Tuesday, February 28, 2017

What Prevents Middle-Income Housing from Being Built?

A Shelterforce blog post explores the roadblocks to developing housing geared toward middle-income residents, and concludes that a combination of artificial production caps, NIMBYism, and regulations result in projects simply not penciling out in city neighborhoods where rents are typically lower. The result is more luxury units being built in inner core areas compared with workforce housing throughout the city. The problem of neighbors opposing new "cheap-looking" housing is especially acute, and results in "upscale" design standards that keep middle-income housing out of many neighborhoods. The post includes a map from a ULI report on inclusionary zoning that shows the areas of Portland where development projects are economically feasible. Read more.

Monday, February 27, 2017

Lender Update: Mortgage Equities Northwest is now McBride Capital

HFO is pleased to share the news that Mortgage Equities Northwest -- co-sponsor of HFO's events, newsletters and information for multifamily owners in the Pacific Northwest -- has changed its name to McBride Capital.

The Mortgage Equities Northwest name served the company well for seven years as it increased loan volume from $38 million to over $100 million. The company expects to surpass $200 million in loan closings for 2017 and looks forward to providing the same exceptional service and leadership under its new name.

New contact information may be found at www.mcbridecapital.com. Take special note that the company also frequently updates its rates page.

McBride Capital also announced $15.55 million in loan closings under the new company name: 226-unit Brighton Park Apartments and 44-unit Brooktree Apartments in Salem.

Friday, February 24, 2017

Rising Interest Rates, High Home Prices Will Keep Portland Renting in 2017

Reports from CoStar, the Portland Tribune, and the Portland Business Journal this week indicate that a variety of forces are likely to keep Portland residents renting. CoStar's analysis of the effect of rising interest rates suggests that an increase in the cost of borrowing could cause many households to hold off on buying. In December, the Federal Reserve indicated it would raise rates three times in 2017, and has indicated that the next increase could be fairly soon.

Meanwhile Windermere Real Estate's chief economist, Matthew Gardner, believes that while first time home buyers may attempt to enter the market in 2017, the supply of owner-occupied homes in the Portland metro area is so low that there may be nothing for them to buy. In his Portland Business Journal article he states that in Multnomah county alone, 7,493 owner occupied housing units are needed. Surrounding counties are similarly low on supply. He forecasts that Portland's above-average price growth will not be slowing anytime soon, due to lack of inventory.

Finally, the Portland Tribune reported this week that according to HSH.com, the average buyer in Portland needs a salary of $70,000 to afford a home. That is an increase of 7.5% from one year ago. The median home price in Portland is $354,700, and the median monthly mortgage payment is $1,654. The 2015 median annual income in Portland was $63,850.

Wednesday, February 22, 2017

Portland's Low Vacancy Rates the Biggest Threat to Renters

Portland for Everyone recently reported on Portland's new ordinance requiring landlords to pay relocation costs after no-cause evictions or rent increases greater than 10%. They argue that this ordinance could cause additional problems for renters due to the lack of housing supply in Portland.

Their fears are echoed by an unlikely ally: Portland Tenant United's Margot Black. Black argues that low vacancy rates mean landlords can afford to be more selective, and penalties for no-cause evictions could make it even harder for low-income tenants to find housing.

"Supply is also the answer" to the housing crisis, says Black. Portland's vacancy rate has been below the national average since 1986, with the exception of a brief period in 2004. At the same time, Multnomah County has not built enough units to keep up with population growth.

HFO is pleased to see that Margot understands the importance of increasing supply, and hopes that tenant groups and governmental bodies will do more to encourage development of affordable housing.

 Read more.

Thursday, February 16, 2017

Landlords Lose Request for Temporary Restraining Order Against City of Portland

Federal Judge Michael Simon of the U.S. District Court of Oregon denied a petition for stay of the City of Portland relocation assistance ordinance yesterday, saying it was "too late" as the ordinance had already taken effect. The case was remanded to State Court where the statewide pre-emption on rent control will be the key argument. A hearing is expected sometime before the end of April.

Tuesday, February 14, 2017

Multifamily Development Pipeline Dries Up In Response to New City Zoning Requirements

The Daily Journal of Commerce [subscription required] reports that Portland architectural firms are now running completely out of design work for multifamily projects.

According to local developers and architects, the development pipeline is drying up in response to City of Portland Inclusionary Zoning requirements that took effect February 1st. Although the 14,000 units currently in the pipeline will keep developers and construction crews busy for the next couple of years, any additional activity may come to a screeching halt as developers say the regulations mean their projects simply cannot pencil out.

Stay tuned.

Author of "Evicted": For Designing Policy, "Landlords Have to Be at That Table"

The Oregonian published an interview with Matthew Desmond, author of Evicted: Poverty and Profit in the American City. His book was chosen by the director of the Multnomah County Library for this year's Everybody Reads Program. Desmond emphasizes that landlord-tenant relationships are often complex, and that "it's not just as simple as antagonism all the time." He believes landlords' concerns have to be taken into account in order to find the best solutions. Desmond also argues that a large-scale expansion of the voucher system would be the most efficient way to help families that qualify for assistance. Read more.

Monday, February 13, 2017

Portland Tenant United Founder: "Homegrown Oregon Landlords Tend to be White and Racist"

Landlords were described as White Racists yesterday morning on KATU's "Your Voice Your Vote" on Sunday, February 12th, by Portland Tenant United founder Margo Black. Click here to watch.

Friday, February 10, 2017

Affordable Housing Data Will Not Be Available in Time for Legislative Session

After being called out in an audit in December, the Oregon Housing and Community Services (OHCS) agency has stated they will not be able to complete a statewide affordable housing inventory until after the 2017 legislative session has ended. Lawmakers will have to rely instead on data from the Oregon Housing Alliance, which has compiled a list of federal affordable housing contracts set to expire. While OHCS has compiled a list of both federal and state-backed housing units, it has yet to complete research on expiration dates for these units. Read more.

Wednesday, February 8, 2017

Tenant Advocates Pressuring State Senators to Lift Rent Control Ban

The Willamette Week reports that while a majority of Oregon State Senators do not currently support lifting the statewide ban on rent control, tenant advocates are putting pressure on senators representing Portland in hopes of changing their minds. SEIU 49 political director Felisa Hagins is hoping to reach Sen. Rod Monroe (D-East Portland), who has previously stated that he does not believe rent control works. The first hearing on tenant-protection bills is scheduled for March 2. Read more.

Tuesday, February 7, 2017

Tenant Groups Targeting the Wrong People

Landlords are the wrong target in the need for more affordable housing. The reason housing prices are up is because the City is not processing permits fast enough and not encouraging development of affordable housing in all the ways it could be. Landlords are an easy scapegoat.

If you believe that what we need is more housing now, like the Facebook Page and share the video by clicking here.

Monday, February 6, 2017

Oregon Voters Deserve Research-Backed Solutions from Lawmakers

By Jennifer Shuch and Greg Frick
HFO Investment Real Estate

This is the full text of an article by Jennifer Shuch, HFO Research Analyst, and Greg Frick, Partner. A shortened version of the article appeared in the Oregonian February 2, 2017. You can read the Oregonian article here.

The City of Portland and the State of Oregon have a lot to be proud of. Once again, Oregon is at the top of the list of places people are moving to. A recent Fast Company report ranked Portland a top city for job seekers. Innovative environmental policies have garnered Portland international attention. On the flip side, many Oregonians are still being left behind. A 2016 article in The Atlantic brought national attention to Oregon’s history of racial segregation, an issue that continues to be ignored by state and local politicians. Housing prices in cities across the state are rising at unprecedented rates, far outpacing wage gains, particularly for minorities and single-parent households. Rates of child hunger are incredibly high, while high school graduation rates continue to be low. On the city level, Portland is at a crossroads: if thoughtful solutions are found for these problems, it will continue its road to prominence on the national and international stage. If not, Portland will be a study in municipal failure.

It is crucial that local and state politicians hoping to make change do the due diligence required to ensure we are not setting ourselves up for failure. Without thorough risk analysis, policies that sound like a panacea may end up doing more harm than good. In November, ballot measures from the state and local governments had lofty goals, but were lacking in practical details. For example, Measure 97 sought to provide much needed funding for schools by raising Oregon’s comparatively low corporate tax rate. Ultimately, it failed because it relied on an untried, untested measure of collecting corporate taxes that raised many questions about how it would impact voters and businesses. There was no reason for this – Oregon schools were failed by politicians who wanted to try something new, rather than perform a formal analysis of successful measures from other states.

If Oregon is 50th in the nation for corporate tax rates, we have 49 case studies in front of us to learn from. Leaders have an obligation to dig into the available data and do a detailed cost-benefit analysis. In performing due diligence, lawmakers should be asking which states continue to attract businesses, despite higher tax rates for corporations. What is the system in Texas? Massachusetts? Washington? California? North Carolina? Instead, Oregon lawmakers came up with a new, untried solution that few advocates could competently explain. Meanwhile, businesses of all sizes feared the uncertainty, especially when at the 11th hour lawmakers began to suggest they would fix the measure’s problems after it passed.

The State of Oregon is now considering overturning the ban on rent control, while Tenants United and other groups in Portland are lobbying the city council to enact a rent freeze prior to the ban being lifted. There is no denying that the concept of rent control sounds great. No more rent increases! How could that possibly be a bad thing? But the fact of the matter is, it has been tried in a number of cities all over the world, and it has never proven to be successful policy. Rent control was attempted in Boston, only to be repealed in the late 1990s. More recently an extremely nuanced version was attempted in Berlin, and studies have found it benefited the upper middle-class renters more than any other group. In San Francisco and New York, rent control has contributed to skyrocketing rents. London is currently blaming austerity and demand-side market manipulation for its own affordability crisis.

Rent control is frequently described as the only topic on which all economists can agree. Renters in Oregon are struggling – there is no denying it. But it is the responsibility of lawmakers to find the best solutions to this problem, not just the solution that plays the best with a progressive audience.  We need a solution that will be most beneficial not only for renters today, but renters in the future. Enacting bad policies now because they sound good to frustrated voters is not an option. Voters depend on lawmakers to do thorough cost-benefit analyses, to research the best possible policies, not to put forth a band aid solution.

It is also concerning that members of the Portland City Council do not always seem to be aware of the full extent of what they are voting to approve. In the 2035 comprehensive plan, a stated goal was to increase housing density in transit corridors. Meanwhile, part of Northwest Portland, arguably one of the most walkable and transit-oriented parts of the city, was downzoned on the recommendation of neighborhood groups. Is Portland demonstrating that it is truly committed to increasing the supply of housing and advocating a multi-modal transportation system if it so easily overlooks an issue like this? Should neighborhood groups’ concerns about potential new neighbors outweigh the recommendations of urban planners and housing advocates?

Many Oregon voters do not have a great deal of confidence in state or local politicians. The turnover rate for mayors and city council members in Portland is a good indicator of this. Arguably, this stems from decades of questionable policies enacted without thorough cost-benefit analysis performed at the outset. Politicians have a responsibility to voters to be able to explain how data-based analyses, recommendations from experts, and specific case studies convinced them that the policy before them is the best possible one for the voters they serve. While there is a lot of disagreement among urban planners on issues like inclusionary zoning, housing vouchers, and transportation systems, it is the job of elected officials to make every effort to find the best solutions for the problems faced by constituents. They do not need to get it right every time, but they do need to demonstrate to voters that they are not simply enacting the easiest, fastest, or most progressive-sounding policies. The future of the state depends on it.

Tina Kotek Interview on Rent Control in the Oregonian

The Oregonian interviewed Tina Kotek about why she wants to end the ban on rent control, as well as what she envisions for a "rent stabilization" program. In the interview she claims there is no evidence that rent stabilization restricts supply, and argues that landlords have not provided what she considers better solutions. She also indicates that a "fair rate of return" for landlords would be determined at the local level. Read more.

Friday, February 3, 2017

Ordinance Requiring Landlords to Pay Relocation Costs Passes in Portland

A city ordinance requiring landlords to pay relocation costs for tenants facing no-cause evictions or rent raises greater than 10% was passed unanimously by the Portland City Council on Thursday. Portland landlords are now required to pay $2,900 to $4,500 in relocation costs in these instances, depending on the size of the unit. The policy will go into immediate effect, and applies to anyone who has received an eviction notice in the last 89 days. Landlords who rent only a single unit are exempt. Commissioner Eudaly referred to the measure as "the next best thing" to a rent freeze. Read more on OPB's website. and on Oregonlive.com.

Wednesday, February 1, 2017

Where Housing Providers Can Donate

Housing providers in Portland and throughout Oregon who do not support allowing rent control or an end to non-renewals of leases ("no-cause evictions") can make contributions in two ways.

1) The Equitable Housing PAC supports candidates who understand the burdens on housing providers to provide safe, clean, housing for renters. Donations to this PAC are disclosed to the public. Click here.

2) The Multifamily Defense Fund supports public education, the burdensome costs of lawsuits to protect landlord rights, and for lobbyists to ensure that housing providers' voices are heard in Salem. Donations to this fund are not disclosed to the public. Click here.

Unintended Consequences of Proposed Renter Relocation Policy

In response to the proposed requirement for landlords to pay $2,900-$4,500 to tenants who face no-cause evictions or 10% rent hikes, John DiLorenzo and the Equitable Housing PAC are warning the city about potential unintended consequences. Landlords note that they use no-cause evictions to remove tenants they have received complaints about when other residents are unable or unwilling to testify at eviction hearings. No-cause evictions also allow landlords to remove tenants engaged in illegal activity who have not yet been charged with a crime. Commissioner Eudaly has discounted these arguments, claiming more tenants will be helped than harmed by this proposal . DiLorenzo has indicated he is likely to challenge the measure if passed, on the grounds that it is a de facto rent control program. Read more.

Upcoming Housing Decisions for Portland in 2017

With mandatory inclusionary zoning set to take effect this week, many Portland residents are wondering what the city's next steps will be to address affordability issues and housing shortages. In 2017, Portland is planning to overhaul the design review process, as well as the rules about the design of apartment buildings and condos. Undertakings such as the Design Overlay Zone Assessment Project, Better Housing by Design, and the Residential Infill Project are all expected to take shape in the coming months. Read more.