By Gabe Frayne
In 1955 the New York state legislature, facing rising urban poverty, enacted the Mitchell-Lama housing program, which allowed private developers to build affordable rental housing in exchange for tax abatements and low-interest mortgages. The program was a success and by 1990, New York City had added 65,000 new apartments to its affordable housing stock under the program.
The legislation only held owners to a 20-year affordability requirement however, and by 2005, over 22,000 of the city’s Mitchell-Lama units, 34 percent of the total, had gone market-rate.
Could this scenario happen in Portland? The abbreviated answer is: highly unlikely. Under state law, all affordable housing projects financed by Portland bond funds, as well as any current or future projects financed by Metro bond funds, must abide by affordability covenants of 60 years.
A spokesperson for Metro noted that in the case of for-profit, affordable housing developers, “it would be unusual but not impossible for one to opt out after 60 years.”
Nonetheless, affordability deed restrictions in Portland comprise a complex web of state and local requirements depending on the type and source of the housing.
For example, Bridge Housing, a public benefit corporation partnered with the Portland Housing Bureau (PHB) to develop affordable housing, is nearing completion on two large apartment projects.
The Vera Apartments on South Waterfront sit on land owned by the city and leased to Bridge for 99 years.
“That means PHB takes control of long-term affordability and they still own the land even if Bridge goes out of business in 75 years,” explains Kurt Creager, Bridge’s executive vice president.
Bridge’s other current project, The Songbird on N. Williams, was built on land purchased from the county. Affordability “was a condition of the approval of the project and the conveyance of the land to Bridge,” Creager said.
Affordability covenants are required for inclusionary housing units. The inclusionary housing ordinance enacted in 2016 requires developers to include a set ratio of affordable housing in developments with 20 or more units. Those units are then bound by a 99-year affordability requirement.
Yet for all the legal maneuvering around preserving affordability, there remains an immediate deficit of at least 23,000 housing units for low and moderate-income Portlanders, according to PHB.
Portland bond funds will eventually provide over 1,400 affordable units, and Metro bond funds will more than double that number. The two Bridge projects will add several hundred more, while the number of protected inclusionary units now stands at around 700.
What about the rest? The city’s answer to that thorny question is essentially the free market, and here’s where the definition of affordability plays a key role.
For several decades, the federal Department of Housing and Urban Development has set 30 percent of Median Family Income (MFI) in a particular area as the threshold for housing costs, above which households are considered “housing burdened.”
The influx of high-skilled workers into the Portland area in recent years has now raised area MFI to $92,000 per year, which translates to an “affordable” housing cost of $2,300 per month.
To bring housing costs down, the city’s urban planning cadre has made “build more” its mantra, in particular, more so-called middle-housing.
These duplexes, triplexes, and now up to eight-plexes (as well as some single-family homes) are infilling lots once occupied by older homes in modest neighborhoods.
These properties aim primarily for the middle-income market, including both renters and first-time home buyers and the logic here is if middle-income residents occupy newer homes, it will take market pressure off of older and cheaper apartments and houses.
An article by the Sightline Institute, a think tank closely allied with the “Portland for Everyone” movement, explains:
“As they age, older rental buildings tend to become gradually cheaper…but only if tenants willing and able to pay more can find more desirable places to rent instead. If you could get into a newly-built apartment for $1,800 or $1,600, then landlords of old buildings nearby would have no choice but to charge less for theirs, too.”
This is a theory that urban planners call “filtering,” which the Oregon Office of Economic Planning notes “has been a surprisingly contentious topic within the housing discussion lately. The key is that filtering does not happen overnight.”
According to Rent Jungle, the average price of a one-bedroom apartment in Portland increased from $738 in June 2011 to $1,452 today.
To Portland architect Michael Mehaffy, cofounder of the Livable Portland blog, filtering is “highly simplistic.”
“Some ‘gentle densification’ can be achieved in existing neighborhoods, by allowing accessory dwellings and infill, etc.,” Mehaffy says, “but this is not where most of the units are going to be added in the region, and it’s foolhardy to over-focus there.
“And incentivizing demolition by encouraging this kind of neighborhood redevelopment is often foolhardy, as new housing is almost always more expensive per square foot than existing.”
From Mehaffy’s point of view, promoting affordability by focusing exclusively on building is a libertarian daydream that ignores contemporary evidence.
Long-term affordability will require public subsidy, rent regulation and careful planning to be sustainable. The only plausible alternative would be massive vertical sprawl in Portland’s existing residential neighborhoods.
As then city council candidate Chloe Eudaly told The Portland Mercury in 2016, “We cannot build ourselves out of this housing crisis.”
Photo of The Songbird on N. Williams by Gabe Frayne