Oregon legislative roundup

There are several bills making their way through the Oregon legislative process which are relevant to housing costs.  This will likely be a controversial post, as I think both ‘sides’ are saying some things that make sense – and some that don’t.  If you have an opinion, jump in and discuss it on our new Facebook group: https://www.facebook.com/groups/BendYIMBY/

One bill would disallow no-cause evictions, and allow cities to pass rent-control bills:

http://www.opb.org/news/article/oregon-no-cause-eviction-bill/

These might seem like good ideas at first as they’d help people who are getting hit by the sharp end of the housing crisis.  Beyond the short term, though, they don’t help, as landlords who have less control over their property are that much more likely to get out of the rental business altogether and simply sell the property.  These provisions would also likely provide fewer incentives for people to jump in and build new housing or renovate and rent out a house. So while they may help a few people now, they may well be counterproductive, which means that renters in the future may pay for them.  For instance, landlords could very well get a lot pickier about who they rent to if it becomes significantly more difficult to ask people to leave.

See this Paul Krugman article about rent control.

Some say that there are loopholes and exceptions and so on – but doesn’t that just make things more complex (more lawyers?) and make these previsions weaker?

Ultimately, the only way to fix the housing crisis is to add enough supply – which can also mean building up, or infill, not just building out – rather than band-aid solutions that don’t address the root cause of the crisis: too many people chasing after too few places to live.  Much of economics is more complicated than simple “supply and demand”, but it’s a pretty good place to start.  Look at how adding lots of apartments helped stabilize rent prices in Denver:

http://www.curbed.com/2017/1/25/14342828/denver-rents-affordable-housing-apartments

Another proposal sounds more interesting: removing the mortgage interest deduction above a certain threshold.

http://www.oregonlive.com/opinion/index.ssf/2017/04/there_are_far_more_effective_h.html

As above, appearances can be deceiving: what at first glance sounds like something that might help people to own homes mostly accrues to wealthier people (they own more expensive homes).  Removing this large government subsidy would likely lower the price of housing, as a significant amount of “easy money” would be removed from the system for things like vacation homes.

In the case of a house purchased to rent out, some of the price increase might be passed on to renters, so the bill may be worth modifying from that point of view, or at least considering future ramifications.  But given Oregon’s budget woes, subsidies that mostly accrue to people wealthy enough to own vacation homes could likely be dispensed with.

Incremental Development

When people complain about “big developers” and the changes they make in a town, they often mistake the development that takes place as the result of a “free market”.

Nothing could be further from the truth: with all the zoning and planning codes in most towns – Bend included – land use is one of the most regulated sectors in the economy.  With the exception of single family housing built within very prescribed limits (you must have two parking spots in your driveway!) it’s often a difficult process to build townhouses or a taller building, or open a retail business in an area not zoned for it.  There are applications and meetings and reviews and potentially appeals if some of the neighbors disapprove.

In a truly free market, you’d be able to build whatever you wanted on your land.  Of course, most of us accept that since what you build on your land affects the people around you, there should be some limits.  However, in the US, these limits have gotten completely out of hand, and rather than stopping a noxious factory in the middle of a quiet neighborhood, people are now fighting tooth and nail over, say, apartment buildings.

Perversely, this has the effect that rather than see a few apartments here, a townhouse there, and a corner store or barber stop at a busier intersection in a residential neighborhood, the hurdle to development is so high that you’d better have a lot of time and money to dedicate to it.  This means it’s not worthwhile for a smaller development that won’t change much, but only for bigger developers with deep pockets, and fewer connections to the area in question.

So instead of some apartments like this:

That are right next to shops, and single family homes, and a mix of other uses, we get things like this:

Which is certainly better than having only single family homes, but this massive block of apartments that is walled off on two sides by busy streets is not the kind of area that can grow or adapt as the city around it changes.

In many places, a mix of housing that includes both single family homes and owner-occupied apartments is the norm, and works pretty well.  Indeed, once upon a time, Bend was like that: it only got its first zoning regulations in 1947.  Rather than having an area that is ‘only renters’ or ‘all single family homes’, you have some apartments that are rented, and many that are owned, creating a healthy mix of people.

Back in the present, “planning” and regulation that attempt to corral certain uses in certain portions of a town seem to have left us with “big chunks” of development: big box stores, blocks of apartments, and large areas of single family homes that are so far away from other uses that they make a car almost a requirement.

It’s possible that, absent quite so many rules and regulations and attempts to specify exactly what can go where, we’d have more incremental, human-scale development that would allow our cities and neighborhoods to adapt in a more natural way.

Here’s a great Strong Towns video about the same concept:

https://www.strongtowns.org/journal/2015/12/16/incremental-development

Update: Also, a timely article about the same subject:

America Needs Small Apartment Buildings. Nobody Builds Them

A chance to support housing in Bend

There is an opportunity to support housing in Bend coming up. I hope we’ll see you there!

A proposal to allow some apartments to be built, by rezoning land off of Reed Lane: Monday, February 6th, 2017 at 5:30 PM, City Council chambers – 710 NW Wall St.  Bend desperately needs more options that are affordable, and that means more market-rate apartments.  People will likely complain about how it’s “inappropriate” for the area, that the people there will add to traffic (as if they didn’t when they moved there), and so on (there’s even a bingo game for these excuses: http://www.nimbyngo.com/ ).  With an extremely low vacancy rate, and rapidly rising prices, Bend needs housing of all kinds, not just single family homes.  We want people like teachers and firefighters to be able to afford to live where they teach and work, and the only way that’s going to happen is if we add enough housing to keep it affordable.

Let’s show up and say “Yes In My Back Yard!”.

Here is a copy of the announcement from the City of Bend – public hearing information about the proposed apartments on page 3:

https://drive.google.com/file/d/0B376R90VwaRodWVMNDhHT005T0tLR1ItNkNCZjNVY0dFZjZV/view?usp=sharing

2016 Elections

As a group, we got something of a late start to really get to know the candidates and make strong recommendations, so what we’re going to do is list what we think are the housing “pro” and “con” aspects of candidates in local elections.  These opinions are based on what we’ve heard and read in the news, and on a survey that we sent out to try and gauge candidate sentiment towards various ideas regarding the housing crisis.

Doug Knight and Bill Moseley

This seems like the most heavily contested election, with both candidates being qualified, competent, successful people.

  • As the incumbent, Doug Knight was a proponent of making ADU’s (accessory dwelling units, or “granny flats”) slightly more complicated by requiring notification of neighbors, rather than simply allowing them.
  • Bill Moseley, as the head of a local company, seems to have a very real sense for how bad the housing crisis is for some people: “I had an employee who lived in a tent for a month with her children because she could not find a place to live”.
  • In answer to our survey, Moseley supports
    •  Streamlining and shortening permit processes and timelines.

    • Eliminating minimum parking requirements – with the possible addition of a permit system for on-street parking in some areas.

    • Allowing accessory dwelling units (ADU’s).

    • Allowing high density and multi-family construction.

  • Knight declined to respond to our survey, suggesting we look at his web site for information.  His site says he voted in favor of several things: “I voted for cottage code, density bonus, and well as System Development Charge (SDC) exemption legislation”.
  • From various letters to the Bulletin and other things I’ve heard him say, it appears that Knight takes “the character of the neighborhood” more seriously than the housing crisis.  “Character of the neighborhood” arguments seem strange in Bend: 40 years ago, most neighborhoods were woodlands, and the neighborhoods that did exist were mostly full of middle class people working in the wood products industry.  Things change.

Sally Russell and Wade Fagen

An interesting race, Russell is the incumbent, challenged by Fagen.  From the information we’ve been able to gather, the two seem quite different.

  • Russell emailed us an extremely detailed response to our survey about housing policy, including statistics on the current situation, and her voting record, which favors housing.
  • She comes across as being very knowledgeable about the local situation and various policies in place.
  • Fagen was kind enough to dedicate some time to talk on the phone, and explain his passion for Bend (he’s a lifelong resident) and some of what he’d like to see.
  • He seemed less informed about the details of Bend’s current situation and policy details, but very open to discussing ideas, which is appreciated.
  • A couple of his ideas that seem sensible include
    • a look at “Transect Development” and
    • reworking the Visit Bend budget to make their promotion of Bend more countercyclical: when rental vacancies are tight and tourism is booming, perhaps ease up promoting the town some, and save the money for a rainy day.
  • Fagen is also a resident of the underrepresented east side.
  • Russell is a known quantity, who has voted in favor of housing, and is also a stable voice on city council with a history of calmy listening and weighing issues.

Justin Livingstone and “Rondo” Boozell

With Livingstone being more of a “mainstream” candidate with what is likely significantly more financial backing, he’s the likely winner of this race.   Unfortunately, he did not respond to our survey.  Having served on the affordable housing committee it’s a given that he’s aware of housing issues in Bend.  His campaign web site does not give a good sense of what policies he’d enact to make housing affordable for all.

Boozell did respond to our survey, with an emphasis on “slow, smart growth”.  The problem is that if the city enacts policies to slow growth, it will not deter people with money from moving to Bend, it’ll simply squeeze supply, causing prices to raise.

Knute Buehler and Gena Goodman-Campbell

Neither candidate was able to respond to our survey with much detail, and local regulations are more important than statewide regulations, but from reading about the two candidates, Buehler seems interested in loosening the state rules regarding cities’ UGB (Urban Growth Boundaries) that limit Bend’s expansion eastward.  There are good and bad aspects to this – it’s a complicated issue.  What is much more straightforward is the support for rent control by some Democrats in the state legislature.  This is a terrible idea that will not solve the housing crisis.  Goodman-Campbell has voiced her support for it.  We appreciate the thought, but it’s bad economics and will not resolve the underlying issue.

YIMBY is bipartisan

While we have a belief that the market should be allowed to build housing, we are a non-partisan group.  Our goal is to keep Bend affordable.

Interestingly enough, last week the Obama administration released a “Housing Development Toolkit“, and a few days ago, the American Enterprise Institute, a conservative think tank, released a report “Economical Rental Housing by Design for Communities That Work

Despite being on opposite ends of the political spectrum, the reports are remarkably similar in their policy recommendations.

The Obama administration’s suggestions:

  • Establishing by-right development
  • Taxing vacant land or donate it to non-profit developers
  • Streamlining or shortening permitting processes and timelines
  • Eliminate off-street parking requirements
  • Allowing accessory dwelling units
  • Establishing density bonuses
  • Enacting high-density and multifamily zoning
  • Employing inclusionary zoning
  • Establishing development tax or value capture incentives
  • Using property tax abatements

The AEI’s recommendations are:

  • Find that increasing the supply of market-rate economic housing by design is in the public interest
  • Declare that land use and building ordinances are to be liberally and flexibly construed to increase the supply of market-rate, economical housing so long as construction will not be adverse to the public health, safety, or welfare.
  • Direct staff, to the maximum extend feasible, to assist in accomodating market-rate economical housing.
  • Reduce parking requirements for economical rental housing developments to recognize reduced dependence on cars.
  • Use density bonuses for economical rental housing developments.
  • Where appropriate, provide relief from otherwise applicable building height restrictions for economical rental housing developments.
  • Consider an equalized approach to density (regulate square feet per acre, not units per acre). For example, using a static density limit of 10 units per acre encourages larger units and higher rents, whereas allowing 12,000 square feet per acre would allow developers to produce 20 units at 600 square feet instead of 10 units at 1,200 square feet.
  • Expedite or fast track planning, zoning, PUD, plan and architectural review, permitting, and variance approvals for economical rental housing developments.
  • Allow just-in-time inspections for economical rental housing developments. Implement a process for economical housing whereby a code or building inspection request by, say, 10:00 AM is fulfilled the same day.
  • Reduce fees to recognize the public-mission value of providing economical rental housing.
  • Direct staff to exercise flexiblity and expedite appeals, whenever literal code requirements are burdensome and a substantially equivalent approach is more economical, for economical rental housing developments.

The latter are more focused on rental housing, but a lot of the ideas are the same: let developers construct dense housing, because it’s cheaper.  Don’t require X number of parking spots per unit.  Speed up and simplify the regulatory process.

Across the board, from liberal blogger Matthew Yglesias in The Rent Is Too Damn High: What To Do About It, And Why It Matters More Than You Think to more libertarian leaning economists, the policy recommendations are strikingly similar: “Legalize Cities”.

 

 

What to build where?

How many Italian restaurants should Bend have?  How many Vietnamese restaurants?  Should they be expensive, or cheaper?

If this seems like an odd question, it should look like an odd question for housing, too.  We have a pretty good way of determining how many restaurants, of what kind and at price point to build in Bend: a relatively free and unfettered market.  As long as you pass the safety inspections, you can serve whatever kind of food you like, and charge as much, or as little for it as you’d like.  If you have a good product, you’ll thrive.  If you don’t sell food that people like at a price that allows you to stay in business, you’ll go out of business.  Perhaps a new restaurant will take the space over and try something different.

It turns out that housing (and really, many other uses of land, too) are not that different from other things that we let markets allocate in the US.  However, cities tend to be some of the most highly regulated markets in the country. Anyone who thinks we have a “free market” for housing or commercial development isn’t well acquainted with the facts.

Just take a look at Bend’s zoning map:

zoning_map

What you can and cannot do with a given piece of property is spelled out in great detail in the zoning code, and mapped out for each lot.  Different types of permitted uses are given different colors in the map above, and often change from one block to the next.

The regulations below are taken somewhat at random from http://www.codepublishing.com/OR/Bend/?BendDCNT.html

  • Maximum lot coverage of 50% for single story homes, otherwise 35% in residential areas.  In “high density areas”, 50% is the maximum.
  • Buildings within the UAR, RL, RS, RM-10 and RM Districts shall be no more than 30 feet in height.

  • All buildings shall incorporate design features such as offsets, balconies, projections, window reveals, or similar elements to preclude large expanses of uninterrupted building surfaces, as shown in the figure below. Along the vertical face of a structure, such features shall occur at a minimum of every 40 feet
  • A minimum of 50 percent of all upper-floor housing units shall have balconies or porches at least four feet deep and measuring at least 48 square feet.
  • A minimum front yard setback of 20 feet is required for buildings or structures, except on corner lots within a platted subdivision, one front yard setback can be 10 feet; provided, that the garage is set back a minimum of 20 feet from the front property line.

That is not a free market.  Far from it: all those areas and the minute details of what you can do there are decided on by a “central planning committee” known as the planning commission.  By and large, these rules and regulations enshrine the car-dependent single-family detached house as the gold standard of housing, and make many other kinds of housing illegal in much of the city.  Perhaps that kind of housing is what people want, but why dictate it by law? If that’s what people want, that’s what developers would provide in any case.

The trouble is, no one knows exactly what to build where.  Smart people can do an OK job at guessing, but no one knows if perhaps that house on the busy corner might be better as a barber shop.  Or maybe as a small group of 5 or 6 apartments.  No one knows what ratio of apartments to duplexes to single family homes Bend should have.  Maybe a given person would prefer a giant house on Awbrey Butte, but not everyone has that money: maybe they’d prefer a duplex or an apartment near the trails on the west side of town to a larger house in NE Bend.  Some people would prefer a large lot.  Trying to decide how many of each kind to produce is what’s known as the economic calculation problem and is one of the reasons markets are a superior (if imperfect) system for allocating many of the goods and services in our lives.

I often read commentary about how “we moved here for this” or “no one wants to live like that”, but that presumes a lot of knowledge about why other people want to live in Bend.  The only thing I’d feel reasonably safe saying is that most of us enjoy the outdoors in some way; but in terms of housing?  Perhaps a single person in his 20ies would prefer to live in a small apartment and save money for skiing.  Maybe a family would rather live in a duplex to be near one of the magnet schools their children attend – which tend to be located in expensive neighborhoods.  A student might wish to rent a large house with friends near the new college.  A family might prefer living close to a job in Bend in smaller housing to a commute to Redmond.  Others want a large lot and don’t care about driving a lot.  To me, living within biking distance of work was really important – but other people may not care. Who are we to decide how other people should live?  Just as some people prefer a larger house further out, the choice should be available to live in denser housing closer in, for those who want it.  This isn’t something the government needs to mandate – it’ll occur naturally if the rules allow it.

Rather than attempting to plan everything out ahead of time, perhaps a more flexible approach would lead to a more dynamic, adaptable city?

Furthermore, the more difficult it is to get land rezoned and projects approved and development fees paid, the more it becomes the exclusive domain of large developers who want to work with larger tracts of land.  Instead of building a few apartments, as a small developer might, which makes a more incremental change in a neighborhood, the larger developer is going to want to build an entire apartment complex.  Change is inevitable in Bend, but if it’s an incremental evolution, perhaps it will be less jarring than the larger projects that are the result of a high barrier to entry.

“YIMBY” is not a partisan group and we do not believe that markets are the solution to every problem.  We take a practical view that more market and fewer regulations would help fix this particular problem.

Vail, Boulder and Bend

One thing that Bend has going for it is that it has grown relatively recently compared to a lot of places.  It can pick and choose from a lot of ideas that have already been tested in other cities.  It’s worth a look to see how other cities relate to Bend and our housing crisis.

Occasionally, I read comparisons in the Bulletin to ski resorts like Aspen or Vail, Colorado or Jackson, Wyoming.  But I don’t think these are accurate: Bend is on track to have 100,000 people in short order, whereas Vail has a bit more than 5,000 people, and Jackson has around 10,000.  These towns are an order of magnitude smaller than Bend, and are almost exclusively centered around tourism, with little to no local industry, and are extremely economically imbalanced in terms of wealthy visitors and residents, on one hand, and people who work in the local service industry on the other.  Due to the geography of where they’re located, they’re also very constrained in terms of land for new construction.  Besides having a lot of tourists, they don’t resemble Bend much, and I don’t think they provide a good example: we shouldn’t just throw our hands in the air and say that it’s inevitable that Bend will be extremely expensive and unaffordable.

Boulder is one of the cities that Bend most resembles: it’s around 100,000 people, is at the edge of the mountains, and physically has a fair amount of room to grow easily, were the political will there.  It’s also got a university – a much bigger one than Bend – and a thriving tech industry with a lot of “good jobs”, something that Bend is working to build.  Sadly, it is also a haven for “I’ve got mine, now get lost” NIMBYism.  This article in the New York Times is illustrative: http://www.nytimes.com/2016/07/04/business/how-anti-growth-sentiment-reflected-in-zoning-laws-thwarts-equality.html – with a former city councilman stating that “We don’t need one more job in Boulder”.  Having been through more than one recession in Oregon, the concept that a place does not want any more of those “pesky jobs” is mind boggling.

Boulder is like Bend in that it has mountains and National Forest land to the west, so building there is out of the question.  Like Bend, it has a lot of flat land to the east that could easily be built on, but in order to prevent urban sprawl, the city has created a “green belt”, akin to Bend’s “Urban Growth Boundary”.  I’m not much of a fan of sprawl either, but the effect this boundary has is to force sprawl further out of town, outside the green belt, to neighboring cities like Louisville and Lafayette.  This has the perverse effect of forcing people to drive even more than if they had simply been on an expanded periphery of Boulder itself!  Of course, Boulder could also build taller buildings, and fill in some of the relatively empty space it already has, but people refuse to do so, via extremely strict zoning laws.

The consequence is that the average house price in Boulder is north of 600,000 dollars!  And you thought prices in Bend were bad…  Naturally, this is pricing out people like teachers, firefighters, and police.

Boulder is a pretty close fit for where Bend may be headed if we do not do things differently.