PORTLAND DEVELOPMENT COMMISSION Portland, Oregon DATE: August 8, 2001 TO: FROM: The Commissioners Donald F. Mazziotti REPORT NO.: 01-73 SUBJECT: River District Housing Implementation Strategy Annual Report Resolution No. 35746, adopted by Portland City Council in December 1998, directed the Portland Development Commission to update the 1994 River District Housing Implementation Strategy (Strategy). The Strategy was updated and subsequently adopted by City Council June 16, 1998, by Resolution No. 35802. The Updated Strategy requires PDC to monitor housing production by housing type (rental and homeownership units) and by five (5) income levels. PDC is also directed to report annually on progress towards meeting the revised income level targets. Attached is the River District Housing Implementation Strategy Annual Report for Summer 2001. In the original 1994 Strategy, the City established a goal adding of 5,000 new housing units in the River District over a 20-year period. In the seven years since the 1994 Strategy was adopted, 2,716 new units have either been built or are underway. As Exhibit #3 in the Report demonstrates, 1,224 new housing units have either been built or are underway since April 1999. Of these, 638 (52%) are homeownership units and 586 (48%) are rental units. In the last year, we have seen a significant rise in the number of rental units and an increase in the number of affordable units. Although there has been less activity in developing the new units in the low (31-50% MFI) and middle (81-120% IVIFI) income categories, the adopted income targets are close to being met. It is important to note that the targets were established for a (twenty) 20-year period with no expectation that they would be met on an annual basis. They are intended to ensure that a diverse mix of housing is available in this emerging neighborhood and to guide allocation of public resources. Over the next couple of years PDC will target Tax Increment funds and other resources to encourage the development of housing for low-income and middle-income households. RECOMMENDATION: Approve the report as submitted. Donald. F. Maz Executive Director ACTION: Approved August 8, 2001
RIVER DISTRICT HOUSING IMPLEMENTATION STRATEGY Annual Report Summer 2001 Prepared By: Portland Development Commission 1900 SW Fourth Avenue, Suite 7000 Portland, Oregon 97201-5304
RIVER DISTRICT HOUSING IMPLEMENTATION STRATEGY Annual Report Summer 2001 On December 21, 1994, the Portland City Council adopted the River District Housing Implementation Strategy (the "Strategy"). This Strategy is one of the City's key policy directives for the River District. It sets forth objectives designed to assure that the River District will be developed at high residential densities, with rental and for sale units serving a broad range of household income levels. As part of the Strategy, City Council requires the preparation of an annual report. The purpose of this report is to monitor the success with which the City and private developers have implemented the objectives of the Strategy, specifically concerning the mix of income levels which new units serve. This report serves as the sixth annual report, incorporating data from projects built or under construction as of the end of the 2000 / 2001 fiscal year. The Strategy calls for the creation of approximately 5,000 new housing units over a twenty year period, through new construction and rehabilitation /conversion. In addition, the City intends that income levels for residents of the River District (new plus existing units) will match that of the City as a whole. To achieve this purpose, the Strategy sets targets by income level. These targets were originally represented by a range of percentages, rather than specific percentages, recognizing the fact that the market and interest rates may vary over the years. However, these targets were subsequently modified by the City Council in 1999 (see below). In October 1998 Council created the River District Urban Renewal District. Concurrent with this action, Council directed PDC to work with staff from the Bureau of Planning and the Bureau of Housing & Community Development, and other interested parties from the community, to update the Housing Implementation Strategy ("HIS"). PDC was directed to use five income categories and to recommend actual percentage targets for each income category. This effort was completed in April 1999, and the River District Housing Implementation Strategy Update was formally adopted by the Portland City Council on June 16, 1999 by Resolution #35802. This report includes data on all housing developed since the original 1994 Strategy was adopted. The data is shown in two charts: Exhibit 2, which includes units developed 1994-1999, and Exhibit 3, which summarizes units developed 1999-2001 by type of housing and by income level. As stated above, the updated HIS includes more specific targets which are broken out into five income categories to better track the City's progress at addressing the need for extremely-low income (0-30% MFI) and middle income (80% - 120% MFI) housing. These new targets are shown in the following Table. Page 2
Household Income Category Housing Targets - New Units as a % of Total New Units ApproxiMate # of New Housing Units in River District Needed to Meet Updated Target Extremely Low (0-30% of MFI) 11% 359 Low (31-50% of MFI) 11% 365 Moderate (51-80% of MFI) 13% 440 Middle (81-120% of MFI) 24% 797 Upper (121%+ MFI) 41% 1,389 TOTAL NEW UNITS TO BE BUILT 100% 3,350 The most current corresponding HUD income figures for these income categories for various family sizes are attached in Exhibit 1. Also included are maximum rents based on households paying no more than 30% of their income for housing. Summary of Housing Production by Income Categories Since adoption of the original Strategy in 1994, twenty nine projects have either been completed or are underway. This represents 2,716 new housing units over the last seven years. Exhibit 2 is a summary of all of the new housing built in the River District 1994 through 1999, by the original (1994 Strategy ) income categories. Due to market considerations, the 56 units at the Yards at Union Station which had been planned as condominiums were not constructed prior to 1999, and these units were therefore removed from this list. The project has been reprogrammed as moderate income rentals, and construction will commence in July 2001. The number of new units developed in the five year period 1994 1999 is 1,494. Exhibit 3 lists housing projects which have been built, are under construction, or have submitted plans with the permit center in fiscal years 1999-2001. This summary breaks out units by the five new income categories and shows progress towards meeting new targets. These are all new housing units since the 1999 Annual Report and the 1999 HIS Update; there is no duplication of the units listed in Exhibit 2. As the summary table in Exhibit 3 demonstrates, there are 1,224 new units in the last two years. Of these, 638 (52%) are homeownership units, and 586 (48%) are apartments. 197 units (16%) are for households with incomes below 30% MFI, and 145 units (12%) for middle income households with incomes between 81 and 120% MFI. The adopted targets were established for new housing being built over twenty (20) year period, with no expectation that they would be met on an annual basis. Over the next few Page 3
years PDC will target Tax Increment funds and other PDC resources to encourage the development of housing for households under 120% MFI, with special 'priority for funding development of housing for households with incomes below 30% MFI. Beyond the income targets, the Strategy included other objectives and requested that PDC monitor and report annually on progress towards meeting those objectives. 1. With regard to financial resources, the updated Strategy anticipated the need for approximately $36 million to accomplish these housing targets. PDC assistance is primarily in the form of low interest loans for gap financing. Additional resources are available for preservation and replacement of units currently serving lower income households. When the River District Urban Renewal District was created in 1998, it brought with it a stable funding source to accomplish the housing targets in the district (generally, west of NW 9 th Avenue). The Downtown Waterfront Urban Renewal District also includes funding for that portion of the district lying east of the River District Urban Renewal area. Based on these funding resources, PDC believes that the goal of 5,000 units, with the mix of affordable units described herein, remains a realistic target. 2. The 1999 Updated Strategy also directed PDC to report on the number and income level of units lost each year due to expiring use Section 8 contracts, redevelopment or conversion to other uses, and increases in rent. PDC has not received any information regarding the loss of housing units at any income level since the last comprehensive housing inventory was completed in the Spring of 1999. 3. The Updated Strategy called for new housing to serve as broad a market range as possible, including Downtown workers, retirees, empty nesters, and families. Recognizing that it will require a variety of amenities and services to attract a diversity of household types to the District, PDC and the River District Steering Committee are working with neighborhood residents and other interested parties to assure a full range of community services. Plans are underway for a full service grocery store. PDC, H. Williams Advisors, and REACH Community Development have executed an MOU and are working to finalize a Development Agreement for the build out of the Horsebarn site, comprising 6 acres at NW Ninth and Lovejoy, made possible by the relocation of the Police Mounted Patrol to its new home at the Centennial Mills site on the north side of NW Naito Parkway. PDC continues to gather information about demand for family units in the District. According to developers and realtors familiar with the River District housing market, less than 1% of existing housing is occupied by families with children. They also report that the majority of customers who are seeking housing in the District are emptynesters and young professionals without children, and that the children living in the District are either infants or high school age. Page 4
The City has made a significant investment in infrastructure improvements in the District, such as the removal of the Lovejoy Ramp, the Central City Streetcar, open space improvements, parking, and other right of way improvements. In October 1998 City Council adopted the recommendations of the Tanner Creek Park & Water Feature Steering Committee. This open space plan calls for the creation of two full City park blocks and a 2.1 acre neighborhood park on land currently owned by Hoyt Street Properties, along with the phased creation of a major new riverfront park. Construction began on Jamison Square, the first park block, in December 2000. 4. The 1994 Strategy called for PDC to draft a Master Development Agreement with major property owners, spelling out the obligations and commitments of the parties to achieve density and affordability targets. On September 9, 1997, the City and Hoyt Street Properties, LLC (HSP) entered into a Development Agreement. The Agreement establishes a series of mutual, contingent obligations, including the property owner's guarantee to develop at high densities for a mix of incomes consistent with the Strategy, in exchange for the City's commitment to finance certain public improvements including the Lovejoy Ramp removal, the Central City Streetcar, and Open space improvements. See additional information about this Agreement in the next section of the report. City of Portland/Hoyt Street Properties Development Agreement (Originally Executed September 8, 1997; Amended and Restated March 12, 1999) Development Agreement density obligations. Beyond reporting on the current status of projects in the overall River District, and progress towards meeting the percentage targets for each income category, this report seeks to measure the status of the City's Development Agreement with HSP. Prior to the Agreement, HSP was subject to a requirement of 15 dwelling units per acre. Upon execution of the Agreement, HSP was obligated to construct at a density of at least 87 dwelling units per acre on its non-committed properties. At the same time, the City was required to begin construction of the Lovejoy Ramp project within 18 months of the execution of the Agreement. This time frame was extended pursuant to an amendment to the Agreement, so that the deadline for demolition of the ramp to commence was August 1, 1999. The demolition of the ramp began in July 1999 and was completed in September 1999. HSP's minimum required densities increase further as the City commits to other projects. An additional 22 units peru acre was required for all of HSP's uncommitted property when the City commenced construction of the Central City Streetcar project in May 1999. An additional 22 units per acre was required for all of HSP's uncommitted property south of NW Lovejoy Street when the City commenced construction of the Jamison Square in December 2000, making HSP's required minimum density 131 dwelling units per acre for uncommitted property south of NW Lovejoy Street. HSP's current required minimum density for uncommitted property north of NW Lovejoy Street is 109 dwelling units per acre, which will increase by 22 units per acre on the uncommitted properties north of NW Lovejoy Street upon the City's commitment Page 5
to commence construction of North Park Square, bringing the required minimumi density to a total of 131 dwelling units per acre. Properties committed prior to the City committing to construct any particular public improvement project are subject to a commensurately lower density requirement. HSP receives a credit for any project constructed at a density exceeding the operative minimum density requirement. Eight housing projects have been built, are under construction, or have been submitted for design review by HSP since the agreement was executed: project Riverstone Kearney Plaza Johnson Townhomes Tanner Place Streetcar Lofts Lovejoy Station Block 11 Block 5 (Park Place) units 120 condominium units 131 rental units 13 condominium units 120 condominium units 134 condominium units 181 rental units 123 condominium units 124 condominium units site area 20,000 Of these eight projects, Riverstone, Kearney Plaza, Johnson Townhomes, and Tanner Place were subject to the initial 87 units per acre requirement. Streetcar Lofts, Lovejoy Station, and Block 11 were committed after the Streetcar construction commenced in May 1999, and they are subject to the 109 units per acre requirement. Block 5 (Park Place) was committed after construction commenced on Jamison Square in December 2000, and it is subject to the 131 units per acre requirement. Together, these projects total 946 units, which equates to a density of 143 units per acre. This significantly exceeds the minimum density requirement (based on the split between pre- and post- Streetcar and pre- and post- Jamison Square requirements) of 717 units, or 102 units per acre. Development Agreement affordability obligations. The Agreement also requires HSP to make "good faith efforts" to help achieve the City's objectives regarding the creation of "housing types serving a population that reflects the income ranges of the City as a whole." Specifically, HSP is obligated to provide the following minimum percentage of total units: 15% for extremely low and low incomes (i.e. households earning less than 50% of median income); and 20% for moderate incomes (i.e. up to 80% of median). HSP's commitment is predicated on "the availability of public financial assistance," recognizing the fact that moderate and low income housing within the Central City typically requires public financial assistance. The Development Agreement requires that PDC and the Housing and Community Development Commission (HCDC) jointly monitor HSP's progress in achieving its Page 6
affordability goals upon the 5 th, 10 th and 15 th anniversary of the effective date of the Agreement. There are provisions calling for City acquisition of HSP pioperty for the purposes of developing new property with affordable housing, in the event that HSP has not met the affordability target at the time of the five year intervals. While the first mandated report on HSP's compliance with the Agreement will not occur until September 2002, it is noted that a total of 898 units have been developed under the terms of the Agreement. These units are located in seven projects: Pearl Court, Riverstone, Kearney Plaza, Johnson Townhomes, Tanner Place, Streetcar Lofts, and Lovejoy Station. Of these units, 182 (20%) are affordable to low income households up to 50% MFI; 216 units (24%) are affordable to moderate income households up to 80% MFI; and 500 units (56%) are affordable to middle and upper income households. These are all with in the target ranges outlined in the Agreement, as shown below. MFI Category HSP Development Agreement Goals HSP Activity to Date 0 50% MFI 15% 20% 51 80% MFI 20% 24% 81+% MFI 65% 56% Total 100% 100% For more information on this Annual Report, or to obtain copies of the 1999 River District Housing Implementation Strategy Update or the Development Agreement between the City and HSP, please contact Bruce Allen at 823-3357 or Margaret Bax at 823-3412. Page 7
Exhibit 1 CLASSIFICATION OF INCOME AND AFFORDABLE RENTAL RATES Revised July 2001 For a Family of Four ($55,900 Year 2001) Income Category (% of MFI)* Income Range Affordable Monthly Rents Extremely Low (0-30% of MFI) $0 - $16,750 $0 - $465 Low (31-50% of MFI) $16,751 - $27,950 $466 - $776 Moderate (51-80% of MFI) $27,951 - $44,700 $777 - $1,242 Middle (81-120% of MFI) $44,701 - $67,100 $1,243 - $1,864 Upper (121%+ MFI) $67,101+ $1,865+ * MFI = Median Family Income as determined annually by HUD for a family of four for Portland Metropolitan Area. For a Family of Two ($44,700 Year 2001) Income Category ( /0 of MFI)* Income Range Affordable Monthly Rents Extremely Low 0-30% of MFI) $0- $13,400 $0 - $372 Low (31-50% of MFI) $13,401 - $22,350 $373 - $621 Moderate (51-80% of MFI) $22,351 - $35,800 $622 - $994 Middle (81-120% of MFI) $35,801 - $53,650 $995 - $1,490 Upper (121%+ MFI) $53,651+ $1,491+ For a Household of One ($39,150 Year 2001) Income Category (% of MFI)* Income Range Affordable Monthly Rents Extremely Low (0-30% of MFI) c $0- $11,750 $0- $326 Low (31-50% of MFI) $11,751 - $19,550 $327 - $543 Moderate (51-80% of MFI) $19,551 - $31,300 $544 - $869 Middle (81-120% of MFI) $31,301 - $46,950 $870 - $1,304 Upper (151%+ MFI) $46,951+ $1,305+ Page 8
Exhibit 2 RIVER DISTRICT HOUSING PROJECTS: UNITS DEVELOPED 1994-1999 Name/Location Unit Count Income Mix Current Status 1 Yards at Union Station Rentals 73 Low Income Phase A completed Phases A & B 214 Moderate April 1998; Phase B 192 Middle / Upper completed April 2000 479 Total Chown Pella Condos 64 Middle / Upper Completed November NW 13th & Glisan 1996 McKenzie Lofts Condos 64 Middle / Upper Completed Fall 1997 NW 12th & Glisan Irving Street Townhouses Condos 14 Middle / Upper Completed Fall 1996 NW 12th & Irving 5 Pearl Lofts Condos 23 Middle / Upper Completed August NW 10th & Hoyt 1994 Hoyt Commons Condos 48 Middle / Upper Completed December NW 12th & Hoyt 1995 7 Pearl Court Rentals 110 Low Income Completed Fall 1997 NW Ninth & Johnson 89 Moderate 199 Total 8 Pearl Townhomes Condos 10 Middle / Upper Completed early 1997 NW 11th & Hoyt 9 Modern Confectionary Lofts Condos 6 Middle / Upper Completed 1998 NW 13 th & Hoyt 10 Riverstone Condos 120 Middle / Upper Completed September 1998 11 Fifth Avenue Place Rentals 70 Moderate Completed February NW Fifth & Everett 1999 12 Fifth Avenue Court Rentals 48 Moderate Completed July 1999 NW Fifth & Davis 48 Middle / Upper 96 Total 13 Royal Palm' Rentals 8 Extremely Low Completed April 1997 NW Third & Flanders 21 Moderate 1 Middle / Upper 30 Total 14 McDonald Center Rentals 54 Low Income Completed July 1999 NW Sixth & Couch (Assisted Living) 15 North Park Lofts Condos 66 Middle / Upper Completed October NW Eighth & Everett 1999 16 Kearney Plaza Rentals 18 Moderate Completed Summer NW 11 th & NW Kearney 113 Middle / Upper 2000 131 Total 17 Park Northwest Condos 18 Middle / Upper Completed Summer NW Park & Flanders 2000 SUMMARY New Units 1994-1999 20 Year Targets Low/Extremely Low Income Units (0-50% MFI) 314 units (21%) 15-25% Moderate Income Units (51-80% MFI) 440 units (29%) 20-30% Middle/Upper Income Units (Over 80% MFI) 738 units (50%) 50-65% TOTAL 1,492 units (100%) 5,000 units (100%) The Royal Palm represents a net increase of only two units, since the building was already listed in the Central City Housing inventory as a 28-unit SRO. This net increase is reflected in the Summary below. Page 9
Exhibit 3 RIVER DISTRICT HOUSING PROJECTS: UNITS DEVELOPtD 1999 - Present2 Name/Location Unit Count Income Mix Current Status3 1 Tanner Place Condos 120 Over 120% MFI Completed Winter 726 NW 11 th Avenue 1999 2 Johnson Townhouses Condos 13 Over 120% MFI Completed February NW 11 th & Johnson 2000 3 Gregory Lofts Condos 134 Over 120% MFI Completed May 2001 NW 11 th & Glisan 4 Pearl Townhomes Condos 13 Over 120% MFI Completed August NW 11 th and Hoyt 2000 5 Old Town Lofts Condos 20 51-80% MFI Completed July 2001 NW 4 th and Flanders 8 81-120% MFI 32 Over 120% MFI 60 Total 6 Lovejoy Station Rentals 72 31-50% MFI Under construction; NW Ninth & Lovejoy 109 51-80% MFI expected completion 181 Total Fall 2001 7 Streetcar Lofts Condos 51 81-120% MFI. Under construction; NW 11 th and Lovejoy 83 Over 120% MFI expected completion 134 Total Fall 2001 8 NW Sixth & Couch Rentals 11 51-80% MFI Under construction; 2 Over 120% MFI expected completion 13 Total Fall 2001 9 Danmoore Replacement NW Eighth & Burnside Rentals 180 0-30% MFI Design review; expected construction Spring 2002 10 Marshall Wells Lofts Condos 40 81-120% MFI Under construction; NW 14 th & Kearney 124 Over 120% MFI expected completion 164 Total Fall 2002 11 Pacific Tower Rentals 17 0-30% MFI Design review; NW Fourth & Flanders 139 51-80% MFI expected construction 156 Total Spring 2002 12 Yards at Union Station Rentals 10 51-80% MFI Expected construction Phase S 46 81-120% MFI Summer 2001 56 Total SUMMARY New Units Since 1999 20 Year Targets Extremely Low Income (0-30% MFI) 197 units (16%) 359 units (11%) Low Income (31-50% MFI) 72 units (6%) 365 units (11%) Moderate Income (51%-80% MFI) 289 units (24%) 440 units (13%) Middle Income (81-120% MFI) 145 units (12%) 797 units (24%) Upper Income (Over 120% MFI) 521 units (43%) 1,389 units (41%) TOTAL 1,224 units (100%) 3,350 units (100%) 2 Only indudes new units constructed or under construction that were not induded in the April 1999 River District Housing Implementation Strategy Update. The following projects completed or under construction in 1999 were included in the April 1999 River District Housing Implementation Strategy Update total unit counts: Fifth Avenue Place, Fifth Avenue Court, McDonald Center, North Park Lofts, Kearney Plaza, and Park Northwest Condominiums. 3 Specific unit counts and project timelines may change. Page 11 -