Multifamily Marketwatch Podcast - February 10, 2020

This week: Oregon State Senator Shemia Fagan proposes a bill increasing enforcement of Fair Housing Laws in Oregon; Tacoma finds success with a program providing temporary rent vouchers for college students, and a new Harvard study provides details but few surprises on the status of Rental Housing in America.


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In response to complaints from minority community groups in Oregon, State Senator Shemia Fagan is introducing SB 1534, which would increase the enforcement of Fair Housing Laws. Labor Commissioner Val Hoyle is a vital supporter of the bill – she believes that the current complaint-based system is insufficient. Factors such as fear of retaliation and language barriers can keep renters from reporting violations. Renters may also be unaware that they are not being informed of move-in specials or that they are being asked to pay higher security deposits. According to the Fair Housing Council of Oregon, more than one in four prospective renters faced discrimination in their search for housing. SB 1534 would reinstate Oregon’s partnership with the US Department of Housing and Urban Development, which has not been active since 2015. After an initial investment of $299,000 from the state, the HUD would pay 90% of increased enforcement costs. The bill does not contain specifics on what the increased enforcement might entail.

TriMet has released new details on the path for the proposed Southwest Corridor MAX line. As initially promised, the line’s terminus will be Bridgeport Village transit center. TriMet is also proposing a transit center in Tualatin with 960 parking spaces, as well as a station on Hall Boulevard with parking for up to 100 vehicles. Additional safety improvements are planned for 72nd Avenue, to allow pedestrian access between the transit center and the Bridgeport Village shopping area. Tigard Mayor Jason Snider cautions TriMet from relying too heavily on the park-and-ride model. He explains that the city is planning significant development around essential transit stops, and he hopes that residents will take advantage of walking and cycling options for connecting with light rail. To that end, Jonathan Maus at the BikePortland blog points out that plans for the line include six miles of new cycling facilities. Between the Barbur Transit Center and Naito Parkway, TriMet’s plans include four miles of raised protected bike lanes separated from traffic by a “curb-protected furnishing zone.” The Southwest Corridor MAX line will run from downtown Portland along Barbur Boulevard, cross over I-5 at the Barbur Transit Center, and continue along 99W, Bonita Road, and 72nd Avenue to its terminus at Bridgeport Village.

Metro has released more plans for the homeless services measure that will appear on the May primary ballot in the Portland region. Rather than an increase in property taxes, the measure would include a tax on high earners, raising a maximum of $250 million. While the proposal is expected to be referred to the ballot on February 20th, a February 4th work session demonstrated that there is still a significant amount of work to be done to iron out the details. But Metro President Lynn Peterson is confident that her team is willing to put in the work to get it done in time. A poll released by HereTogether shows that 53% of voters support a tax on individuals earning more than $125,000 or families earning over $250,000. Metro’s ability to tax personal income is capped at 1%, though House Speaker Tina Kotek is reportedly working on legislation to increase that cap. HereTogether is studying a potential tiered income tax system that it plans to present to Metro this month. A handful of Metro Councilors are worried that the public’s goodwill regarding tax proposals could be running thin, potentially impacting the funding measure for the Southwest Corridor MAX line, which will be up for a vote in November. Along with that measure, voters will be asked to approve levies for Portland Public Schools, the David Douglas School District, and the Multnomah County Library. The gas tax will also be up for re-approval in November.

NextCity reports that a housing voucher program for college students in Tacoma appears to be having a positive effect on students at risk of homelessness. The Tacoma Housing Authority launched the Community Housing Assistance Program in 2014, and between 2014 and 2016 tracked the performance of students who received vouchers compared with those who were in similar financial situations but did not receive assistance. The disparities were significant – while just 16% of students who did not receive housing vouchers remained enrolled in school after two years, 60% of those who received vouchers through the CHAP program remained enrolled. GPA’s for those who received vouchers were higher on average as well – 3.05 compared with 2.75. The program is available for students at Tacoma Community College as well as the University of Washington’s Tacoma campus. In Tacoma, studio apartments typically cost $800 per month, but students who receive vouchers through the CHAP program pay between $400 and $800, depending on their income. The program includes a mix of project- and tenant-based vouchers. In one recently opened apartment building near the UWT campus, 63 of the building’s 152 small studio apartment units are subsidized. The Harvard Kennedy School’s Ash Center for Democratic Governance and Innovation named Tacoma’s CHAP program one of the top 25 Innovations in American Government in 2018. As the program continues, it is being monitored closely by Sara Goldrick-Rab of the Hope Center for College, Community, and Justice at Temple University in Philadelphia.

According to the New York Times, the movement to ban gas hookups in new homes is gaining momentum in cities nationwide. Berkeley, California was the first city to ban natural gas hookups in 2019, followed by Brookline, Massachusetts. Now several west coast cities including LA, San Francisco, and Seattle appear to be following suit. In some markets where a ban has not yet gone into effect, a handful of developers are already making the switch to all-electric buildings to meet self-imposed environmental goals. But not all developers believe the blanket bans are a good idea–home builders are concerned that their homes will not be as appealing without the option of gas stoves. Developer Aaron Fairchild of Portland- and Seattle-based development company Green Canopy has hired chefs to do cooking demonstrations to make potential residents feel more comfortable with the idea of cooking on an electric stove. And it is not just home cooks that are wary of banning gas – the restaurant industry has also come out against the idea. But in some parts of the country, the concept of all-electric homes is unlikely to be seen as particularly radical. 45% of homes in the Southeastern US are already all-electric. Climate change experts believe that switching from natural gas to electricity could be a critical step toward reducing carbon emissions, particularly in dense cities. The Global Carbon Project believes a large portion of the added emissions last year were due to an increase in oil and natural gas use.

Oregon Public Broadcasting published an article last week detailing the shift that has taken place over the past several years regarding the importance of housing policy at the state level. In 2013, Governor Kitzhaber had all but given up on Oregon Housing and Community Services, a bureau that at the time suffered from a lack of a coherent mission. But now housing and homelessness issues dominate conversations at the state legislature, and in 2019 the agency’s budget increased by $160 million. House Speaker Tina Kotek recently released a plan to declare a homelessness state of emergency across the country, arguing that many local jurisdictions have been unable to solve housing-related problems in their communities. But while everyone agrees that housing costs and homelessness are an issue statewide, some Senators believe that the state may be moving too quickly. Senator Betsy Johnson of Scappoose thinks the state should do more to ensure that the programs it invests in are providing positive outcomes, and delivering the most “bang for the buck” for taxpayers. Still, Kotek appears prepared to introduce several ambitious housing bills in this year’s short legislative session. Along with the state of emergency declaration, she hopes to approve $50 million for new affordable housing units and $20 million for the preservation of existing affordable housing. In addition, Kotek is working on plans to establish a statewide voucher program.

Opponents of the I-5 Rose Quarter Freeway Expansion in Portland have recently determined that the Mayor may be able to demand a review of the project due to its encroachment on the Eastbank Esplanade. The freeway expansion would turn the celebrated and much-used path along the river into a cave of sorts – the freeway would hang over the path blocking sunlight and increasing noise and pollution. According to federal law, the City of Portland must sign off on the encroachment for the freeway expansion to move forward. If the city does not sign off, the state would be required to make improvements and compensate the city. The Mayor could also instruct ODOT to perform a full environmental review of the project, which several local leaders have been calling for over the past several months. The Eastbank Esplanade is not the only sticking point for opponents of the freeway expansion – Portland Public Schools has been urging ODOT to conduct a review of the potential impacts to the recently re-opened Harriet Tubman Middle School. The Albina Vision Trust has also expressed frustration with ODOT, due to the agency’s waffling on plans to include buildable freeway caps.

Finally, Harvard’s Joint Center for Housing Studies released its 2020 report on America’s Rental Housing. The detailed, 40-page report finds that the number of low-cost rental units continues to decline, while the number of cost-burdened households has ticked up substantially. With low vacancy rates and new construction concentrated at the higher end of the market, rental property prices rose 150% between 2010 and the third quarter of 2019. Meanwhile, a lack of federal investment in housing programs has kept the number of households receiving assistance flat since 2008, despite an increasing need. Over 80% of households making under $15,000 per year are either severely or moderately cost-burdened, along with around 55% of households earning between $30,000 and $44,999 per year. Just under 50% of all renter households in the United States are moderately or severely cost-burdened. At the same time, the number of high-income renters has risen substantially over the past few years, driven by young, college-educated households. Nearly half of these upper-income renters are white, and around 44% are married. As of 2019, approximately 44 million households in the United States rent their homes, up from about 33 million in 2004.