Tuesday, December 26, 2017

Local apartment manager plays Santa, pays for layaway items in the nick of time

Donations by Sage Apartment Communities totaling more than $71,000 were made to cover holiday items purchased on layaway through December 19th at K-Mart Stores located at 440 NW Burnside Road in Gresham and 12350 NE Sandy Blvd. in Portland.

“As a manager of more than 1,200 market-rate and low-income housing units in the Gresham/Fairview area, we realized we couldn’t fit a bag of presents down the chimney in every house this year—so we thought a random act of kindness was in order, Sage President Amber Monte said. “Our team has always found inspiration from those who volunteer to make a difference in the lives of others, and it is in honor of their generosity that we made our gifts today.”

Checks arrived at both stores via FedEx on Thursday, December 21. Store managers began calling customers to let them know Santa had arrived early. 

Wednesday, December 20, 2017

Congress Passes Tax Overhaul - What it Means to the Multifamily Industry

The U.S. Congress passed the Tax Cuts and Jobs Act today, which will impact real estate owners throughout the country. The National Multifamily Housing Council has summarized key components of the bill, including:
  • Individual and pass-through income will be taxed in seven brackets, with rates ranging from 10-37%
  • A portion of pass-through business income will qualify for a 20% deduction
  • REIT dividends are fully eligible for a 20% deduction
  • The current-law 27.5-year depreciation period for multifamily buildings is now extended to 30 years
  • Businesses may expense $1 million in qualifying property in the year of purchase
  • Like-kind exchanges for real properties are preserved
  • Assets must be held three years to receive capital gains tax treatment
  • Low Income Housing Tax Credits and private activity bonds will be preserved, but will likely be affected by the cut in corporate tax rates
  • The estate tax exclusion is doubled from $5.49 million for a single filer and $10.98 million for a married couple
Click here to download a 6-page summary by the National Apartment Association and the National Multifamily Housing Council. 

Read more on the NMHC website, or find details on specific provisions in their tax reform chart.

Oregon Was the 9th Fastest Growing State This Year

Between July 2016 and July 2017, Oregon's population grew by 1.4%, making it the 9th fastest growing state in the nation. The state gained 57,000 new residents, with domestic and international migration accounting for 81% of the total population growth. Oregon's growth rate of 3,800 net newcomers each month this year brought the state's total population to approximately 4.1 million. Washington was the 4th fastest growing state, with a growth rate of 1.7%. Its population is now 7.4 million. The fastest growing state in the nation was Idaho, which has seen a recent influx of retirees. Read more.

Monday, December 18, 2017

Multifamily Marketwatch Podcast - December 18, 2017

This week: Cities across the country are looking to retain millennials by adding duplexes, triplexes, rowhouses and other medium-density housing options that serve the middle class and keep them from being forced out; a local expert says Portland's MSA needs 30,000 more housing units each year to keep up--something builders are saying is impossible due to development fees and permit timelines. Marketwatch returns January 8th.

Check out this episode!

Thursday, December 14, 2017

Experts & Legislators Discuss Statewide Housing Shortage at Oregon Leadership Summit

State Representative Alissa Keny-Guyer discussed housing as a statewide issue while serving as a panelist at the Oregon Leadership Summit on December 4th. She emphasized the state's responsibility to treat housing as a core responsibility like transportation, education, and health care. Kelly Ritz of Stone Bridge Homes NW explained why a goal of building 30,000 new homes per year is unrealistic, citing a shortage of skilled construction workers, rising system development charges, and processing delays. Keny-Guyer also discussed proposals on the table for this year's short legislative session, including a proposal to increase the real estate transaction recording fee to $75 in order to raise funds for housing services and production. Read more.

Wednesday, December 13, 2017

Fed Raises Benchmark Interest Rate to 1.5%

The Federal Reserve raised its benchmark interest rate to 1.5% today, forecasting that inflation will remain below 2% over the next year. Fed officials expect that the rate will reach 3.1% by the end of 2020. Read more.

Tuesday, December 12, 2017

Republican Josh Hill to Challenge Mark Meek in OR House District 40

Republican Josh Hill has announced that he will be running against Democrat and incumbent Mark Meek in Oregon's House District 40 in 2018. Meek currently represents Oregon City, Gladstone, and Johnson City in the Oregon State Legislature. Last year, Meek supported the tenant protection bill that would have lifted the statewide ban on rent control. Hill has indicated that he will make this issue a major talking point for his campaign. Read more.

Monday, December 11, 2017

Multifamily Marketwatch Podcast - December 11, 2017

This week: Oregon Department of Land Conservation and Development approves the City of Portland's 2035 Comprehensive Plan as at least one neighborhood readies its appeal; Portland Housing Bureau director Kurt Creager gets ousted by Mayor Ted Wheeler; the City of Portland buys 240 planned affordable housing units at $285-thousand dollars each.

Check out this episode!

Thursday, December 7, 2017

Portland's 2035 Comprehensive Plan Approved by State Dept of Land Conservation & Development

The state's Department of Land Conservation and Development has rejected all objections filed against Portland's Comprehensive Plan, moving the plan closer to implementation. The Multnomah Neighborhood Association already plans to appeal the decision to the Land Conservation and Development Commission. The appeal must be filed within 21 days of approval. The Department rejected arguments that residential infill plans were added too late, saying that necessary public comment and documentation were received by the city council. The Portland City Council voted last week to delay the implementation date of the Comprehensive Plan from January 1, 2018 to May 24, 2018 in anticipation of likely appeals. Read more.

Wednesday, December 6, 2017

Willamette Week: Six Cities Smarter Than Portland About Housing

Willamette Week reports there are six cities around the world that the City of Portland would be well to copy ideas from to solve the affordable housing crisis. They are: Montreal (row houses); Tokyo (taller buildings); Pittsburgh (tax vacant land); New Orleans (Ban Airbnb); Singapore (increase public housing); and Chicago (cut red tape to 5 months from the existing 12-18 in Portland).

According to the paper, all these ideas except the last two are opposed by Mayor Ted Wheeler. Read the full story.

Portland Seeing Unintended Consequences of Law Aimed at Developers

The Oregonian reports on the high fees homeowners are being charged for sidewalk maintenance when they apply for building permits to improve their homes. The fees are a result of the Local Transportation Infrastructure Charge, which requires people building on a street without sidewalks to either pay for a sidewalk along the property line, or pay a fee of $600 per foot of frontage. The city hoped that this would result in developers paying for pedestrian infrastructure where the city had failed to provide it, but the law was overly broad and is now affecting homeowners looking to upgrade their homes. According to the Oregonian, a Portland resident who applied for a permit to install a new mobile home on her property was faced with a $54,000 sidewalk charge. The City Council is set to discuss this week whether the charges should be limited to $30,000 in most residential zones. Read more.

Tuesday, December 5, 2017

Seismic Retrofits for Unreinforced Masonry Take Center Stage

A front page report in this month's Southeast Examiner outlines the dilemma many owners of unreinforced masonry in the City of Portland find themselves in: upgrade or tear down and rebuild?

Owners hope to engage politicians in finding a financial solution that works for them as the clock starts ticking on a 15-year reinforcement deadline they say will result in renter displacement and demolition of thousands of affordable apartments. Read the full story.

Monday, December 4, 2017

Multifamily Marketwatch Podcast - December 4, 2017

This week: City audit of its Prosper Portland department uncovers financial mismanagement; Oregon's population grows at a record level for the second straight year; Congressional Republicans' tax plan could throw a wrench into plans for thousands of affordable housing units in Oregon.

Check out this episode!

Wednesday, November 29, 2017

Oregon's Population Continues to Grow by Numbers Not Seen in More Than 20 Years

New residents are pushing Oregon's explosive growth for a second straight year, according to a new study by the Portland State University Center for Population Research.

The study indicated Oregon's population increased by 64,750 between 2016 and 2017, up from a similar gain of 62,505 between 2015 and 2015; both numbers represent a 1.6% year-over-year increase and the largest growth over a two-year period since the early 1990s.

Since 2012 net migration into Oregon has added 200,000 residents. Portland continued to add more residents than other cities, with 11,705 new residents this past year, an increase of 1.8%.

Read more.

Tuesday, November 28, 2017

Business Journal: Private Sector Creative Solutions for Homelessness DOA at City of Portland, Multnomah County

The cover story of this week's Portland Business Journal: How government rejection of creative solutions from the private sector for housing the homeless is not helpful.

The news outlet cites the failures of government in addressing the homeless problem--specifically using the examples of Multnomah County's failure to accept the use of Wapato as a homeless transition center, and the City of Portland's rejection of turning the City's Terminal 1 facility in Northwest Portland into a huge campus for a shelter and services.

The City of Portland says it needs help from the business community, but local developers are discouraged by the bureaucratic responses to their efforts. Some of the many local developers taking action to help with homelessness include Tom Brenneke, Brad Malsin, Barry and Jordan Menashe, Homer Williams, Rob Justus and others. Kevin Cavenaugh of Guerrilla Development will open a multifamily project, reserving 18 units to rent at $600 a month for social workers seeking to make an impact in area homelessness.

If you have a Business Journal subscription, read the full article here.

City Audit of Prosper Portland Finds Financial Mismanagement

The Portland Auditor's Office has found significant evidence of financial mismanagement at Prosper Portland, formerly the Portland Development Commission. When auditors looked into four of the commission's most significant properties, they found that the agency had not gotten reliable information from contractors, and had not prepared financial forecasts or planned for upkeep at the properties. Prosper Portland also paid the operators of the Inn at the Convention Center $600,000 in 2016, almost five times the market rate for services provided. The Auditor's Office found that the agency is not ready to transition away from its current revenue stream to a plan that relies more heavily on its real estate operations. Last year the commission made $5.9 million in gross operating income from its properties, but after expenses only saw a profit of just $1.7 million. Read more.

Monday, November 27, 2017

2035 Comprehensive Plan Implementation Delayed Until May

Portland's 2035 Comprehensive Plan has been set to go into effect January 1, 2018, but the City Council is likely to delay it until May 23, 2018. Kurt Creager of the Portland Housing Bureau had asked for the delay in order to give the Land Conservation and Development Commission more time to rule on appeals to the plan. The 2035 Comprehensive Plan includes zoning changes that affect large portions of the city, and the Residential Infill Plan and Central City 2035 Plan cannot go into effect prior to the implementation of the Comprehensive Plan. Read more.

Milwaukie City Council Approves 1% Construction Excise Tax

The city of Milwaukie in Clackamas County has approved a 1% excise tax on new residential, commercial, and industrial development. The funds raised by the tax will go toward building affordable housing units, as well as assisting community development programs.

The Milwaukie City Council is also set to consider a new resolution to extend the housing state of emergency. They originally declared the emergency in April 2016, and then voted on a six month extension in April 2017. That extension is now expired, but according to City Manager Ann Ober the 90-day notice for no-cause evictions remains in effect. The City Council will likely extend the housing emergency until April 2018, unless the vacancy rises above 4% before that date. Read more.

Wednesday, November 22, 2017

Tenants Sue Landlord Who Was Also Linchpin Senate Vote Against Rent Control

Portland Tenants United (PTU) is doubling down on its fight against Sen. Rod Monroe (D-East Portland) who was the linchpin vote against rent control in Oregon during the 2017 legislative session. PTU hooked up renters of one unit in Monroe's apartments who were itching to sue. Read the full story.

Monday, November 20, 2017

Multifamily Marketwatch Podcast - November 20, 2017

This week: A major Portland homebuilder announced he will no longer build in the city due to excessive permitting times; Portland Mayor Ted Wheeler calls on the business community to help with homelessness; businesses complain city bureaucrats won't work with them.

Check out this episode!

San Jose's Mercury News: "Rent Control Likely Fueled Gentrification of San Francisco"

A Stanford University paper presented at the National Bureau of Economic Research conference found that following the implementation of rent controls in 1995, the number of available rental units dropped by 30% as landlords rebuilt rentals or converted them to condos. Read more.

Thursday, November 16, 2017

Local Developer: Portland's Permitting Process is "Slower and More Complicated Than Any Other City We Work In"

The Portland Tribune spoke with residential developer Jeff Smith of J.T. Smith Companies, who has said he will no longer build new homes in Portland. Smith explains that the city's long and complicated permitting process has left his company unable to predict project costs. Smith also points out that the permitting delays work against the City Council's goal of encouraging builders to increase the housing supply in the city. In response, David Austin of the Bureau of Development Services says that the bureau is "committed to eliminating inefficiencies in the system." Read more.

Wednesday, November 15, 2017

Spokane's Push for Development on Surface Parking Lots Could Lead to Statewide Changes

The City of Spokane is hoping to revitalize its downtown by providing incentives for development on surface parking lots. City Council President Ben Stuckart is proposing a 10-year property tax exemption for developments built on existing parking lots, which are scattered throughout the downtown area. In order to achieve this goal, Spokane would need permission from the Washington state legislature. If the state grants permission to Spokane, it would open the door for such proposals in comparable cities such as Tacoma and Vancouver. Read more.

Tuesday, November 14, 2017

Multifamily Marketwatch Podcast - November 13, 2017

This week: Metro regional government releases a report concluding that Portland lacks adequate affordable housing; Bend considers ways to assist renters and affordable housing advocates speak out about the loss of specialized bonds that could eliminate construction of hundreds of thousands of affordable housing units.

Check out this episode!

Monday, November 13, 2017

Catholic Charities Running Up Against Landlord-Tenant Laws at Women's Village

Catholic Charities has run into a hurdle in its administration of the Kenton Women's Village because of landlord-tenant laws. The nonprofit organization had instituted a zero-tolerance policy for illegal activity, but were recently told by the Portland City Attorney's office that residents are protected by normal landlord-tenant laws, and evictions must go through normal proceedings. Catholic Charities issued a statement in response, saying, "Because Catholic Charities is committed to assuring the wellbeing of villagers and maintaining a healthy environment for those participating in the program, we find the City Attorney's interpretation of landlord-tenant law to be problematic." Managers are also struggling to prepare the tiny homes in the village for winter temperatures. Read more.

Thursday, November 9, 2017

Housing Supply Matters When Addressing Affordability

Economist Joe Cortright writes in his City Observatory blog that politicians and affordable housing advocates are starting to realize what economists have been arguing for years: increasing the supply of market rate housing is an essential part of addressing affordability issues. He also points out that a recent article in Shelterforce tackling the phenomenon of "filtering up" actually showed that building two market rate housing units has the same impact on mitigating displacement as building one affordable unit. In cities that spend vast sums of money to subsidize affordable units, this conclusion could motivate some city planners to do more to encourage market rate construction. Read more.

Wednesday, November 8, 2017

Vancouver, WA to See 1% Property Tax Increase in 2018

The Vancouver City Council voted on Monday to increase property taxes by 1% in 2018. The city council aims to add $459,500 to the general fund with the tax increase, which they point out is below the rate of inflation. Read more.

Tribune Report: Home shortage looms

The Home Builders Association of Metro Portland held its annual housing forecast last week. The Portland Tribune reports that "All of its main speakers agreed the current shortage of new homes for sale is driving up costs, including rents paid by households with the lowest incomes." Keynote speaker Tina Kotek said she plans even more work in 2018 regarding increasing affordable housing and housing choices in single-family neighborhoods. Another speaker, Oregon Economic Forum senior director Tim Duy, in a nod to residential towers resulting from growth boundaries, encouraged more high-rise condos to increase homeownership. "The only thing Oregonians hate more than sprawl is density," he said.  Read more.

Tuesday, November 7, 2017

Kate Brown Executive Orders: Green Energy Mandates on New Construction

Oregon Governor Kate Brown signed executive orders yesterday requiring builders to prepare for an increased use of green energy in the state.

  • New homes built after September 2020 and commercial buildings built after October 2022 must be equipped for solar panel installation. 
  • By October 2022, all new homes and commercial buildings must be wired for at least one electric vehicle charger.
  • By October 2023, all new homes will be required by the Building Codes Division to be "zero-energy ready."

Senator Alan Olsen (R-Canby) objected to the new executive orders, arguing that they will increase the cost of housing in the state. Read more.

Monday, November 6, 2017

Rob Justus: "Too often, government sees private developers as the enemy."

Home First Development Principal Rob Justus discusses his company's approach to building affordable housing in Portland.

Since 2009, Rob and Home First co-founder Dave Carboneau have built hundreds of apartments for low-income individuals -- many without government subsidies. He is an outspoken critic of local government's approach to creating more housing for low-income individuals and families.

Multifamily Marketwatch Podcast - November 6, 2017

This week: Rents in Portland have fallen slightly, mostly for high-end units close to downtown; Bend renters are finding more options as several new multifamily housing communities open; a new study of rent control in San Francisco by a trio of Sanford economists documents how the policy has failed. Those stories and more in this week's Multifamily Marketwatch.

Check out this episode!

Oregonian Guest Editorial: Portland, don't let it go to your head

In an op-ed piece published Sunday, Kevin Frazier, a former Portlander now living in the Bay Area, laments that without proper steps, Portland will turn into another San Francisco.  Among other things he urges, "Get private and public stakeholders to craft solutions that don't just temporarily lower rents for a select few, but stimulate the development of more affordable units." Read more. 

Friday, November 3, 2017

Rent Growth Beginning to Slow in Portland as New Units Come Online

The Daily Journal of Commerce reports that rents in Portland were down for the second month in a row in October. Year over year, rents were down 0.4%, and they were down 0.8% from September. Most of the softness in the market is occurring at the high end - with more brand new luxury units hitting the market, buildings in the Pearl District and Central Eastside are offering concessions or lowering rents. As of October, the median rent for a one-bedroom apartment in Portland was $1,140, and $1,350 for a two-bedroom. Buildings catering to middle- or low-income renters are still seeing low vacancy rates, but those rates are beginning to stabilize with an increase in overall supply. Joe Cortright noted in his City Observatory blog last week that more "for rent" signs have been popping up throughout the city recently. These trends will likely continue as new buildings open their doors to renters in the coming year. Read more.

Tuesday, October 31, 2017

Multifamily Marketwatch Podcast - October 30, 2017

This week: Want to live in the nation's best place for business and careers in 2017? If you live in Portland, Forbes says to stay put; more "for rent" signs are cropping up on lawns these days and the Washington Post says affordable housing stock has dropped 60% since 2010.

Check out this episode!

Affordable Housing Bond Spending Delayed Until March 2018

Although the City Council recently approved its policy for how to spend money generated by the $258 million affordable housing bond, it is unlikely to receive any proposals from the Portland Housing Bureau until March of 2018, almost a full year and a half after voters approved the bond measure. Although the PHB has generated support for a turn-key pilot program that would allow developers to build projects and sell them to the city, it is currently soliciting proposals for land where it can build affordable units, as well as existing properties. Proposals will be vetted by Kurt Creager, Director of the PHB, and Mayor Wheeler before being presented to the City Council. Between its purchase of the Ellington Apartments and administration costs, the City Council now has approximately $205 million left to spend on housing. Read more.

Thursday, October 26, 2017

Portland Ranked Best Place for Business and Careers in 2017

Forbes ranked Portland the #1 city in the country for business and careers in 2017, after ranking the city fifth last year. Portland's ascendance can be attributed to the large number of tech companies in the region as well as the highly educated workforce. The cities on the list were ranked on 14 metrics including job growth, business and living costs, income growth, quality of life, and labor force education. Portland finished in the top quartile for every metric except for business and living costs. Portland's household income has grown 4% annually since 2011, and unemployment in the city is below 4%. Read more.

Wednesday, October 25, 2017

Washington County Considering Construction Excise Tax, Property Tax Levy

Washington county residents have been feeling the effects of the region's housing crunch, and county commissioners are looking at new sources of revenue to fund affordable housing. During a working session on Tuesday, the commissioners considered a construction excise tax and a special property tax levy as two likely options to raise the needed funds. Portland and Bend both have construction excise taxes, which are capped at 1% for residential construction. Public support for a countywide levy is only about 52%, though Board Chairman Andy Duyck thinks that outreach to city councils could improve a levy's chance of passing. Read more.

Tuesday, October 24, 2017

Multifamily Marketwatch Podcast - October 24, 2017

This Week: Portland City Commissioner Chloe Eudaly stops strict enforcement of code restrictions against sleeping in RVs and tiny houses built on private property without a permit; Portland State University reports that wages in Portland are rising, and housing prices are increasing at a slower rate.

Check out this episode!

Wednesday, October 18, 2017

Multifamily Marketwatch Podcast - October 17, 2017

This week: a Portland Landlord slams Commissioner Eudaly for violating City of Portland social media policy and blocking him from her public Facebook page; the Portland Tribune reports that more than 15% of the cost of new apartment buildings comes from City of Portland fees and development charges.

Check out this episode!

Breaking: Greater Portland Apartment Vacancy Rate Trends Higher (Multifamily NW)

At this morning's Multifamily NW Apartment Report Breakfast the overall fall 2017 vacancy rate for Greater Portland apartment properties was reported at 4.37%, up from 3.71% one year earlier. Here are year-over-year comparisons by submarket:

The survey involved more than 52,500 units at 738 properties.

Monday, October 16, 2017

Oregonian Op-Ed: Eudaly Blocked Landlord's Free Speech in Public Forum

Portland landlord Nishant Bhajaria penned an op ed that appeared in this week's Sunday Oregonian. The piece was critical of Portland City Commissioner Commissioner Chloe Eudaly. Bhajara says when he posted on Eudaly's public Facebook page for evidence that rent control really worked, Eudaly deleted his posts and banned him from the page without explanation, in violation of the City's social media policy.

Bhajaria says it wasn't until he threatened the city attorney with a lawsuit that he was unblocked and allowed to comment. The opinion piece states that while Eudaly and mayor Ted Wheeler claim to embrace diversity, they met privately with "mostly white liberals" who had not registered as lobbyists, and that these groups were "allowed a seat at the table in almost every discussion around housing policy in Portland." Read more.

Bhajaria's previous Op-Ed in opposition to the ordinance requiring payment of relocation fees to renters appeared in the Oregonian on Sunday, February 25, 2017.

Wednesday, October 11, 2017

Oregonian Editorial Board: City Council Is Not Adequately Monitoring Effects of Housing Policies

The Oregonian Editorial Board published a statement yesterday afternoon faulting the Portland City Council for failing to examine the effects of its housing policies. The Board points out that the city has not done anything to track whether the relocation fee ordinance is working, and that the council has relied more on anecdotes than data. The Portland Association of Metropolitan Realtors estimates that 400 single-family properties that were previously used as rentals have been put on the market by owners since the relocation fee ordinance went into effect, but City Council members seem to be shrugging off the impacts of the tightening housing supply. The City Council's lack of reliable data on policy effects is due in part to a failure to establish Mayor Wheeler's promised Office of Landlord-Tenant Affairs, which was a central part of his campaign in 2016. The Board also acknowledges that most of the pain felt by renters is due to a shortage of thousands of housing units, and that many of the city's policies negatively impact the developers who could be building more housing units in the city. The city is reliant on private housing developers to solve the problem, but rising development costs associated with fees, demolition requirements, and zoning and FAR restrictions deter that investment. Read more.

Tuesday, October 10, 2017

Multifamily Marketwatch Podcast - October 10, 2017

This week: Chloe Eudaly's First Right of Refusal ordinance for renters would likely apply to all types of rental housing; Portland developers propose to build up to 2,500 units on Portland's waterfront, including 500 affordable units, in exchange for increased height limits.

Check out this episode!

Portland-Area Politicians Not Living Up to Promises on Addressing Homelessness

In 2015, Portland, Gresham, and Multnomah County officials created A Home for Everyone. They stated an ambitious goal of halving homelessness by 2019. During his campaign in 2016, Mayor Wheeler came out with his own ambitious goal - providing all Portlanders with a safe place to sleep by the end of 2018. He believed he could achieve this goal by getting the city and county to fund 1,800 new shelter beds. It is becoming clear, however, that metro-area elected officials are not living up to the promises they made. KGW-TV commissioned a poll on homelessness that found that 57% of Portlanders are dissatisfied with Wheeler and the City Council's response to homelessness in the city. 46% of residents are dissatisfied with Multnomah County Chair Deborah Kafoury's approach to handling problems associated with homelessness. Since 2015, the number of residents who lack permanent housing has increased from 3,801 to 4,177. Residents in East Portland who live in close proximity to the Springwater Corridor multi-use path argue that sweeps of homeless camps have only exacerbated problems in their neighborhoods. Wheeler believes that homelessness in the city is a symptom of a number of problems facing Portland as well as many other major cities. The nationwide housing shortage, the opioid crisis, a lack of mental health and addiction treatment, and unemployment all contribute to increasing homelessness in the city. Addressing homelessness is no easy task, but Portland residents seem to be losing patience with officials who are so far from achieving their own stated goals. 49% of residents surveyed said there are currently people living in tents in their neighborhoods, and public opinion may be turning against leaders who fail to adequately address the needs of housed and un-housed residents alike. Read more.

Thursday, October 5, 2017

Portland City Council Extends Housing State of Emergency, Renter Relocation Fee Ordinance

The City Council voted on Wednesday to extend the Housing State of Emergency by 18 months, and the Renter Relocation Fee Ordinance by 6 months. Mayor Wheeler announced that he plans to propose a permanent replacement for the temporary relocation fee requirements to the City Council by December 6th of this year. Commissioner Eudaly proposed eliminating the exemption to that ordinance for small landlords, but the other commissioners voted that proposal down. They are also considering a "hardship exemption" for some landlords. Renter advocates present at the meeting argued that their rent is going up in other ways, such as being asked to pay utilities. The commissioners plan to look into whether renter utility payments are increasing beyond what landlords are being charged for those services. In the coming weeks, the council will vote on spending guidelines for the affordable housing bond, as well as a pledge to create supportive housing units in the city. Read more.

First Right of Refusal Proposal Would Cover All Types of Rental Housing

The Daily Journal of Commerce published additional details on Commissioner Eudaly's proposal to give tenants the first right of refusal on the sale of rental units. Commissioner Eudaly's Policy Director, Jamey Duhamel, estimates that the proposal is likely to begin hearings in two to three months. It would apply to all types of rental housing, from single family homes to apartment complexes. A tenant or group of tenants would have 60 days to put together an offer, and if they do not do so, the city would have 30 days to submit an offer on the building. If the city declines to submit an offer, the seller would then be able to market the property openly. While Eudaly's office claims that the proposal is based on a similar law in Washington, DC, the DC law gives tenants an opportunity to make an offer that is competitive with any third party offers that have already been received within 45 days of being notified of a pending sale. It does not impose a 90 day delay on the marketing of a privately owned property. Read more.

Tuesday, October 3, 2017

Multifamily Marketwatch Podcast - October 3, 2017

This week: Portland Commissioner Chloe Eudaly wants to give tenants first right of refusal to buy apartment buildings before they hit the market, and Mayor Ted Wheeler to ask for an 18-month extension of Portland's housing emergency, this time requiring agencies to figure out when to end it. 

Check out this episode!

Wednesday, September 27, 2017

Bombshell: Chloe Eudaly to Propose Tenant "First Right of Refusal" to Purchase Apartment Buildings Listed for Sale

The Portland Mercury reports today that Portland City Commissioner Chloe Eudaly plans to unveil a proposal that would allow tenants 60 days to determine whether they want to purchase an apartment building that's up for sale, and the City of Portland would have 30 days after that, meaning property sales would be stalled for up to 90 days while an owner waits for the groups to decide. Read more.

HFO Brokers Sale of Happy Valley Apartment Community for $58 Million

HFO Investment Real Estate announced the sale of Latitude Apartments located near Clackamas Town Center mall in Happy Valley for $58 million.

The Latitude Apartments is a gated apartment community consisting of 210 apartments with an average unit size of 1,133 square feet. Built in two phases between 2008 and 2014, the sale represents the second largest apartment transaction for Clackamas County this calendar year.
Latitude Apartments consists of 33 three-story apartment buildings and one clubhouse on 6.89 acres across from Clackamas Town Center one of the largest regional malls. The transit-oriented development is convenient to I-205 and easy walking distance to MAX light rail and several bus lines.

“Happy Valley is an affluent, educated area with high employment in healthcare, professional services and retail,” said HFO partner Cody Hagerman. “Latitude Apartments is a great example of well-constructed condo-quality housing that is in exceptionally high demand.”

Latitude Apartments offers its residents numerous community amenities including a dog run and grooming station, electronic parcel lockers, bike repair station, fitness facility, pool, basketball court, and direct-entry garages.

The seller was Bay Area investment firm The Reliant Group and the buyer was global real estate investment company Kennedy Wilson. The sale represents a price per unit of $276,190 per unit or $243.76 per square foot.

City Council to Vote on Extending Housing State of Emergency by 18 Months

Portland's Housing State of Emergency, declared in October 2015 and extended for an additional year in 2016, could be extended by another 18 months. Mayor Wheeler is submitting an ordinance to city council for consideration prior to the October 6th expiration date. The ordinance includes the following provisions:
  • The Housing State of Emergency will be extended by 18 months, until April 4, 2019, unless the City Council chooses to extend or terminate it
  • Affordable housing projects will be subject to Type IIX rather than Type III design review
  • The Portland Housing Bureau and Joint Office of Homeless Services will decide what criteria must be met to end the Housing State of Emergency within 180 days
The mayor's push for this extension is a result of a continued housing shortage in Portland. Rents have continued to rise at a rate of 7% per year, and while the vacancy rate has been increasing it is still under 5% in most of the city. Many of the largest rent increases have been in East Portland, and rents for 1-, 2-, and 3- bedroom units have increased in every neighborhood in the city. Read more.

Tuesday, September 26, 2017

Multifamily Marketwatch Podcast - September 26, 2017

This week: The Tribune turns a spotlight to the City of Portland's dysfunction; hurricane disasters could result in a construction slowdown due to scarcity of workers and increasing materials costs; and six months in -- the inclusionary zoning requirement's impact on apartment construction applications in the City of Portland.

Check out this episode!

Monday, September 25, 2017

Multifamily Marketwatch Special

In an interview with HFO partner Greg Frick, Multifamily NW spokesman John McIsaac relates the bureaucratic difficulties facing developers in the City of Portland. Estimates are that 50,000 new apartments will be needed by 2030 to accommodate the nearly 100 people moving to the city every day.

Check out this episode!

Wednesday, September 20, 2017

Portland Tribune: 17 Groups from Six Different Bureaus Required to Review Construction Permits

The Portland City Council has begun a review of bureaucratic processes in an attempt to streamline various processes. The hitch? Folks from bureaus overseen by different councilors are often involved in the same projects, making it even more difficult. One example cited by the paper is the simple fact that there's no single phone number for people wanting city services to call, resulting in countless phone calls by the public to the wrong bureaus and even to 9-1-1 for non-emergency help. Read more.

Six-Month Review of Inclusionary Zoning in Portland Shows Slowdown in Land Use Review Applications

The Bureau of Planning and Sustainability released its six month review of Portland's Inclusionary Housing policy, which went into effect February 1st of this year. Prior to the law taking effect, developers rushed to get projects with 20 or more units into the permitting pipeline. That rush to submit plans to the city resulted in a pipeline of 19,000 units, or a four-year supply of new construction. This backlog has led the BPS to determine that the new requirement hasn't caused a slowdown in development activity. The Bureau also does not believe there is a trend of developers keeping projects under 20 units. 5,000 of those 19,000 units have been permitted since February, but since then only 11 projects over 20 units have been submitted. Five of these these developments are affordable housing projects. According to the Portland Tribune, no new land use review applications have been submitted for projects over 20 units during that time. Read more.

Tuesday, September 19, 2017

Multifamily Marketwatch Podcast, September 17, 2017

This week: the Metro council considers new taxes to help pay for affordable housing outside the city limits of Portland; The U.S. Census reports Oregon's median household income rose 6.2% in 2016, after decades of trailing the rest of the United States.

Check out this episode!

Amazon to Build New Fulfillment Center in North Portland

Amazon announced that it will build a new fulfillment center in North Portland that will create 1,000 new jobs. The fulfillment center will be located in the Rivergate Industrial District, north of the St. Johns neighborhood near Kelley Point Park. The large site will facilitate the packing and shipping of larger items, and Amazon also hopes it will help the company reduce shipping times within the metro area. The 918,400 square foot site is being developed by Trammell Crow Co. and Clarion Partners, and is part of a designated enterprise zone. Amazon is also planning to open facilities in Salem and Troutdale, which are likely to employ 2,500 full-time workers in total. Warehouse jobs such as the ones that will be coming to North Portland typically pay $13-$23 per hour, and Amazon's warehouse workers are eligible for the same benefits package as other company employees. Amazon also announced last week that it is scouting locations for its new HQ2. While Portland is involved in the competition, its proximity to Seattle makes it an unlikely choice. Read more.

Monday, September 18, 2017

Portland Monthly Report: Four New Downtown Portland Apartment Buildings to Add Nearly 1,040 Units

Portland Monthly reports on four new apartment projects either under construction or awaiting final approval that "could change downtown forever." From Old Town/Chinatown to the Pearl to the heart of the Arts District, these buildings will add another 1,039 living spaces downtown (including about 80 units of affordable housing). With amenities including outdoor pools, decked rooftops with chefs kitchens. and fire pits - but no playgrounds... yet. Read more. 

Friday, September 15, 2017

Metro Council Considers Taxes to Fund Affordable Housing

The Metro Council, which oversees ares of Multnomah, Clackamas, and Washington counties that fall within the UGB, is considering tax measures aimed at funding affordable housing initiatives. The Council is considering a construction excise tax, a property tax measure, or authority to use money generated from property tax increases. The city of Portland already has a 1% construction excise tax, and in November 2016 city voters passed an affordable housing bond measure. Other cities in Metro's jurisdiction have not taken comparable steps to address the shortage of affordable housing units. More than half of severely cost-burdened households in the metro area live outside of Portland, but far fewer affordable units have been built outside city limits. Although development costs are higher in Portland, the city provides better access to transportation and job opportunities than can be found in the suburbs and outlying areas. Metro staff had a meeting to discuss proposals with the Metro Policy Advisory Committee September 13th, and the Council is set to begin discussions with the 24 city councils and 3 county commissions that make up the metro area. Read more.

Thursday, September 14, 2017

Oregon's Median Household Income Grew by 6.2% in 2016

Oregon's median income is now on par with the national median after several decades of lagging behind. The U.S. Census Bureau reports that Oregon's median income is currently $57,532 compared with the national median of $57,617. The last time Oregon's median income was within reach of the national median was in the late 1970s, but the state has since lagged behind due to the decline of the timber industry as well as housing crashes in the 1980s and 2000s. Since the late 2000s, income in the state has been growing at a steady clip, with Portland seeing big gains beginning in 2013. Salem and Bend have begun to outpace Portland in job growth over the last couple of years, and poverty rates in rural parts of the state have been declining. In 2016 the state's median income grew by 6.2%, outpacing every state except Idaho and Massachusetts. Read more.

Tuesday, September 12, 2017

Multifamily Marketwatch Podcast - September 12, 2017

This week: The Portland Unreinforced Masonry Policy Committee holds a final public meeting October 4th and then heads to City Council; Vacancy rates for studios and one-bedroom units are increasing; national economics professors argue that restrictive land use policies are adding drag to the national economy.

Check out this episode!

Monday, September 11, 2017

Portland Tribune: Studio Apartments Sit Empty As Renters Seek Larger Units

Three quarters of market rate apartments built in the last five years have been studio or one-bedroom apartments. The Portland Business Tribune reports that many of the new units sit empty as renters look for housing with two or three-bedrooms. Read more.

Thursday, September 7, 2017

City Council to Review URM Policy Proposal October 19th

The URM Policy Committee is set to meet for a final time October 4th, before presenting their policy proposal to the City Council October 19th. The policy will determine what retrofits building owners are required to complete, as well as the timetable for completion. Building owners have expressed concern about the lack of available financing for retrofits, as well as the scope of retrofit projects. Seismic retrofits frequently require tenants to relocate, and landlords who own URM buildings are subject to the relocation ordinance passed earlier this year. The ordinance requires landlords to pay tenants $2,900-$4,500 upon issuing a no-cause eviction. Such evictions would be hard to avoid if the city requires landlords to add steel reinforcement throughout their buildings. Nonprofits, schools, and churches also own several URM buildings in Portland, and Central City Concern is urging the city to provide an exception for affordable housing. The URM Policy Committee is overseen by the Bureau of Emergency Management as well as Mayor Ted Wheeler's office. Read more.

Wednesday, September 6, 2017

Multifamily Marketwatch Podcast - Sept. 6, 2017

This week: lender to the rescue for Portland's pending seismic upgrade requirement? Cap rates continue to decline despite an increase in interest rates. 

Check out this episode!

Friday, September 1, 2017

PropertyFit Program Expands to Finance Seismic Upgrades in Multnomah County

The Daily Journal of Commerce reports that the PropertyFit program, which offers 100% financing to building owners and developers for energy-efficiency and seismic upgrades, will be expanding to serve properties throughout Multnomah County. Prosper Portland, Multnomah County, and the Energy Trust of Oregon are sponsoring the program in hopes that it will encourage "mom and pop" owners of unreinforced masonry buildings to perform necessary seismic upgrades. The capital providers for the program include Prosper Portland, CleanFund Commercial PACE Capital Inc., and PACE Equity. Funding can also be used to replace outdated boilers and lighting systems with more energy efficient alternatives. It appears from the website that interest rates range between 5-10%. Read more.

Wednesday, August 30, 2017

Portland Seeks Public Comment on Affordable Housing Bond Framework

The Portland Housing Bureau released a report written by the Affordable Housing Bond Stakeholder Advisory Group, which lays out a plan for how the money should be spent. The affordable housing bond was passed last November, and the city has pledged to use the $258 million dollars it expects to be generated by the levy to build 1,300 units available to households making less than 60% AMI. The Draft Policy Framework includes targeted goals that identify communities the city wants to prioritize for potential new affordable units. The PHB is conducting mail and online surveys, and will be holding hearings on the policy between September 6th and 11th. The final vote is scheduled for October 11th. Read more.

Wednesday, August 23, 2017

State of Oregon Expects to Return $464 Million to Residents

Oregon collected $464 million more in personal income taxes than expected this biennium, triggering the "kicker" rule, which goes into effect when revenue exceeds expectations by more than 2%. The increased revenue is largely do to the strength of the state's economy, which has seen steady growth over the past few years and currently has an unemployment rate below the national average. Oregon's general fund will also receive an additional $87 million. The kicker will not provide a windfall to individual residents, however - the middle 20% of income earners should expect to receive an estimated $91. Read more.

Monday, August 21, 2017

Bend Looking to Encourage Middle-Market Housing

The city of Bend, Oregon has seen a spike in housing costs over the past few years, and is actively looking for solutions that would encourage the building of new units. The Affordable Housing Advisory Committee met in the city last week to discuss some the Bend 2030 Work Group proposals that they may include in their recommendations to the city. Among the proposals discussed were:

-Deferment of development fees or long-term loans for developers building homes for families that make less than 125% area median income
-Tiered system for development fees based on home size
-Measuring density by radius rather than lot-by-lot
-Allowing four-plexes to be built in single-family neighborhoods
-Altering the requirement for open space when a home is built near a park
-Raising allowable lot coverage for multifamily housing from 40% to 60%

Read more

Portland's Central City 2035 Plan Will Have Public Hearings

 Since 2010, the Planning and Sustainability Commission, Bureau of Planning and Sustainability, Bureau of Transportation, and other city agencies have been working on a proposal to update design requirements for Portland's central core. When the final 2035 Plan is implemented, it will affect zoning and height restrictions, FAR, setbacks, and other important design features. The goal of the overhaul is to increase density in the central city, and encourage the use of public transit as well as biking and pedestrian infrastructure. The plan will have its first public hearing September 7th, and the city is expecting a great deal of public input at that time. The final vote will likely be in January 2018, with a March 2018 effective date. Read more.

Tuesday, August 15, 2017

City of Seattle Prohibits Housing Providers From Screening Applicants Based on Criminal History

The City of Seattle has passed 8-0 an ordinance called the Fair Chance Housing Ordinance prohibiting housing providers from screening applicants based on past arrests or criminal convictions.

Landlords are still allowed to screen applicants on employment, credit scores, income ratios and other criteria.

Read a statement on the City of Seattle website.

News Reports: City of Portland Plans to Extend Relocation Assistance Following Landlords' Judicial Appeal

The Portland Mercury quotes Portland Housing Bureau Manager Matt Tschabold as stating the Portland City Council will be asked to extend the relocation assistance for six months and then possibly even longer.

The news comes on the heels of two Portland landlords filing an appeal of a recent judges' ruling allowing the relocation assistance.

Multifamily Marketwatch Podcast - August 15, 2017

This week: The City of Portland considers special tax breaks for projects approved before inclusionary zoning took effect; Mayor Ted Wheeler criticized for lack of action on affordable housing initiatives; and Portland's relatively low rent-to-income cost average.

Check out this episode!

Monday, August 14, 2017

Relative to Income - Portland's Rents are West Coast's Lowest

A new report demonstrates that Portland's rents are the lowest on the West Coast relative to income.

As of the second quarter, Portland's rent-to-income ratio is just a shade under 25%, at 24.96%. The average income in metro Portland is about four times average rents. That is higher than some places, such as Raleigh at 18.77% or Austin at 21.53%, but a lot less than other markets, and less than the national average of 28.99%.

The highest rent-to-income ratio in the country is New York, at 51.33%. Other pricey markets include LA at 42.95%, San Francisco at 38.57% and San Diego at 33.28%. Among major West Coast markets, Portland has the lowest of all rent-to-income ratio.

Source: August, 2017 report from CBRE.

Wednesday, August 9, 2017

Oregonian Report: Wheeler Slow to Deliver on Affordable Housing

Portland mayor Ted Wheeler made the urgency of affordable housing a key part of his 2016 campaign, promising to deliver results quickly. Eight months since his election, not much has happened. Read today's story in the Oregonian.

Multifamily Marketwatch Podcast - August 9, 2017

In this week's news: REIS announces the national vacancy rate; streamlining Portland's design review; affordable housing bill proposed in U.S. Senate.

Check out this episode!

Multifamily Marketwatch Special

In an interview with HFO partner Greg Frick, Portland attorney Andy Hahs discusses the 2017 legislative session and Portland's relocation assistance program, which is likely to be modified and extended this year by Portland's City Council.

Check out this episode!

Friday, August 4, 2017

Seattle Tightens Rental Inspection Rules on Landlords

The Seattle City Council has reduced the amount of notice that landlords receive before building inspections. The Rental Registration and Inspection Ordinance (known as RRIO) provides for inspections for heating, infestations, leaks, etc. A property must be inspected at least once every decade.

Landlords were previously provided with 60 days' notice on which units would be inspected. Now they will receive a 60 day notice of pending inspection and a 10 day notice of the exact day, but they will not know which units will be inspected.

Previously, landlords could hire a private inspector if they didn't want the city inspector to conduct the inspection, but landlords weren't required to provide the resulting written report. The rules will now require inspectors turn over the resulting report to the city.

Thursday, August 3, 2017

Clark County Tax Appeals Due Beginning August 7

Many Washington State counties have mailed the Value Change Notices for the 2017 assessment for taxes payable in 2018. 

Appeal Deadlines
You have 60 days from the mailing date to file an appeal with the local board. 
  • The state and most counties offer a 60-day appeal window, but some only offer 30 days. 
City of Vancouver - Multifamily Abatement Program
The City of Vancouver has adopted abatement programs for new apartment construction depending on location. Developers and owners contemplating development should be aware of this program. Contact the City of Vancouver at (360) 487-8600 for details. See fact sheet. 

When considering your increase (and it will increase) the focus should be on whether the NOI supports the new value. While there is nothing wrong with trying to mitigate the value increase through an appeal, owners should be judicious with this approach.

Washington has a preference for using the sales comparison approach but also uses the income approach.

Some potential reasons to appeal your assessment
  • Your property has significant deferred maintenance or capital needs 
  • Your property has construction defects
Need help?
Contact your attorney or Christopher K. Robinson at (503) 635-9330 for assistance.

Read more.

Freddie Mac Forecast: Portland Among Leaders in 2017 Rent Growth

Portland will remain among the highest income growth for multifamily in 2017, even as vacancy rates increase. Freddie Mac estimates Portland gross income will increase by 5.7% with a year-end vacancy rate of 5.1%.

Download the full mid-year report here.

Rental Occupancy Rates Could Fall in Downtown Portland

Yardi Matrix reports that overall occupancy of stabilized properties in the U.S. was 95.6% nationwide in June, down 20 basis points year-over-year. Annual completions are expected to see a peak in 2017.

Yardi forecasts that as that new supply is absorbed, occupancy rates are likely to fall, especially in construction-heavy submarkets like downtown Portland and Austin's Hyde Park, which have seen occupancy decline by more than 3% in the past year.

Yardi expects the second half of 2017 to have slow rent growth the second half of 2017 with increases more in line with wage growth and increases in supply reducing occupancy. Occupancy rates in Portland and Austin have fallen as much as 80 basis points, according to Yardi.

The company forecasts effective annual rent growth in Portland this year will be 2.5%.

A mid-year report by Fredie Mac Multifamily Research Group forecasts Portland's gross rent growth at 5.7% for 2017, with an end of year vacancy rate at 5.1%.

Tuesday, August 1, 2017

U.S. Census: Portland Rental Vacancy Rate Climbs to 6.7% - Middle of the Pack

The U.S. Census Bureau reports that the rental vacancy rate for the Portland-Vancouver- Hillsboro metro area was 6.7% percent for the second quarter of 2017* -- an increase of 2.8% from Q1. The next definitive report on the area's vacancy rate -- by Multifamily NW -- is due out in October.

Seattle's Vacancy Rate Jumps 2.8%
Census estimated Seattle-Tacoma-Bellevue's vacancy rate has also increased the same amount -- 2.8% in the past three months -- from 1.9% to 4.7%.

The nation's lowest vacancy rates:

Allentown-Bethlehem-Easton, PA-NJ (1.2%)
Fresno, CA (2.2%)
Grand Rapids-Wyoming, MI (2.7%)
Jacksonville, FL (3.2%)
San Jose-Sunnyvale-Santa Clara, CA (3.5%)
Syracuse, NY (3.5%)
San Diego-Carlsbad, CA (3.6%)
Buffalo-Cheektowaga-Niagara Falls, NY (3.7%)
Los Angeles-Long Beach-Anaheim, CA (3.8%)
Worcester, MA (3.8%)

Average National Rental Vacancy Rate
The average national rental vacancy rate for Q2 2017 was 7.3 percent for multifamily dwellings of five or more units -- up 0.6% from one year earlier.

Year-over-year vacancy rates in the western U.S. have climbed from 4.9% to 6.0%.

Click to Enlarge

U.S. Homeownership Rate Increases
After falling to a 26-year low last year, homeownership rates have been increasing. The current homeownership rate in the West has increased the past 12 months by 1%.

Click to Enlarge

*The margin of error for the Greater Portland MSA is 2.9%