Developers Say Building in Portland Has Become Unaffordable

Summarized from a news story written by Alex Zielinski for Oregon Public Broadcasting 

Portland developers are struggling to build affordable housing due to the accumulation of various development requirements that have been introduced by the city in recent years. Justin Wood, a developer, has said that these requirements are preventing him from building more affordable housing on a vacant lot he was interested in. Wood said that after he calculated the cost of building materials, labor costs, construction loans, city bureau development fees, and the cost to hold the empty lot for the months it takes for the city to process permits, he estimated that he would make about $35,000 in profit per unit. After taxes, the payout would drop closer to $20,000. 

To meet the city’s goal to significantly reduce carbon emissions and slow the effects of global warming, the city established policies that have gradually added up, making it difficult for developers to afford to build new housing in Portland. However, urban studies experts believe that rolling back these policies is shortsighted, and places Portland’s collective health at risk in exchange for developers’ financial comfort.

The city of Portland is facing a housing crisis, and costly construction requirements are believed to be a significant factor in slowing down the supply of affordable housing. Developers argue that the city's affordability crisis would be best addressed by building more housing affordable to households making near the area's median income. However, developers face regulatory costs that can be burdensome and may discourage them from building affordable housing.

To address this issue, the city is considering several solutions, including streamlining information about development requirements, creating a specialty team for quick permitting requests, and allowing housing developers to defer System Development Charge (SDC) payments for at least two years. These initiatives aim to make housing projects more financially feasible and spur additional investment in the housing market.

In addition, the state government has set a goal for Oregon to produce at least 36,000 units of housing each year, with the aim of adding 348,000 homes by 2030. The state legislature recently passed a bill requiring cities to establish their own annual housing production goals for specific income levels, and penalties will be imposed on jurisdictions that fail to meet these targets.

Experts argue that while many costly housing construction requirements may have been well-intentioned, they may now be obstructing the development of affordable housing. Therefore, it is essential to examine these policies and find a balance between maintaining high standards and addressing the housing crisis in Portland.