By Lydia White

The masterminds behind Portland’s newest inclusionary zoning recommendations have proven once again to be economically illiterate.

The Portland Planning and Sustainability Commission unanimously recommended requiring developers with 20 units or more to make 20% of units “affordable” at 80% of median family income, or 10% “affordable” at 60% median family income.

This policy fails to accomplish the Portland Housing Bureau’s stated intentions to “harness the economic power of the private market to increase the supply of affordable housing.”

A simple economics lesson would show them their policies exacerbate the city’s affordable housing crisis.

Developers are indeed responsive to basic economic concepts like incentives and cost-benefit analyses. They will not, and cannot, eat 20% of their costs. As with any tax, costs are passed on to consumers. Developers must offset their losses by accepting taxpayer-funded subsidies, cutting costs (such as forgoing routine maintenance or major repairs), or raising the prices of remaining units. This makes housing even less affordable, forcing lower-income households out of the city and spurring gentrification.

Until such unintended consequences are seriously considered, Portland city leaders will continue to amplify the housing crisis. Only the most out-of-touch city planners believe they can defy the laws of economics and make a scarce commodity more affordable by decreasing its supply.


Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

4 thoughts on “Portland’s Zoning Policies Make the Housing Crisis Worse

  1. John,

    The City of Newberg is going through all of this now. They passed a similar ordinance a few years ago, and now wonder why no one wanted to do do the extra paperwork. Since I work in the field, I too wonder why even try to implement the ordinance.

    Oregon’s problem is that my taking colored pencils to a map, we have locked our city’s development in time, so the natural progression form cross roads to village to town to city cannot happen anymore. There are well meaning citizens in Newberg trying to address the issues outside of the City’s formal processes. Contact Rick Rogers (Director of Newberg Habitat for Humanity) at rich@newberghabitat.org.

    Thanks,

    Leonard

  2. Congrats to Lydia for nailing it! Fascinating that the City of Portland fails to see the irony. Do they know what the words “private market” mean?

  3. Please do a study on Bend and our struggle for low cost housing. After more than two years of haggling with LCDC to expand our Urban Growth Boundary they finally granted a tiny expansion and they wonder why we do not have low cost housing

  4. In Portlunia the intent is more important than the actual results from the effecting of government policy. The only thing left to do in Portlunia is let government in Portlunia implode.

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