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Thursday, September 24, 2009

The affordable-Pearl-District-liquor-store tax break

I had no idea such a thing existed. But no sooner do I discover it than I read that OMG! This important tax handout is in jeopardy!

If there is a case to be made that local government ought to keep itself out of the real estate development business, this is Exhibit A. Tax breaks for Safeway stores, bureaucratic bungling about what the state property tax laws allow -- what a mess.

If you want to help poor people with their housing, either hand them a subsidy check or build publicly owned projects. Running the money to developers and private landlords on an ongoing basis through the tax system is sure to cause nothing but trouble.

Comments (25)

"If the market allowed us to build affordable housing, we'd rely on the market, but it doesn't pencil out," Fish said.

He must mean the market in the Pearl District, SoWhat, and other places downtown. There are plenty of other places in town where it DOES pencil out - WITHOUT the tax breaks. Sharpen your pencil, Fish, and take a drive across the river, for crying out loud.

I remember one place it penciled out was in the Cabrini Green complex in Chicago. But that public project was not too successful.

But I agree that the Portland version of a public - private partnership does not work well for the public interest, only for the electeds and their developers.


Fish wont drive across the river, the bridge might collapse.

Oh come on....giving Safeway a tax break is like giving the Home Depot the land at MLK and Burnside 5 years ago. It is a scam pure and simple. Enormous multi national corporations do not need any more corporate welfare at the expense of the masses of regular taxpayers.

Yeah, but then Steve Janik will have no one to vist then.

"hand them a subsidy check" = Best solution.

My favorite quote from Fish: "The real cost may very well be our entire system for building affordable housing."

That sounds great, I think the current entire system is broke, and if this kills the system that is a good thing. Maybe they can come up with a better one that doesn't hurt the taxpayers and enrich the developers as much.

You could also give the non-profit Community Development Corporations a fair shot at managing this kind of project. Portland has at least four of them; none have yet built a Cabrini Green.

Isn't this the same building that Vera Katz lives in? How does anyone sucking at the public trough as much as she has get "qualified" for low income housing?

The delightful irony here is that for years Multnomah County has complained that the City of Portland has generously given away the county's property taxes, as well as its own, to subsidize the City's favored developers. I'm delighted to read that the County's found a way to even things out.

You always get this controversy when different people pay different tax rates.

If we have a tax then everybody should pay the same rate.

Why do suppose that there is resistance to a flat (income) tax? The resistance comes from those who don't pay the tax or only a portion of the tax.

The myth is that these units are even "affordable". They're affordable to those earning around the median income, i.e. average joes. These aren't priced to help the truly needy, just students and young people who could easily find places on the Eastside.

Our "affordable housing system" as Fish puts it is already broken. If the goal is to keep pricing affordable, it isn't coming close to keeping up.

You know, the market had a solution for this for centuries before there was such a thing as a public housing agency. The solution was for lower income people to live in older properties and neighborhoods which, yes, tend to be a bit run down, but that's what they could afford. New units were for people who could afford new units.

The myth is that society can afford to supply brand-spanking new units to everyone. Yes, it would be nice, but no, we can't afford it.

Britt is right - it's even in the Oregon Constitution:

Section 20

Equality of privileges and immunities of citizens.

No law shall be passed granting to any citizen or class of citizens privileges, or immunities, which, upon the same terms, shall not equally belong to all citizens.

But, in the hands of our local Supreme Court, the Constitution is a very elastic document...

According to the NW Examiner 6/09 Safeway has not been well recieved in the Pearl.

Sounds like more empty retail space in the Pearl is coming. Maybe they can move to the SoWhat district to sell products to vacant condos.

Our "affordable housing system" will become even more broke and dysfunctional if PDC and the City expands "affordable" to include Work Force Housing and Student Housing. When a working person or household can earn 125% of Medium Income to qualify for Affordable Housing, and a student with parents making six figures qualifies, then the system will certainly crash.

Right at this moment PSU is lobbying to make all of their present campus and beyond an Urban Renewal area with a massive program to build student housing. They even want to cross I-405 into the Lair Hill Historic District, call it "blighted" and extend the campus south and build student housing with all kinds of taxpayer subsidies.

There needs to be an honest discussion about Affordable Housing and Urban Renewal and how it affects so many other regional tax problems.

PSU is another example like OHSU that takes taxpayer dollars to build then because they don't pay property taxes they pay nothing back to settle the debt they create.

The dynamic Snards is describing worked to some extent up until the emergence of what David Brooks terms the "BoBos" -- bourgeois bohemians -- in the late '70s-early '80s. These were mostly young Boomers who could well afford new housing in upscale suburbs where their parents lived, but instead opted to move into older, run-down inner-city areas with more "character." This had the effect of pushing up prices/rents in many heretofore working class neighborhoods (i.e., gentrification) and was a primary cause of the widespread homelessness now visible in all major cities and many smaller ones. Land values are now so high (the recent downturn notwithstanding) that it is impossible for the private sector alone to provide anywhere near enough decent housing (old or new) at prices working people can afford. Hence the need for public involvement of some kind. Personally I agree that publicly-owned housing (when done right, learning from the mistakes of the past) and community housing trusts are preferable to developer subsidies.

2)I think the implication of your post as well as the comments here ignore the benefits here. While you may have a point on the liquor store, there is a pretty obvious advantage to bending over backwards in order to encourage a place like Safeway into these neighborhoods. The affordable housing would mean nothing if residents were forced to procure food at a corner store where they pay a 50% premium...

Benefits? Give them "affordable" housing and the most expensive grocery store chain in town? Its probably cheaper to shop at that "corner store."


I am all for public housing and cash subsidy.

Unfortunately, the federal government has not invested in public housing for a long time.

Most affordable housing requires a subsidy: Tax credits; bond financing; TIF; tax abatements;etc.

The more affordable--eg 0 to 30% of mfi--the bigger the subsidy.

As for critics of subsidies in general--the biggest single tax break for housing is the mortgage interest deduction. It dwarfs all other housing programs.

On the question of the assessor's ruling, my biggest concern is with the timing. For 18 years, the city and county granted this abatement. I don't think it is fair to change the rules midstream.

And this decsion puts a big hole in 19 projects--putting low income renters at risk. That's why i proposed grandfathering in the existing abatements.

Nick Fish

Nick you say: For 18 years, the city and county granted this abatement. I don't think it is fair to change the rules midstream.

From what I read the city was granting the abatement, and the county just did as the city asked. Now the county is actually checking if the city is allowed to ask them to process the abatement.

Can I apply that same logic to breaking others law? I've been speeding for 18 years now without getting a ticket, why should I pay the photo radar ticket that I got in the mail? (Ok not exactly the same but you get the point.)

If the laws says you can't do it, and you now know that you have to stop. If it is that horrible and will be a huge problem than you should work on changing the law, but don't continue to knowingly break it.

If the city would stop abusing tax abatements and TIF financing, maybe the occasional excess could be overlooked. But now that the Sam-Rand twins are blatantly, repeatedly distorting "urban renewal" far beyond anyone's intent in enacting it, they can expect lots of pushback. My hat's off to the county -- this is one more reason to love Cogen and Wheeler.

Mr. Fish: you state "Unfortunately, the federal government has not invested in affordable housing for a long time".

I'm sure you are aware that your statement is off basis by a mile, and you probably know it.

The federal budget just in US Housing and Urban Development(HUD) for 2009 is $40.5 BILLION. 2010, its up to $43.7 BILLION. Look in all the categories in their budget and the amounts in what some of us might agree is really Affordable Housing is in the tens of BILLIONS.

This is just one of many Departments of the federal government that is contributing to Affordable Housing.

In fact, for Block 49 in SoWhat the feds were planning on contributing over $10 Million for 200 units of Affordable Housing. That's been axed, not due to the feds.

How can you make such a statement with your history and knowledge concerning Affordable Housing?


You are mixing things up.

Jack said he was ok with "publicly owned" projects.

The publicly owned housing in our community is public housing. The federal government has not invested in new public housing for some time. Instead, it issues Section 8 vouchers, tax credits, etc. These operate in the private market

There is a big difference between "public housing" and "affordable housing." Public housing is funded directly by federal subsidies. It is geared for the very poorest in our community. AKA Hillsdale Terrace.

Affordable housing is housing affordable to low and moderate income households, and is typically developed by for profit and non-profit developers. It is owned and operated by private parties.

The 19 projects affected by the assessor's ruling are private, not public.

The assessor, not Chair Wheeler, issued the ruling.

I support reforms to Urban Renewal. I do not think it is fair to change the rules re tax abatements mid-stream. Especially where the City and county concurred in the action for 18 years.

Nick Fish

Nick Fish: it was you that used the words "affordable housing" and the feds haven't invested in it for a long time. Did I misread your sentence? No.

Nick's quote: "Unfortunately, the federal government has not invested in public housing for a long time."

Both Lee and Nick serve to make the point that the terminolgies used in this field aren't specific enough. As with Baskin-Robbins ice cream, "affordable housing" comes in many, many flavors.

Seattle choking on condos too


Commissioner Fish,
Please consider not building affordable housing in the most expensive neighborhoods in the most expensive high-rise construction types. If you go out a bit further from Downtown you can supply twice as many units for the same money.

"Most affordable housing requires a subsidy"

Not true, most affordable housing is supplied on the private market with no subsidies, vouchers or involvement of any public agency whatsoever. Just a renter finding a cheap enough place and renting it.

Don't fall into the trap of thinking that the government HAS to be involved in everything. Not all private activity represents a vaccuum that the taxpayer must fill.

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