affordable housing mandate for new construction shows promise, study finds
Portland’s affordable housing mandate for new construction shows promise, study finds Oregon Public Broadcasting
sdgtalks
Affordable Housing Policy in Portland: Study Finds Lesser Impact on Developers
A new study funded by the city of Portland and conducted by BAE Urban Economics has found that the city’s “inclusionary housing” policy, which requires new apartments to include affordable units for low-income tenants, is not as costly for developers as previously feared. The study suggests areas where the city could reduce fees to further incentivize affordable housing construction. The findings of the study will serve as a guide for policymakers in addressing the housing affordability crisis in the city.
Background and Policy Details
Portland adopted the inclusionary housing policy in 2017 to address the shortage of affordable housing in the city. The policy mandates that all new apartment complexes with 20 or more units allocate a certain percentage of units for low-income tenants. Specifically, developers must keep 15% of a building’s units affordable to individuals earning at least 80% of the region’s median income. Alternatively, developers can keep 8% of the units affordable to individuals earning 60% of the median income. In exchange, developers receive certain benefits such as waived development fees and property tax exemptions for the affordable units.
In downtown Portland, the policy is even more stringent. If a developer builds a new apartment in the designated “central city” area, 20% of the units must be affordable for individuals earning at least 80% of the area median income. Developers in this area can have property taxes waived for the entire building for 10 years.
Developers have the option to opt out of the program by paying a fee per square foot of the planned building. However, the study found that it is financially beneficial for developers to opt into the program, especially in downtown Portland where the incentives are higher.
Study Findings and Recommendations
The study analyzed the cost of building a seven-story residential building in downtown Portland. It found that developers agreeing to rent 15% of the building to low-income tenants would make an estimated $2.8 million less than if all units had market-rate rents. However, the city incentives would save them $3.6 million, resulting in an additional profit of over $800,000.
For developers building large apartment buildings outside the central city, the financial benefits are less significant. The study estimates that developers would forgo an estimated $825,000 in profits to create the mandatory affordable units and save only $594,000 through the city’s incentives.
The study also identified system development costs (SDCs) as the largest overall cost for apartment developers. SDCs are developer fees used to pay for changes to public infrastructure resulting from new construction. The study suggests that reducing SDC costs could further incentivize affordable housing construction, but acknowledges that this could impact city infrastructure projects funded by SDCs.
Other recommendations from the study include reducing the number of required bike parking spaces, cutting mandates for retail space in some buildings, and improving the permitting process to save developers time and money.
Impact on Development and Future Policy Changes
The inclusionary housing policy has resulted in the creation of 1,000 new affordable rental units in Portland since 2017. City Commissioner Carmen Rubio emphasized that this achievement should not be overshadowed by the program’s challenges.
Developers have expressed concerns about the program’s impact on construction costs and the overall housing supply. They argue that the focus should be on increasing overall housing supply to address the housing crisis.
A volunteer work group composed of housing developers and researchers has been formed to review the study’s findings and propose policy changes. The group is considering expanding the property tax exemption allowed for central city buildings to citywide construction and improving the program’s administrative systems. The recommendations will be presented to City Council for a vote in the fall.
Overall, the study highlights the importance of balancing affordable housing goals with the financial viability of development projects. It provides valuable insights for policymakers as they work towards achieving the Sustainable Development Goals (SDGs) related to affordable housing and sustainable cities.
SDGs, Targets, and Indicators in the Article
1. Which SDGs are addressed or connected to the issues highlighted in the article?
- SDG 1: No Poverty
- SDG 11: Sustainable Cities and Communities
- SDG 17: Partnerships for the Goals
2. What specific targets under those SDGs can be identified based on the article’s content?
- SDG 1.4: By 2030, ensure that all men and women, in particular, the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services, including microfinance.
- SDG 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums.
- SDG 17.17: Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships.
3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?
- Number of affordable rental units created under the inclusionary housing policy (Indicator for SDG 11.1)
- Reduction in development costs for affordable housing projects (Indicator for SDG 1.4)
- Number of partnerships established between the city and developers to incentivize affordable housing construction (Indicator for SDG 17.17)
Table: SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 1: No Poverty | Target 1.4: By 2030, ensure that all men and women, in particular, the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services, including microfinance. | Number of affordable rental units created under the inclusionary housing policy |
| SDG 11: Sustainable Cities and Communities | Target 11.1: By 2030, ensure access for all to adequate, safe, and affordable housing and basic services and upgrade slums. | Reduction in development costs for affordable housing projects |
| SDG 17: Partnerships for the Goals | Target 17.17: Encourage and promote effective public, public-private, and civil society partnerships, building on the experience and resourcing strategies of partnerships. | Number of partnerships established between the city and developers to incentivize affordable housing construction |
Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: opb.org
Join us, as fellow seekers of change, on a transformative journey at https://sdgtalks.ai/welcome, where you can become a member and actively contribute to shaping a brighter future.
