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Some developers worry that if the incentives are not sufficient they will not be able to raise enough capital for future projects.


The City Council is set to approve a new program next week to increase the supply of affordable housing that some developers argue will have the opposite effect.

On Wednesday, the council approved a series of amendments to an Inclusionary Housing program introduced by Commissioner Dan Saltzman, who is in charge of the Portland Housing Bureau. It would require developers to include an increasing number of less expensive units in multi-family projects with 20 units or more. The programs provides incentives intended to offset the lost revenue from the lower-priced units, which are required to be affordable to households earning 80 percent or less of the area's median family income.

Some developers, including members of a trade group called Oregon LOCUS, worry that if the incentives are not sufficient, developers will not be able to raise enough capital for future projects, and fewer new housing units will be built in the future, adding to the affordable housing crisis.

The Portland Business Alliance has also warned the program needs to be carefully calibrated to avoid unintended consequences.

"To be clear, the alliance does not oppose the adoption of an inclusionary housing program, but we do have concerns about the program design. It is critical the inclusionary housing program take into account make realities and the impacts on the ability to deliver additional housing stock, including the impact on development and the ability to attract outside capital," alliance President and Chief Executive Officer Sandra McDonough wrote in a Dec. 14 letter to the council.

But on Wednesday, the council voted down an amendment proposed by Oregon LOCUS and introduced by Commissioner Steve Novick intended to make the program's rules the same in both the Central City and mixed use zones. PHB Director Kurt Creager testified against the amendment, saying his bureau was concerned it could create financial windfalls for some developers.

Aggressive proposal

Adopting the other amendments clears the way for a council vote on the program Dec. 21. When the program was first considered last week, Saltzman told the council he believed it is well reasoned and can be adjusted in the future if problems are discovered.

The program was allowed by the 2016 Oregon Legislature, which repealed a longstanding ban on local governments requiring developers to include lower-priced units in their projects in response to the state's affordable housing project. Some developers say the program proposed by Saltzman is the most aggressive in the country, applying to more projects with fewer exemptions than anywhere else.

For a related Portland Tribune story on the issue, go to portlandtribune.com/pt/9-news/334970-214836-controversial-inclusionary-housing-proposal-heading-to-city-council

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