Monday, February 19, 2018
Oregonian Headline: "Apartment Construction Drying Up" Because of IZ Program; Portland Housing Bureau Responds Program is "Operating as Expected"
12-month review of Portland's Inclusionary Zoning policy, interviewing developers and city officials to find out why permitting activity has slowed so abruptly. Tim O'Brien of Urban Asset Advisers explains how the math has changed for development in the city, with rising construction costs, development fees, taxes, and land prices all contributing to higher price tags for developments. Urban Asset Advisers is currently working on two smaller developments subject to IZ requirements, which are being financed by local investors who are willing to accept a smaller return rather than larger REITs or financial institutions. Other developers, such as Cairn Pacific, are staying away from new housing projects due to the difficulty in securing a construction loan. According to the Oregonian, Shannon Callahan of the Portland Housing Bureau is not surprised by the drop-off in permitting activity, and the program is "operating as expected." Mayor Wheeler is planning to offer developers with projects in the permitting pipeline the opportunity to opt-in to the program in exchange for a 10-year tax abatement, but the city has yet to propose a plan that would bring new projects into the pipeline. Read more.