House of cards | Portland's housing replacement ordinance stands neither the test of time, nor logic
Government relations consultant at Drummond Woodsum, and Portland Community Chamber liaison to city hall
My buzzing iPhone displayed: “Annie Cell.” My wife and I are more into texting and e-mailing than talking. So I answered, thinking maybe there’s a problem.
“We have a problem. The kitchen phone’s on the fritz. I can get a wall mount, a cordless, one with a voicemail feature, or maybe you can fix it.”
“Wait. What problem? We never even use the home phone. Maybe just throw it away and cancel the service. Less clutter.”
“Well, I suppose.”
Ah, the appeal of simple solutions.
Conflict arose last year in the city of Portland when developers were affected by a punitive land use regulation. A firestorm followed the handling of Roxanne Quimby’s 660 Congress St. “project of special merit” and the former B&B Cleaners building at 6 Washington Ave. Quimby’s artists-in-residence project was questionably exempted from the regulation, while the other project, a redevelopment of a derelict building that hadn’t been used as housing since the 1950s, was inexplicably ensnared in it.
Portland agreed. We have a problem.
The city has been trying to solve an apparent housing problem since 2002. That was the year the City Council enacted the Housing Replacement Ordinance and created its accompanying Housing Replacement Fund. The HRO requires that anyone who removes housing stock from the market must provide housing elsewhere, or pay a fee into the HRF, which then funds future affordable housing projects.
The problem at the time, so the councilors perceived, was caused by market forces. Housing was red hot. Condos were in vogue. Rents were increasing, and the vacancy rate was about 3%. There were wait lists for apartments.
At the same time, commercial development was robust. A car dealership near the Westbrook line and the city’s largest hospital were each proposing to make room for expansions by purchasing — then demolishing — a handful of neighboring residential dwellings. The politicians feared a housing shortage, so they enacted an emergency moratorium on residential demolition permits. Two months later they unveiled the now-infamous HRO.
The HRO serves as a deterrent to a property owner who wishes to remove three or more housing units from Portland’s housing stock. The main instrument employed by that deterrent is a financial penalty.
A hefty penalty. If I decide to tear down my four-unit apartment house to build a non-residential building, I would have to pay $58,000 per unit into the HRF. That’s almost a quarter-million dollars in demolition costs that are added to my project. So now all I get when I call my lender is a dial tone.
The HRO gives me another option: Rather than pay the fee, I can build four units of housing somewhere else in the city. But remember my problem. The bankers already think I’m asking to borrow too much.
The HRO included a statement of purpose, so that, years later, when we would wonder, “What were they thinking?” we would have our answer. They reasoned then that housing is a crucial component of the public interest, and that once it is lost, housing not easily replaced. The HRO states that its purpose “is to limit the net loss of housing in the city … the preservation of housing … will contribute to the health, safety, and welfare of its citizens.”
There’s no problem with that thinking, especially considering that 10,000 Portland households have incomes under $25,000. But what about that other city goal: economic development? Portland needs businesses and residents.
Most people in business know the three-step “Problem Tree” exercise, where one conducts analysis of: a problem, objectives being hindered by the problem and then strategies to rectify the problem. The first and crucial step is to clearly identify the problem. Government does not always employ the Problem Tree methodology. In the case of Portland’s HRO, it should have.
Portland has another chance. The council has responded to a public outcry over the 2009 invocations of the HRO and is now attempting to fix it. One of its many problems is applicability; the burned-out B&B building had apartments that were unoccupied for decades. Yet the owner who sought to raze the building, now a vacant lot, was told to pay the penalty for each apartment.
While fixing problems within the HRO is laudable, nobody asks whether we need the HRO in the first place. Since 2002, three demolition projects paid a total of $472,000 to the HRF. Recently the HRF committed its first $380,000 to a possible 24-unit affordable housing project. Since the HRO was hastily enacted in 2002, a total of only 69 units have been removed citywide, while 1,525 housing units have been added, not including additional living space for 430 students. Only 20% are single-family, and a third of the new units are affordable housing units.
Since 1960, Portland’s population has shrunk 20%. During that time, Portland’s housing units have increased 22%. And vacancy rates — with occasional spikes like 2002 — have remained constant.
So what’s the problem? And if there is one, does the HRO rectify it?
Just as I asked Annie whether we need the phone, the council should ask whether it needs this ordinance.
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