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ECONorthwest president John Tapogna spoke at the Feb. 20 Portland Business Alliance break forum.

PORTLAND BUSINESS ALLIANCE/KARLIE DRU PHOTOGRAPHY - ECONorthwest president John Tapogna presented the 2018 Economic Check-Up.Despite the many building cranes in parts of Portland, the regional economy is slowing down and new residential construction could grind to a halt as soon as 2020, according to John Tapogna, president of the local ECONorthwest consulting firm.

If that happens, progress being made to reduce inequalities could also stumble, especially in East Multnomah County, where incomes lag behind the rest of the region, Tapogna said.

"Housing construction accelerated in 2016 and 2017, enough so that rents fell at the upper levels and increases slowed down at the lower levels. But we're about to get back into one of those cycles where not much is happening," Tapogna told the Portland Business Alliance at its monthly breakfast forum on Feb. 20.

Tapogna spoke during a presentation of the annual Economic Check-Up report commissioned by the Value of Jobs Coalition, which includes the alliance. The first report was prepared in 2010, during the depths of the Great Recession, to better understand how the region's economy compares to the country as w whole and such similar cities as Austin, Indianapolis, Nashville, Salt Lake City and Seattle.

According to Tapogna, after falling behind the country as a whole and most similar cities during the recession, the economy in the Portland region has boomed since it ended, boosted in large part by young, college-educated workers who have moved here to enjoy the quality of life.

"Regarding median household incomes, since 2015, Portland has increased from the 32nd to the 16th highest city in the country," Tapogna told the business leaders gathered at the downtown Sentinel Hotel.

At the same time, housing costs have also increased faster than practically anywhere else in the country, Tapogna said, fueling the homeless crisis by pricing an increasing number of low-income people out housing. The report found the greatest region-wide problem is the lack of housing. Home building almost completely stopped during the Great Recession and has never recovered.

"What is driving Portland's homeless crisis is the high cost of housing," said Tapogna, who noted that since the recession ended, only seven new homes have been built for every 10 households that have been formed.

The problem could get worse if new residential construction stalls. Tapogna and ECONorthwest Project Director Mike Wilkerson, who was also at the breakfast forum, said few new construction permit applications are currently being made to the Portland Bureau of Development Services. That means almost no new projects are now scheduled to start in 2020 or 2021.

"BDS has a lot of alarm bell ringings," said Wilkerson, who blamed the slowdown on a number of issues, including increasing construction costs and interest rates, and the city's relatively new inclusionary zoning policy, which requires owners of apartment buildings with more than 20 units to rent some of them at below market rates.

"The inclusionary zoning requirement is well intentioned but misapplied and needs to be reconsidered," said Tapogna.

COURTESY PORTLAND BUSINESS ALLIANCE - A map showing commute patterns in the new Economic Check-up report. The darkest orange area in East Multnomah County.

This year's report included a focus on East Multnomah County for the first time. It revealed that even when the economy is doing well, that part of the region has special problems that need to be addressed to ensure that its residents prosper equally.

The report defined East Multnomah County as everything in the county east of Interstate 205, which includes the cities of Gresham, Fairview and Wood Village. It found a number of positive economic indicators there, including the fact there were 99,216 total jobs last year, closely matching the 102,361 in Portland's Central City.

But the report also identified the following problems: a live-work imbalance, where the majority of residents in East Multnomah County don't work there, while the majority who work there don't live there; a disproportionately high percent of cost-burdened renters, who pay more than 30 percent of their income for housing; and wage disparities, with virtually all industry sectors having lower average wages than the rest of the region.

After the presentation, Tapogna told the Portland Tribune that regional leaders could help East Multnomah County the most by ensuring that as much new housing as possible be built there in the future. That would help lower rents and purchase prices for area residents, and allow more people who work there to live closer to their jobs, reducing commute times.

The report was prepared by the Portland's EcoNorthwest economic consulting firm. The Value of Jobs Coalition is led by the Portland Business Alliance and includes the Oregon Business Council, Oregon Business & Industry, the Port of Portland and Greater Portland Inc. You can find all the reports, including the 2018 Economic Check-Up, at

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