 photo by ANTONIA CURRY |
BY BOB YOUNG |
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A City Hall hearing
on Kafoury's preservation ordinance will be held at 2 pm Thursday, Sept.
17. You can read the ordinance at www.ci.portland.or.
From 1984 to 1994 the increase in average rent in the Portland area was 81 percent, while the increase in average wages was 42.5 percent, according to the Portland Development Commission.
Almost 70 percent of the tenants who receive federal rent subsidies are elderly or disabled. The average income for these tenants is $600 per month.
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She's been called a communist,
threatened with a lawsuit and warned that her bleeding-heart housing policy
will backfire--all before noon on Monday. It's just another day at the
office for City Commissioner Gretchen Kafoury, as she holds firm to the
idea that landlords who receive city subsidies ought to give more in return.
Kafoury's resolve should make for fireworks as hundreds of renters, housing advocates and landlords are expected to pack a city council hearing this week. The showdown pits a burgeoning tenants' rights movement against powerful Portland landlords--and it looks as if the tenants might actually win. The entire city council supports the dramatic new housing policy crafted by Kafoury, who retires in January. Kafoury's "preservation ordinance" seeks to prevent the situation that occurred last year at the Roosevelt Plaza Apartments in downtown Portland. In that case, the federal Housing and Urban Development Department reduced its generous rent subsidies to the building's owners, who then decided to convert the Roosevelt into a hotel and evicted 56 low-income tenants. As the tenants scrambled to find new housing, Kafoury discovered that at least another 2,197 tenants in Portland faced similar fates because of declining HUD subsidies. Her remedy requires owners who receive HUD rent subsidies to give 120-day notice before they convert low-income housing to another use. This allows the city first dibs to buy the property at fair market value. If the landlords refuse to sell to the city, they must pay $30,000 to replace each unit of low-income housing they convert to another use. Kafoury's ordinance also says that developers who receive construction subsidies in the future must maintain those properties as low-income housing for 60 years--instead of 30 years as currently required. Landlords loathe the policy for two reasons. First, they don't like the fact that they have to pay to replace lost affordable housing. "I can't remember a time when the politics of Portland City Council has been so communistic," said Frederick J. Hoene, president of Westland Investment Co. Realtors, in a letter to Kafoury three weeks ago. Other property owners, such as Harold Schnitzer, have been less bellicose, but Schnitzer is still threatening the city with a lawsuit--something city officials don't want to see from a leading philanthropist and campaign contributor. The second problem for landlords is the 60-year affordability requirement for housing built in the future with city subsidies. Landlords say this unfairly deprives them of profits and will cause private investors to get out of the affordable-housing business. The city's response to the first complaint has essentially been that this is a modest request considering the handsome subsidies this group of property owners has received from HUD. There are just 35 for-profit properties that this part of the ordinance--paying to replace lost affordable housing--would affect, and 57 percent of those have received HUD rents in excess of market rates; some, like Schnitzer's Park Towers, have received rents at 246 percent of the fair market rates, according to the Portland Development Commission. On the second argument--about 60-year affordability--city officials like Erik Sten say that if developers don't like the rules, they should get out of the game because there are plenty who want in. Sten notes that many projects now come with 55-year federal affordability requirements. Because competition for those federal subsidies is fierce, Sten doesn't believe Kafoury's plan will deter private investment. Other cities such as San Francisco and Seattle also have 60-year requirements. The city-council debate now seems to have shifted from the merits of the ordinance itself to money. Specifically, commissioners are considering two financial questions: Should the city give private investors additional incentives such as tax breaks to stay in the affordable-housing business? Where will the city get the money to buy so-called "preservation projects"? In the short term, the money could be surplus from the city's general fund or come from tax reinvestment programs in urban renewal districts. In the long run, it could also come from a new "real-estate transfer tax," which would commit a small portion of each property sale to affordable housing, or from a dedicated slice of the general fund, similar to the 1 Percent for Art requirement on city building projects. If anyone can snag a slice now, it's Kafoury. Even some developers who criticize the ordinance respect the tenacious eight-year crusade she has waged for affordable housing. "I have nothing but the highest regard for what's she done," says developer Brian McCarl. "If we haven't pinned a medal on her already, we should."
originally published September 16, 1998
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