Tuesday, March 31, 2020

Portland Bureau of Development Services Only Processing Tier #1 & #2 Permits

Portland's Bureau of Development Services has created a tiered system to ensure that its efforts are focused on immediate infrastructure needs. According to the BDS website, the agency is currently only focusing on intakes for Tier #1 and Tier #2 projects, which include hospitals and clinics, essential services, shelters and transitional housing, essential facilities, wastewater treatment, and wireless facilities. Tier #2 also includes permits for projects that are already under construction. Portland Housing Bureau Projects are considered Tier #3, while other regulated affordable housing projects are Tier #4. All other projects are considered Tier #5. Read more.

Monday, March 30, 2020

Portland Sets April 1st Deadline for Small Businesses to Apply for Aid

The Portland City Council passed a $2 million grant package last week that is expected to support up to 150 local businesses that have been impacted by the COVID-19 pandemic. Businesses with fewer than 50 employees that make less than $2 million in annual gross revenue and have seen at least a 25% decline in revenue since February 1st are eligible for the funding. Businesses can expect between $2,000 and $10,000 in grant money if they are chosen, and funds will be dispersed starting Friday, April 10th. Applications are due by 11:59 PM on April 1st. Read more.

HFO Multifamily Marketwatch Podcast - March 30, 2020

Oregon and Washington issue stay-at-home orders; Oregon’s governor delays state tax filing deadline, and local, state, and federal government work on funding strategies to offset the pandemic’s economic impact.

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Oregon Governor Kate Brown announced last Wednesday that the state’s income tax deadline will be moved to July 15th. Her announcement came less than a week after Treasury Secretary Steven Mnuchin announced that the federal tax filing deadline would be delayed to the same date. Also, Portland arts tax filings will be due in July. Oregon’s filing extension applies to personal and corporate income tax filings. However, corporations that are making estimated tax filings for the current tax year will still have a deadline of April 15th. The extension is due to the impacts of the COVID-19 pandemic, but some lawmakers have expressed concerns that the delay in revenue collection could impact recovery efforts. State Senator Elizabeth Steiner Hayward of Portland estimates that the state could forgo $300 to $500 million in the short term as a result of this decision. Brown acknowledged the complexity of balancing these concerns, which required her to weigh lower revenues and the need for an expensive public health response against the large number of people whose lives have been impacted by the pandemic. OPB – Oregon Delays Personal Income Tax Deadline until July

The Portland City Council passed two measures on Wednesday that dedicate a total of $4 million to emergency efforts aimed at tackling the impacts of COVID-19. The first measure transfers $3 million in unallocated reserves from the General Fund to an “initial incident budget.” Of this, $1 million will be directed to a Small Business Relief Fund that will be distributed to approximately 150 local businesses. The rest of the $3 million funding package will be allocated to coordinated response efforts, including shelter beds, handwashing stations, and protective gear for first responders. The Small Business Relief Fund will be administered by Prosper Portland, which will also add $1 million from its own budget to the Fund. As of Monday, March 30th, businesses will be able to apply for grants up to $10,000. The city plans to prioritize companies that have seen at least a 25% decrease in revenue, but which have continued paying employees or providing workers with healthcare benefits. Businesses owned by women and people of color will also be prioritized. Prosper Portland plans to distribute money to selected companies by the second week of April. According to the Oregonian, Prosper Portland is also considering using $1 million from the enterprise zone tax abatement program to fund five-year, interest-free loans to businesses. Also, the City Council approved $1 million in direct payments to Portlanders, which will come out of the Portland Housing Bureau’s budget. The funds are intended to go toward necessities like food and cleaning supplies, but the specifics of the payments are still being worked out.
Oregonian – Portland Approves $3 Million in Coronavirus-Related Aid, Including for Impacted BusinessesPortland Business Journal – Prosper Portland Readies $2 Million Small Business Relief Package 

The Portland Tribune reports that the city of Wilsonville is considering significant changes for its Town Center area. The city’s Town Center plan was finalized in 2019 after years of public outreach and discussion among city leaders. In the plan, heights on Main Street were limited to 3 to 4 stories. But earlier this month, the City Council held a work session with city staff. After viewing a virtual visualization, Council Members argued that height limits for some buildings should be between 6 and 9 stories instead. Councilor Charlotte Lehan argues that taller buildings would provide scenic views of the community and that the city should be thinking about these structures from the rooftop perspective as well as the street view. Councilor Ben West agreed, describing the original design as sterile and “squatty.” But City Planning Director Miranda Bateschell explained that the public was in favor of shorter buildings and that taller ones would be more expensive to build. Mayor Tim Knapp also expressed concerns that there are not enough green spaces designated within the Town Center area. Bateschell believes that the visualization the staff provided to the city council, which spurred discussion of these changes, may not have captured the full scope of the plan. The City Council intends to revisit potential changes in the future, though a date has not yet been set. Portland Tribune – Nine-Story Towers? Wilsonville Thinking Big for Town Center

Governor Brown of Oregon and Governor Inslee of Washington both issued stay at home orders last week, telling residents to avoid going out unless absolutely necessary. Governor Brown’s order allows businesses and nonprofits to remain open as long as employees are allowed to work from home where possible. Companies that remain open must designate an employee who is responsible for ensuring social distancing measures within offices and physical workspaces. The state has opened a hotline for workers to report conditions that violate social distancing rules. Also, Brown’s order allows coffee shops, cafes, and restaurants to remain open as long as they are only taking pickup or delivery orders. Doctors’ offices, health care facilities, grocery stores, pharmacies, pet stores, and veterinary offices may also remain open. Childcare facilities that serve 10 children or fewer can continue to operate, though priority must be given to the children of medical professionals and first responders. Businesses that rely on foot traffic and close interaction with customers are required to close. The order also bans all social gatherings and outdoor activities where people are not able to maintain 6 feet of distance. People or businesses found in violation of the rule could face Class C misdemeanor charges. Governor Inslee’s order is similar to Brown’s, requiring the closure of a large number of businesses and the cancellation of social events as well as concerts, festivals, and parades. Inslee’s order includes a detailed list of the types of essential companies that may continue to operate, such as law enforcement, health care, manufacturing, childcare, food and agriculture, transportation, finance, defense, media, and local government. While Brown’s stay at home order is tied to the state of emergency, Inslee’s mandate is scheduled to end on April 8th. Oregonian – Oregon Stay at Home Order: Where Can I Go? Seattle Times – Here’s What Gov. Inslee’s New “Stay-at-Home” Order Does and Doesn’t Restrict

In the wake of Oregon Governor Kate Brown’s stay at home order, many homeless residents are wondering how they will be impacted. Unlike similar rules in other states, Governor Brown’s order did not carve out an exemption for homeless residents, who are, by definition, unable to stay at home. The rule requires residents to keep a distance of six feet from others, and a violation could result in up to 30 days in jail or a fine of up to $1,250. But homeless residents and social workers argue that it is much more difficult for people in homeless encampments to maintain an appropriate social distance. Raven Drake, who runs Street Roots' coronavirus action team, says that when distributing items like hand sanitizer, her group works to mark off six-foot intervals, but it is difficult to enforce them. Advocates worry that the order will give police officers more of an incentive to arrest residents who group together to keep warm at night. Social workers who hand out free meals have also expressed concerns about the order. Brown’s spokesman Charles Boyle argues that the law is not meant to criminalize homelessness. Still, without explicitly addressing the needs of homeless residents, it may not do enough to protect them from being disproportionately targeted. Oregonian – Oregon’s “Stay at Home” Order Leaves Unanswered Questions for People with No Homes

To encourage other developers to adopt mass timber technologies, Ben Kaiser of Kaiser Group + Path Architecture is publicly releasing all drawings, technical specifications, and engineering documents for his Carbon 12 building in North Portland. At 8 stories, Carbon 12 is one of the tallest mass timber buildings in the US. Corey Martin of Hacker, another firm that has completed mass timber buildings in the city, believes the mass timber movement is bringing people together due to its potential for innovation. He describes enthusiasts as a, quote, “open-source community.” Both Martin and Kaiser argue that there is a lot to learn about mass timber and that the knowledge gained from completed projects should be shared with other developers. In building Carbon 12, Kaiser found that mass timber buildings fare better in seismic events due to the lightness of the structures. They are also easier to build on brownfield sites. Since Carbon 12 was completed, Kaiser has received several information requests and has given more than 200 tours of the building. The high level of interest among building professionals spurred his decision to make plans public. DJC – Eager to Stimulate a Mass-Timber Revolution

The Seattle Times reports that as Washington residents are told to stay in their homes, construction professionals who continue showing up to building sites have mixed feelings about being designated as essential. While workers on some sites have been told to go home, Inslee’s order carved out exemptions for the construction of some critical projects, including health care facilities, transportation infrastructure, and housing. Maintenance workers at public housing facilities are also exempt from the stay at home order. Construction industry groups had lobbied Inslee to allow them to continue working, arguing that they had already begun taking precautions against COVID-19 infections. But Seattle Times reporters spoke with some construction workers who say that these precautions are all but impossible to follow in some circumstances. One worker explained that on residential building sites, a large number of workers may end up crowding into unventilated rooms as small as 600 square feet. While homebuilding is allowed to continue, at least one home builder, Sellen Construction, has halted work for two weeks due to health concerns. CEO Scott Redman has pledged to continue paying the company’s 320 employees during this time. But despite the risks, some construction industry professionals would prefer to continue working to ensure that residents continue to feel safe in their homes. Portland Business Journal – Portland Building Owners Stress Cleaning, Other Precautions amid COVID-19 Pandemic

Finally, a new report titled “More for Less?” published by Harvard’s Joint Center for Housing Studies evaluates design and construction strategies that could begin to address the high cost of housing. The report’s author, Hannah Hoyt, conducted 30 interviews with construction and policy professionals to determine the extent to which construction choices could impact the cost of housing. Hoyt acknowledges that significant policy changes at both the local and federal levels are needed to increase the construction of affordable housing. Still, she also points out areas where building professionals could start to reduce costs until these policies are adopted. Hoyt points out that the solutions will not be the same in every market, and that industry leaders must evaluate what makes sense for a specific project or region. One aspect of construction that is more universal, however, is time. The longer a project takes from inception to completion, the more it will cost. While developers do not necessarily have the power to reduce approval timelines, they may be able to lessen the amount of time spent on design and construction. Hoyt also argues that a focus on building efficiency can improve the design as well as lowering costs. In her analysis, Hoyt focuses on ways to reduce land costs, soft costs, and hard costs, which include site preparation, structure, interiors, and services. She hopes that by sharing strategies gleaned from these interviews, she can provide best practices for cost reduction in multifamily construction projects. JCHS – More for Less?

Gov. Inslee Clarifies Real Estate Transaction Guidance

Governor Jay Inslee of Washington issued a memorandum on Friday clarifying restrictions on real estate transactions during the COVID-19 state of emergency. While real estate activities are allowed to continue during the state of emergency, Gov. Inslee has issued a number of restrictions limiting in-person interaction during real estate transactions. The new rules include:

  • In person meetings with customers are only allowed when necessary for a customer to view a property or sign necessary documents
  • Real estate open houses are not permitted
  • No more than two people can be on site at a time for property viewings, inspections, appraisals, and final walk-throughs, which must be arranged by appointment
  • All new real estate listings must be facilitated remotely

Wednesday, March 25, 2020

Gov. Brown Announces State Personal Income Tax Deadline Is Delayed until July

Governor Brown announced today that the state of Oregon is delaying the deadline for personal income tax filings until July 15th, in line with the new deadline set for federal tax filing. The Oregon Department of Revenue is expected to provide further guidance on the change. Lawmakers have expressed concerns that the delay will make it more difficult to fund emergency mitigation efforts - State Senator Elizabeth Steiner Hayward estimates that the state could experience a short-term hit of $300 to $500 million. Read more.

Tuesday, March 24, 2020

What's new in 2020 in Real Estate Opportunity Zones with Trent Baeckl of Perkins and Co.

Perkins & Co Shareholder Trent Baeckl offers an update on what's new relating to the creation of real estate opportunity zones.

Gov. Inslee Issues "Stay-at-Home" Executive Order

Washington Governor Jay Inslee announced a Stay-at-Home order for the entire state, just hours after Governor Brown of Oregon issued a similar order. Inslee's order is effective immediately and is scheduled to last until April 6th. Businesses deemed non-essential will have 48 hours to close and will not be allowed to open until April 8th. Activities permitted for Washington residents include:

  • Grocery shopping and ordering takeout
  • Attending medical appointments
  • Visiting pharmacies
  • Outdoor activities that allow for social distancing
  • Essential errands to gas stations, banks, food banks, and laundromats
  • Going to work if you're employed by an essential business
Governor Inslee's order includes a long and detailed list of which jobs are considered essential. These include emergency services, law enforcement, health care, manufacturing, child care, food & agriculture, transportation, finance, defense, media, and local government. Read more.

Monday, March 23, 2020

Gov. Brown Issues "Stay at Home" Executive Order

Oregon Governor Kate Brown issued an executive order aimed at keeping Oregonians in their homes to stop the spread of COVID-19. Effective immediately, Oregonians will no longer be able to gather in "non-essential social" groups. Only essential businesses may remain open. The list of essential businesses includes:

  • Cannabis stores
  • Bars, restaurants, and cafes (delivery & pickup only)
  • Childcare facilities with a limit of 10 children (priority must be given to children of first responders)

Governor Brown's order does not require businesses to close, but she urges employers to let their staff work remotely when possible. Read more.

Follow Today's Live Oregon Joint Special Committee on Coronavirus Response

Watch today's Coronavirus Response Committee meeting happening live in Salem.


HFO Multifamily Marketwatch Podcast - March 23, 2020

Government entities declare moratoriums on evictions for the COVID-19 emergency; a survey finds two smaller Oregon towns had the state’s highest rent growth, and Portland apartment developers find creative ways to adapt to Portland’s inclusionary zoning rules.

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At a press conference last Tuesday, Portland Mayor Ted Wheeler and Multnomah County Chair Deborah Kafoury announced a new eviction moratorium for the duration of the current state of emergency. Their announcement came just days after Seattle Mayor Jenny Durkan announced a similar order to ensure that residents do not suddenly lose their homes in the middle of a pandemic. In Multnomah County, rent will continue to accrue during the moratorium, and residents will have six months to pay any rent owed once the state of emergency has ended. Tenants who are unable to pay rent during the state of emergency must provide letters of proof demonstrating how they have been impacted by COVID-19. At the press conference, protesters interrupted the Q&A session, demanding that rents be frozen until the end of the economic crisis, which is rapidly unfolding. But according to Mayor Wheeler, a rent freeze would run counter to the state’s prohibition on local rent control policies. Although the city charter allows the mayor to establish rent controls during a crisis, state law supersedes this. In response to a question about how landlords will be able to pay their mortgages without rental income, Mayor Wheeler said he plans to work with local banks and credit unions to come up with a way to help property owners. He does not intend to use city funds to support either renters or landlords. The day after Wheeler and Kafoury’s announcement, officials in Beaverton also established an eviction moratorium. On Thursday, Washington Governor Jay Inslee announced a 30-day eviction moratorium statewide, along with other measures aimed at helping homeowners as well as renters. Also, Washington landlords will not be able to issue 20-day notices for nonpayment of rent unless they can prove it is necessary for the health and safety of the community. During the 30 days, the state will provide flexibility for tax collections and utility assistance, as well as small business grants and cash payments for some residents. Both Oregon and Washington are seeing a significant spike in unemployment claims. In Oregon, the number of applications increased by 3,200% last Tuesday, while Washington is seeing a 150% increase year over year. Oregonian – Multnomah County, Portland Suspend Evictions during Coronavirus Outbreak; Portland Tribune – Protesters to Portland Mayor: Freeze Rents or Face our Cough; Oregonian – Portland Can’t Legally Impose Residential Rent Freeze, Mayor Says; Seattle Times – Inslee Orders Temporary Stop to Evictions

Federal Reserve Chairman Jerome Powell announced last Sunday that the bank cut its benchmark interest rate by a full percentage point, bringing it close to 0. The Fed had already lowered the interest rate by 50 basis points at the beginning of March in response to the ongoing pandemic. Despite an initial jump in stocks after that cut, global supply chain issues, increasing uncertainty regarding the impacts of the COVID-19 outbreak, and rapidly dropping fuel prices have all caused the market to continue trending downward. And as small businesses across the country are having to shutter due to social distancing policies, an increasing number of people are finding themselves out of work. In an attempt to mitigate this, the Fed plans to keep rates near 0 until it feels the economy is heading back on track. Along with the interest rate cuts, the Fed plans to purchase $500 billion in Treasury securities and $200 billion in mortgage-backed securities. AP – Fed Slashes Interest Rates to Near Zero, Eases Bank Lending Rules

The Daily Journal of Commerce reports that developers are finding creative ways to adapt to Portland’s inclusionary zoning rules. Portland’s IZ program went into effect in February 2017, causing a rush of permitting activity in the months before. Developers warned at the time that the incentives provided by the city were not enough to offset the costs of providing affordable units, but since then, a handful have been able to make it work. Portland-based development company Urban Development Group has three projects in the works that are subject to inclusionary zoning rules – for two of these projects, the company is utilizing an off-site transfer. Rather than including the affordable units in the market rate buildings, they are choosing to build a higher percentage of affordable units than is required by the city in their third building at 1645 SE Nehalem. While one market-rate building was recently completed and the other is under construction, work has not yet begun on the SE Nehalem property. Another development group, Native Land, found that SDC waivers and a 10-year property tax exemption would allow them to build two entirely affordable developments.

Meanwhile, the development company BPM Real Estate Group will likely use the fee-in-lieu option for its Block 216 project downtown, which will include office space as well as a hotel and condos. The city is planning a review of the Inclusionary Zoning policy this Summer, which will evaluate whether the program is meeting city goals. DJC – More Affordable Housing, One Way or Another

RentCafe published its February Rent Report for Oregon, which found that Albany and Keizer saw the highest rent growth year over year. While Lake Oswego was the only city that saw rents drop over the past year, the 0.1% decrease was not enough to keep the city from being the most expensive in the state for renters. The average rent there was $1,588 in February. Rents in Albany grew by 6.9%, while Keizer saw rents increase by 6.3%, and Oregon City saw an increase of 6.1%. Also, Bend, Tigard, Beaverton, Tualatin, and Springfield all saw year over year increases over 5%. In Portland, rents grew by 2.8% year over year – slightly below the national average of 3.2%. Portland had the third-highest average rent in the state in February at $1,522, trailing both Hillsboro and Lake Oswego. Salem had the lowest average rent at $1,067 per month, a 4.1% increase from the year before. RentCafe – Oregon Rent Report, February 2020

The Portland Tribune reports that over 40 ISPs and phone companies announced that they will not be disconnecting service for residential and small business accounts for 60 days. The companies also plan to waive late fees and data usage limits to keep people connected during the ongoing pandemic. The companies signed a pledge along with the FCC called Keep Americans Connected, which was first announced March 13th. FCC Chairman Ajit Pai acknowledged that many people across the country are relying on TV and internet access for public health updates, while many children are now relying on home internet access to continue learning despite school closures. Internet Service Provider Century Link acknowledged that there may be more traffic than usual on the network, but stated that it is ready and willing to meet the needs of the customers it serves. Portland Tribune – Internet, Phone Companies to Halt Late Fees, Disconnections

Earlier this month, the Washington State Legislature passed an extension of the Multifamily Tax Exemption, or MFTE, which reduces property taxes for developers who provide units at 80% AMI or below. The extension passed by wide margins – 93-4 in the House and 42-7 in the Senate. The new law allows for a short-term extension of the tax benefit to properties where affordability is set to expire before January 2022. The bill also establishes a workgroup that will recommend a proposal for a longer-term extension to be considered by the state legislature in 2021. Approximately 1,000 housing units will remain affordable for the next two years due to the extension. Also, the government passed a law that eliminates off-street parking requirements for ADU’s within a quarter-mile of transit stops. Legislators hope that the removal of this barrier will encourage the construction of more ADU’s throughout the state. Up for Growth – Washington Legislature Overwhelmingly Approves Extension of Key Housing Affordability Legislation

The Portland Business Journal published a report on how building owners in the city are cleaning their properties and keeping tenants informed to prevent the spread of COVID-19. Prologis, which owns a large number of Portland-area assets amounting to millions of square feet of space, directs its customer service teams to inform tenants and contractors of infection cases at its communities. The company also consults with industrial hygienists and follows recommendations for cordoning off impacted areas. Real estate firm Melvin Mark Companies has been reaching out to tenants encouraging them to follow public health guidelines, including washing their hands and staying home when sick. They have also hired janitors to clean highly trafficked areas more frequently. Harsch Investment Properties has implemented a similar protocol and has notified tenants of increased cleanings. Harsch also reminds tenants not to provide identifying details when informing building managers that someone may be infected. Portland Business Journal – Portland Building Owners Stress Cleaning, Other Precautions amid COVID-19 Pandemic

Finally, the Canadian province of Ontario is working on new rules to curtail what the provincial government calls “renovictions.” The term “renovictions” refers to instances where a property owner evicts a tenant to renovate a unit and then increase the rent. The proposed Protecting Tenants and Strengthening Community Housing Act would require landlords to compensate tenants for no-cause evictions, and offer the tenant the renovated unit at the same rent they were paying previously before advertising to new tenants. If the landlord does not offer the apartment to the previous tenant, the tenant can file a claim of up to $35,000. If a landlord owns between 1 and 4 units and evicts a tenant for renovation or repair, or because they are selling the unit to a homebuyer, the landlord must offer the tenant one months’ rent. The law allows landlords to use mediation to negotiate settlements with tenants, rather than requiring a formal Landlord and Tenant Board hearing. It also will enable disputes over utilities and nonpayment of rent to be overseen by the Landlord and Tenant Board rather than small claims court. Provincial leaders believe this would make it easier for landlords to operate. Still, Cole Webber of Parkdale Community Legal Services in Toronto argues that these provisions will make it easier for landlords to evict tenants. Again, Steve Clark, Minister of Municipal Affairs and Housing hopes that the proposed rules will discourage landlords from issuing no-cause evictions. The Star – Ontario Unveils Plan to Combat “Renovictions.” Critics Say the Rules Will Make It Easier to Evict