Imagine if there was a way to put the Portland area's countless unemployed architects and construction workers back to work. And while you're imagining, suppose this plan stemmed from an already-existing city program that has simply been shelved for the last four years. And finally, imagine that this endeavor would not cost the city money but in fact do the opposite: create a long-term revenue stream.
This isn't mere architectural pixie dust or pie-in-the-sky optimism. It comes from a conversation I had recently with John Warner, who manages housing development and workforce housing policy for the Portland Development Commission. Warner met me at a coffee house near PDC with a binder full of stats and graphics, but the message was more emotionally resonant: that we can do more to stimulate housing and jobs as well as great architecture without exhausting city coffers.
For thirty years until a 2005 moratorium was put in place, the city utilized the New Multiple Unit Housing Property Tax Exemption program to stimulate multifamily housing in the central city. It was geared towards residents too well off to qualify for low-income housing but not affluent enough to be able to afford to live here. Exemplified by projects such as the Sitka Apartments in the Pearl District (pictured at right) or Shaver Green in North Portland (apologies - these turned out to be affordable housing projects) these programs help create close-in housing for working people like cops, teachers, social workers and firefighters.
Prior to the 2005 moratorium, both the New Multiple-Unit Housing program and the Transit Supportive and Residential Development programs provided a 10-year tax exemption on the improvement value of a new multifamily or mixed-use project in the central city and in PDC-designated urban renewal areas as well as light rail station areas outside the central city. They were intended to provide an incentive for high-density residential and mixed-use development in Portland’s centers and other transit-oriented areas so that the city can accommodate new population growth, improve the housing-jobs balance, and support public transit, particularly the regional light rail system.
Tax abatement programs such as these not only help make the central city a viable destination for more than just the richest and poorest populations, but also lead to increased tax revenue by growing the overall tax base. It's worth it to offer discounts to projects that bring more middle income people into the heart of the city.
But because these workforce housing programs have in the past been used in relatively tony areas like the Pearl District, there is also a stigma: that people already well off are getting tax breaks they don't deserve, while some granny in Lents or a minimum-wage worker in Parkrose is having to pay their property taxes in full.
This misleading appearance of unfairness seems to be why the moratorium was placed on the New Multiple Unit Housing and Transit Supportive development programs in 2005. The tax exemption, heretofore intended for middle class/workforce housing, was re-directed to low-income housing projects.
It may sound fairer for the city to devote its limited housing funds to the neediest people, and build all low-income housing. Why give tax breaks for fancy condo towers?
But it's not that simple; in fact, such a notion is misleading. Nationwide, low-income housing already receives vastly more funds than workforce housing. Certainly I'm not arguing that there shouldn't be strict attention to providing low-income housing. It's just that if low-income housing is already relatively stable in its funding mechanisms, why cut off workforce housing when it's the neediest and most neglected in terms of city financial support?
It's also middle-income housing that can have the most impact on the places where it is built. Healthy urban areas are places where people from a variety of income levels live and work in a manner that promotes the overall economic growth. I mean, it's great to help a homeless person get off the streets into a single-room-occupancy residence. That's our responsibility as a caring society. However, it's workforce housing projects that will bring people into the central city to patronize restaurants and shops, reduce crime and traffic, contribute to the tax base and make the whole economy prosper.
Now, Warner says, the city is preparing to re-evaluate these tax-abatement programs. Over the next year, we could see them made active again. And that's a good thing.
“The tool is sitting in the tool shed," Warner explains. "All we have to do is pick it up. We could have the design and construction communities back to work. It’s a catalyst.”
Warner and PDC are proposing a 15-year fund that is contributed to by employers, foundations, and the city. The goal is 20 projects (with 3,400 households) built during that time. All of the money would be paid back but in the meantime it would induce $1.1 billion in total development.
Portland has enjoyed a relatively low cost of living compared to other West Coast cities, which have experienced greater crisis of affordability in their centers. In places like San Francisco, for example, you have to be J.R. Ewing to live within five miles of the Transamerica building or the COIT tower. That's not quite the case in Portland, but things are changing here. Simply in order to stay even with the current standard of living, you'd need annual income growth of 4.7 percent. Most people I know get a 3 percent annual cost-of-living raise at most.
“A rational consumer will not choose to live here," Warner says. "So you have to trade on people’s irrational exuberance.” It's a good thing we have all that beautiful scenery and all those yummy food carts. Otherwise Portland could become a lot more like Cleveland than we're prepared to admit.
Recently I wrote a blog post about the proposed workforce housing project envisioned by Works Partnership and developer Randy Rapaport. The project, which won an unbuilt-design award from the American Institute of Architects last month, would require the kind of workforce-housing funds the city previously provided (before the 2005 moratorium) in order to get built. And this is true with countless projects across the city that haven't even been conceived of yet. Tax abatement could be putting architects and building-industry workers back on the job.
PDC owns many land parcels around Portland that could be turned into workforce housing projects if the abatement moratorium were to end. And again, this wouldn't be a strain to the city's tax coffers, but would actually increase them over time by growing the tax base to include more taxpayers. Wouldn't it be nice to see more construction cranes in the air next year? It could happen if we bring the abatement program (which was on the books for 30 years) back.
If the city's tax abatement programs for workforce housing are re-instated, there's only one more thing I'd like to see done: the instigation of a design excellence program at PDC that helps assure commissions are given to the city's most talented architects, and not simply those who have the most experience or have an inside track with the agency. Part of what was exciting about seeing the Works-Rapaport project was that it combined affordability and location with superlative architecture. That hasn't always been the case with PDC-oriented projects. Some of them are outright ugly. So while the economic and social factors are more than enough to make workforce housing programs worthwhile, we also needn't give up the opportunity to direct such projects to the best designers.
Even so, in such a devastating economy for the design and building community, there may be a growing sense of urgency about putting workforce housing programs back on city books. Of course we have to be protective of the city budget, but I'd do this in a heartbeat.