A review by Bath consulting firm CZB LLC looking at housing data over the past 10 years, found that fewer approved projects are coming online, most approved projects are taking longer to build and many have stalled out.
A study of the city of Portland’s controversial Inclusionary Zoning fee finds that the policy has inhibited the growth of affordable housing, rather than spurred it, as was hoped.
A
review by Bath consulting firm CZB LLC looked at housing data over the past 10 years and found that fewer approved projects are coming online. Most approved projects are taking longer to build and many have stalled out.
CZB predicts more stagnation if the current policy remains in place. The firm briefed the city’s Housing and Economic Development Committee on its preliminary results at a meeting in February.
The report also found that market conditions — land and construction costs and increased interest rates — are prohibitive to new housing builds.
Adopted in 2015, the IZ ordinance required all new development with 10 or more units to commit 10% of the units to be affordable to lower-to-middle-income residents, or pay an "in lieu" fee of $100,000.
In 2020, voters adjusted the ordinance to mandate that 25% of the units must be affordably priced or pay an in-lieu fee of $182,830 per unit.
“Even if market conditions returned to those of the more favorable past, Portland's inclusionary zoning policy is prohibitive,” consultants said.
“If the IZ policy were to remain unchanged … interest rates would need to fall to about 2.5%, to be less of an impediment,” CZB found.
“If neither conditions nor policy changed, an external subsidy of $150,000 per affordable unit would be needed.”
CZB expects to deliver the full report for City Council review soon.
