This week: Portland’s inclusionary housing policy appears to have slowed multifamily development; four bills in Washington State related to landlord-tenant laws await the Governor’s signature; development activity in Portland has slowed since the implementation of Portland’s inclusionary housing policy; and an update on some land-use ballot measures in California.
Listen to our latest podcast.
Read the text of our podcast here.
The Daily Journal of Commerce reports that housing production was down by 5.9% in Portland in 2019 due to a combination of factors including rising construction costs, increased regulations, and an oversupply of new luxury housing units. The number of housing permits issued by the Bureau of Development Services peaked in 2017 when 5,993 units were permitted. In 2018, that number dropped to 4,887. While 2019’s permit rate was similar to 2016 and earlier, the region is still facing a lack of supply due to underbuilding in the recession’s aftermath. The DJC also notes that 2017 is the year the City’s inclusionary zoning requirement went into effect. Since then, the number of permit applications for buildings under 20 units has increased substantially, indicating the possibility that many sites are not being built out to their full potential.
Along with smaller buildings, there are a handful of large superblock projects in the pipeline. But the number of mid-sized projects has not returned to pre-2017 levels. Private developers also see increased competition from government agencies, as Metro and the City of Portland use bond funds to build affordable housing bond projects. The City is currently seeking an outside consultant to evaluate the first three years of the inclusionary zoning requirement. In essence, it is not yet clear whether the City plans to change the law if the report finds that the policy has a hand in slowing construction. DJC – Costs Escalating for Multifamily Development
The Federal Reserve announced Tuesday that it has decided to cut the benchmark interest rate by half a percentage point. The range now sits between 1% and 1.25%. In October, when the Fed announced a previous rate cut, Chairman Jerome Powell indicated there were no plans to cut rates again in the near term. But economic impacts from the Coronavirus spurred the regulatory body to action. In a statement last week, Chairman Powell indicated that the Fed might move to lower rates further if fears of a pandemic continue to weigh on economic activity. But lower interest rates do little to alleviate concerns of a rapidly spreading virus, and after a brief jump, the stock market continued trending downwards. Despite initial hopes that the cuts would stimulate the economy, in reality, the Fed’s actions do not fix supply chain, personnel, or business travel issues currently being faced by major companies worldwide. While some investors are hopeful that the Fed will cut interest rates further in March, if the impacts of the Coronavirus lead to a recession, the government will have little room to lower rates further. NY Times – Fed Makes Emergency Rate Cut, but markets Continue Tumbling
Willamette Week reports that Metro’s projections for ridership on the proposed SW Corridor MAX line may have been over-inflated. TriMet announced new ridership estimates last month, lowering the number of expected riders by 12%. Still, the line is expected to attract 37,500 new riders – the equivalent of an I-5 car lane’s worth of people. The project’s costs are estimated at $2.8 billion – it will be the most extensive line item on the $3 billion transportation measure that will appear on the November ballot. The revised projections are due in part to TriMet’s decision to reduce the number of park and ride spaces along the line – the most recent version of the plan includes 2,000 fewer spaces in total. The agency decided to eliminate these parking spaces due to cost and traffic concerns. Other MAX lines are also failing to meet ridership goals. The Yellow line is 4,700 daily riders short of its 2020 targets, while the Green Line has 12,000 fewer passengers than anticipated. The number of transit riders in the region has dropped by 6% since 2009, despite TriMet’s goals of doubling ridership by 2040. John Charles of the Cascade Policy Institute believes investment in light rail and streetcars is inefficient – he advocates for more investments in bus lines, which are “better, cheaper, and faster.” Public transit activists in the region have also argued that the newer MAX lines, including the Orange line, would benefit from better bus connections. Only 23% of SW Corridor rides are expected to connect with other transit options. Former TriMet planner Jim Howell believes that is an indication that the proposed line is not well-linked to the current system. Advocates also argue that there is a need for more housing density along the line, which like the Orange line, will primarily travel through single-family neighborhoods. Willamette Week – TriMet Downgrades What It Expects to Accomplish with Its Next Light Rail Line
The Washington Multifamily Housing Association issued a legislative update last week, detailing the four landlord-tenant bills that have passed both chambers of the state legislature. These bills are awaiting a signature from Governor Inslee – the other housing bills being watched by WMFHA this session were defeated. Senate Bill 5165 prevents housing providers from discriminating against potential tenants based on their immigration or citizenship status. Landlords will no longer be able to require a social security number on a rental application or offer different terms to a tenant based on citizenship status. House Bill 2535 requires landlords to wait five days before assessing late fees, as well as requiring that housing providers work with tenants who pay rent with a source of income that comes from government service.
In some cases, the tenant may not receive their income – such as social security – until the 3rd of the month. In these cases, landlords must allow for a later due date for rent payments to avoid late fees. House Bill 1694 will enable tenants to ask housing providers for a payment plan if move-in costs are more than 25% of first months’ rent. Tenants can also request payment plans if last months’ rent is required. Senate Bill 6378 allows housing providers to refuse to accept cash payments, requires landlords to take community pledges for rent during the 14 days after an eviction notice is issued, prohibits evictions due to non-rent charges such as late fees or damages, and prevents attorney fees from being awarded when a tenant fails to respond to an Eviction Summons. Washington’s legislative session is scheduled to end Thursday, March 12, 2020, at 5 pm. WMFHA – Legislative Update: The Final Push
Health experts in Portland are warning that the coronavirus outbreak could critically impact the area’s homeless population. Homeless residents are more likely to have health conditions that could exacerbate the effects of the virus without the sanitary conditions that could prevent it from spreading. The City does not offer sufficient hygiene facilities for its unhoused residents, where they can wash their hands, shower, or do laundry. The Coronavirus is particularly deadly for people over 65, and according to Dr. Brian Chan of OHSU and Central City Concern, many homeless patients have health issues typically found in people who are 10 or 20 years older. At a Community Conversation on Homelessness last week at the University of Portland, Mayor Wheeler said the county is working on a response plan for shelters, but that it has not yet been finalized. Over the past few years, homeless communities in Portland and San Francisco saw an outbreak of Shigella, a usually rare bacterial disease. HIV has also spread through these communities in recent years. Even after regular outbreaks of disease, public health workers are still struggling to identify where official recommendations fall short for unhoused communities. While hospitals have been discharging coronavirus patients to recover at home, homeless residents who are discharged from hospitals are significantly more likely to die. At the same time, there are not enough hospital beds in the area to enact an effective quarantine. Without a comprehensive plan to address these issues, homeless residents could end up one of the hardest-hit communities in the region. Oregonian – Coronavirus Could Hit Oregon Homeless Population Particularly Hard
As Portland residents are starting to receive notices that the annual $35 Arts Tax is coming due in April, Willamette Week reports that the arts organizations that initially lobbied for the tax are unhappy with how it has been implemented. Since the arts tax was passed, the largest arts organizations in the City, including Portland Center Stage, the Oregon Ballet Theatre, the Portland Art Museum, the Portland Opera, and the Oregon Symphony, have all seen public funding levels fluctuate. This year, both the Portland Art Museum and the Portland Opera will see lower levels of Arts Tax funding than they did before the tax’s passage in 2012. Scott Showalter, President of the Oregon Symphony, claims that the arts tax has made funding less reliable, despite hopes that it would provide arts institutions with a permanent funding stream, leaving them less reliant on philanthropy and ticket sales. And because so many Portlanders have grown frustrated with the tax, the City now employs a collection agency to go after residents who fail to pay three years in a row. While the City expected the $35 per resident tax to generate $12 million, even at its peak in 2016, the City fell short of its goal, raising just $11.46 million. Compounding matters, the City has used the arts tax to plug holes in public education funding – in 2017, 71% of the funds generated by the arts tax went to schools. Administrative costs, which were initially promised to stay below 5%, now average 9.9%. And as funding continues to dwindle, Metro has moved to dramatically increase rent at the performance centers that house the most significant arts organizations. The Symphony, Ballet, and Opera are all facing rent increases of at least 30% this year. Andrew Proctor, executive director of Literary Arts, expressed frustration at having to use meager city funds to pay Metro for ever-increasing rents. In his view, the City is essentially paying itself, rather than boosting the art institutions the tax was initially meant to serve. Willamette Week – Portland’s Leading Arts Organizations Hate the Arts Tax, Too
BikePortland reports that Metro has released its first-ever report on traffic fatalities and serious injuries. The report tracks severe and fatal injuries from 2014 to 2018, along with baseline numbers from 2011-2015, as well as target numbers established in the 2018 Regional Transportation Plan. The report looks at a variety of metrics, including the total number of road fatalities, the rate of deaths per 100 million vehicle miles traveled, the number of serious injuries, the price of severe injuries per 100 million vehicle miles traveled, and the number of non-motorized fatalities and serious injuries. The region met its 2014-2018 target in just two of 25 categories, and in almost every case, the actual performance over that time was worse than the baseline. For example, between 2011 and 2015, there were 62 fatalities. Metro had hoped that between 2014 and 2018, there would be 58, but in reality, there were 75. The number of serious injuries also jumped significantly, from a baseline of 458 between 2011 and 2015 to a total of 512 between 2014 and 2018. The rates of fatalities and serious injuries per 100 million vehicle miles traveled also increased, as did the number of deaths and severe injuries per 100,000 people, indicating that the increase in the number of injuries and fatalities is not strictly due to more people traveling around the region. The one bright spot in the report is that the number of serious bicycle injuries did improve slightly, from 33 in 2011-2015 to 30 in 2014-2018. Metro hoped that the number of motor vehicles involved in fatalities would decrease slightly every year, reaching 0 in 2035, but instead, there has been an increase over each of the last five years. If current trends continue, the number of fatalities could reach 140 by 2033. Metro hopes to use this data to inform its 2020 transportation measure, which will include safety improvements on city streets. BikePortland – Metro: Region Is Failing to Meet Transportation Safety Goals
Finally, Planetizen published a blog post detailing some of the land-use measures that were up for a vote on Super Tuesday. Most of the bills that passed or appear on their way to passing were on ballots in cities and counties across California. Voters in the City of San Francisco approved Measure E, a controversial plan to cap new office space based on whether the City meets its affordable housing goals. Also, in San Francisco, voters appear to have passed Measure D, a vacancy tax on retail space that amounts to $250 per linear foot during the first year a space remains vacant. The tax increases to $500 the second year and $1,000 every year after. In San Jose, voters approved a tax on the sale of properties worth over $2 million. The City hopes to use the expected $73 million annual revenue from the tax to fund affordable housing and homeless services. A handful of transit measures were defeated, including a sales tax in Contra Costa County and a similar tax to fund the SMART transit system in Marin and Sonoma Counties. In Redlands, voters defeated a bill that would allow for more density surrounding a new regional rail line. In Mountain View, residents rejected a measure that would have softened a 2016 rent control ordinance. Planetizen – Super Tuesday Results for Planning and Land Use Votes