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City Council adopts Oregon’s first Inclusionary Housing Program

New mandate will serve as critical tool for increasing Portland’s affordable housing supply

On December 21, City Council voted unanimously to amend Portland’s Zoning Code and Housing Code to implement an Inclusionary Housing (IH) Program. The new program requires all new multifamily or mixed use development with 20 or more units to set aside some of the units as affordable housing. The new rules go into effect on February 1, 2017.

Watch the videos of City Council sessions about the Inclusionary Housing Program (November 29 and December 14).

Acknowledging that the city is experiencing an unprecedented housing affordability crisis, Mayor Charlie Hales said before he voted, “We’ve committed hundreds of millions of dollars to add more affordable units to Portland’s inadequate supply, but the lack of local policy tools to address the issue continues to price renters and low-income families out of their neighborhoods." 

"Inclusionary Housing is a big and important step that will add another strategy to help provide more affordable housing in Portland. The program will leverage private development to provide affordable units, helping to create the diverse neighborhoods that Portlanders value, and keep Portland a livable city for all."

What is the Inclusionary Housing Program?

The Council-adopted program requires new multifamily development to provide housing affordable to households below 80 percent of median family income (MFI) or $58,650 for a family of four. The program includes an incentive for projects that provide units for households at 60 percent MFI or $43,980 and below.

Specifically, the program will provide:

  • Incentives to offset the cost of providing the affordable units, including Construction Excise Tax (CET) waivers, System Development Charges (SDC) waivers, density bonuses and property tax exemptions.
  • An exemption from minimum parking standards for development projects that are close to transit and provide on-site or off-site affordable dwelling units. This exception applies only to affordable dwelling units that are located on sites that are far from transit. This exception does not apply when a fee-in-lieu of affordable housing is paid.

New construction of 20 or more units must provide those units on-site, off-site or pay a fee in lieu of constructing affordable units, which will go into an affordable housing fund. An “offsite option” allows developers to comply with the inclusionary requirements by either building new units or dedicating existing units at a site that is near the development site.

Acknowledging the difference between the Central City and the rest of Portland

The IH Program identifies two “inclusion rates” to account for the difference in scale and development costs of multifamily development in the Central City versus the rest of Portland.

  • In the Central City: Require projects with 20 or more units to provide 20 percent of units at 80 percent MFI or 10 percent of units at 60 percent MFI.
  • Outside the Central City: Phase in a lower inclusion rate, starting at 15 percent of units at 80 percent MFI and 8 percent of units at 60 percent MFI. On January 1, 2019, the rates will increase to match those in the Central City.

In addition to the Title 33 Zoning Code amendments, other parts of the Inclusionary Housing Program will be implemented through revisions to Title 30, the Housing Code. These provisions include the incentive packages offered to offset the costs to development and a fee schedule for the in-lieu fee option.

Next steps

Changes to the Zoning Code and Housing Code will become effective on February 1, 2017.

Background

The Oregon State Legislature passed SB 1533 on March 3, 2016, authorizing local governments to create inclusionary housing programs. Key provisions of SB 1533 established the level of affordability (80 percent MFI), the maximum share (20 percent), and the requirement that local governments provide incentives to offset some of the costs of providing the affordable units.

Under the direction of Commissioner Dan Saltzman, the Portland Housing Bureau led the community discussion on the proposed Inclusionary Housing Program.

In support, the Bureau of Planning and Sustainability proposed a set of new Zoning Code regulations to implement the Inclusionary Housing Program consistent with SB1533.

For more information, visit the Inclusionary Housing Program website and/or the Inclusionary Housing Zoning Code Project website.

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Rescheduled: Inclusionary Housing Hearing at Council

Updated hearing date due to weather

Due to City offices being closed due to inclement weather on December 8, the Council hearing on an Inclusionary Housing program and Inclusionary Housing Zone Code Amendments has been rescheduled due to December 13 at 9:00 a.m. Public testimony will be taken, and written testimony will be accepted at least until this time. Send testimony directly to the Council Clerk at cctestimony@portlandoregon.gov.

Inclusionary Housing Recommended Draft now available; City Council public hearing scheduled for December 8

City Council will consider adopting an Inclusionary Housing Program as one of the many tools to increase Portland’s affordable housing supply.

City Council will consider a recommendation from the Planning and Sustainability Commission (PSC) to amend the Zoning Code and the Housing Code to implement an Inclusionary Housing program. A work session is scheduled for November 29, followed by a public hearing on December 8.

The Inclusionary Housing zoning code changes create a new mandate for the production of affordable housing. New development with more than 20 units in one building will be required to have a share or portion that is affordable as defined by proposed regulations.

Specifically, the program requires residential development projects to provide housing affordable to households below 80 percent of median family income (MFI) with an alternative option for projects that choose to produce housing for households at 60 percent MFI and below.

The proposed amendments set the percent of all units in a development that must be affordable to meet the terms of the program. Referred to as the “inclusion rate” that must be provided in one of the following ways:

  • On-site. Providing at least 20 percent of the units are affordable to those earning no more than 80 percent MFI, or at least 10 percent of the units are affordable to those earning no more than 60 percent MFI; or
  • Off-site. Either construct new units or dedicate existing units.  If constructing new units, either provide 20% of the total units at 60% MFI, or 10% of the total units at 30% MFI. If dedicating existing units, either provide 25% of the total units at 60% MFI, or 15% of the total units at 30% MFI; or
  • The applicant pays a fee-in-lieu of providing affordable units.

The other zoning code amendments change the base zones of the Central City and Gateway Plan Districts to develop a base Floor Area Ratio (FAR) and bonus FAR to offset some of the cost of compliance with the IH program. The proposed amendments also eliminate the parking minimums for residential development projects close to transit.  The other parts of the Inclusionary Housing Program will be implemented through amendments to Title 30, the Housing Code. These provisions include the incentive packages offered to offset the costs to development and a fee schedule for the in-lieu fee option.

If approved by City Council, all new multi-family or mixed use development with more than 20 units will be subject to these requirements effective as of February 1, 2017.

For more information, read the Inclusionary Housing Zoning Code Project Recommended Draft

City Council Briefing and Public Hearing(s):

The public is invited to testify on the Recommended Draft at the upcoming City Council hearing.

Staff will start the process by providing a briefing to City Council on the Recommended Draft. Council will then hold a public hearing, followed by a vote to adopt the code changes.

November 29, 9:00 a.m. (time certain)
Briefing (no public testimony)

December 8, 2:00 p.m. (time certain)       
Public hearing

All public hearings will be held in Council Chambers at City Hall, 1221 SW 4th Avenue. Meetings will be broadcast live at http://www.portlandoregon.gov/28258.

How do I testify at City Council?
You may testify in person by signing up when you arrive. Check the Council agenda prior to the hearing to confirm the item is still scheduled.

You may also testify on the Recommended Draft in writing:

Via U.S. Mail: 1221 SW Fourth Ave. Room 130, Portland, Oregon 97204

Via emailCCTestimony@portlandoregon.gov.

Note: Written testimony must be received by the end of the hearing(s) and must include your name and address. All testimony to City Council is considered public record, and testifiers' name, address and any other information included in the testimony will be posted on the website.

Next steps

After the briefing and public hearing, City Council will vote to adopt the new regulations. Changes to the Zoning Code are anticipated to become effective on February 1, 2017.

For more information, visit the Inclusionary Housing Program website and/or the Inclusionary Housing Zoning Code Project website.