Inclusionary Zoning Under the Microscope as Housing Development Declines

Apartment development has slowed after years of multi-family construction in Portland, according to an article by Eliot Njus, and some are placing blame for the changing market fundamentals on the city's inclusionary zoning policy.

…Construction costs have ballooned, as have land prices. The glut of new construction, meanwhile, has taken the wind out of rising rents, at least at the high end.

But Portland officials are increasingly worried the city’s inclusionary zoning policy, which compels developers to set aside rent-restricted units in large apartment and condo projects, might be playing a role, too. And if home construction dries up, it could ultimately push housing costs even higher.

Although its not totally clear exactly how much inclusionary zoning is responsible for the drop off in apartment construction in Portland, the city agency tasked with monitoring the program, is considering whether it's "time to consider changes that could give developers a better deal — or risk putting an artificial cap on the housing supply, driving rents higher in the long run." Njus quotes Tyler Bump, a senior economic planner with the Bureau of Planning and Sustainability, in the article. Bump also recently authored a report for the Bureau of Planning and Sustainability [pdf] that documents the slowing pace of development permitting during the period from February 2017 to February 2018. That report concludes that for the city to keep pace with the housing goals established in the city's 2035 Comprehensive Plan, the city must "explore a process to make adjustments or modifications to the Inclusionary Housing Zoning Code and Program requirements."