Density Creates Congestion and Degrades Affordability.

COST Commentary: This article is about the study and conclusions of a respected, competent university professor regarding the impact of population density policies in Portland, Oregon. Portland is regarded by many as the MECA of modern light rail due to its early adoption and rapid implementation of modern light rail.

Portland’s congestion is about the same as Austin’s after Portland has spent billions of dollars on its light rail system. Portland’s unfunded liabilities are substantially greater than Austin’s due to its transit employees’ obligations. Portland’s general fund has suffered in numerous ways due to its development incentives which have negatively impacted its police, fire, emergency and other basic city services.

Portland’s land use regulations have resulted in housing costs which are 22% higher, while Hosehold income is 4% lower, than Austin’s resulting in the loss of 40% of Portland’s public school enrollment which peaked at approximately Austin’s current enrollment which started to decline three years ago.

There are no “models” of success in pursuing the path Austin is on regarding transportation and land use.

Expert: More density in Portland will drive up housing costs

Created on Tuesday, 02 December, 2014 06:00, written by Jim Redden

PSU real estate professor says Metro assumptions are flawed
Regional plans to increase density will drive up housing costs, burden the poor and cost local governments billions they do not have, according to a new study by a Portland State University real estate expert.

The study analyzes the 2014 Urban Growth Report released in September by Metro, the elected regional government. The report says cities within the region can accommodate all predicted residential growth during the next 20 years by increasing density.

“This report deserves special attention by citizens and professionals in the local business community because it distorts economic data and will lead the region to make decisions that will harm economic growth,” says the study, which was written by Gerard C.S. Mildner, academic director of PSU’s Center for Real Estate.

State law requires Metro to maintain a 20-year supply of buildable land within the growth boundary. The Metro Council must decide whether to expand it every five years or so, and the next decision is scheduled for 2015. The report was prepared by Metro staff to help guide the decision. The Metro Council will consider adopting it at 2 p.m. on Thursday, Dec. 4.

Mildner’s “Density at Any Costs,” the study is the first independent housing analysis of the Metro report. Many of its findings also apply to the draft comprehensive land-use plan update under consideration in Portland, which also envisions higher density. The study was posted on the center’s website on Monday.

The Metro report predicts a reversal of historic home building trends during the next 20 years, with most new housing being multifamily apartments and condominiums in urban centers and along transit corridors. But Mildner’s study says that reversing the housing mix would substantially increase housing costs in the Portland region in the next 20 years, making it the fourth most expensive metropolitan area in the country, just behind San Francisco, Washington, D.C., and San Diego. Portland is the 15th most expensive metropolitan area in the county, behind Phoenix, Chicago and Denver.

And, according to Mildner’s study, local governments would have to spend billions on subsidies and infrastructure improvements to support these new multifamily buildings, including development incentives and new mass transit lines.

But Metro spokesman Jim Middaugh dismisses Mildner as one of several “libertarian-minded activists” in the region working to repeal Oregon’s land-use planning laws. He says the region does not have enough available land to support even a 50/50 mix of single family homes and multifamily housing in the future.

“The kind of development Mildner and his supporters espouse would require adding a minimum of 4,000 acres to our UGB every six years,” Middaugh says. That’s the equivalent of a parking lot with more than a million spaces — an area three quarters the size of Forest Park. A million cars would form a bumper-to-bumper line from Portland, Oregon, to close to Portland, Maine.”

According to Middaugh, “Metro’s goal is to work with local cities and towns to make sure that wherever new growth happens, it’s well-planned, efficient for taxpayers and good for our local economy. That’s what voters in this region value. That’s what local cities are asking for. That is what Metro is doing.”
Mildner denies the accusations, saying he is only trying to understand the implications of Metro’s land-use planning decisions.

According to PSU, the Center for Real Estate was formed in 2004 as a partnership between the Schools of Urban Studies and Planning and Business Administration to manage the real estate programs at the university and serve as the link to the real estate community. Mildner has a B.A. in Public Affairs from the University of Chicago and a Ph.D. in Economics from New York University. His research is focused on the economics of local government, including growth management, rent control, municipal sports stadiums, housing markets, land-use regulation and urban transportation.

Mildner has written or co-written numerous papers raising questions about land-use planning policies like those in Oregon and the Portland area. He has consistently said government efforts to restrict where growth can occur frequently have unintended consequences, including higher housing costs and additional taxes required for mass transit systems to move urban dwellers around.

Taller buildings?

Metro planners prepared the Urban Growth Report to help guide the council’s growth boundary decisions. They are based in part on an in-house computer modeling program called Metroscope and an analysis of land-use plans adopted or under consideration by the cities within the boundary.
Mildner says he received several Metro staff briefings on the 2014 report while serving on a number of local land-use groups in his official capacity.

“Most of the business leaders were concerned about land availability for industrial supply. My expertise is housing policy and no one was looking at that section of the report. The more I looked at, the more I was appalled,” says Mildner.

Among other things, Mildner says the projected increase in multifamily housing will double rents during the next 20 years. That is partly because the taller buildings envisioned in the report are the most expensive to build.

This will be especially true in Portland, Mildner says, where the report predicts that 60.2 percent of all new residential construction will happen. According to the report, 92 percent of that construction will be multifamily housing — and 37.9 percent will be the same density as the Pearl District. That will require many of the new buildings to be more than five stories high, which require steel construction and underground parking.

“The amount of the increases in prices required by the Metroscope model is staggering … In terms of income inequality, the large projected increases in housing costs work greatly to the disadvantage of low-income households,” according to the study.

But Mildner’s study says the government housing subsidizes required to achieve such density levels are also staggering — almost $3 billion in developer incentives. They range from $10,000 per unit in Tigard to $50,000 per unit in central Portland.

“While the report says that there subsidies are, ‘based on existing programs,’ none of these programs are currently producing housing on this scale,” according to the study. “Moreover, nothing in the Urban Growth Report suggests where these subsidy dollars will come from.”

You can find Mildner’s report at: Milner’s Report.

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