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Wednesday, September 2, 2009

Latest SoWhat casualty: affordable housing

One of the tradeoffs that the developer birds gave in exchange for permission and free money to build the monstrous, soulless condo boxes in Portland's South Waterfront (SoWhat) District was the assurance that affordable housing would be included in the mix down there. Well, kind of like the 10,000 biotech jobs that OHSU promised in SoWhat, the affordable housing in the doomed district is now on "indefinite hold."

The city's pulling the plug on the veterans housing complex in which it's already got close to $2 million invested (and that amount is by its own admission). Indeed, they're already talking about alternative uses for the site, where 209 units for veterans were supposed to be built.

What's more depressing than the financial disaster that SoWhat represents is the way the people of the Portland area have failed to hold the chief proponents of this fiasco responsible for their hideous judgment (or worse). Don Mazziotti, who led the Portland Development Commission into this mess, is currently a finalist for the same job in Beaverton. Vera Katz, the mayor who went for SoWhat hook, line, and sinker, at last report was teaching at Portland State, as an authority on effective city government. And her economic development guru in SoWhat's formative years? Now the mayor himself, of course.

On the bright side, at least now the city is admitting, in a backhanded sort of way, that the whole idea of affordable housing in SoWhat was misguided. Here are the reasons being given for abandoning the veterans housing deal:

• The housing bureau lacks the in-house capacity to effectively provide asset management, ownership and general project oversight.

• There's too much uncertainty in the housing market.

• It’s difficult to manage a “somewhat untested mix of populations” in an emerging residential market.

The second bullet point is relatively new -- what incompetent decision-maker isn't blaming the recession these days?-- but the other two flaws have always been there, even in boom times. In other words, Portland never should have even thought about public housing in SoWhat. That place is going to be a glaring monument to incompetence for a long, long time.

Comments (24)

The problem here Jack is accountability. There has never been a way to hold city bureau managers responsible for anything (and there are a slew of f...-ups I could get inot but the Water Bureau is a great place to start for this) because of Civil Service. And you cannot hold elected officials accountable when their elections are bought and paid for by the entities that benefit from this kind of incompetence. One suggestion I do have is some sort of "non-compete" cause that prevents the employment of government employees elected or otherwise from taking jobs with companies that contract with the city for two years and vice versa. A little distance is a good thing. Avoiding conflicts of interest is a good thing. And maybe it should be illegal for companies that do business with the city to fund any candidates for city government (not sure if that's a constitutional stick wicket but I throw it out there because it makes sense and it passes my rational basis test).

It’s difficult to manage a “somewhat untested mix of populations” in an emerging residential market.

It's f*cking hilarious how they now list as a liability, that which they previously used as a justification.

Puh-leeeze, affordable housing has never been in the plan. The developers' all knew affordable housing would put a stank on the project they didn't want.

PDC/CoP knew this, so it was wink-wink deal to get stuff approved. So now we're back to subsidizing $600K (erm, $450K now) condos for the usual suspects.

Americans who served in the armed forces and are now in need of subsidized housing are now an "untested mix populations."

The irony here is that any rich oil sheik from Dubai with a million dollars in his pocket could show up at one of those sales offices right now and be treated like royalty.

I hope this gets traction in the media, because City Hall just spit on U.S. Veterans. Then again, they have no problem with back office deals to tear down the Veterans Memorial Coliseum, so why would they care if there's a buck in it for them?

If the fourth estate would do it's job, accountability wouldn't be much of an issue. Sourcing, investigating and fact checking seems to have gotten lost in the cloud of blaming Craigslist, talk radio and the blogs.

Lies and more lies delivered SoWa.

So many along the way.

Another recent default is OHSU failing to provide the new building and 100 parking spaces it was paid $3.5 million for back in 05.
That cash payment when the Tram cost was soaring and the city was negotiating shares of the higher cost OHSU gets a check for $3.5 million from the PDC borrowed TIF money.
At the same time Homer Williams got a check for $6.5 million for 100 parking spaces.

And then creepy and company said the city Tram share stayed at $8.5 million.

With many other chapters in the city that corrupts.
etc etc etc

I personally like the "uncertainty in the market" dodge. THAT would be the reason not to green-light The Atwater, the John Ross, etc. In this economy, in these times, there's not going to be any shortage of demand for affordable housing and veterans housing.

Affordable Housing: The first thing talked up, but the last thing actually built; and this is why.

You can cancel it after the rest of the stuff the developers actually wanted is planned and half-built. Yet more wonderful policy from our heroes in City Hall.

Go by Streetcar!

You can't print what I am thinking!

I'm going to play fair here - Mazziotti didn't really lead SoWa into the current mess, he just inherited it. It was Felicia Trader (the then director of PDC) and Katz and the rest of Council at the time who approved all the push-backs of affordable housing in the district and instead put all their money on condos and the tram (cue giant sucking sound)and sold the City's soul to OHSU.

The original plan was to build market rate housing first and then, betting on that the housing boom would continue, take the revenue from the district and build the affordable component from that. That goes back to at least 1999, long before Maziotti even moved back to PDX.

Not defending him or anything - Maziotti is still an unethical ass who has done far more damage than good in Portland (hello Armory and Burnside Bridgehead deals!), but have to put blame where blame is due on this one.

Portland is all talk about affordable housing, but no walk. There is always an excuse. Look at all the SRO housing in downtown that has been eliminated over the last twenty years.

Why don’t we call affordable housing what it really is? SUBSIDISED HOUSING. Affordable housing is different for everyone. For some it is a mansion and for others it is a room in their mother’s basement.

[i]That place is going to be a glaring monument to incompetence for a long, long time.[/i]

That’s right, but canceling low-income housing in the South Waterfront would be a good thing, especially the veterans building. It's unfortunate that we wasted millions on that misadventure, but there is still hope for the South Waterfront if Portland can avoid throwing good money after bad.

There have always been four big problems with low-income housing in the South Waterfront.

First, the South Waterfront includes some of the most expensive land in Portland per acre, so building low-income housing here requires larger public subsidies than in other parts of Portland. Before you even start building, it costs more here than almost anywhere else in Portland. Dunthorpe is cheaper per acre.

Second, the South Waterfront is zoned for large, tall, buildings that must be made of steel and concrete, which is much more expensive than prefab or stick-frame construction. While it is important to distribute low-income housing throughout Portland, that doesn't mean we should use the most expensive land and building methods. There are many great neighborhoods in Portland where anyone would be delighted to live, where land doesn't cost a fortune, and where zoning allows less expensive construction. I would be astonished if a poor family would prefer a 500sf condo with no yard in the South Waterfront over a 1,000sf 4-plex with a small fenced yard in Montavilla.

For these reasons alone, low-income housing in the South Waterfront is an awful idea. Beyond that, there are two more arguments against low-income housing in the South Waterfront that relate to its horrible effect on financing improvements in the North Macadam urban renewal area (URA).

The third reason low-income housing is a horrible idea in the South Waterfront relates to the fact that it’s usually either owned by a non-profit entity that rents units to poor people, or is eventually owned by poor people whose title is subject to restrictions designed to ensure that the property remains in use as low-income housing. This is a problem because property owned by non-profit entities is completely exempt from property taxes. Similarly, if low-income housing is subject to restrictive covenants, it is worth much less than properties without such title restrictions.

Low-income housing is like a gangrenous black hole for every URA, because improvements in each URA are financed by the increase in property taxes (tax increment financing, TIF). Since low-income housing never increases the property tax base, TIF money goes into building low-income housing but never comes out. Also, that portion of the URA used for low-income housing is permanently off the property tax roll, so low-income housing never generates more TIF, and never helps pay off bonds that are secured by future TIF. Therefore, any URA that builds low-income housing at the start of its life cycle carries around a lot of dead weight for TIF purposes. Low-income housing also ruins property tax and debt service projections so that a URA with low-income housing may never be able to issue debt that would be attractive to institutional buyers.

The fourth and final reason low-income housing is a horrible idea in the South Waterfront relates to the statement above, that "[i]It’s difficult to manage a 'somewhat untested mix of populations' in an emerging residential market.[/i]" That’s sustainable newspeak for the notion that rich people don’t buy expensive condos when their next-door neighbors are poor and mentally-ill. This unfortunate reality relates back to the TIF issue. If developers can't sell condos to the rich, then the South Waterfront will not be an exclusive enclave, so property values will not rise, and then there will be no TIF to use to build streetcars or to hand out to developers to help them build in the URA.

The "[i]untested mix of populations[/i]" issue is an especially acute problem with the veterans building, because the plan for that building was that it would house some seriously mentally-ill veterans. You can imagine how sheik Dunthorpe baby boomer transplants would enjoy sharing their prissy Poodle Poop Park with a one-legged Iraq war vet who talks to himself, doesn’t bathe, and sleeps on the park benches. It's an awful commentary on humanity and on our treatment of veterans, but it is real estate 101. Buyers pay for location, and part of location is the neighbors, and whether they're rich like you or whether they make you uncomfortable in the elevators.

It’s good news for the financial viability of the South Waterfront that the veterans building is shelved. Unfortunately, however, common sense has not suddenly come into vogue. Instead, this is simply OHSU encouraging City Council to abandon its misguided mandate to spend 30% of TIF money on low-income housing, or at least wait until the end of the URA’s life cycle to spend that money.

OHSU's preferred vision for low-income housing in the South Waterfront was to broaden the definition of low-income housing to include housing for students, individuals, and families earning up to 120% of average incomes. OHSU was trying to get Portland to spend 30% of the South Waterfront URA’s TIF on housing for its students and employees. That didn’t work. This new strategy of putting low-income housing on hold is riskier, because there is no rule requiring Portland to continue to use TIF money to subsidize OHSU’s own misguided expansion. Also, the logical extension of this policy is to also hold off on giving handouts to OHSU, because nothing OHSU builds will ever increase the property tax base in the URA. On the other hand, this might be a signal that the South Waterfront URA is preparing the numbers for a bond issue, and OHSU will almost certainly benefit from any bond proceeds. We will see.

City Council should not stop with shelving one low-income housing project in the South Waterfront. They should revisit and revoke their 30% set-aside rule. They should adopt a strong-OHSU policy by weaning that institution from Portland’s TIF teat. URAs should stop using TIF money to finance developments that do not directly increase the property tax base, even if those developments enhance the URA, because the best way to offset each URA’s cost to other taxing jurisdictions is by increasing the property tax base for everyone.

You left off Abe Farkas, former PDC exec who is working as a consultant now for the City to evaluate whether or not the life of the URAs downtown should be extended.

Give it a few more months and a few more auctions of bank owned condos in SoWa and there will be plenty of affordable housing there in already constructed buildings.

There has never been a way to hold city bureau managers responsible for anything

Well, when Grampy Potter came on board, he fired four of them (or was it three?).

Thank you, Not Maziotti, Really. The big picture of Common Sense, clear focused. But I think in it somewhere is required to say that the land of SoWat is a toxic waste spoilage. ... and whereas the rich would live there, they should be 'confined to quarters.'

And I am grinning unstoppably at the best line, (and planning to steal it often, in varied guise), "sheik Dunthorpe baby boomer transplants." That's so sheik chic ... (for example).

- -
When voices call out for "media" or "fourth estate" to 'wake up,' perform responsibly, do their duty, redress negligence malfeasance incompetence anti-American corruption and worse, hearing the call makes me laugh and cry.
Laughing like ironic that "I've fallen and I can't get up" -- if media ain't doing its job, (which they ain't), then where did/does one get informed that the job of media is to inform. Wherever you got informed, go back there for more. (Like, if I get a haircut at the salon, I don't call out that the grocery stores are not doing haircuts when I need it, though I suppose they could -- instead I go back to a salon.) Give up on the 'mainstream media' -- they are worthless; they never were what you might have supposed and they never will be. Notice all the successful movers and shakers and doers and rainmakers you know personally: they don't watch TV, they are TV. Cancel your F'ing newspaper subscription. Cancel your F'ing pay-TV subscription. Cancel those two waste-of-time expenses, and you gain more money in your pocket and grow more informed in your living.
Crying like for 80 percent of Americans 95 percent of what they know they got from TV. That's the problem.

Despicable , in the middle of two wars Council chickens out.
They should Condemn an empty condo tower and move our Vets in today. Homer gets paid off , and Our Vets get homes.

Well, gilslater, I worry a lot more about the subsidized housing where the owner/inhabitants' property values are several times that of mine but I pay several times more property taxes because of the ridiculous incentives given to builders and buyers for the first x years in terms of property tax reductions. I don't begrudge the working poor housing. However, why should the middle class subsidize the rich - both developers and owners?

If I had any clue how to use photoshop I would make a picture of the (leaning) John Ross tower in twenty years complete with tumbleweeds, broken windows, and squatters inside taking crack hits as they enjoy the view.

Also, Farkas put together the Farkas report which calls for mixed use public/private mixed use development (green LEED condos) surrounding the Nike arena in Eugene. I am sure glad Eugene planners like to imitate Portland planners and follow them down the $mart Growth path to "vibrant" density hell.

It's funny how practical about money, officials suddenly get when it comes to helping poor people or low income Vets. Suddenly fiscal responsibility is in vogue and a host of overpaid city planning types parade forward to explain just why doing what they themselves proposed not too long ago - no longer makes sense.

Then it's on to the Condi "No one could have imagined" spin and then a 10-minute break before the next planning meeting for the next fiasco.

The only trouble is after a while, it becomes obvious that these noble-sounding components are thrown around to sell the turkey in the first place. Then with a predicability bordering on sunset, they are dropped later after the turkey is safely cooking away in the oven.

At some point, you'd have to call this fraud. Nobody can repeat the same about-face this often, before even they - with their delusional city planning brains - know they don't mean it. They never meant it. It was simply a way to make their true mission of shoveling cash to the wealthiest among us, seem less blatant.

The incompetence defense - while plausible sounding - is no longer available. They had to know what was going to happen in South Waterfront - or they just didn't want to know.

Jack's blog proves this wasn't a surprise to anyone who really looked. It was a SCAM.

All the fancy happy talk was BS from the beginning and I believe they knew. Wouldn't that make them criminals?

Let's just look at this Vet housing thing.

Now you have a real problem. Now you're using a group who are as far from deserving exploitation as anyone in our society, except for children. And you've used them to sell your turkey. After all they've been through, you've decided to profit by dangling helping them in front of the people while you snuck this loser past.

Of course, it's okay with the powers that be. They'll look at South Waterfront and still say it smells like a rose - even as the toxic stink fills their noses. Then they'll move onto the next hustle - hell, they already have.

Housing for Vets? Sorry. Housing for Paulson's soccer team? We can do that.

But the next time they see a homeless Vet - you know how they sometimes wear military garb so you can tell - these planners had better take a few moments from congratulating each other to realize the level they have lowered themselves to, and all for the sake of a few condos.

Sometimes the worst part of the deal is what you do to yourself.

It’s difficult to manage a “somewhat untested mix of populations” in an emerging residential market.

Where'd that come from, Atlanta 1866? Warsaw 1940? Cape Town 1980?

Portland's "Green Zone" 2010....cha-ching, ker-plunk.

The Pearl seems to have a successful mix of populations: I wouldn't choose to live that close to skid row, but plenty of others don't seem to mind.

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