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City planners predict 20-year, multifamily construction boom that home builders say isn't realistic

PAMPLIN MEDIA GROUP PHOTO: JONATHAN HOUSE - The construction of new multifamily housing, like this building in the Pearl District, must exceed current rates to meet Portland's goals in the draft Comprehensive Plan update.Portland planners say the city can house half the people expected to move to the metropolitan area during the next 20 years. They predict 123,000 new housing units will be built in Portland by 2035.

The Metro Council heard that prediction from Portland Bureau of Planning and Sustainability Director Susan Anderson and Principal Planner Tom Armstrong last Tuesday. Anderson and Armstrong had been invited to give the council an overview of the comprehensive plan update that will guide Portland’s growth until 2035.

“Portland has essentially half of the region’s capacity over the next 20 years,” Anderson said.

The council had requested the briefing to help decide whether it needs to expand the urban growth boundary it administers later this year. Most of the councilors seemed impressed with the presentation, with some saying Portland’s planning process could serve as a model for other cities in the region.

But the housing projection is based on a controversial premise. According to Anderson and Armstrong, the vast majority of the new housing — 75 to 80 percent — will be multifamily housing. For that to happen, multifamily construction will have to more than double the rate of the past 14 years.

BPS defines multifamily housing to include apartments, condominiums, auxiliary dwelling units, duplexes, rowhouses and townhouses. The vast majority are apartments and condominiums. According to the Bureau of Development Services — which issues construction permits — 31,563 such permits were issued between 2001 and 2014.

That’s an average of 2,254 such permits a year. But to reach the draft comp plan update goals, between 4,612 and 4,920 such permits will have to be issued every year for the next 20 years.

That rate has been questioned by the Home Builders Association of Metro Portland, which does not believe such a building boom can be sustained for so long. In fact, the highest number of multifamily permits issued so far was 4,486 last year. The home builders argue that much of the construction is the result of pent-up demand caused by the slowdown during the Great Recession, not a trend that will increase and continue for two decades.

Metro President Tom Hughes acknowledged the controversy during the briefing. He said that Oregon legislators ask him whether Portland’s goals are realistic whenever he visits the state Capitol.

“I keep hearing that Portland can’t live up to its promises,” Hughes said.

Anderson assured Hughes and the rest of the council that the goals are realistic, however. She said the number of multifamily permits have increased in each of the past few years, and predicted the trend will continue because of demographic changes sweeping the nation. They include increasing numbers of young people moving to cities and aging baby boomers who are downsizing.

“Portland is not unique. The same thing is happening in other cities,” Anderson said.

PAMPLIN MEDIA GROUP PHOTO: JONATHAN HOUSE - Get ready to see a lot more multifamily housing buildings like this one under construction at Northwest 21st Avenue and Quimby Street over the next 20 years.

Planning pushback

All Oregon cities are required to have detailed comp plans by state land-use planning laws. The last time Portland updated its plan was 35 years ago. The new plan has been in the works for years, beginning with the VisionPDX community meetings initiated by former Mayor Tom Potter and the Portland Plan written under former Mayor Sam Adams. The appointed Planning and Sustainability Commission that oversees PBS is scheduled to vote on a recommended Comp Plan to send to the City Council in May or June. The council is expected to hold hearings and approve a final version by the end of the year.

During the briefing, Anderson admitted that some Portlanders are pushing back against the amount of new apartment and condominium buildings called for in the current version of the draft comp plan update. Among other things, she said the controversy over the lack of parking for some of the new apartment buildings on Southeast Division Street has created divisions.

“Some people complain about the lack of parking, but others like the new restaurants the apartments support,” Anderson said.

According to Anderson and Armstrong, the draft comp plan update attempts to preserve livability by concentrating the majority of new development in the most urbanized parts of Portland. It calls for 30 percent of the new housing to be built in the central city, which includes downtown and the innermost neighborhoods. Another 50 percent is targeted for designated town and neighborhood centers, such as the Hollywood business district, and along well-traveled corridors. The remaining 20 percent will go in residential neighborhoods, although Anderson said it will be mostly additional single-family houses, duplexes, and townhouses.

Some residents have questioned whether all centers and corridors can take that much growth, including members of the Multnomah Neighborhood Association board of directors.

A greater concern to Anderson was the increase in housing costs likely to result from all the new construction. In fact, several recent studies have found Portland already is becoming increasingly unaffordable. A recent study by the Zillow real estate economists found that 50.3 percent of Portland homes for sale are unaffordable by historic standards. Zillow also found Portland rents increased 7.2 percent last year, the fifth-highest increase in the country.

“People with money are going to keep moving to Portland, and I’m worried sick that a lot of families are not going to be able to continue living here,” said Anderson, who suggested lower-income people may need to move to communities like Beaverton and Milwaukie.

To expand or not to expand?

PAMPLIN MEDIA GROUP PHOTO: JONATHAN HOUSE - The city is hoping to buy a site to build more affordable housing in the Pearl District near this building at Northwest 13th Avenue and Overton Street.Metro is the elected government in the region charged by the state with land-use and transportation planning. The council asked for the briefing as part of a work plan to help decide whether it needs to expand the Urban Growth Boundary it administers. The UGB limits where new development can occur. State land-use laws say it must always maintain a 20-year supply of buildable land. The council is scheduled to decide whether it needs to be expanded by the end of the year.

An urban growth report adopted by the council last year argues the that the urban growth boundary does not need to be expanded. The staff-prepared report says there is enough capacity to accommodate the 300,000 to 485,000 additional people expected to move within it by 2035.

But that conclusion has been questioned by the home builders and others. They say it depends on nearly half of those people being willing to live in apartments and condominiums in Portland — even if they can all be built on time.

Around 10,000 new housing units were expected to be built by 2035 in Damascus, Oregon’s newest city in east Clackamas County. That is growing increasingly unlikely, however. For the sixth time, at the March 2015 special election, Damascus voters rejected the comp plan needed to start construction. Property owners adjacent to Happy Valley are annexing into it. Legislation is currently moving through the 2015 Oregon Legislature to make it easier for Damascus voters to leave and disincorporate their city.

The Metro Council may not be able to expand the growth boundary by the end of the year even if it wants to, however. It wants to expand the boundary into areas that have been designated urban reserves, and that process has been anything but smooth. After years of legal challenges, the 2014 Oregon Legislature stepped in to approve urban reserves and approved previous growth boundary expansions in Washington County. But it did not do the same thing for Clackamas County, where urban reserves have yet to be ratified. Until they are, Metro cannot easily expand the urban growth boundary in Clackamas County, even though some property owners in the Stafford area want to develop their land.

The Metro Council is scheduled to discuss the status of Damascus and the Clackamas County urban reserves in coming months. But it also has the option of asking the state Land Conservation and Development Commission to extend its growth boundary decision by the end of the year, which would essentially be the same as not expanding it, at least for the length of the extension.

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