URM Year End Update

by Gabriel Frayne Jr.

The battle between URM building owners and the Portland City Council over seismic upgrades ended the year on a litigious note as the Masonry Building Owners of Oregon, an industry group, is threatening to sue the city over the Council’s enactment of an ordinance that will require the owners to install warning placards beside the entrances of their buildings.

The ordinance, which the Council approved October 10th, will require placards that read, “This Building is an Unreinforced Masonry Building. Unreinforced Masonry Buildings may be unsafe in an event of a Major Earthquake.” Unsurprisingly, URM owners consider the mandate a “scarlet letter” that will make their buildings harder to insure, nearly impossible to finance, and worth considerably less.

A letter sent by Attorney John DiLorenzo, who represents Masonry Building Owners of Oregon, claims that “the Ordinance violates the First Amendment free speech clause and the Fifth and Fourteenth Amendment Due Process clauses to the United States Constitution.”

URM owners cite a long list of grievances regarding the Council’s decision. Angie Even, the co-founder of Save Portland Buildings, claims the city acted arbitrarily “without having any input from the community, especially the thousands of small businesses that are in these buildings.” She adds that owners now have a “great fear” of tenants moving out.

While it is difficult to gauge the likelihood of that actually happening in a city with a severe housing shortage, other concerns are more concrete. Many critics point to the Council’s requirement that URMs must upgrade to a “life safety”

standard—which is higher and costlier than the “collapse risk reduction” standard recommended for residential and commercial buildings by the Bureau of Emergency Management—in order to remove the placards.

 

The placarding mandate has also drawn the ire of the local chapter of the NAACP. In a letter to the City Council, chapter president E.D. Mondainé  expressed concerns that the mandate could contribute to the displacement of African American businesses, reminiscent of what occurred in the Albina neighborhood in the 1960s when the Portland Development Commission declared the area “blighted.” Mondainé also claims in the letter that “a great number of [African-American] stakeholders” have been “excluded from the process.”

 

Critics of the Council’s action are particularly incensed that the Council approved the mandate despite the fact that the Bureau of Emergency Management’s Policy Committee recommended against enacting the measure in its final report. Many URM owners see ulterior motives in the placarding mandate, labeling it, in the words of one critic, “a lever to force building owners to upgrade.”

Indeed, the placarding mandate is a side show to the issue of seismic upgrading itself, which has brought the URM controversy to center stage during the past year. In June the Council approved a resolution directing city staff to “formulate a working group” comprised of URM stakeholders who will be responsible for “evaluating reasonable seismic retrofit requirements.” The group has until next June to submit their recommendations, but it seems likely that the Council will eventually adopt the “risk of collapse reduction” standard for commercial and multi-family residential URMs, with a 20-year implementation time line.

There is, however, one piece of the puzzle missing, and that is financing. Earlier this year the Oregon legislature approved SB 311, which allows local governments to give a limited property tax abatement to building owners for the purpose of financing seismic upgrades. Very few URM owners expect that this alone will enable them to undertake upgrades that will run into six figures. Nor do they have any reason to expect that local banks will bend over backwards to help them.

Patrick Gyurca, the branch manager of the Hawthorne Rivermark Community Credit Union, recently sent an email to the Hawthorne Business Association in which he noted that, “I have reached out to a few of the larger banks in the area and they do not have much on URM buildings other than a similar [to Rivermark’s] lending policy outlining that URMs need to be remedied prior to financing.” The city’s placarding mandate obviously will not make obtaining loans for seismic upgrades any easier.

URM owners and tenants may find themselves in a more favorable situation when newly-elected member Jo Ann Hardesty takes her seat on the Council.  In October Hardesty told OPB that “It would be extremely irresponsible of the city to require all buildings to be retrofitted without any understanding of the financial impact it will inevitably have on homeowners, property managers, and small business owners.”

However, in a recent email Hardesty also stated that she “recognizes that URM buildings pose a significant public safety risk; this issue needs new strategies but it won’t go away.”

As for financing, Hardesty notes that the city is advocating for a bill in the 2019 session of the legislature that could provide $20 million in retrofit grants for non-profits. Nonetheless, public funding options are limited: “The City has been successful in securing some federal grants from FEMA to help pay for seismic retrofits,” she says, “and I expect they will continue to pursue opportunities as they become available. But with more than 1,600 such buildings in Portland, federal grants are a likely strategy for only a handful of such buildings.”

It seems safe to say that as 2019 begins there is no consensus on the Council as to how to proceed on the URM issue.  Sometime in the coming year the people of Portland will need to decide whether safeguarding human life can be achieved through a plan that does not include forced gentrification and the demolition of Portland’s historical heritage.