Oregon Cities

Multnomah County poised to expand affordable housing incentives

The construction site for the Glisan Landing housing development on July 7, 2023. The development  comes from Related Northwest, Immigrant and Refugee Community Organization (IRCO) and Catholic Charities of Oregon and will have 137 units of affordable housing for families with income ranges 30-60% of the region's median income.

The construction site for the Glisan Landing housing development on July 7, 2023. The development comes from Related Northwest, Immigrant and Refugee Community Organization (IRCO) and Catholic Charities of Oregon and will have 137 units of affordable housing for families with income ranges 30-60% of the region’s median income.

Caden Perry, Caden Perry / OPB

A Portland-area policy, which mandates that new apartment buildings include a specific number of affordable units, will expand next month.

On Thursday, Multnomah County Commissioners will vote on whether to tweak zoning rules to allow the regional “inclusionary housing” policy to go further to incentivize the construction of affordable apartments.

The county and the city of Portland jointly adopted this policy in 2017 to spur affordable housing development. The policy requires all new apartment complexes with 20 or more units keep 20% of those units affordable to people making 80% or less of the region’s median income. That’s about $90,000 yearly for a family of four.

The city also gives developers the option to keep 10% of those units affordable to people making 60% of the median income ($60,000 yearly for a family of four). In exchange, developers can have certain development fees and 10 years of property taxes waived for the affordable units.

Those incentives go further for developers building in an area called the “central city,” a region that spans from the Lloyd District to Goose Hollow. For new apartments built in that area that meet the same affordable unit rules, developers can also have property taxes waived for 10 years for the entire building — not just the affordable units.

The proposal before the county board will stretch that same 10-year waiver to affordable apartment developers beyond the central city. Specifically, it will be granted to property owners committed to keeping 10% of a building’s units affordable to people making 60% of the region’s median income.

But this incentive remains limited by geographic boundaries. Developers will be granted this waiver if they build in certain higher-rent areas beyond the central city, including nearly all Southwest and Northwest Portland neighborhoods and eastside neighborhoods like Sellwood-Moreland, Hollywood, Montavilla, King and Alameda.

The proposal is informed by a 2023 study, which found that apartment complexes that met the inclusionary housing criteria would only make money for developers who build within the central city boundaries — effectively disincentivizing affordable development in other neighborhoods.

Related: Portland’s affordable housing mandate for new construction shows promise, study finds

Stefanie Kondor, senior vice president at affordable housing developer Related Northwest, spoke to this issue at a January Portland City Council meeting. Kondor said that she regularly gets calls from Portland market-rate developers who are selling apartment buildings because of policies like inclusionary housing that leave them in the red.

She characterized the update to the policy as a “balanced and largely fair initiative to address our city’s housing crisis.”

Other developers told the council that the extended property tax exemptions will fast-track apartment construction projects that have been delayed by cost concerns.

According to Michael Buonocore, interim deputy director of the Portland Housing Bureau, the inclusionary housing policy has led to the construction of 1,300 new affordable apartments since 2017, despite the cost of construction rising more than 50% during the same time period.

“We knew in developing these recommendations that it was important to fortify a healthy, balanced program for the long haul,” said Buonocore at the January council meeting. “And also to respond to the moment that we find ourselves in, in which the development landscape is challenged and we need to move aggressively to meet the demands of the housing need analysis.”

In December, a state-mandated “housing needs analysis” identified that Portland needs to build more than 120,000 additional housing units in Portland over the next 20 years to meet demand. And more than 50% of those units need to be affordable to families making 80% of the region’s median income.

Portland City Council unanimously approved the expansion to the policy last month, but any changes to regional property tax also need the sign-off of county leadership. Multnomah County Commissioners are expected to pass the proposal Thursday morning. If approved, it will be effective March 1.

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