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Development projects that are working under the Inclusionary Housing requirements are beginning to enter the review process in permit applications and early assistance requests, according to the BPS

The good thing about Inclusionary Housing is that in the rush to submit projects before it took effect, there are currently four years' worth of new residential projects in Portland's development permit pipeline, according to findings from the BPS.

The Bureau of Planning and Sustainability released a memo analyzing trends in development and permit activity over the past six months since Inclusionary Housing policy went into effect. The analysis shows projects that were permitted ahead of Inclusionary Housing are consistent with recent development rates.PAMPLIN MEDIA GROUP: FILE PHOTO - New residential developments with more than 20 units are required to include an affordable mix, with incentives, under the Inclusionary Housing policy that went into effect six months ago.

The Inclusionary Housing policy affects projects submitted for permit after February 1 earlier this year, and requires residential projects with more than 20 units to set a percentage of residences at affordable rates, with incentives. Critics said developers would quit building housing altogether, or use workarounds like going to build in the suburbs or building 19-unit projects, and that overall Inclusionary Housing would ultimately reduce the number of units being brought onto the market.

There were no effects found on projects submitted for permit ahead of the Inclusionary Housing policy taking effect, and there were no effects found on the overall rate of residential development, yet.

Development projects that are working under the Inclusionary Housing requirements are beginning to enter the review process in permit applications and early assistance requests, according to the BPS.

The BPS intends to continue monitoring the development pipeline and release progress reports every six months, the next being February 1, 2018.

The BPS's conclusion thus far is that it's too early to determine the impact of Inclusionary Housing on the overall rate of residential development. The BPS isn't very worried about a slowdown in permits because of the four-year supply of projects already in the pipeline.

"If the combined pre- and post-IH permits that are moving forward falls below 5,000 units per year, it could be a sign that the IH program is impacting housing production," the memo reads. "However, development activity is also responsive to broader market fundamentals and economic cycles."

By the numbers

Since 2013-2017 there have been 3,000 to 6,000 new residential units built per year in Portland.

"At this rate, 19,000 units in pre-Inclusionary Housing vested developments represents about four years of development activity," reads the memo.

The new sites' locations are spaced out around the city in a normal fashion consistent with trends: 40 percent of vested units are located in the Central City and 60 percent in mixed-use and multi-dwelling corridors and neighborhoods.

According to building permit applications submitted between December 2016 and January 2017, an additional 1,574 units in 28 buildings with 20 or more units were submitted before Inclusionary Housing began to be required in February.

The BDS staff estimates that approximately 5,000 new residential units were submitted to land use review over the same time period. As of February 1, 2017, the BDS estimates about 19,000 new residential units were in the pipeline ahead of Inclusionary Housing taking effect.

Out of 19,000 units vested before Inclusionary Housing, 5,000 units across 57 projects have already been issued building permits to move toward construction. There are still 14,000 units in the process queue.

The BPS has not seen a significant increase in the volume of 15-19 unit buildings, which had been a workaround rumored about developers. Additionally, new permit applications for 15-19 units buildings are on smaller lots between 5,000 and 10,000 square feet and are all within close range of maximum residential densities allowed.

Post-Inclusionary Housing

Between February 1 and August 1 this year, permits were filed for 11 projects subject to IH requirements. Six were privately financed and five were affordable housing projects receiving some level of assistance from the Portland Housing Bureau. (There were no new land use review applications filed for projects with buildings consisting of 20 or more units during this time period.)

The six private projects include 406 market-rate residential and 60 affordable units, which break down into 23 units offered at 80 percent of the median family income and 37 units at 60 percent.

Four private projects used the parking exemption for being near transit, three used the floor-to-area ratio (FAR) bonus, three are located in close-in commercial corridors and three are in the inner neigborhoods of Sellwood, Woodstock and Mt. Tabor.

The five projects that included Portland Housing Bureau financing were 100 percent affordable housing projects and account for 424 units at various income levels.

By Jules Rogers
Reporter, The Business Tribune
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