20 Years Of Pearl District Condos; Should We be Worried About Affordability?

by | Nov 5, 2014 | Market Trends | 0 comments

20 Years Of Pearl District Condos; Should We be Worried About Affordability?

As early as 1988, Portland planning officials saw the potential for a vast redevelopment in the neighborhoods north of downtown.  At the time they called the area the “River District.”

By 1994, the City Council adopted a housing plan to ensure that some 5,500 new condos, apartments and townhomes.  The development would sprout atop old railroad tracks and in place of aging warehouses.

City planners had a vision for the area and ambitiously set out to ensure that 35 percent of all the new units would be affordable to residents of modest incomes.  This is a striking contrast to what has become one of the wealthiest neighborhoods in Portland, now known as the Pearl District.

In a thoughtful graphic – created by The Oregonian’s Mark Friesen – details how Portland fared, year by year, project by project.  Graphic

Holding the City Planners Accountable

As the Oregonian began to ask the City of Portland questions about the original vision it became apparent that the planners had not kept tabs on the affordable housing ratios for some 7 years.  And what the investigation uncovered is that we are 800 units behind the original vision.

In an attempt to hold city policies accountable, the Oregonian’s investigation was conducted using third parties to aid in all of the collection of data.  Details of how they conducted the study can be found in this article by Brad Schmidt entitled “Portland’s shortfall of affordable housing in the Pearl and Old Town: How we crunched the numbers.”  Brad is apart of the city hall watch team at the Oregonian.

At present date the Pearl District has a rate of 26 percent of homes that pass the affordability test.  A test that aims to make housing available to residents that make half of the median income.  It seems that the debate over wether we should care about the negligence by the city to hold developers accountable for the affordability policies stems from the amount of tax payer dollars that were spent to supplement the growth and development of the district.

Is There Logical Reasoning For Missing The Mark?

I advocate that the bigger question is how and why did we get to this point?  What are some of the variables that got us to this position of deficiency and how do we compare to other major cities with warehouse districts.

Many cities look to denser development as a way to advocate for affordability.  The theory is that if you build higher, it leaves more room for the lower floors to stay affordable.  However in cities like San Francisco and Washington, D.C., height regulations which forbid buildings from surpassing certain thresholds in height make it tougher to create more affordable housing through denser development.

Would Pearl District condo owners want denser development to keep to the affordability ratios?  What makes the Pearl District so charming is the lack of density which allows for a diversity of open city views for most of the buildings.  Buildings are spread out within the neighborhood and heights are staggered nicely as to not have buildings feel like they are on top of each other.

Maybe The Hipsters Ruined The Pearl District’s Affordability

Many studies show that one of the crucial steps to gentrification is the presence or creation of artist/creative communities.  In Phillip Clay’s four-step model of gentrification, a form of economic succession occurs as first starving artists, “marginals,” and “urban pioneers” move into low-cost communities.

The first generation of artists help make the neighborhood attractive for more well-off students and creative types that have parents who can afford to flip the bill.  Those people then attract more established professionals whose quality-of-life create demands for renovated buildings and higher-end retail and dining.   Developers understand this demand and capitalize on it which drives up housing prices across the board.

Pearl District Condos Not That Different

In my brief investigation I found that affordable housing mandates, which usually require a developer to set aside a small percentage of new units for affordable housing, sound good in theory, but rarely work.  Developers simply pass on the cost of the affordable units to other residents, driving up the cost of market-rate units.

So as buildings turn over, the affordable units rise dramatically in value to catch up to the rest of the market.  This was the trajectory for places such as Soho (NYC), Midtown (ATL), Montrose (HOU), Wicker Park (CHI), and Columbia Heights, Adams Morgan and Logan Circle (DC).


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