By Eric Fruits, Ph.D.
Portland City Council has just learned that what it thought was a $500 million water filtration plant will now be an $850 million project–and may go as high as $1.2 billion. The reason for the 70% spike: The water bureau did not include the cost of the pipes leading to and from the plant. Those forgotten pipes are going to add more than $130 a year to the average water bill.
Truth is, those pipes weren’t forgotten. They were omitted so the bureau could low-ball the cost of the project. This isn’t a first. The Portland Aerial Tram was three times over budget in part because the city “forgot” to include soft costs. If they included these costs, the eye-popping prices for the tram would have given even a spendthrift city council some pause. Portland Public Schools intentionally low-balled the cost of school construction so voters would approve a school bond measure.
These are not accidents or mistakes. This is intentional malfeasance by the bureaucracy. Our elected officials are so busy with photo ops and posturing that they forget their jobs are to scrutinize their staff and serve the people who put them in office. Voters can’t fire the bureaucrats, but we can fire the politicians who hired them.
Eric Fruits, Ph.D. is Vice President of Research at Cascade Policy Institute, Oregon’s free market public policy research organization.
Click here for PDF version:
By Micah Perry
On Wednesday, August 7, 2019, the Portland City Council passed yet another ordinance that will harm the housing market in the city. Landlords will now be required to register all their rental units with the city and pay a $60 yearly registration fee for each unit.
Any economist, or even a student who has taken Econ 101, can tell you that countries with more regulations are less prosperous than nations that enjoy greater economic freedom. Entrepreneurship, from the opening of a small bakery to the development of an apartment complex, is seriously disincentivized by regulations.
Rules and fees placed on the housing industry cause any would-be entrepreneurs and developers—individuals who could provide a solution to Portland’s housing problem—to think twice and reconsider investment in housing rentals. This new ordinance joins a slew of deterrent regulations on rental housing within Portland.
Over the past few years, Portland’s City Council has approved policies that restrict or complicate a landlord’s ability to reject a rental applicant for reasons such as criminal background or ability to pay rent, and that require landlords to help pay for a renter’s relocation costs. Those who have already built rental housing may find it more lucrative and safer simply to sell the property they own rather than continue to rent it. Those considering building new rentals may now balk at the opportunity altogether.
Proponents of the new ordinance will argue that the fee is critical because it funds the city’s Rental Services Office, but the necessity of the office itself is questionable. Most of the office’s responsibilities seem to involve explaining the complex landlord-tenant laws passed by the city in recent years, a self-induced problem that could be solved by simply repealing them. In addition, while the office is portrayed as a resource for tenants to utilize when being treated unfairly, the office’s website notes that it often refers those in need of help to previously existing nonprofits and advocacy groups, who would help without the city’s intervention.
There are also at least two clear structural problems with the ordinance. First, mobile homes, which provided an affordable housing solution long before the city stepped in, will be subject to the tax and almost certainly see rents rise. Second, the fee’s structure makes it an especially steep price to pay for landlords managing large complexes throughout the city, even though city bureaucrats claim that it is a moderate price.
To use an example from the testimony of one landlord, Seattle, which has a similar program, charges landlords a base rate of $175, plus two dollars for every additional unit they own. So, the owner of a 200-unit apartment in Seattle would pay $575 a year, but an identical building in Portland would be charged $12,000 a year. Landlords most likely will pass along the costs to tenants in the form of higher rent.
This new ordinance will do more harm than good. It will raise rents on most people and, more importantly, further constrict the supply of rental housing in the city.
Micah Perry is a Research Associate at the Portland-based Cascade Policy Institute, Oregon’s free market public policy research organization. He can be reached at firstname.lastname@example.org. A version of this article appeared in The Portland Tribune on August 20, 2019.
Click here for PDF version:
By Micah Perry
The Portland City Council recently passed a new ordinance that will require landlords to register all of their rental units with the city and pay a $60 yearly registration fee per unit.
While regulated affordable housing will be exempt, other types of rentals, like mobile homes, will still be subject to the fee. It is almost certain that landlords will pass on the increased costs to their tenants.
During one council meeting, current landlords noted that the registration fees will siphon money away that could be used for maintenance. They also said that increased housing regulations will discourage potential developers and landlords from wanting to build new rental units in the city. Many landlords are incentivized to sell their units, rather than rent them, because of the increased regulation.
The money raised by the fee will fund the Rental Services Office, a new, needless expansion of Portland’s bureaucracy that will only serve to grow the number of rules placed on housing in the city.
This ordinance adds to the long list of policies that disincentivize the operation and construction of rental units in Portland. If the Portland City Council keeps pursuing policies like these, rents will continue to go up and rental housing will continue to disappear.
Micah Perry is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.
Click here for PDF version:
By Lydia White
Affordable housing advocates are quick to criticize Portland City Council’s use of the $258.4 million affordable housing bond, but their criticism is fundamentally misdirected. Advocates should turn instead to Oregon’s state and local governments to demand an overhaul of restrictive land use policies.
Vanessa Brown Calder of the Cato Institute has produced a report which demonstrates a correlation between increased zoning and land use regulations and more expensive housing.
One of Oregon’s most restrictive land use policies is the urban growth boundary, a simulated border created to reduce urban development. The Portland Tribune recently reported that, according to Christopher Herbert, the managing director of the Center for Housing Studies at Harvard University, UGBs “have the downside of raising land prices” by restricting access to developable land. While some proponents claim that UGBs protect farmland, most fail to acknowledge the extent of their negative externalities.
Calder also suggests government housing subsidies undermine the incentives for states and localities to address what underlies the housing problem—an artificially scarce supply of land—because the aid serves as a substitute for substantial solutions.
Advocates continue to underestimate well-intentioned policies’ unintended consequences. To have an effective impact on housing affordability, they should call on legislative officials to address Oregon’s state and local land use policies.
Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.