Cost of housing’s value

By Don MacGillivray

The history of housing affordability in Portland is complex. Thirty years ago, inner city neighborhoods were affordable for low-income tenants. Over time, these areas slowly increased in value making it profitable to build new developments.

A recent report, Metro Urban Centers: An Evaluation of the Density of Development, funded by Metro with the help of the Oregon Department of Land Conservation and Development, explains the situation thoroughly.

An important point made in the report is that urban land must increase in value to where it requires a significant investment that justifies its use. Increased urban density requires larger buildings with many people living and working nearby.

This makes the most sense in the central city and in the surrounding neighborhoods. Thus, low income and deteriorated neighborhoods have been “discovered” and are growing as they never have before. The impact of this is to take away affordable housing, displacing the residents, and replacing it with luxury and market rate housing.

When land prices are too low, high density will not occur because small developments are profitable. If land prices are high then it takes a larger development to be profitable.

A large project can provide several times more profit than the smaller project while using less land, but such projects are luxury developments that would not be affordable to those currently living there.

One of the ways to insure high land prices is to constrain the supply of available land. The Portland region does this through Metro’s urban growth boundary.

Since the end of World War II, all cities in America have expanded into suburban areas in a way that is generally considered sprawl. This makes the Metro urban growth boundary controversial.

However, without it, much of Oregon’s best farm land in the Tualatin Valley would be sacrificed to the bulldozer at much inflated land prices.

With the great influx of people to Portland, housing is scarce. Recent planning decisions have increased the capacity of various zones in and around the central city, making land more valuable and encouraging developers to build larger office and apartment buildings.

While this may be good for landowners and developers, it has been very disturbing to existing neighborhoods, their residents, and much of the affordable rental market. It is, along with stagnated personal incomes, the reason for our housing crisis and why it will not end soon.

One of the leaders and critics of modern urban development was Jane Jacobs who taught and wrote about the need to preserve neighborhoods and create communities for people.

She attacked urban renewal programs and freeway projects that tore down poor neighborhoods and displaced residents from their homes. She was not against high urban densities if they were properly planned with the needed goods, services, and amenities located conveniently for local residents.

While Portland’s new high-rise apartments and offices do not remove entire neighborhoods, they create opportunities for the growth of infrastructure in the surrounding areas so that it becomes pedestrian-friendly and livable in the ways described by Ms. Jacobs.

This “social capital” she talks about must be added to these newly redeveloped areas. It will be interesting to see if this changes the auto traffic congestion and parking concerns as densities increase.

On Friday, October 19, the acclaimed film Citizen Jane: Battle for the City, will be shown at the NW Neighborhood Cultural Center, 1819 NW Everett St. at 7 pm.

Jacobs had a special relationship with the City of Portland over its evolution as diverse place of mixed uses and walkable neighborhoods. She championed lively, diverse neighborhoods, and citizen activism to preserve urban communities in the face of destructive development projects.

Arguably no one did more to shape our understanding of the modern American city than this visionary activist.

The film is presented free of charge and will be followed by a panel with long-time Portland neighborhood activists discussing Portland’s current housing situation.

Citizen Jane is a timely tale of what can happen when engaged citizens fight power for the sake of better cities.

Another progressive thinker from the late nineteenth century that influenced land development in the public interest was Henry George. His ideas are all but forgotten, but he promoted the idea that the value of the land belongs to the people, not to private owners.

In order to capture this value the government could simply tax the value of the land as rent. All improvements such as buildings, etc. would remain the property of the landowner untaxed. This has the effect of encouraging the owners to improve their properties to its highest and best use. The land value tax would reduce all other forms of taxation creating greater equity for everyone.

He believed that people should own the value they produce themselves, but the economic value derived from the natural wealth of the land should belong equally to everyone because it is the growth of society that increases the value of the land.

George pointed out that poverty increases amid great economic and technological progress. Perhaps those that achieve wealth and power are not aware of their responsibilities to the culture at large.

These same people react negatively to the regulation of the use of the land in the name of civic fairness. The presence of poverty and homelessness on our streets may be an indication of this phenomenon.

Progress and Poverty was the influential book written by George in 1879. It became a national best seller that was serialized in Popular Science magazine and sold over 3 million copies.

Cost of housing’s value

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