If it's not "financially feasible," stay in California
It's a little unseemly during the most mortifying two-week period in recent American history for me to jump back onto the City of Portland's property tax shenanigans. But before the saga of the denial of the tax abatement for the Alexan luxury tower in the SoWhat district becomes a dim memory, I want to continue my followup on the intriguing, if relatively unimportant, questions that it has raised.
What is Portland trying to achieve with all the property tax abatements that it is handing out to developers of condo towers and apartment buildings? In the case of the Alexan, the City Council said the denial was all about the lack of low-income housing for families. The city had conditioned the abatement on a satisfactory level of low-income housing in the building. Although 48 studio apartments at upwards of $850 a month, before parking fees, technically met the guidelines established by the Portland Development Commission and the 200-employee city Planning Bureau, the city commissioners said it wasn't good enough. The 3-to-2 vote was swung when Commissioner Dan Saltzman, who's got to run for re-election next year on a skinny portfolio, came on board in opposition.
But a subsequent exchange on the red hot blog of Commissioner Sam Adams (who along with Fireman Randy joined Saltzman in voting against the abatement) reveals that low-income housing hasn't been what the Portland tax giveaway program was really designed to promote. Mostly the city has been looking only for "density" -- the mantra of the "smart growth"-Metro-wreck-Portland-to-save-Newberg crowd. As long as it's "dense," new housing can qualify for a 10-year property tax holiday in Portland, even if everyone who can afford to live in the development is rich as Croesus.
Take the Merrick Apartments (a.k.a "Burgerville Manor") over on MLK and Multnomah. A ridiculous project, still with lots of vacancies, at least from an exterior inspection. It's got all sorts of problems. The much-touted ground floor retail space went over like a lead balloon. As a salvage move, a big chunk of it has been leased to a realty firm, John L. Scott, for its offices. Retail entrances on two sides of the building are locked, and so they'll stay. So much for pedestrian-friendly. We got another Subway sandwich joint, though. Whoopee. (Unlike the one in our troubled downtown, this one even has a restroom.)
The location is rotten for families, and at least at the outset, the developers were hoping to charge high enough rents that no one would have called the place "affordable housing." I saw a guy outside the other weekend washing his Porsche out of a bucket in a metered parking space. And yet it got a 10-year abatement of taxes. Why? Well, because... it's... "dense."
John Warner, PDC housing guru, explained it this way:
Throughout the 30-year history of the tax abatement, the program's purpose has not been to provide low-income housing. The purpose has been to stimulate housing development in the central city and urban renewal areas by helping to make projects financially feasible. The program has been successful in this regard, producing over 5,000 apartment units. The Alexan project is no exception to this history.I hate to see Portland become an apartment tower jungle, especially since all the jobs are fleeing to the suburbs. But it's particularly galling to know that the people building these things are paying zilch toward the cost of public services for a full decade. Who needs this?
In September 2004, the Portland City Council changed the program to require some affordable units in projects that receive the tax abatement. The Alexan project is the first project to apply for a tax abatement since the affordable housing requirement was added to the program.
The Alexan�s developer and the Bureau of Planning and PDC staffs have never argued that the purpose of the tax abatement was to provide low-income housing. The justification for the tax abatement has always been to make the project, not just the affordable units, financially feasible.
For Pete's sakes, people! If luxury apartments and condo towers are not financially feasible, then just DON'T BUILD THEM!
Ah, but the beat always goes on in Portland. I was reading in The Hollywood Star the other day that the guy who wants to put a six-story condo project at the already-traffic-choked corner of NE 33rd and Broadway is going to ask for his own 10-year property tax abatement on the ground that it's "transit-oriented development." Give me a break! Sure, the Max tracks run just below there along the Banfield Freeway, but there's no station within nine blocks. And the closest station toward downtown, where presumably the transit-oriented jobs are, is at Lloyd Center, which, hello? Is around 27 blocks away.
A grand total of two buses go by that corner, the 10 and the 77. This qualifies for a 10-year property tax abatement? Does anybody who builds apartments on a bus line now get a tax holiday around here?
And here I thought George Bush was the only one who couldn't manage a tax system.