By Don MacGillivray
As housing rents grow at rates faster than inflation those without income or housing have few choices. A structural budget gap exists between the city’s affordable housing goals and the available funding to implement them. Communities of color continue to experience lower median income levels than that of most Portland households. When compared with income, affordability, and population trends, many ethnic households are being priced out of the Portland rental market. Hopefully a partial solution is on the horizon.
Inclusionary zoning policies will allow local governments to require up to thirty percent of housing units within a residential development to be sold below market rate if HB 2564 becomes law. In exchange for this regulation developers will be allowed one or more incentives to improve the profitability of the housing project. These may include density increases, reduction of administrative costs, expedited project processing, or modification of the site and project conditions such as height or floor area.
This will allow local governments to incentivize and require that affordable housing units be built as part of higher value projects larger than twenty units. Voluntary programs don’t produce below-market-rate units by themselves and incentives alone don’t work.
A growing and diverse chorus of public interest advocates representing housing, environmental, racial and social justice interests, along with forward-thinking developers and realtors, have joined many of Oregon’s cities and counties in calling for a repeal of the ban on inclusionary zoning. It is a tool local jurisdictions can use to ensure that public investments in transportation and other public infrastructure are available to everyone.
This policy was first used in Maryland, where inclusionary zoning helped to build over 10,000 affordable housing units over the past thirty years. Oregon and Texas are the only states with a prohibition on inclusionary zoning policies. It is estimated that 500 local jurisdictions in thirty states are using a form of inclusionary zoning policies and in California there are more than 100 locations using it to provide affordable housing.
There are four decades of successful evidence and industry expertise in keeping the building sector satisfied while creating much needed housing opportunities for working families.
Safe and affordable housing is out of reach to many Oregonians. Between 2007 and 2011, a quarter of Oregonians paid half of their income or more on housing costs making it another persistent challenge like so many other basic needs. This is an unsustainable burden, especially for low-income families and seniors on fixed incomes. The policy is an effective housing creation opportunity that relies on a public-private partnership rather than one based on federal dollars or public subsidies.
The builders and developers expect the government to pay for below market rate development as it has done in the past. But the government funding is in competition with many other important needs such as schools, social services, health care, and the criminal justice system so it is understandable that there is little left for affordable housing.
Housing advocates have been unable to overcome the substantial influence of the homebuilders and real estate lobbies who oppose this common sense market regulation. By requiring developers to set aside a percentage of units for rent or sale to young, low income families, elderly couples, or local workers, inclusionary zoning with the energy of the private market can help create affordable homes, while enabling economic integration and social inclusion.
Those that oppose this concept suggest that HB 2564 would allow local government to coerce builders to lose money. They believe it is an unconstitutional shift of a public obligation to the private sector businesses and it is wrong to hold builders responsible for the affordable housing problem in Oregon.
Government conveniently ignores such minor details as the state budget where money for housing is so small that it is hardly a rounding error. Builders and developers would much prefer programs and initiatives that would reduce or pay for the cost of affordable housing.
HB 2564 repeals the law (ORS 197.309) that denies local governments from using inclusionary zoning. The Oregon House of Representatives passed the bill in mid April by a vote of 34-25. The legislation is now in the Oregon Senate awaiting action by the Committee on Human Services and Early Childhood. With effort it will become law this summer.
Inclusionary zoning will not end the housing crisis, but it is a proven and effective way to create housing choice and opportunity. Inclusionary housing policies are very flexible, and can be adjusted to meet the needs of the community and local market.
Oregon will be able to join the rest of America in addressing affordable housing. To deny that local option when wealth inequality is growing and home ownership opportunities are limited, especially for people of color, is simply unacceptable. The question remains, shouldn’t the costs of low-income housing be broadly spread so that everyone contributes and benefits?