The Affordable Housing Thread

[2oh1]

I'd like to tackle this topic in two parts.

#1: BUILDING IT.
How can Portland increase its supply of affordable housing? What approaches are being used in other cities that could work here? What unique approaches should be considered here that might not have been tried elsewhere? I hope we all agree that overbuilding would lead to economic ruin. I hope we all agree that a "build whatever, wherever" strategy is foolish as well. And sprawl is absolutely not the answer here.

#2: FINDING IT.
How does one find affordable housing that already exists or is on the way? This is particularly challenging with buildings that have a few affordable units among mostly upper market rate or luxury housing. Example: 20% of the units in the upcoming Sky3 Place tower will be priced for those earning 80% of Median Family Income or less (though that still puts studios that look like they'll be around 400 sq/ft at $870/mo and up. Yikes). There's no mention of affordable housing on their website. It's common for buildings with affordable units to not promote them at all. Museum Place, downtown, has around 20% affordable units mixed among market rate and luxury apartments, but there's no mention of them on their website. I think the Skylab tower at the Burnside Bridgehead is going to have a few affordable units too, but again, that info is hard to find.

[rsbear]

Is there a standard, broadly accepted, definition of affordable housing? If so, including it might help frame the conversation.

[2oh1]

Originally Posted by rsbear

Is there a standard, broadly accepted, definition of affordable housing? If so, including it might help frame the conversation.

Good point! My goal here was to move this off topic conversation into a thread where it made sense. The conversation got really good here, but it needed a proper thread. I'm hoping people continue the conversation here. We'll see.

You're right though. What is "affordable"? As I mentioned above, Sky3 Place is a new tower coming to SW 12th & Jefferson. 20% of the units (supposedly) will be "affordable." But is 400 sq/tf starting at $870 a month really affordable?

[bvpcvm]

Originally Posted by hat

How in the hell do we both redevelop neighborhoods AND keep people (and existing businesses) in their place without pricing them out?

Do we have any examples from around the world where this has been accomplished? This is something I know almost nothing about, but it seems like the only way you do this would require a degree of government intrusion that would be unacceptable in the US.

[2oh1]

I remember reading talk about affordable housing incentives that have been successful in other cities - but that was a while ago and I have no idea which thread it was in. I'd swear somebody mentioned Seattle...?

[cityscapes]

Originally Posted by 2oh1

But is 400 sq/tf starting at $870 a month really affordable?

I don't think so but it sure is better than $1,200 a month for similar sized floor plans in other less centrally located buildings.

[rsbear]

Originally Posted by 2oh1

Good point! My goal here was to move this off topic conversation into a thread where it made sense. The conversation got really good here, but it needed a proper thread. I'm hoping people continue the conversation here. We'll see.

You're right though. What is "affordable"? As I mentioned above, Sky3 Place is a new tower coming to SW 12th & Jefferson. 20% of the units (supposedly) will be "affordable." But is 400 sq/tf starting at $870 a month really affordable?

This is were it's going to get interesting in an eye-of-the-beholder opinion. $870 is very affordable. Downright cheap. A steal. A dream come true. For me and my family, that is.

It is way to expensive for someone making minimum wage.

I'd say a single person would need to make at least $30,000 for that much rent to be considered affordable.

So how do we determine what qualifies as affordable?

[cityscapes]

Originally Posted by bvpcvm

Do we have any examples from around the world where this has been accomplished? This is something I know almost nothing about, but it seems like the only way you do this would require a degree of government intrusion that would be unacceptable in the US.

In Germany I believe their rules on renting only allows landlords to raise rent after seven years and when the time comes to raise rent they can only raise it by 20% of the average rent price in the neighborhood or 20% of the price increase in the neighborhood.

In the UK they no longer build council housing. Local councils basically go back and forth with a developer housing developers and settle on a % of affordable housing to be included within a market rate development, usually this is between 15-20% of the overall units. They are then handled by a registered social landlord.

In some projects that are extremely high end such as One Hyde Park I believe the procedure is that the developer has to buy an appropriate plot of land in the vicinity and build the affordable housing there to gain planning permission for the luxury housing scheme.

I feel like the UK system does a good job of constructing affordable housing without state interference, however it's also part of the reason why the British planning system moves at a glacial pace and does not provide a lot of certainty for developers who are concerned about their profit margins. It slows down the progress of construction in times when there's a huge housing shortage in London.

I think something like the Community Infrastructure Levy in the UK could be used as a better way to gain funds for affordable housing. It's presently a set rate charged by councils based on the size of a development which is then used for community infrastructure needs that the project generates, similar to impact fees in the US. If developments were charged a CIL type rate for affordable or social housing it would make things more clear cut for developers and eliminate the long bartering process with the local council.

[maccoinnich]

Here is the exhibit related to the ordinance approving the tax exemption for Sky3. I would agree that $870 for a studio is not particularly impressive - it's below market for new construction, but there are plenty of studios available in NW Portland for less than that, which don't receive any government subsidy. However the price for the 10 subsidized two bedroom apartments is set at $1,118, which is dramatically below the $2,250 price they'll be charging for the non-subsidized units.

I do think building lots of market rate apartments is part of the solution. We should want market rate housing to be affordable to as many people as possible, thereby minimizing the number of people requiring subsidized housing. Rents in Portland remain a lot cheaper than other coastal cities, and there's no reason that can't continue. Indeed, there are signs that the sheer volume of construction going on right is actually reducing rents slightly. From a recent Oregonian article - "Northwest Portland, which has seen rapid apartment development in recent years, actually saw average rents fall over the six-month period."

However, the market simply can't produce new housing affordable to low income people, and the current funding mechanisms are not producing enough subsidized units to meet the demand. Ultimately it's a revenue issue. The Portland Housing Bureau and/or PDC owns land that they can't afford to build anything on. The PDC already sets aside 30% of Urban Renewal Area revenues to build affordable housing. That could perhaps be increased, but it wouldn't be a very good idea as subsidized housing doesn't generate property tax revenue. If property taxes in Oregon reset on sale there would be a large increase in revenues, but I can't see voters approving that.

[mhays]

The private market can produce affordable housing in two ways:

1. Build enough housing that there's a decent supply of older and less-desired units. Ideally there will be a balance so that new housing has rents high enough to justify construction, but there are plenty of the older ones too.

2. Build micros without parking, and preferably do it on relatively cheap land, though it has to be near transit and retail. I mean 120-300 sf. It's truly bizarre that the smallest micros aren't allowed in most places (Seattle just clamped down on units in the "dorm room" range) because that's the only way you can get new+location+quality+affordable. Apparently massive commutes and the gutter are better options to force on people.

Construction is expensive. You simply can't build good, big, and central housing to be affordable at the lowest wages.

The "affordable" sector has a bunch of levels that probably vary by specific program. Some are just targeting median wages and are called affordable. Others are "low income housing" for segments of the true poor, down to <30% of median income and so on.

Portland must have some sort of subsidy program. The Seattle version is a voter-approved levy that's been going for a couple decades probably, which provides I think $16,000,000 per year that mostly goes to non-profits (LIHI, Plymouth Housing, CHH, Bellweather, and so on) that build and operate housing. This is often for true low-income but can also be for 50-80% of median.

Whatever the solution, a major goal should be to not stifle the construction of new housing. If you do that you get scarcity, which drives prices up for the rental market -- all of it, not just the new units. Inclusionary zoning and "linkage fees" (the latter being debated in Seattle) add a lot of cost to new development, and push rent levels up. Their models are San Francisco and New York...but they helped turn those cities into what they are.

[2oh1]

Originally Posted by maccoinnich

I do think building lots of market rate apartments is part of the solution.

As a part of the solution, absolutely. So long as it isn't viewed as being the entire solution, I strongly agree. Strongly. The complication is that new market rate housing tends to mean as close to the luxury market as the market will bear... which often means it's about what people who don't live in the neighborhood would pay in order to move into the neighborhood. Does anybody really believe long time residents of inner SE are going to be the majority of the tenants in the new Burnside Bridgehead building by Skylab? When Hassalo opens, it's not going to be filled with longtime residents of the neighborhood. It'll be filled with people who will be new to the neighborhood. I always wonder where those new people come from, and why prices aren't falling in the neighborhoods they're moving out of. I'm certainly not complaining about new housing. I'm very excited by it - underline very at least ten times! I'm just worried about rapidly escalating prices as more and more luxury housing is built.

[cityscapes]

Originally Posted by 2oh1

As a part of the solution, absolutely. So long as it isn't viewed as being the entire solution, I strongly agree. Strongly. The complication is that new market rate housing tends to mean as close to the luxury market as the market will bear... which often means it's about what people who don't live in the neighborhood would pay in order to move into the neighborhood. Does anybody really believe long time residents of inner SE are going to be the majority of the tenants in the new Burnside Bridgehead building by Skylab? When Hassalo opens, it's not going to be filled with longtime residents of the neighborhood. It'll be filled with people who will be new to the neighborhood. I always wonder where those new people come from, and why prices aren't falling in the neighborhoods they're moving out of. I'm certainly not complaining about new housing. I'm very excited by it - underline very at least ten times! I'm just worried about rapidly escalating prices as more and more luxury housing is built.

A big percentage of those people are not coming from other neighborhoods in Portland. When I've gone to look at apartments for example at Burnside 26 the leasing people told me that most of the residents came from out of state never having even visited Portland before. Hassalo is more of a mixed bag from they told me. There are a lot of people relocating but a good chunk is coming from within PDX.

This is off topic but a lot of the people that are relocating work from home. The influx of people fascinated me until I learned that. It didn't seem like the job market was growing as rapidly as the construction of new apartments and I guess it doesn't have to because a lot of people are bringing their job with them.

[2oh1]

Originally Posted by mhays

1. Build enough housing that there's a decent supply of older and less-desired units. Ideally there will be a balance so that new housing has rents high enough to justify construction, but there are plenty of the older ones too.

That works so long as the number of people who want to move into a neighborhood only increases by the number of new homes built. In a stagnant neighborhood, it works. But if the new housing is making the overall neighborhood more desirable, people in the older, less desirable, housing get priced out, because the new housing (and the new retail that comes with it) makes the neighborhood more vibrant and more desirable to outsiders.

It's a catch-22. You want new housing and more retail, but as those things arrive in your neighborhood, the neighborhood becomes more desirable and longtime residents get priced out. Yay, look at all of this great new stuff coming to the neighborhood. The neighborhood is becoming trendy! Too bad we can't afford to stay.

Originally Posted by mhays

Whatever the solution, a major goal should be to not stifle the construction of new housing. If you do that you get scarcity, which drives prices up for the rental market -- all of it, not just the new units.

Absolutely. It's a complex problem and there won't be any easy answers.

[2oh1]

Originally Posted by cityscapes

This is off topic but a lot of the people that are relocating work from home. The influx of people fascinated me until I learned that. It didn't seem like the job market was growing as rapidly as the construction of new apartments and I guess it doesn't have to because a lot of people are bringing their job with them.

That's not off topic at all. It goes back to my point about market rate housing often being what the newcomers will pay to move into a neighborhood. Those newcomers are paying top dollar, and their incomes tend to be higher than the neighborhood norm... and their disposable incomes make it possible for even better retail to thrive... and all of that leads to a neighborhood becoming more vibrant and more desirable to even more people who don't live in the neighborhood. It's a cycle that pushes up rent across the board, even at the older, less desirable, housing.

Again, I want to be clear here. I'm very strongly in favor of new housing. I'm super excited about the Burnside Bridgehead project! I'm just wondering what can be done to help Portland stay affordable enough for the people who work here to live here. For years, most of my friends lived in NW or SE. One by one, all of my friends who don't own are getting priced out of their apartments.

[58rhodes]

Portland does have a decent amount of Section 42 properties and more and more owners are getting board every day. We also have programs like REACH and others out there. Mhays made the point that as the newer higher end places are built older ones come available and some of them are being renovated very nicely and offer larger floor plans at very reasonable prices and this trend is very popular right now. I took a drive out to east Portland today and noticed lots of available land so at this point I dont think space is the issue.

Also keep in mind that a NEW state law requires all rental properties to except Section 48.

[58rhodes]

Originally Posted by 58rhodes

Portland does have a decent amount of Section 42 properties and more and more owners are getting board every day. We also have programs like REACH and others out there. Mhays made the point that as the newer higher end places are built older ones come available and some of them are being renovated very nicely and offer larger floor plans at very reasonable prices and this trend is very popular right now. I took a drive out to east Portland today and noticed lots of available land so at this point I dont think space is the issue.

Also keep in mind that a NEW state law requires all rental properties to except Section 48.

Another thing that could be done is encourage people to share/split their homes.This is popular in most big cities.

[mhays]

Yes, sharing/splitting should be broadly allowed in single-family areas. Regulation should cover building codes and health codes, but not exist to keep density down.

2oh1, I'd put affordability on the city/metro scale above affordability on the neighborhood scale. The two can work against each other.

Also, close-in and transit-heavy neighborhoods have an important role to play in improving transportation mode splits, which will tend to save money and help the city be successful. Affordability for a relative few people near transit shouldn't trump the benefits of a lot of density near transit.

[2oh1]

Originally Posted by mhays

Affordability for a relative few people near transit shouldn't trump the benefits of a lot of density near transit.

I'm not sure I follow. I never said it should - however - people who have lower incomes are less likely to have cars and more likely to need mass transit.

[mhays]

Ideally a ton of people of all income levels will not have cars, and will use transit even if they do have one. Having a ton of people near transit is more important than having a few more needy people near transit. Particularly since the added density will bring more needy people close to transit in the long run.

Parking ratios are probably similar in our cities. If 200 units go up with 150 parking spaces, and only 75 of those are used on a given workday, that's more useful (from a transit mode perspective) than putting those people further away, and accommodating 20 poorer people even if nearly all use transit.

[2oh1]

I still don't see what you're getting at here. Who ever suggested building housing for the needy near mass transit - or not building housing for the needy near mass transit? Where did that part of the conversation come from? We were talking about the need for affordable housing and you chimed in with "Affordability for a relative few people near transit shouldn't trump the benefits of a lot of density near transit."

I'm confused about how the conversation shifted from the need for affordable housing to "...not near mass transit."

Too often, people often think about affordable housing in terms of the well off and the rest, as if a person is a leper for not being able to afford market rate rent even as market rate escalates deeper into prices that were considered luxury housing not long ago. We've got so many great shops, restaurants, pubs, etc etc etc. I hate the idea that workforce housing should be looked down on, as if it doesn't matter if the people who work in the city can afford to live there. Is a person "poor" or "needy" if he or she can't afford over a thousand bucks a month in rent? Is everybody in retail, the service industry or blue collar poor?

People with lower incomes are less likely to be able to afford a car... so, since they have to rely mass transit rather than choosing to not drive, build homes for them further away from it??