Tag Archives: housing market trends

Residential Infill Project Needs Improvements

May 8, 2018

Residential Infill Project Testimony to Portland Planning and Sustainability Commission

I’m Mary Vogel of PlanGreen and Portland Small Developer Alliance. I work for the small developers pro bono because I want to see a world where young people have the same opportunity for a livable planet in neighborhoods of their choice that much of my generation has had.

Now, speaking for the group: Our focus is on providing housing opportunity in all neighborhoods across Portland, in a small-scale incremental way that fits in with the surrounding context. So the proposed Residential Infill Project has an immense impact on what we do.

We found that there are some major issues with the RIP proposal that fundamentally work against the stated goals of the project, and aren’t in line with how small-scale infill development works. On the screen are five areas we think are most important to improve before the RIP is adopted.

1. Five Improvements-1

Number one:

On the left is the Dekum Charles, a fourplex by Woodsong Partners, that neighbors are happy to see in their neighborhood. http://dekumcharlescondos.com

This table shows what costs look like when you hold the land acquisition costs stable across four housing types. The fourplex at $360,000 is about a third what the single family home costs—a price far more manageable by the average Portland household.

Number two: 4. Five Improvements-2

Pictured is Citizen Flats, another project by Woodsong Partners that neighbors asked about investing in–they liked it so much. http://citizenflatscondos.com

Please help us implement a market-based solution to HOUSING AFFORDABILITY that we had prior to the vast downzoning to SF of 1959—not just “AFFORDABLE HOUSING” that depends upon a subsidy that’s been shrinking for the last 50 years.

Here’s a link to the YouTube video of the first hearing, testimony begins at 2:25:00.

You can get more talking points to testify to the Planning and Sustainability Commission yourself on May 15 at http://pdxsmalldevelopers.org/news/.

Housing Affordability – Put a Bern on It

April 14, 2016

Bernie Sanders speaking at the Moda Center on Aug. 9, 2015 to a crowd of 28,000. Most people don’t know that he helped to found one of the most evolutionary housing organizations in the nation. Photo by PlanGreen

Bernie Sanders is a housing affordability hero to a group of people in Burlington, VT. As Mayor of Burlington, Bernie was able to get the city to seed the founding of the Burlington Community Land Trust (BCLT) with a $220,000 grant. Sanders was at first skeptical about the limited equity concept the BCLT promoted. But he came to see the Community Land Trust (CLT) as both a means of achieving permanent affordability as well as a new model of land tenure for America. Now he admits that helping to found the BCLT was “the best thing I ever did as Mayor.”

Burlington Community Land Trust has since expanded into three counties around Burlington (Chittenden, Grand Isle and Franklin) and changed its name after its merger with an affordable rental non-profit in 2006 . It’s now the Champlain Housing Trust. With over $309 million in assets, CHT is the largest CLT in the nation. Its 2015 Annual Report shows that it owned 389 buildings (2227 units) of affordable rental housing, 33 commercial/industrial buildings and the land under 570 single family shared-equity homes. And it’s adding more units every year. This year, they are in process of developing another 160 permanently affordable units in a larger 700 unit development on the Burlington waterfront. In all, they control an impressive 7.6% of the Burlington area’s total housing stock.

How it works:

Champlain Housing Trust is the largest Community Land Trust in the nation. It enables housing to be kept permanently affordable by holding title to the land under it. Image from CHT 2014 Annual Report.

Community Land Trusts are nonprofit organizations, with a board composed of representatives of the public, members of professions with technical expertise, and the tenants of the CLT. The CLT obtains land through a number of means (purchase, donations, foreclosures, etc.) and removes it from the private, commodity speculative market. If there are not already buildings on the land, the CLT may build and either lease or sell the buildings with restrictive covenants. The CLT retains ownership of the land and sets a formula for shared equity as the properties appreciate. This formula is applied when the home on the property is sold.

As explained by Daniel Fireside writing in Dollars & Sense: When a normal home is offered for sale on the usual terms, it does virtually nothing to make the overall housing market more affordable. A land trust home, by contrast, creates a permanently affordable property because the land it sits on is removed from the speculative market. Most of the appreciation is retained by the housing trust (and by extension, the community), rather than the individual. In this way the trust model creates a bridge between purely public and purely private property.

This limited equity model still allows a reasonable return. In Burlington, the 233 homeowners who have resold a CHT home have realized, on average, a 31% annualized IRR [internal rate of return]! The model also allows the CLT to intercede in the case of a foreclosure. A study by the Lincoln Institute of Land Policy showed that, as of 2010, homeowners within a land trust were 10 times less likely to default on their homes than their private-market counterparts.

A New Model of Land Tenure

Champlain Housing Trust holds the land under O’Dell Apartments in So. Burlington in permanent trust. Renters get a say in policies. Photo from Google Maps w/assistance from CHT’s Chris Donnelly.

The original impetus behind the CLT movement was to create a new institution to keep housing permanently affordable. The first people I ever met living in a CLT in the 1980s were NOT low-income, rather middle-income professionals who saw the CLT as a better way to live while also making a statement that we need a new model of land tenure. I believe the CLT is the best tool for transforming our housing system. By taking the land under housing off the private, commodity, speculative market, it helps to change the concept of housing from a commodity to be bought and sold for a profit. Instead it encourages us to see it as a social good that everyone needs and deserves. Involvement in the CLT also gives both renters and homeowners a say in how properties are managed. And it gives them a sense of community with all members of the CLT.

CLTs can work in both hot and cold markets. John Davis, former Chair of the Board of the Institute for Community Economics¹ and now a CLT consultant, says in an interview he did for Democracy Collaborative with Steve Dubb in 2011:

Most housing and community development programs in the United States have been designed as if there is no business cycle. What community land trusts are particularly good at is preventing the loss of homes, homeowners, and public investment at both the top and the bottom of the business cycle. We run counter to the threats and dangers that a fluctuating economy imposes on low- and moderate-income people.

Proud Ground – The Portland Region’s Community Land Trust

Multifamily Woolsey Corner in the New Columbia area of Portland was developed as a Community Land Trust by Proud Ground utilizing Orange Splott as its builder. Photo courtesy of Orange Splott.

Multifamily Woolsey Corner in the New Columbia area of Portland was developed as a Community Land Trust property by Proud Ground utilizing Orange Splot as its builder. Photo courtesy of Orange Splot.

Proud Ground (a merger of Portland Community Land Trust and Clackamas Community Land Trust). It currently focuses on helping a limited subset of moderate-income people get into homeownership. (See Oregonian OpEd: One Way to Turn Moderate Income Portlanders into Homeowners by PG’s Diane Linn and Roger Henshaw). It has partnered with Bank of America to do an important study, Solving the Affordable Homeownership Gap that gives data about an out-of control housing market that is has largely been taken over by an investor class. To me, this study helps to demonstrate how unsustainable the current housing system is and why we need more systemic solutions than simply getting a few more people into such an anxiety-inducing system. Nonetheless, Proud Ground has many ways to get involved in making housing more permanently affordable on its website.

Achieving Housing Affordability for the Long-Term

To achieve real housing affordability for all in the Portland region, we will need to move beyond promoting the Community Land Trust model solely for the moderate-income and solely for homeownership. We will need to take a cue from Champlain Housing Trust and push Proud Ground to serve both rental and owner properties and to gain far more foothold in the Portland area market. It may be a long-term process, but we can take heart from the progress that Champlain Housing Trust has made in Burlington since 1984–nearly 8% of all housing. Various levels of local, regional and state government and private foundations, institutions and individuals owning property will need to partner with Community Land Trusts to change our housing model.

People came from all over the region to fill the Moda Center while 9000 waited outside in the August heat. It will take this kind of enthusiasm to change our housing system! Photo by PlanGreen

Ultimately, changing our housing model won’t just happen in Burlington or in Portland. Although I do believe strongly that we all need to work for change from the bottom up, it will help greatly to have a supportive federal government to promote and achieve this concept nationwide.

Put a Bern on Housing Affordability²

Let Bernie know that you want him to promote the CLT model of housing affordability.

There is already a National Community Land Trust Network (now Grounded Solutions Network) that has been bringing leaders from CLTs across the nation together to discuss issues and best practices in CLTs for many years. They also push for policy change. Intersections 2016 claims to be “the only national conference dedicated to permanently affordable housing and the creation and preservation of just, equitable and inclusive communities across the country and around the globe.” The conference is expected to draw more than 350 professionals to Park City, Utah, September 26-29, 2016.

Grounded Solutions Network is likely our best chance to help us understand and then achieve change that needs to happen at the federal level. Meanwhile, let Bernie know you want him to repeat “the best thing I ever did as Mayor” on a larger scale–for ALL OF US. Let’s work to put a Bern on housing affordability.

Notes:

¹Founded in 1979, the Institute for Community Economics (ICE) pioneered the modern community land trust (CLT) model, Today ICE is a federally certified Community Development Financial Institution (CDFI) offering loans and more to create community land trusts. I worked for ICE in the 1990s.

²Most Portlanders will likely appreciate the take-off in my title on Portlandia’s “Put a bird on it.” A national audience may not.

Many thanks to Chris Donnelly of Champlain Housing Trust for spending nearly an hour on the phone with me answering my questions.

Another article worth reading: How Bernie Sanders Made Burlington Affordable by Jake Blumbart in Slate Jan. 19, 2016.

Camas Council: Consider Trends Before You Decide!

Below is the Draft Testimony of Mary Vogel,CNU-A, principal of PlanGreen, regarding the Lacamas Northshore proposal that Carolyn Foster covered in her blog earlier in August.

I know that you are concerned with the city’s economy—in the long term, not just today. I suspect that you believe that the proposed master plan will help the city’s economy. But I want you to consider some future trends before you make up your minds.

Maureen McAvey, Senior Resident Fellow for the Urban Land Institute (ULI) in Washington, DC was in Portland last year to discuss the ULI publication “What’s Next? Real Estate in the New Economy“. The event notice read: A paradigm shift is unfolding over the course of this decade, driven by an extraordinary convergence of demographic, financial, technological and environmental trends. Taken together, these trends will dramatically change development through 2020. My notes indicate that McAvey said:

More single-family homes are being occupied by renters, changing the feel and politics of suburban communities
Seventy-five percent of households in the Portland area do not have children under 18
47 percent are non-families
Twenty-somethings on tight budgets prefer places to congregate with friends — in parks, bars, restaurant clusters and building common areas — and can tolerate smaller living spaces.

Arthur C. Nelson, one of the nation’s most prescient housing market researchers, says declining homeownership, tighter lending standards, a sell-off of single-family houses by the nation’s fastest growing demographic — senior citizens—and even rising household sizes due to more multigenerational living will have an impact on the market you may be trying to attract with the single family home portion of the plan.

Nelson, professor of city and regional planning at the University of Utah, reports that the US faces a massive oversupply of large-lot single family houses and an undersupply of multifamily units. By 2020, Nelson sees 1.5 to 2 million homes from seniors coming on the market, and between 2020 and 2030, there will be a national net surplus of 4 million homes that they cannot sell. And Nelson believes those are conservative figures for what has been dubbed “The Great Senior Sell-Off.”

The 2009 American Housing Survey (AHS) found that 28 percent of houses are attached, 29 percent are detached on small lots, and 43 percent are detached on large lots. Three studies — by National Association of Realtors, the Robert Charles Lesser & Co. (RCLCo), and Nelson — all found a nearly identical, imbalance in US housing supply and demand. Only 24 to 25 percent of Americans would prefer to live in large-lot single-family houses (see graph “Housing preference versus supply”).

Consequently, there’s an oversupply of approximately 28 million units in what developer, professor and author Christopher Lineberger calls “the drivable suburbs.” Attached housing and small-lot housing, on the other hand, are undersupplied — by about 12 million and 13.5 million units, respectively.

Source: RCLCo Consumer Survey

This imbalance is likely to grow in the years to come, reports Nelson. The generation that is currently moving into the housing market — Millennials — is the most urban-oriented cohort since World War II. Melina Druggall with RCLCo reported at a National Association of Home Builders conference in January 2011 that 81 percent of Gen Y renters want to live in an urban setting. (Wall Street Journal reported that number as 88% at that time and they were quoted in numerous sources such as Better Cities & Towns and Grist).

Ninety percent of the increase in the demand for new housing will be households without children, and 47 percent will be senior citizens (the latter resulting from the rising tide of Baby Boomers who started turning 65 last year). Both of these demographic groups—the Millennials and the Boomers—lean toward multifamily and away from large-lot SFH.

Referring to a recent National Association of Realtors (NAR) finding on percentage of households that prefer to live downtown or in mixed-use city or suburban neighborhoods, Nelson says “Back in ‘70s or ‘80s, people wanted drivable suburbs. Now 70 percent want to walk to discernable destinations, from transit to grocery stores. This wasn’t the case until recently.” Nelson believes the most popular locations will be mixed-use, walkable, transit-friendly neighborhoods.

This Lacamas Northshore master plan is being portrayed as both walkable and mixed-use, but the concept plan I’ve seen so far indicates to me that it is not. The zoning proposal shows a segregation of uses. Business parks, by their very nature, are drive-to! The single-family and the multi-family seem quite segregated from each other and all are segregated from the shopping area.

Rendering courtesy of NBBJ. Amazon Headquarters adjacent downtown Seattle, WA

As far as economic development is concerned, there is increasing evidence that the kind of high tech, light industrial firms that you hope to attract are choosing to locate near where their employees want to live. Consider the choice of Amazon to locate adjacent to downtown Seattle and Adobe Systems to locate in downtown San Jose.

I hope you will take into account the “extraordinary convergence of demographic, financial, technological and environmental trends” that ULI talks about before making your decision on this zoning change and the future development that it presages. I agree that a master plan with changed zoning is what is now most desirable for this area–but NOT the kind of segregation of uses we see in this plan. I urge you to delay approval of a zoning change–until you can get it right!

What’s Next Portland? Real Estate in the New Economy

A version of this blog first appeared in the Portland Business Journal shortly after the ULI What’s Next event on March 7, 2012.

The Oregon Chapter of the Urban Land Institute promoted their breakfast seminar based on ULI’s most recent publication: “What’s Next? Real Estate in the New Economy“: A paradigm shift is unfolding over the course of this decade, driven by an extraordinary convergence of demographic, financial, technological and environmental trends. Taken together, these trends will dramatically change development through 2020

Walking over to the event at the Nines Hotel, I thought about what I hoped to learn. ULI is a national, even international, thought leader in the real estate industry. The advertised intent of the seminar was to examine how our region is postured to remain competitive in the 21st century. I had more short term goals. I wanted to know how ULI and local business leaders foresee the Portland region and the state getting out of the building slump (and consequent unemployment for planners, urban designers and other built environment professionals) we have been in since 2007.

From an examination of name tags, the audience for this event were largely lawyers, a few planners and a few commercial real estate consultants. I didn’t see any developers that I recognized—albeit my recognition field is limited.

After a string of men from ULI’s national office in Washington, DC offering their wisdom over the past two years, it was refreshing to have a woman as keynote speaker. Maureen McAvey started off her talk with the proposition “This is not just another real estate cycle but a fundamental change.” She went on to make her case through a litany of demographic factors she claims are leading to new trends, e.g.:

Gen Y is the largest generation in American history—80 million strong and still growing and
The Boomer generation is living longer–“If I retired at 65 and lived to my mother’s age—98—I’d have more than 35 more years to do what?”

I had been wondering when ULI would jump on the jobs bandwagon in a big way. This was the event! Both in her presentation and in the book, McAvey asked “Where the hell are the jobs?” (resisting her editors plea for more sedate wording). Even lawyers are outsourcing parts of their business as never expected. Social Security in 1945 each worker was supported by 42 workers, in 2009 just 3.

Lumina Foundation found that young people in US do not have enough education to compete. Between now and 2018 Oregon is expected to create 59.000 jobs – but there will not be enough workers with post secondary education to fill those job needs. America is significantly de-funding its education.

McAvey believes there are some bright spots. Business and professional sectors and education of all types as well as health care and medical have grown phenomenally. “America is still wildly entrepreneurial and leads in venture capital” she claims. This is partly due to the creative culture and substantial capital reserves.

The Housing Outlook she presented was similar to what I have heard for the past few years: Apartment living is on the rise. Six million new renter households may be formed between 2008 and 2015, requiring 300,000 new units annually compared with just 100,000 produced in 2010. “But can the industry deliver that amount for the rents at which people looking to rent can afford?” she asked. Meanwhile, more single-family homes are being occupied by renters, changing the feel and politics of suburban communities.

Seventy-five percent of households in Portland do NOT have children under 18; 47% are non-families, she said. Twenty-somethings on tight budgets prefer places to congregate with friends—in parks, bar scenes, restaurant clusters, and building common areas—and can tolerate smaller living spaces, McAvey claims.

The Regional Panelists consisted of Jill Eiland, Corporate Affairs Manager, Intel Corporation; Keith Leavitt, General Manager of Business Development and Properties, Port of Portland; Sandra McDonough, President and CEO, The Portland Alliance, Wim Wiewel, President, Portland State Universtiy

McAvey went on to ask a softball question of most of the panelists—and most responded in predictable ways, e.g., Keith Leavitt feels that we need to continue and expand efforts to export wheat and other grain to the world as well as electronics. “There is a boom in new port developments along lower Columbia River,” he said.”

Sandra McDonough believes that we are hampered by tax policy, physical infrastructure and regulatory framework – a lot of it from the 70’s [referring to Oregon’s land use laws]. “We do not have enough sites for new industrial users,” she maintains.

Wim Wiewel feels we need to move beyond the sad state of education funding from legislatures (not only here, but across the country) and partner more with industry—and with local government. He was excited to announce “We are working with the Mayor and the County on an Urban Renewal Area for Education.”

McAvey’s question for Jill Eiland was a little more challenging. “Is Intel going to follow Amazon’s lead and start building highly urban campuses?”

Although I spaced out during Eiland’s answer, she later told me that “Intel has now invested more than $20 billion in Oregon since 1974. We continue to invest and grow our manufacturing and R&D capacity here. The Hillsboro site remains Intel’s largest and most comprehensive site anywhere in the world.” I interpret that to mean don’t expect Intel to move into downtown Portland, or even downtown Hillsboro, anytime soon.

I heard recently that Metro Council Members were cautioned not to talk about climate change. Governor Kitzhaber and Mayor Adams didn’t mention it in their recent State of the State/State of the City speeches at City Club either. It seems that ULI got that memo too.

I was a bit baffled to attend an event on trends that made no mention—only guarded allusion to—the two big trend topics of the day in my world: climate change or growing income inequality! While ULI played up this event as being about a paradigm shift, their Oregon panel members gave only predictable answers that did not reflect much awareness of that shift–none of that Oregon leadership that we witnessed in the last century. It would seem that we are resting on our laurels rather than embracing the shift. I left with more questions than answers—but eager to read the copy of “What’s Next? Real Estate in the New Economy” that ULI so generously provided to attendees.

Mary Vogel is founder and principal of PlanGreen, consultants on walkable urbanism. She is a Board Member and Advocacy & Alliances Chair of the Congress for the New Urbanism Cascadia Chapter where she helps to shape climate change policy. She is also a member of the progressive business alliance, VOIS.

Reshaping The Housing Market?

Oregon Metro expands its urban growth boundary for more suburban development

This article originally appeared on my Sustainable Industries blog site

The Urban Land Institute (ULI) Oregon[1] recently advertised a workshop to the Oregon development community:

In the wake of the financial crisis and the great recession, sweeping structural changes are reshaping the housing market. Generation Y and the retiring Baby Boomers will be the catalysts for the next wave of housing development. The workshop promoters asked “Are you ready to meet this demand?”

Speakers from the development community all pointed to the market demand being urban and transit-oriented; and, for the time being, rental rather than homeownership. Some quotes:

They have less money than any generation, but are well-educated, well connected and very urban. The cities that do it best for young creatives will thrive. John McIlwain, ULI

Gen Y has no interest in the suburbs! They value being close to friends and don’t want to commute. You can bet on transit-related locations. Clyde Holland, Holland Partners

Gen Y wants smaller, greener housing. They want to live in the city and take responsibility for their carbon footprint. Jim Winkler, Winkler Development

A few months earlier, ULI’s Young Leaders Group had attested to this same wave in its own sessions. And it focused all its conference field trips close to the urban core along transit corridors of Portland, Oregon. At least one of that conference’s participants brought his suburban developer dad along as well—perhaps to learn new skills.

In April 2011, ULI Oregon sponsored two of its national leaders at talks held at Metro on such impressive topics as: Carbon, Development & Growth: Navigating New Frameworks for Real Estate, Planning, Transportation, and the Economy and Finding Certainty in Uncertain Times. Ed McMahon and Michael Horst both indicated that the pendulum is swinging re: how we invest housing dollars. The trend is towards walkable, mixed use neighborhoods with transit—and towards green building.

Although McMahon and Horst have strong relationships with the US Green Building Council (their sons play important leadership roles there), McMahon pointed to an EPA study that transit-oriented development may outperform green building in reducing greenhouse gases.[2] ULI’s Growing Cooler was a mega analysis of the impact of urban form on driving. “We cannot address greenhouse gases without addressing vehicle miles traveled,” McMahon stated emphatically.

A September 21, 2011 story in the Oregonian reported that Renaissance Homes’ president, Randy Sebastian, a builder long known for its sprawling subdivisions on the fringes of the Portland market, thinks that the days of building on the fringes is coming to an end. He has taken to doing urban infill instead.

During 2010, Portland’s metropolitan planning organization, Metro, had also pulled together an impressive list of professionals from the development community to serve as its Expert Advisory Group on Centers and Corridors. Not only did that group tell Metro about the same trends that ULI events have showcased, it also made recommendations that Metro should take a larger long-term role in facilitating the implementation of compact urban development, by playing an enhanced role in education, technical assistance, gap financing, infrastructure financing, and legislative advocacy. These respected local experts in the fields of institutional real estate, financing, development and planning also volunteered their time to carry their message out to communities in the region and work with them to make changes.

Despite these strong messages from the real estate industry, the Metro Council, on October 20, 2011, decided to add another 1,985 acres to the Portland region’s urban growth boundary in areas of Hillsboro, Beaverton and Tigard. About 330 of those acres will be brought in as industrial land. The other 1600 plus acres is to accommodate projections for needed housing. State law requires Metro to maintain a 20-year perpetual land supply.

Bob Stacey, candidate for Metro Council, thinks that the Portland area had more than enough land within its UGB to meet its needs. He argues that Metro planners think that developers won’t choose to build enough housing on the land already in the boundary because its harder. “The planners fear that if we don’t add land for housing to the UGB, developers will build outside Metro. . .”

Stacey maintains that residents within the existing UGB will pay by seeing needed improvements in their neighborhoods deferred or cancelled while highways, schools and transit are expanded to the new areas.

While none of the three ULI national experts who have visited Portland in 2011 had any answers about how, in the current economy, to actually finance and build development where it is most needed, Metro’s own Expert Advisory Group was more explicit. Their report “Achieving Sustainable, Compact Development in the Portland Metropolitan Area: New Tools and Approaches for Developing Centers and Corridors” identifies one of the greatest obstacles in centers and corridors development as the current credit market. Amongst the recommendations of the report are:

Develop a new approach to gap financing with creative lending tools and mechanisms for public-private collaboration.
Create a mechanism for metropolitan infrastructure investments that supports compact mixed-use development.

Even with Metro’s own role in convening the Expert Advisory Group, it is not apparent that anyone at Metro is paying attention to the advice of these experts. Instead, while not bowing to ALL of the pressures that suburban communities were putting upon them,[3] some believe the Metro Council is following the old paradigm for growth–expansion, rather than embracing the sweeping structural changes savvy developers are predicting.

Next it will be interesting to see where Metro’s Climate Smart Communities scenario planning takes it! Can the Portland region reduce greenhouse gases 75% below 1990 levels by 2050 while still following 20^th Century development strategies?

[1] ULI is the preeminent think tank for the real estate industry. ULI Oregon is the “District Council” or chapter for Oregon.

[2] That recognition did not stop them from promoting green building, however: “Stay on top of green or eat everyone’s dust. There will be differentiation; over the long run—adapt or get crushed.”

[3] Wilsonville, Forest Grove and Cornelius had proposals for expansion that were not approved.

Residential Infill Project Testimony to Portland Planning and Sustainability Commission

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