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Portland, Oregon Who Pays the Price for Regional Planning? How to Link Growth Management and Affordable Housing

March 6, 1998 by Administrator in March/April 1998

by Tasha Harmon

The Portland Metro region is hailed all over as the mecca of growth management – a unique regional planning tool that limits suburban sprawl and central city disinvestment.

But is growth management good for low-income people? Can growth management incorporate strategies to increase equity? Our experience as advocates of affordable housing in Portland suggests that it can, but not without concerted action by activists.

Arguments for Growth Management

Recent work by David Rusk, Myron Orfield, Manuel Pastor, John Powell and others demonstrates that suburban sprawl and urban disinvestment increases the isolation and challenges faced by low income people and reduces the overall quality of the regional environment. Others argue for growth management as a less costly alternative to sprawl. They say that sprawl increases public expenditures for new infrastructure while existing infrastructure in central cities and older suburbs is allowed to disintegrate.

However, there are also costs to growth management. When you make the choice (in our economic system) to limit the available land supply, require more parks, protect environmentally sensitive lands, and build mass transit, someone’s got to pay the price. Poor people usually carry a disproportionate burden and rich people benefit most from growth management – as they would from unregulated growth. As with many neighborhood revitalization efforts, the success of growth management is too often measured by asking whether “the community” or “the neighborhood” improves, without asking whether that improvement comes at the expense of low income residents.

I side with the folks who believe that sprawl is ultimately more costly for the poor (and for all of us) than growth management (done right). Many costs are born by households because of the kind of region they live in – transportation costs, the costs of services or amenities in regions where they are very inequitably distributed, the costs of not being able to find work because the regional economy is doing poorly, or because there are no entry level jobs in some communities and no affordable housing in others. Well thought out growth management strategies are more likely to help us produce affordable communities where people of different incomes can live.

I would rather see us deal proactively with the problems of growth management than allow disinvestment and sprawl. The issue is how we redistribute the burdens and benefits of growth management more equitably and how we can use growth management strategies to reduce inequities in the region.

What Metro Has Done

The Portland region has taken a unique approach to growth management. In 1979, voters in the region created Metro, the only directly elected regional government in the U.S. Its charter gives it broad powers to do regional planning and regulate land use throughout the three-county region, and to address what it identifies as “issues of regional concern.” Metro started the 2040 planning process which has, over the past nine years, engaged broad public debate and input as it developed a vision for the region’s future. The results are the 2040 Growth Concept (a map) and the Regional Framework Plan, which defines the shape that growth will take in the region for the next 45 years. This Plan is binding on local jurisdictions through Functional Plans that cover various topics. It calls for a compact urban form, with higher density development focused along transit corridors and in town and regional centers, a more diverse housing stock in all communities, a diversified transportation system, and protection of green spaces and natural resources within the urban growth boundary. Lands outside the urban growth boundary are to be preserved from urban development.

The 2040 strategies and the Urban Growth Boundary appear to be succeeding in preventing the worst of the “donut” effect we see in many urban areas, where poverty is concentrated in the central city and older suburbs and jobs and wealth flee to the outer suburbs. Still, there are strong counter-trends. We are seeing gentrification in many “undervalued” neighborhoods in Portland and some suburbs. There is a great deal of redevelopment of old industrial areas in Portland into new residential neighborhoods, largely for middle and upper income singles. Though many of the jobs in other Portland neighborhoods and inner suburbs have left, and much of the job growth in the region is taking place in the wealthier suburbs, downtown Portland has shown strong job growth in the past few years. Housing densities in the region are increasing and there are more housing options (i.e. smaller homes on smaller lots, townhouses, apartments, etc.) for both rental and homeownership. But these new options are not “affordable” by advocates’ standards, except in some cases where they are directly subsidized.

All of this appears to leave low-income people less geographically isolated than they are in many other urban regions, but far less integrated than we would like them to be. Growth management strategies already adopted have had some positive effects on equity compared to the strategies (or lack thereof) in other regions. But the burden of growth still falls disproportionately on low-income people.

Activists Bring Equity to Growth Management in Portland

Housing affordability and the displacement of low-income people from communities undergoing “revitalization” and reinvestment were not on Metro’s radar screen in 1994 when the Coalition for a Livable Future was founded. An association of 40 non-governmental organizations, the Coalition is determined to make the question of the burdens and benefits of growth, and growth management, major issues throughout the region. It came together to propose amendments to the 2040 growth concept and in the past three years, equity issues have become much more central to discussions at Metro, and among elected officials and others concerned with growth management in the local jurisdictions.

The Coalition has focused the initial stages of our fight on two issues: housing affordability and reinvestment in existing “distressed” communities. We recognize that there need to be larger regional and local economic development strategies, policies to address wages and income polarization, and tax-base sharing and other strategies to address fiscal inequities between local jurisdictions in the region. We have done preliminary work on these issues, but have neither the expertise nor clout to be able to use land use planning (and therefore Metro) to move forward in these arenas.

The Coalition was successful in its attempts to get Metro to include in its objectives stronger language on the importance of focusing public investment in existing communities with excess capacity to absorb more housing and jobs. This philosophy fits well with Metro’s larger vision of a compact urban form with vital “regional centers” spread throughout the region. Metro has also taken some land use actions to move towards this goal. They have kept the urban growth boundary tight, and required upzoning and mixed-use zoning in some areas. Metro also designated some of the former vital commercial strips in now distressed communities as “main streets”, signaling to local jurisdictions that these areas should be primed for reinvestment. This strategy seems to be succeeding in many sections of Portland by directing new public and private investment to neighborhoods that for over a decade had seen no redevelopment except by non-profits.

Affordable housing became a central organizing issue in the Coalition’s platform because the need was so compelling and because it was so clearly an issue that had to be addressed on the regional level. We have found it easy to get people to understand that we live in a regional economy. Many people live in one community, work in another, and shop in a third. But the property tax system for funding local government infrastructure and services makes some kinds of development more welcome than others. A few jurisdictions have the lion’s share of the new job growth and very little of the housing needed by the low- and moderate- income workforce that keep those businesses profitable. This means that the services and infrastructure (schools, police and fire protection, parks, etc.) provided to those workers and their families are paid for by jurisdictions that are not benefiting directly from the property taxes paid by the businesses. In addition to resulting in the perpetuation and growth of fiscal inequities between regions (as is well described in the work of Myron Orfield), this dynamic also leads to long commutes, increased traffic congestion and air pollution, and high transportation costs. Time and money are lost that might otherwise be invested in housing, education, family and community activities.

Growth Management and Housing Affordability

The real estate industry has been quick to blame growth management for raising housing prices and making housing unaffordable. But consider a few facts:

  • Housing prices in the Portland region have nearly doubled in the last 10 years. Many “undervalued” neighborhoods have seen housing prices (and rents) double in the past two to three years. Meanwhile, real wages for low- and moderate-income people have stayed essentially flat.
  • The Portland region was rated the second least affordable housing market in the nation by the National Homebuilders Association in 1997. While the Portland area has nothing that looks like a “ghetto” to most people, there is a severe shelter-poverty problem in the region.

The Homebuilders Association’s lobbyists argue that the Urban Growth Boundary (UGB), over-regulation and high system development charges (SDCs) are responsible for the housing price increases. They cite rapidly increasing raw land prices since 1990 and argue that the way to insure sufficient affordable housing is to add well over 10,000 acres to the UGB (the urbanizable land), decrease regulation and SDCs, and let “the market” take care of the problem. There are several deep flaws with this analysis. First, there is no evidence that bringing more land inside the UGB would actually bring home prices down significantly. Data provided by Metro shows clearly that an almost identical rapid rise in home prices occurred from 1973 to 1979, the last rapid growth boom in the region, when there was still so much undeveloped land inside the UGB that even the Homebuilders admit it couldn’t have been influencing prices. Secondly, the Homebuilders’ strategies would not address the many factors beyond land prices in the housing cost equation. For example, average house size in the region has increased by 20% in the last 15 years.

The Coalition believes that housing prices are set at “what the market will bear” in this consumer society where many middle and upper class people willingly pay exorbitant prices for more housing than they need. Most low-income people have no choice in the matter. There is no reason to believe that lowering land costs for the homebuilders will achieve any significant decrease in housing prices while the boom goes on.

Many homebuilders also note that there is deep resistance in many communities to housing built on smaller lots, townhouses, duplexes, accessory dwelling units and, of course, multi-family housing. Banks have also been reticent to lend on projects that differ much from the standard suburban subdivisions (despite strong demand for Portland’s fine and much loved stock of old, neighborhood-scale multi-family housing built along the streetcar lines and just north of downtown in the early 1900s).

Affordable housing advocates and the Homebuilders agree that barriers to affordable housing exist. Metro is currently addressing these barriers by mandating major zoning changes. However, it remains to be seen whether the public will go for it. While there is a clearly stated popular preference for a tight UGB, many people have serious qualms about the increased density required to accomplish it. Whether they will allow real changes on the ground in their own communities is an open question.

The Coalition believes the rapid increase in demand, very weak requirements for housing diversity, and greed have created higher land and home prices and higher rents. Our solution is to get Metro and local governments to make proactive housing affordability strategies a central part of the growth management strategies for the region. To this end, we have supported the kinds of zoning changes Metro is mandating, pushed (with some success) for more local and state funding for subsidized housing, and worked to strengthen the nonprofit housing sector. We have proposed adoption of a wide variety of regulatory tools on the regional level, including:

  • A Fair Share Approach. Each jurisdiction in the region should provide a “fair share” of the affordable housing needed in the region.
  • Inclusionary Zoning. A percentage of the housing units in any project above a given size should be affordable to people of moderate incomes without public subsidy.
  • Replacement Ordinance. This would require the replacement of affordable rental housing lost to demolition or conversion. (The Community Development Network, the Community Alliance of Tenants and others are also proposing a more comprehensive replacement ordinance for adoption by the City of Portland).
  • Condo Conversion Ordinance. This would regulate conversion of affordable rental housing to ownership, providing protection for tenants and the rapidly shrinking affordable rental stock.
  • Permanent Affordability in Exchange for Public Subsidy.
  • Government Investment Tax. This measure would capture a significant percentage of the increase in land values that occurs due to government regulation (i.e. bringing new parcels inside the UGB) or investment.
  • A Speculation Tax to penalize rapid resale of properties for high profits.

Regional Affordable Housing Successes

This past December Metro formally recognized affordable housing as “an issue of regional concern.” They incorporated affordable housing in Metro’s Regional Framework Plan (RFP). They mandated the use of a “fair share” approach to affordable housing in the region, based in part on an examination of the jobs-housing balance. And they committed themselves to setting “fair share” standards for housing in each jurisdiction in the region. The RFP mandates a replacement ordinance, and several preliminary steps that could support inclusionary zoning. The Metro Code regulating the expansion of the UGB also includes strong language about housing diversity. It includes a requirement that some percentage of the housing developed on the added lands be affordable to people at or below 80% of median family income without public subsidy (a working definition of inclusionary zoning). Metro also made a commitment to staff an Affordable Housing Technical Advisory Group, which will include planners, advocates, homebuilders, elected officials, and other interested parties, to refine the policies in the RFP and work on other housing affordability strategies. Metro is likely to commit funds to hire a housing planner in July of 1998. We are moving forward.

Despite this progress, growth management can only do so much to address equity issues. There are many counter-trends, including:

  • Oregon passed two regressive property-tax limitation measures in the past four years. These severely restrict local government funding for important infrastructure and services. In general, anti-tax attitudes appear to be getting stronger in Oregon despite the fact that people here get more from local governments for far fewer dollars than in many other areas.
  • Major fiscal inequities still exist between local jurisdictions in the region. The property tax system is so complex that any kind of tax-base sharing will be difficult without a total overhaul of the tax system.
  • The apparently progressive state policy of shifting school funding from local property taxes to the state and “equalizing” funding across the state (combined with limits on property taxes) has resulted in a significant cut in funds for Portland’s public schools, which educate 90% of school age kids in Portland. Portland had been one of the few central cities in the nation that did a better job of funding its schools than most of its suburban jurisdictions.
  • A recent ballot measure on mandatory sentencing is forcing the state spend massively on new prisons. In one community in the region, a prison is being sited on what was a major affordable housing site. At the moment a major backlash is building among some local jurisdictions against Metro’s stance on affordable housing. Whatever the outcome, we are convinced that growth management can be a tool for efforts to create equity in our region. Growth management can play a positive role in addressing the needs of low- and moderate-income people.

As the struggle progresses, we need to be asking ourselves what it would take to create a truly progressive growth management program. Would costs somehow be borne in proportion to one’s ability to pay? How would this be designed? What would a fundamentally progressive settlement pattern and urban form look like? And, how do we get there from here?


Tasha Harmon cdn(at)teleport(dot)com is a planner, a founding member (now serving on the Steering Committee) of the Coalition for a Livable Future, and Executive Director of the Community Development Network, an association of CDCs in Portland. She would like to thank Ethan Seltzer for his suggestions for this article.

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