Wednesday, May 27, 2015

Gentrification and its Discontents in Portland

Did you see the controversy generated by Tyler Hurt’s obnoxious piece on the new Burnside26 development in Portland?

Upon reading a recent, somewhat inflammatory, piece published Hurst as a defense of his decision to move into the new Burnside26 development and much of the angry community response that it generated, there seems to be a lot of issues around housing, displacement and development that should be unpacked around gentrification.

To begin, I do not oppose the construction of Burnside26 or think poorly of Tyler for choosing to live there, though his choice in how he defended this let a great deal to be desired. That said, the city has done a poor job managing rapidly gentrifying neighborhoods. This has been particularly galling in traditionally black neighborhoods like Mississippi, Albina and Alberta that have seen the displacement of thousands of black families to Gresham and elsewhere. The city should be working hand-in-hand with Community Development Banks/Organizations in order to retain and provide meaningful housing options and provide some combination of micro loans and workforce/vocational trainings to help secure livable economic futures for many of the individuals who were living in those areas. This would help make sure that people could stay in their communities and become local business owners and the like as those neighborhoods change. Instead, the City set-up a Tax Increment Finance (TIF) district and let developers call the shots. This is a huge problem and people should be pushing the City to do a better (or any) job of mitigating gentrification outcomes. The City tries from a policy perspective: I was on a Policy Expert Group around "Infrastructure Equity" a few years back and the group came up with some good recommendations that the City is trying to implement as part of the ongoing (though nearly finished) Comp Plan Update. The push to allow inclusionary zoning again at a state level, which was banned for decades in Oregon, may also prove to be beneficial.

One of the more interesting critiques leveraged against this piece came from Chloe Eudaly (who owns and operates the venerable Portland business Reading Frenzy). Eudaly made some remarks that focus on the idea that a lot of this development is bad because they lose track of 'historic preservation' and 'proportionality of scale' To me this is problematic in that a lot of that is coded "I don't like in-fill development". However, in-fill is really the only way Portland is going to be able to meet future affordable housing needs if it continues to grow at the rate that it does. Portland, despite doing some very smart things with the urban growth boundary and comprehensive land-use management, is an extremely low-density city. Much of the inner East Side is zoned at 4-8 units per acre. This makes it, basically a suburb from a planning perspective. The ability of the City to meet future housing needs is going to necessitate building large buildings that those already in the area dismiss out of hand as eyesores, or worse. Neighborhoods constantly change and increasing housing stock through in-fill development is, to my mind, Portland’s best chance of staying relatively affordable. Under the status quo, Portland's rental vacancy rate is around 3%, which means rents are likely to continue to rise and displacements are extremely likely to continue. The solution is to increase housing stock and densities in areas that are desirable to live. Saying that all or most of the new development is bad because it "doesn't look to scale" seem to imply that the scale isn't ever going to change. We need to consider the scale of building in many communities in order to boost housing stock.

By contrast, where I currently live in Washington, DC, rents are completely crazy. A lot of high rents in DC is a product of a regulatory height limit on development that effectively limits urban densities. That said, DC is already significantly denser by several orders of magnitude than much of Portland, despite having only 40,000 people more living in the District itself. The rapid on-boarding of a number of new developments (some affordable, some market-rate) is the only thing that has really arrested and even slightly decreased rents over the last year.

Back to Portland, the areas that are predominantly residential with the highest urban densities in town is, curiously, NW and the Pearl. This does not necessarily make either of these a model for future development, but it is pretty telling that people are so quick to cry foul the minute new development goes in. I think there is a strong tendency for people to distrust neighborhood change and as a result to adopt a reactionary positon whereby they want neighborhoods to stay the same way forever (- something that in the history of cities has yet to happen - often at the expense of interventions that may be helpful. Burnside26 clearly is not the model that every development should follow, but having it accompanied by other similarly sized buildings that offer quality affordable housing, either through market rate affordable or subsidy (via LIHTC or some other federal or local program) seems entirely reasonable.

I also find it a bit curious that the controversy surrounds displacements from East Burnside (and the inner-East side), which has always been pretty Lilly-White with very little said these days about gentrification outcomes affecting more diverse areas like Lents or, historically, the Mississippi/ Albina area. This is not to say that lower-income white people don't also deserve good access to transit and nice neighborhoods, but it is curious that people always bring up issues with fairness to minorities around gentrification yet the loudest outcry always seems to be in displacement of white residents from historically white areas. The 28th Ave corridor has always been affluent (the main anchor businesses are high end restaurant/retail and a Whole Foods, with Hollman's serving as the outlier), and so resistance to this area spreading down a couple of blocks seems to be divorced from a lot of the more pressing issues. Portland-proper has grown dramatically whiter demographically between 2000 and 2014 at time where the metro area as a whole has grown significantly more diverse. Where activist pressures should be pushed is in ensuring that historic minority communities continue to receive ongoing housing support, quality urban services, and that new development of affordable units happens. A lot more needs to be done to beyond that to directly engage people and make sure that they are part of the planning/development process and to insure that their needs are met.

A lot of people will suggest that we should just let developers have freer reign to build new housing stock until supply exceeds demand and rents start to decrease. There a few issues with this argument that I will address. Housing is one of those things where markets don't automatically equilibrate given enough time, particularly as in a lot of cities, what developers built is often initially unaffordable and because a lot of new construction gets bought up by wealthy absentee owners who almost never set foot in the units. In, for example, a large number of new New York City and San Francisco developments, there is are extremely high absentee rates (often up to 70-80%). This is also true in New York, Vancouver, BC and numerous other “hot” housing markets, including, increasingly Portland.

So even if we could easily control the number of absentee owners and renters driving up the costs of housing, a market-based strategy of exclusively new development is still likely to cause a large numbers of displacements. New construction is expensive and developers want to make their money back and maximize profits. With a lot of neighborhood dynamics already being the product of downright racist historic housing restrictions, including redlining and restrictive covenants, fragile low-income and minority communities frequently bare the brunt of displacements. For the good of these individuals, low-income people shouldn't have to be forced out every time an area becomes hot and a market heats up. With policy interventions to build more affordable housing, impose limits on how often buildings can be flipped, and interventions by Community Development Corporations, people don't have to be displaced and can enjoy the benefits of improving neighborhoods while retaining their communities. There is, after all, case to be made that people should have an absolute right to housing. Unlike many other commodities that are subject to markets, housing is something that people inherently need. Real wages haven’t risen against inflation since the late 70s, while housing costs have skyrocketed across much of the country. The situation is increasingly one by which median housing costs are becoming absolutely unaffordable for a good number of, not just low-income people, but formerly Middle-class working people. In San Francisco, which seems to be the end product of where a lot of these trends lead, you need to be making around $140,000 a year to avoid spending significantly more than the HUD guidelines of 30% of income on rent and utilities. Cost burden is becoming increasingly the norm in Portland and it is only a matter of time before it starts affecting everyone, reasonably affluent or otherwise.

Beyond this, cities need their artists and musicians and teachers and a whole lot of other creative types of people that are never going to be able to pull in substantial salaries, to be vibrant places that we might all want to live. When housing rates are painfully unaffordable for these people, then your city becomes less interesting, less dynamic and less livable. Being a good neighbor largely means fostering a sense of community. Communities usually have people with different backgrounds, skills and gifts that contribute in different ways. Obviously, as I mentioned above, cities cannot stay the same forever, they always change, but local governments can have a lot of say in how those places change.

There is also a thesaurus of both Federal and local housing programs and initiatives that directly deal with rising property values. I suspect, when we start seeing direct funding for the National Housing Trust Fund (NHTF) which is scheduled to start in 2016, we will start seeing a lot more permanent assistive and market rate affordable units. Right now, the Low Income Housing Tax Credit (LIHTC) is responsible for roughly 90% of existing affordable housing stock in this country. LIHTC can be problematic because it means relatively generous handouts to developers to build some affordable units, but with 15-year expirations on affordability (the units then revert to market rate, unless they are remodeled/redeveloped, which can further extend the LIHTC). NHTF, on the other hand would build permanent, low-cost housing. Additionally, there are a huge number of permanent housing assistance programs, many of which are simply underfunded federally, or lack local push by municipalities to see implemented. There are also strategies that tie housing, economic development and community development together, including a number of Community Development Banks (CDBs) and Community Development Corporations (CDCs) have done a huge amount to mitigate gentrification outcomes.

In his development of the Ramona on NW 14th and Quimby, Ed McNamara, who owns and runs Turtle Island Development has done some great things with permanent workforce housing for lower-income working families in the Pearl. He has also managed to do so without subsidy. This project was designed and developed by McNamara as something of a labor of love and has been hugely successful. Housing advocates tend to overlook the development, largely because it is located in the Pearl, but it is an attractive new building that is energy and water efficient, includes quality facilities for children, built in internet and is designed to remain permanently affordable. It is located near transit and caters to working minority families. This is precisely the type of development that Portland needs more of.

The issues around housing and displacement are complicated. Like many people who grew up in Portland, I get frustrated seeing institutions and communities I care about get pushed out of business or forced to move. I think Portlanders need to put a lot more pressure on the City to not give developers carte blanche and to insist on community development along with redevelopment. Now that the state ban on inclusionary zoning has been lifted, it is time for people to get serious with the city and start demanding that affordable units be tied to new development. I also think it is incumbent on people to find a way to reframe the way we talk about neighborhood change. To the uninitiated, the conversation can often sound like, "We hate all changes and outsiders aren’t welcome here. Hands off my neighborhood!" As a result, a lot of valid concerns are swept under the rug. Instead, Portlanders fearing displacement need to be saying something more along the lines of: "We understand change is inevitable, we want to be part of that change in a way that mutually reinforces the existing community as well as allowing the city to grow."

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