We’re sharing your perspectives on inclusionary housing policy recommendations before Portland City Council.

Developers, academics and housing and social justice advocates gave testimony on IZ at a public hearing on December 13. Read what they said, and send us your opinions.

By Open: Housing | Dec. 15, 2016

This post was updated on December 16, December 22 and January 4.

On Tuesday, city commissioners heard public comments on a historic proposal to mandate inclusion of affordable housing units in new multifamily buildings greater than 20 units in Portland. Citizens and invited experts spoke up about the struggles of low-income residents in a city of fast-rising rents, the risk tolerance of capital investors, and how best to thread the needle between housing affordability and housing production goals. Here’s what some of them had to say. We’ll keep adding testimony to this page as we gather it, and we invite you to send your views on the policy recommendations to hello_at_openhousing.net.

Tram Hoang

Communications and Engagement Manager, Welcome Home Coalition

Good morning Commissioners and Mayor Hales,

I’m honored to be here today to speak about this important issue. My name is Tram Hoang, and I am the Communications and Engagement Manager at the Welcome Home Coalition. Inclusionary Housing has incredible potential to create affordability, opportunity, and diversity throughout Portland, and Welcome Home urges you to pass this policy as we continue to fight for affordable housing solutions in the Metro area.

We need far-reaching solutions to address the comprehensive need in our region. The bond measure that Welcome Home recently helped pass will support very low-income Portlanders, like our seniors who live on fixed incomes, single mothers, and those with disabilities. However, our public investments can only go so far when the cost of market-rate housing continues to rise unchecked and misaligned with Portland’s needs.

With Inclusionary Housing, we can leverage new development with under-utilized Section 8 vouchers. We can give modest income earners more housing choice, taking pressure off of low-income renters whose rents are increasing hundreds of dollars at a time.

There are Portlanders who have modest-wage jobs that simply aren’t enough to ensure a safe and permanent home for themselves and their families. In a sad twist of fate, this includes the very social workers who devote their lives to transitioning people out of homelessness. They work on the frontlines of the housing crisis, and now find themselves no longer able to afford the city they serve.

I am one of those people. As a young professional who was born and raised in North Portland, I have always dreamed of establishing a career and life for myself here. Even after paying off my student debt from an affordable, in-state university, I find it incredibly difficult to afford a place of my own. I currently live with my parents so that I can continue to serve on volunteer advisory boards, steering committees, and non-profit boards. If housing remains unaffordable to emerging professionals like myself, my priorities will have to shift from community involvement to a second job, or possibly even leaving Portland all-together. It is a sacrifice that I hope my civically engaged peers and I will not have to make.

Please, take action with Inclusionary Housing TODAY. Do not stall. More than ever, we need this policy in our toolbox to ensure that new development fits the needs of working Portlanders, so that we can keep our precious public resources focused on helping those who will never be able to compete for market-rate housing. Thank you for your time.

Vivian Satterfield

Deputy Director, OPAL

I’m thankful for this opportunity to speak to you today, and thankful to finally be able to say, “Portland can and should enact the inclusionary housing proposal before you without delay.”

OPAL has been working at the intersection of transportation, housing and health for over a decade in our communities. In 2008 when we began examining the root causes of housing injustice for communities of color and working class households, we identified inclusionary zoning as a critical tool used in other jurisdictions to make a community less racially segregated and more economically diverse. Inclusionary housing isn’t difficult to understand: it is simply a tool to help maintain diversity and economic stability when housing markets fluctuate.

There is only one reason why this tool was banned outright in 1999 at the state level: profits were valued higher than people.

Inclusionary housing has been under consideration in this state, from the original ban, to our successful repeal of the ban, for nearly two decades. This includes the ongoing scrutiny of the development industry which maintains that if we only had more time, we would arrive at a program — likely, with an end result that would be more in their favor. Today’s consideration is not a surprise. Rather, it has been a long time coming. And as we’ve waited, we’ve declared a housing state of emergency. We’ve documented through the excellent but sobering State of Housing reports published by the Housing Bureau how unaffordable — and exclusionary, especially along the lines of race, class and household size — our city has become. We’ve observed the change in our neighborhoods as block by block, for sale and new construction signs became ubiquitous in every quadrant.

A lot of folks from our advocacy community and their members desperately wanted to but couldn’t be here this morning. Some are in Salem sharing stories and furthering policy ideas with our elected representatives to address other aspects of our statewide housing crisis such as renter protections and rent stabilization. Others are directly impacted by the lack of affordable housing aren’t here because they can’t afford to take the morning off work. Then there are those who have been pushed so far to the fringes of our city due to the lack of affordable housing that what would’ve been a short bus ride down to City Hall to appeal directly to you in person has now become a complicated scheduling endeavor of multiple transit trips which simply takes too long.

We’re appealing to every level of government because we must — and despite working with shoestring budgets, despite addressing the multitude of real and pressing threats to our community’s livability in this city — we’ve been succeeding in unlocking the tools which this Council can then use to address affordable housing production and housing choice like the construction excise tax and inclusionary zoning. We’re going back this upcoming legislative session for meaningful renters protections and rent stabilization and yes, we plan on succeeding there too.

Portland’s housing crisis is among the worst in the nation, while we remain an attractive place for people to move. We must act with a sense of urgency to stop the resegregation of our communities where unaffordable housing is the only option being built.

There are claims that this inclusionary housing proposal will stifle, and even stop development entirely. That it will exacerbate an ever-worsening housing crisis. These claims are demonstrably false: simply look to the 500 jurisdictions nationwide where some version of inclusionary zoning already exists. Buildings are still going up. Resistance to inclusionary housing as a regulatory tool to address what the free market does not provide, again, comes because profits are valued higher than people.

We’ve been prompted throughout this process to ask ourselves: what does a successful policy look like in other cities, and how do we replicate that? But we should also ask ourselves, what does failure look like? And honestly, it’s further delay, it’s inaction. Failure is a policy that lets one more day go by where our neighbors are priced out, and profits are placed over people. Service workers and hourly wage earners are a part of the fabric of Portland and must not be dismissed. Entire communities of color have dwindling places in Portland we can afford to call home. We will know this policy is a failure if it allows rampant racial and economic segregation to continue.

We must ground ourselves in the reality of this type of failure is very real. We have an opportunity to steer Portland in a different direction despite toxic rhetoric at the national level. This city is filled with progressives who believe in inclusion, not exclusion. People who want to move forward, not backward. People who understand history’s mistakes, and want to learn from them, not repeat them.

This current council has been given the opportunity to do so — to move Portland forward from its dark past of exclusion, toward a more just future. This policy is based on 40 years of trial and error from across the nation, a process with community-organized forums and presentations, informed by expert panels and experienced consultation. It is my opinion that before you today is the best possible form of inclusionary housing we can enact at this time. I urge you to take action without further delay, maximize the policy as allowable under state law with no additional carve outs or ramp up periods.

Our movement bears witness to how you vote on this most clear of choices: will you stand with the profiteers and continue to enrich those at the top? Or will you say enough is enough, we’ve gone too long and too far without protecting the needs of those trying to find a small foothold of security. Before you is but a most modest request: the chance for place to call home here in the City of Portland for our people.

George Galster, PhD

Hilberry Professor of Urban Affairs & Distinguished Professor
Dept. of Urban Studies & Planning, Wayne State University
Portland resident

Members of Council:

It is an honor and privilege to participate in the discussions of this important proposed ordinance, which I believe will positively affect my new hometown for generations. Based on my over 40 years of analyzing metropolitan housing markets and reviewing the scholarly research rigorously investigating the effects of inclusionary housing policies, I strongly endorse the proposed ordinance.

Inclusionary housing ordinances were first enacted in the U.S. 40 years ago, and since have widely proliferated in both geography and programmatic specifics. They are now in operation in hundreds of cities and counties across US (Schuetz, Meltzer and Been, 2009), including fast-growing, “Portland-sized” places like Denver and Minneapolis, (See table below for comparison of ordinances). Despite its longstanding track record and considerable number of scholarly evaluations, the debate over inclusionary housing here in Portland has been shrouded in half-truths and myths [some advanced by self-appointed “experts” who have purported to summarize scholarly research but in fact have misrepresented these findings]. I know that some people believe that there are no such things as “facts” anymore; I strongly dispute that. On the contrary, respected researchers whose methods have passed exacting peer-reviews have come to a consensus about what inclusionary housing ordinances such as the one being considered in Portland will do. That is, they; (1) increase the supply of housing affordable to moderate-income households; (2) they do not reduce the rate of new housing construction; (3) they do not raise overall housing prices, only perhaps in the luxury submarket.

My task this morning is to explain briefly why researchers have come to these conclusions. I shall proceed by debunking four myths that keep cropping up in the discussion over the proposed ordinance. Perhaps some think that by repeating them loudly and often enough these myths will acquire the veneer of truth…

Myth #1. Inclusionary housing will slow the production of housing.

This could only occur if the proposed ordinance made developing housing absolutely UN-profitable (not simply LESS profitable). Even with the ordinance developers will make handsome profits because: (1) demand for luxury housing is growing so quickly that developers can’t keep pace as it is; (2) they can raise prices for their luxury customers; and (3) they will receive a variety of financial incentives from the city.

Research shows that there is virtually no impact on total housing production with the sort of inclusionary housing policy Portland is proposing: mandatory but with strong financial incentives (Bento et al., 2009; Mukhija et al, 2010; Schuetz et al, 2011). Why? Developers as a rule are neither timid nor stupid — they’ll read the regulations and quickly figure out a way to tweak their projects to still make a lot of money. And if for some reason the development community in Portland proves me wrong in my generalizations, I am confident that many developers from around the country who are experienced with inclusionary housing will come into Portland and eat their lunch.

Myth #2. Inclusionary housing will slow the filtering down of housing to moderate-income households & thus hurt them.

Just the opposite is likely. This myth is based on the fiction that we are building housing faster than the number of households is growing, whereupon an excess supply of newly built luxury housing will allow some Portlanders to move up from their middle-quality housing, thereby allowing their former house to filter down to others who are less well-off. Unfortunately for this myth, for the foreseeable future there is no chance that construction at the luxury end of the market will exceed demand and thus there won’t be any filtering down of dwellings. By contrast, the inclusionary housing ordinance will provide moderate-income dwellings directly, not waiting for filtering to come into play in the distant future.

Myth #3. Inclusionary housing will raise housing prices overall. Not surprisingly, with little impact on production there will be little impact on housing prices overall. However, research has shown that if there is an overall price impact (Schuetz et al., 2011) it is due to increases in prices for luxury dwellings (as developers pass on some of their costs to their higher-income customers); there are decreases in prices for moderate- and lower-ends of the market (Bento et al., 2009).

Myth #4. Inclusionary housing will generate few affordable units. Few compared to what? Right now the construction of buildings with over 20 units in Portland is generating NO affordable housing. Certainly this ordinance is not a panacea for Portland’s housing affordability challenges, but it is an important component of the solution. Research shows that thousands of affordable dwellings have been created by inclusionary housing programs like the one proposed (both directly and indirectly through the investment of in lieu fees into subsidized developments) (Schuetz et al, 2009; Urban Institute, 2012; Dawkins et al., 2016).

So, when you “bust the myths” with hard-headed research, the conclusions are clear. Inclusionary housing ordinances such as the one being considered in Portland will: (1) increase the supply of housing affordable to moderate-income households; (2) do not reduce the rate of new housing construction; and (3) do not raise overall housing prices, only perhaps in the luxury submarket.

But let’s face it: like any public policy, inclusionary housing ordinances will produce both benefits and costs. I am confident that the benefits will far outweigh the costs…But of equal importance is WHO will reap the benefits and who will pay the costs. I think we all know who will bear the costs, as they are the ones opposing this ordinance: Developers and landowners (who will reap slightly lower profits) and higher-income households (who will face slightly higher housing prices). In fairness, all Portlanders will bear some of the costs through foregone property tax and fee revenues.

Who will be the beneficiaries of this ordinance? Moderate-income households who occupy newly built set aside affordable dwellings; lower-income households who occupy newly developed subsidized housing generated by in lieu fees paid by developers; all Portlanders who believe that we should strive for more economic diversity in our neighborhoods and more affordable housing for the neediest citizens. (Research shows that inclusionary housing programs increase economic and/or racial diversity of neighborhoods; Kontocosta, 2014).

This is what a fair, progressive housing policy should do: ask the advantaged with the greatest ability to pay to bear most of the costs of a policy that primarily benefits the disadvantaged with less ability to pay. I support the proposed ordinance because the gains will outweigh the costs and the costs will primarily be borne by those who can most afford it. This inclusionary housing ordinance is no panacea for Portland’s affordable housing challenges, but it is an important component that is both effective and equitable. I strongly urge its adoption by Council.

References

Bento, Antonio, Scott Lowe, Gerrit-Jan Knaap, and Arnab Chakraborty. “Housing Market Effects of Inclusionary Zoning.” Cityscape 11, no. 2 (2009): 7–26. doi:10.2307/20868701.

Dawkins, Casey, Jae Sik Jeon, and Gerrit-Jan Knaap. “Creating and Preserving Affordable

Homeownership Opportunities: Does Inclusionary Zoning Make Sense? Journal of

Planning Education and Research (online 2016): doi: 10.1177/0739456X16659763.

Kontokosta, Constantine E. “Mixed-Income Housing and Neighborhood Integration: Evidence from Inclusionary Zoning Programs.” Journal of Urban Affairs 36, no. 4 (October 2014): 716–41. doi:10.1111/juaf.12068.

Mukhija, Vinit, Lara Regus, Sara Slovin, and Ashok Das. “Can Inclusionary Zoning Be an Effective and Efficient Housing Policy? Evidence from Los Angeles and Orange Counties.” Journal of Urban Affairs 32, no. 2 (May 2010): 229–52. doi:10.1111/j.1467- 9906.2010.00495.x.

Schuetz, Jenny, Rachel Meltzer, and Vicki Been. “Silver Bullet or Trojan Horse? The Effects of Inclusionary Zoning on Local Housing Markets in the United States.” Urban Studies 48, no. 2 (February 2011): 297–329. doi:10.1177/0042098009360683.

Schuetz, Jenny, Rachel Meltzer, and Vicki Been. “31 Flavors of Inclusionary Zoning: Comparing Policies from San Francisco, Washington, DC, and Suburban Boston.” Journal of the American Planning Association 75, no. 4 (2009): 441–56. doi:10.1080/01944360903146806.

Urban Institute. Expanding Housing Opportunities through Inclusionary Zoning: Lessons from Two Counties. Washington, DC: US Department of Housing and Urban

Development Office of Policy Development and Research (2012).

Mary Kyle McCurdy

Deputy Director, 1000 Friends of Oregon

1000 Friends of Oregon supports the inclusionary housing proposal before you in its current form, and we urge the Portland City Council to approve it. We have joined in this request with the Inclusionary Zoning Coalition, of which we are a member.

1000 Friends of Oregon has been engaged in affordable housing issues since the beginning of the land use planning program, over 40 years ago, and with inclusionary zoning since the late 1990s. We have advocated lifting the pre-emption on inclusionary zoning and returning that tool to local governments.

The 2016 Oregon Legislature opened up a narrow opportunity for inclusionary zoning, structured and calibrated with the understanding that Portland might be the only jurisdiction in the state that would use the IZ tool as structured in the legislation. Other cities and counties are looking to Portland to lead this effort, anticipating that they will return to the legislature in a future year to more fully lift the current pre-emption.

Inclusionary zoning is a well-tested housing tool, in use in over 500 communities and states across the country, for decades in some cases. It is effective in providing affordable housing integrated into mixed-income developments, helping to make neighborhoods less racially segregated and more economically diverse. Inclusionary zoning, combined with the Residential Infill Project, comprehensive plan changes, investment strategies, and other actions the city is taking, is part of the continuum of actions Portland must make to provide housing for all, in all its neighborhoods.

Portland has proceeded in a very thoughtful manner in translating this legislation into a tool that can be implemented, including the creation of the panel of experts and extensive technical and economic analyses. From this, Commissioner Saltzman and the Portland Housing Bureau have developed the inclusionary housing recommendation before you. It has been calibrated to ensure it is feasible to developers. It provides options for developers to pay a fee or build units off-site for those who decline to include units on site. Recalibration of the policy to adjust to changing market conditions will ensure it remains a flexible and attractive program for the development community.

The 2016 legislation was already a compromise. There is no justification to weaken it further. We urge you to adopt the inclusionary zoning proposal before you.

Thank you for consideration of our comments.

Dennis Allen

Founder, Oregon LOCUS
Managing Director, Holland Partner Group

Hello, my name is Dennis Allen. I’m here today as one of the founders of Oregon LOCUS, an affiliate of Smart Growth America’s coalition of responsible developers and investors. We started Oregon LOCUS in part to be a helpful voice in the important goal of obtaining more housing affordability for all incomes. We believe that inclusionary IZ can be one of several different programs that together provide a range of housing choices affordable for all.

You are going to hear lots of opinions in the coming few hours, mine included. The central issue today is that IH can be a valuable tool for affordability throughout Portland if it encourages housing production; but very bad if discourages housing production.

Inclusionary housing will need to work well with all the other important growth, design and sustainability goals and regulations so we just need to be careful that all this doesn’t stack up in a negative way that affects our overall housing supply. In addition, there are changes that are coming in the comp plan update and we don’t yet fully understand how they will affect housing production, which again shows the reasoning for why we should be cautious at the start.

While IH is done in many places, no other city has done a program this wide-ranging (rental and for sale, all areas, all building types.) That is exciting, and Portland can be a leader others follow if we do this right…but a cautionary tale if we don’t.

A high inclusion rate will produce fewer units unless it’s matched with cost reductions that offset the impact on production getting financed, whether a 20-story high rise in Central City or an 8-story multifamily building on a transit line; investors and lenders — many of which are pension funds that are required to provide specific returns to retirees — can invest anywhere to get those returns. If projects aren’t financed, that pushes rents up; if only smaller projects get financed, Portland has lost that density for 50+ years, also pushing rents up as we fail to meet our growth goals.

So why not start with a more measured inclusionary housing program that can be adjusted over time as the market supports…and actually gets more housing built?

Oregon LOCUS has offered up four amendments to the IH proposal, which will start Portland on both confident and measured footing, keeping housing production going and growing more affordable housing as time moves forward. LOCUS’s executive director, Mike Kingsella, will share the details of those amendments in upcoming testimony.

We look forward to our continued work together on housing for all, and inclusionary housing policy moving forward.

Thank you, and I’m happy to answer any questions.