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This page contains a single entry from the blog posted on January 9, 2012 10:47 AM. The previous post in this blog was Free baloney. The next post in this blog is Clackistani rebels find a candidate. Many more can be found on the main index page or by looking through the archives.

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Monday, January 9, 2012

Bankrolling the stack-a-shacks

If you think all the apartment bunkers being slapped up in Portland's neighborhoods are wrecking the place, here's some insult for your injury: You're paying for them.

Our friend Mark Barry, who's the leading expert on the apartment market in the Portland region, has his always-excellent annual report posted here, and we noted an interesting passage (with emphasis added by us):

Apartment Construction: Many developers are champing at the bit to get back in the game, and trying to get their project to make sense in light of low cap rates for investment grade apartments, and the amount of capital chasing after newer stabilized projects. Financing is more readily available, and the word is out that the apartment market is the place to be. We expect to see permits for 2,000 to 2,500 new units in 2012, with half of the construction activity in Multnomah County. While this is below the trend line of the five years ended in 2008, we will see double the apartment construction in 2012 that we saw in 2010. We expect that half of this apartment construction will have public sponsorship or participation.

No money for street maintenance, no money for schools, no money for parks, no money for cops. Pretty soon they'll be turning off the street lights. But hey, we've always got plenty for the construction companies and developers.

Comments (9)

Even better, if history repeats as usual, the city will be responsible for maintenance or completion. The worst slime in the developer world shows up for these sorts of deals, and it's all lowest-cost crap on everything. It's bad enough that the places are falling apart within ten years because they weren't built to last, or that you discover they blatantly broke codes to save a few bucks. It's when the bunker is half-finished and the developer suddenly decides to sell his entire stake to some sucker or shell company that things get interesting. More often than not, the city in question has to step in to finish the job, whereuponwhich it suddenly finds all sorts of interested characters willing to take it off the city's hands for pennies on the dollar.

The rate this city is going, no paved roads for five years, proposed cuts to no garbage pickup in parks, water rate increases, and most troublesome shootings in our city...
we may be seeing more people leaving this neglected city with more vacancies than ever.

Shouldn't there be an inventory of how many vacancies exist before any more are built? This public sponsorship of housing needs an eagle eye examination.
I see many for rent signs...

Maybe next year Portland will qualify for the top 10 least desirable cities along with Detroit! Looks like it could happen!

This just may catch on here, if they aren't careful: At the Archipelago condo facing Bedok Reservoir Park, about 12 per cent or 15 of the 130 units for which options were issued since the project was previewed on Dec 2 are being returned to developers UOL Group and Singapore Land.

All 15 or so units returned are apartments; none of the strata semi-detached homes sold in the project have been returned,' said a spokesman for UOL.

http://forums.asiaone.com/showthread.php?t=46014

Portland Native,
I am afraid when the curtain is opened wide for all to see, the house of cards may fall....perhaps our city will be known as the City of Regrets.
...and the decision makers who played in this game of pet projects will not be held accountable or have to pay.

Gotta love the intertubes, and what one can find . . . Creston Homes is building the parking-less condo units in the Buckman neighborhood and the building by the Hollywood theatre, and according to the Star newspaper, another one across from the Hollywood library, also without parking. (The story says they'll work with owners of surface lots in the neighborhood to acquire parking - yeah, right!) If they build to "City Design Standards" sounds like there are few opportunities to challenge their designs, and it sounds like the standards don't include parking.

Turns out Creston is owned by Dennis Sackhoff, the father of Katee Sackhoff. Sackhoff paterfamila is also the owner of Arbor Custom Homes, who's built all of that single family housing on the west side. Also, along with the Remmers guy, owners of West Hills Development. I wonder how much in subsidies these guys have received over the years.

Here's the game that Fish, the City Council and the Portland Housing Bureau have been playing:

1) Increase city fees and SDC's by more than 100% during the recession, amounting to close to $15,000 per dwelling unit, which for the non-incentivised developer makes construction of apartments no longer feasible.

2) Give tax incentives to developers via the New Multiple-Unit Housing (NMUH) property tax exemption program...which, given this 10-yr tax abatement, now makes developing apartments financially feasible - even with the fee increase.

3) Collect the HUGE development fees from Sackhoff and other Bunker Builders, allowing "revenue" to flow back to City coffers.

4) Repeat.

Over the coming decade, the City (and County) will see almost no tax revenue from this new bunker construction, having used NMUH to ignite projects.

Just as the case with URA, the City is leveraging future tax collections to generate a pile of cash now (via development fee collection), which obviously equates to reduced services for more future residents.

Is this why the density push?
If when we had quality livability codes, for example 30 unit apartments with parking in a development then only $450,000 would be collected in development fees where if they can mandate or squeeze in 70 units without parking space then over $1 million can be collected.

Questions:
What is the history of the fee rate per unit increase over the years, taking into account the cost of living, etc.?

What is the history of this New Multiple-Unit Housing property tax exemption program?

Seems like not only reduced services for more future residents, but for residents period, and that the current residents who are not part of that game end up paying more and more and getting less and less.

Developers of new urban apartment buildings are not inclined to build more parking regardless of what the city says. It is not profitable to have more than one auto parking space per unit since having more does not result in higher occupancy or rent. builders are concentrating on the areas of town that have the highest rent per sf in order to justify the huge building costs and municipal fees of about $14,000 per unit which are expected to grow to $14,500 within a couple of years.

I was not aware of the NMUH tax credit -- more insult to injury. If Portland can't get it's act together and elect a sensible mayor, we need to get some people with common sense at the state and federal level to turn off the money tap and then restrict the use of non-profit grants for government programs. When we can get control of our money -where it comes from and how it is spent, then we can hope to get the public's business taken care of.

And for needy residents, fund the people, not the buildings. Let's see who builds with a level playing field, and who moves in.


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