Tuesday, May 26, 2020

Multifamily Marketwatch - May 26, 2020

Oregon state economists warn Oregon will bring in $2.7 billion less revenue in the current biennium, and a prediction that homelessness could spike by up to 45% nationwide and $8.5 million approved by the legislature for rent payments to landlords will soon be distributed. Watch for our Washington State updates next week.

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Oregon held its primary election on Tuesday, May 19th, and several races in the Portland area are now headed to runoffs. Portland Mayor Ted Wheeler fell just short of the 50% he needed to avoid a runoff election with competitor Sarah Iannarone, who garnered 23.8% of the vote. And while Carmen Rubio handily won the race for Position 1 with 67.6% of the vote, the races for Positions 2 and 4 were much tighter. In the race for Position 2, Loretta Smith will face Dan Ryan in a runoff in November. Incumbent Chloe Eudaly received 31.3% of the votes for Position 4, while Mingus Mapps received 28.6%, and former Mayor Sam Adams received 27.7%. Eudaly and Mapps will face off again later this year. Mike Schmidt, a progressive candidate for Multnomah County District Attorney, won in a landslide victory over Ethan Knight. Still, a runoff will be held between Adrian Brown and Rima Ghandour for a Multnomah County Circuit Court Judge seat. Also, the race for the Democratic nominee for Secretary of State was so tight that many news outlets had to issue corrections after calling it for Mark Hass Tuesday night. By the time all ballots were counted on Wednesday, Shemia Fagan was declared the winner with 36% of the vote. Voters also approved several ballot measures – the Metro homeless services measure won with 53.8% of the vote, the Centennial and Canby school districts passed construction bonds, Wilsonville residents set term limits for City Council, and Washington County passed a library levy. Beaverton residents signed off on significant changes to their city charter. In Baker City, residents voted to sell an old backhoe. In all, a record number of ballots were returned statewide, though the percentage of eligible voters who turned out fell just short of the 2016 primary.

Oregon Public Broadcasting reports that the state legislature is now ready to start distributing the $8.5 million it allocated to rental assistance for low-income tenants. 18 local agencies have been charged with distributing the funds – these agencies are located throughout the state. They are typically county or regional level housing or service agencies, such as the Lane County Human Services Commission and the Mid-Columbia Community Action Council. Multnomah County’s Department of Human Services was given $1.6 million of the funding and is working on a system to ensure that the money is distributed equitably and efficiently. Renters who make up to 50% of area median income are eligible for the relief, which will be allocated based on need. Renters must show proof of a loss of income, but the type of evidence required will vary by agency. When a tenant is approved, the funds will go directly from the agency to the tenant’s landlord. OPB – Oregon Made $8.5 Million Available to Pay Rent. Here’s How to Get It

Earlier this month, most of the counties across Oregon were allowed to re-open businesses according to the Governor’s Phase 1 plan. But Multnomah, Clackamas, Washington, Polk, and Marion counties were unable to open at that time. Last Wednesday, Governor Brown gave the go-ahead to Marion and Polk counties, which were able to partially re-open on the 22nd, despite having some of the highest rates of new infections statewide. Marion County, which boasts the highest prevalence of infections, had 879 confirmed and likely cases at the time of the Governor’s announcement. 24 county residents have died. In the Portland Metro Area, Clackamas County also applied to begin re-opening businesses on the 22nd, but as of Thursday, the Governor had not responded to the county’s request. Washington County asked at the end of the week. Officials in both Washington and Clackamas Counties emphasize that even if their applications are approved, they may not open immediately. Washington County Chair Kathryn Harrington stated that they are working to onboard 142 new employees who will be engaging in various aspects of contact tracing, and the county will not open until all of these new hires are trained. Clackamas County Chair Jim Bernard cautioned that the state may have acted too hastily in allowing all retail stores to resume operations. Both Harrington and Bernard plan to continue monitoring the number of new cases to ensure it is safe to start opening more businesses. Multnomah County Chair Deborah Kafoury stated that the county needs $75 million over the next year to meet the criteria set out by the state. Under the CARES Act, Portland received $114 million while Multnomah County, which has been spearheading the public health response for the region, received just $28 million. Kafoury is negotiating with the city of Portland as well as the state to secure the necessary funding before applying to re-open according to the Phase 1 plan.

State economists in Oregon presented the June 2020 Economic and Revenue Forecast last week, which estimates that the state will likely receive $2.7 billion less than anticipated over the current biennium, and $4.4 billion less in the biennium ending in 2023. The economists also caution that 2023 will likely not be the end of the state’s budget woes – there could be an additional loss of $3.3 billion between 2024 and 2025. State economist Mark McMullen warned legislators that Oregon is particularly reliant on personal and corporate income taxes, making it more vulnerable during economic downturns. State Senator Betsy Johnson believes the legislature should take action to mitigate the potential budget cuts. Earlier this month, the Governor directed state agencies to craft budgets that included a 17% cut in spending in preparation for what is to come. But it is likely the state will not have to cut $2.7 billion in budgetary expenses over the next year – the country expected to have around $1.1 billion in cash on hand by the end of 2020, which could be used to fill in some of the gaps. House Speaker Tina Kotek believes that using this money and bonding for public infrastructure projects could help residents get back to work and improve the state’s economic outlook. Governor Brown acknowledged that the country will need to make additional cuts. Still, she called on the US Congress to provide stimulus payments to states to ensure that essential services continue to function.  OPB – The Coronavirus Will Blow an Enormous Hole in Oregon’s Budget, Economists Say

The Lake Oswego City Council voted last Tuesday to allow the owners of the Marylhurst University campus to rezone their properties to turn a portion of the school into affordable housing. Also, the Council authorized the City Manager to waive application fees for the project. The Sisters of the Holy Names of Jesus and Mary own both the Marylhurst campus and a nearby retirement community called Mary’s Woods. The Sisters issued a statement indicating that the planned affordable housing would primarily be reserved for employees of Mary’s Woods – they argue that housing local employees on the campus would mitigate traffic congestion on Highway 43 and boost housing supply in the area. In addition to providing affordable housing, the Sisters plan to maintain historic structures on the Marylhurst campus and designate areas for nonprofit uses. Open spaces would be made available for public use.

As problems persist at Oregon’s Employment Department, high profile lawmakers are calling on the state to do more to help vulnerable residents who are waiting on unemployment claims. According to the Oregonian, the average hold time for calls to the department reached 3.5 hours in mid-May, as 50,000 people across the state continue to wonder why they haven’t received their unemployment benefits. Some of these residents have been waiting for checks since March, and many had claims that were erroneously denied. Those who called to check on their applications or fix a mistake have been hung up on or encountered a busy signal. In some cases, they were left on hold for 6 hours. Last Wednesday, US Senator Ron Wyden and US Representative Earl Blumenauer wrote a letter to Kay Erickson, head of the state’s Employment Department, urging immediate action. They wrote that “Failure to clearly communicate and get unemployment benefits out promptly is failing all of us.” As the state jobless rate climbs past 14%, one in eight applicants for unemployment is still in the dark as to when they will receive a check. While Erickson has refused to answer questions, David Gerstenfeld, one of Erickson’s deputies, will testify before a legislative committee this week.

According to the Regional Multiple Listing Service, as of April, pending sales and listings in the Portland Metro Area were down 30% year over year. Meanwhile, closed sales were down 16.4%, and new listings were down 32.4% since April 2019. Between March and April 2020, the number of new listings fell by 17.9%. March and April are usually the peak time for sales in the region. Still, this year the pandemic and the sudden economic downturn due to business closures are having a significant impact on home sale activity. Eric Hagstette, the owner of Inhabit Real Estate, believes there will be a speedy recovery in home sales. And while the number of sales is down sharply year over year, home prices are still up by 4.7%. Hagstette predicts that there will be an increase in inventory as people move out of homes they can no longer afford. He expects to see more REITs and institutional buyers entering the Portland market. DJC – Regional Home Sales Drop amid Economic Shutdown.

Finally, CityLab’s Mimi Kirk interviewed Don Mitchell, author of the new book Mean Streets: Homelessness, Public Space, and the Limits of Capital about the history of urban homelessness, and what can be done to get people back into permanent housing. Mitchell points out that homelessness has changed since the early 1900s. Previously, homeless residents tended to be migrant workers. The latter would stay temporarily in “skid row” neighborhoods, which were typically home to boarding houses, single room occupancy hotels, and cheap bars and restaurants. By the 1980s, cuts to the public welfare systems and the shuttering of mental institutions contributed to increased homelessness. Residents without homes starting at that point were more likely to be people of color, including women and families. At the same time, so-called “skid rows” were targeted for redevelopment, and many of the affordable housing options like SRO’s were turned into higher-priced apartments or boutique hotels. Mitchell links the history of homelessness to the history of capitalism. He points out that the US was already experiencing a crisis of homelessness before the current public health crisis. He argues that some of the strategies used to mitigate homelessness and poverty between the Great Depression and the early 1970s could be revisited to minimize some of the “meanness” of capitalist systems. CityLab’s interview with Mitchell comes on the heels of a report by Columbia University Economics Professor Dr. Brendan O’Flaherty, who projects a 40-45% increase in homelessness across the nation this year. As the US works to get the economy back on track, it may be worth considering Mitchell’s advice to avoid an unprecedented disaster where 250,000 people lose their homes over the next several months.

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