A survey of the Portland-area economy in the final days of 2019 reveals strong conditions much like those of the year prior.

鈥淚t’s been mostly 鈥楪roundhog Day,’鈥� said Mike Wilkerson, a senior economist with ECONorthwest, said during a Builder Breakfast panel event on Tuesday.

The area remains in uncharted territory in terms of expansion. Employment is strong, construction is growing 4 percent per year, and the manufacturing sector is doing very well. A year from now, however, that picture is likely to look very different, according to panelists, as the current boom cycle winds down. Despite industry-wide confidence as high as it’s ever been nationally, in Portland and within the state of Oregon, Wilkerson is less bullish.

鈥淲e see strength through the remainder of (next year) into 2021, but after that the questions are going to be what’s going to continue to fill the pipeline,鈥� he said.

Apartment construction is trending downward, with about 8,000 units under construction right now, as opposed to 12,000 last year. That number could dip to 6,000 by this point next year. The demand drivers don’t exist for hotels, which Wilkerson says have been overbuilt in the current cycle and will see much lower occupancy rates as more projects are delivered.

Similarly, he said, multiple factors will result in a dearth of office space. The region absorbed about 600,000 square feet of office space this year, and about 1.7 million square feet are in the pipeline. Employment is slowing down, and the sectors that continue to grow 鈥� logistics, manufacturing, construction 鈥� are not major office users.

By Wilkerson’s estimation, the largest tenant in town right now is the city of Portland, which has leased space throughout downtown while the Portland Building undergoes renovation. City workers are due to return to the building next spring, leaving a vast amount of vacant office space.

鈥淲ho’s going to take that hundreds of thousands of office feet, on top of what’s already in the pipeline?鈥� he asked.

The panel discussion, a 2020 outlook for the construction industry, was the Daily Journal of Commerce‘s fourth Builder Breakfast of the year, and also included panelists Kristina Thomsen, a partner with ZGF Architects, and Aaron Bouchane, a workforce and professional development manager with Associated General Contractors‘ Oregon-Columbia chapter. Stephanie Holmberg, leader of the real estate and construction industry group at Schwabe, Williamson & Wyatt, served as moderator.

The skilled labor shortage persists here and throughout the U.S. An annual workforce survey conducted by the local AGC chapter showed members are overwhelmingly, and unsurprisingly, still having a hard time finding skilled workers. Only 2 percent of respondents think it will become easier to do so in 2020.

鈥淪o, not a lot of optimism where we sit currently or into the future, in terms of the skills gap or the workforce shortage,鈥� Bouchane said.

Some contractors say the skills gap is having little effect on them, and that they’re adapting as best as possible to make it through each day and quarter. On the other hand, many others are reporting that it is impacting budgets, lengthening timelines, and changing how they bid on projects. Contractors in areas like Medford, Klamath Falls and along the coast are having an especially hard time finding help. Despite the looming end of the current building boom, a worsening workforce shortage has the potential to impact builders even more severely than it already is.

One-third of construction workers within the Portland-metro area are older than 45, Bouchane said, and contractors are worried that once work slows down, those older skilled workers who have been hanging in and making good money during the boom years will decide the time is right to retire. Their exodus from the industry will not only drain the workforce from a numbers perspective, but also result in a widespread loss of institutional knowledge.

鈥淓ven if there is a bit of a slowdown and companies aren’t as busy as they were the last couple of years, the idea of retirement and baby boomers getting to the point of leaving the industry is something that we’re hearing more and more as an immediate and future concern,鈥� he said.

Efforts to stem the effects of the skills gap are helping, Bouchane said, citing the AGC’s increasingly popular educator externship program as well as Measure 98 funding for career and technical education programs.

Looking forward from a design perspective, Thomsen continues to worry about the effects of tariffs and trade wars on projects. One project, she said, suffered a six-figure price increase due to escalating rebar prices. Owners are responding by removing major components from projects, decreasing footprints, or not finishing shell space in order to keep costs down.

鈥淭hat keeps me up at night 鈥� just figuring out how to deal with this,鈥� she said.

Thomsen cited sustainability as a major concern, pointing toward the building industry’s heavy carbon footprint and emphasizing the responsibility of designers and builders in helping change that. Fortunately, she said, developers are more frequently trending toward energy efficiency as costs come down for sustainable building features. Owners are realizing better returns on investment via reduced operating costs and higher rent rates from tenants, who want to be in sustainable buildings that are demonstrated to benefit occupants.

As a health care design specialist, Thomsen is seeing that market segment begin to adapt as popular transportation modes change. Clients are planning for ride sharing and micro-mobility options like electric scooters to become more widely used, and the possibility of automated cars following suit. Health care clients in other parts of the country are building less parking, she said, and exploring options for converting parking garages into occupiable space further down the road.

鈥淐lients are really looking at it big-picture-wise, in terms of what they’re actually building,鈥� she said. 鈥淪o they know they need to build parking garages now, but what does it look like in the future, and how can they adapt their buildings to provide less parking in the future because someone’s arriving by autonomous vehicle or a scooter?鈥�

The post Industry professionals foresee challenges, changes ahead appeared first on Daily Journal of Commerce.

In a last-minute push, the Oregon Senate last weekend passed a sweeping land-use bill that allows construction of duplexes and other small multifamily structures in residential neighborhoods.

House Bill 2001 carries the potential to transform many of Oregon’s historic urban neighborhoods. Some homeowners decried the zoning reforms as a bid to change the character of their neighborhoods, but housing and tenant advocates successfully pushed the bill by arguing that housing has become unaffordable to many Oregon residents.

The Senate passed the bill Sunday after Republican lawmakers returned from Idaho, where several had fled to deprive the Legislature of a quorum. A spokeswoman for Gov. Kate Brown said she intends to sign the bill.

Oregon will become the first state to require cities to allow duplexes, triplexes and fourplexes. The requirement applies to cities with populations of 10,000 or greater, or any residential zone in the Portland-metro area.

Advocates said more 鈥渕iddle housing鈥� positioned between single-family homes and apartment complexes will benefit small families, renters and people of color who risk being priced out of Oregon’s cities.

鈥淚t is the kind of gentle infill that can be very compatible within existing neighborhoods, and it’s long overdue,鈥� said Mary Kyle McCurdy, deputy director of 1,000 Friends of Oregon.

The bill was backed by House Speaker Tina Kotek and other Democratic leaders, and came as Portland advanced its own Residential Infill Project with similar provisions for increasing housing density. Cities are required under the bill to bring their land-use rules in line with H.B. 2001 by June 30, 2021, or June 30, 2022, depending on the city’s size.

Portland has until June 30, 2021, to come into compliance with H.B. 2001. The Bureau of Planning and Sustainability plans to bring the Residential Infill Project and related changes before the City Council in the fall, the bureau stated in a news release.

It remains to be seen how the density push will play out in Oregon cities. Housing and policy professionals were skeptical that the zoning change alone would spur a rush of redevelopment.

鈥淚 think people will be surprised how little things change,鈥� said Eli Spevak, owner of Orange Splot LLC, a Portland-based developer and general contractor that builds townhomes and other urban housing types. 鈥淭he way to think of it is it expands choices, but in most residential neighborhoods, the choice people will make is single-family homes, as they have in the past.鈥�

Historically, most housing units in Portland were single-family even before modern zoning was in place that limited housing development options, Spevak said.

Housing analysts also pointed to Portland’s experience with corner-lot duplexes, which have been allowed for years.

鈥淚n general, we haven’t seen a mass demolition and new development of duplexes on corners,鈥� said Tyler Bump, a project director for ECONorthwest.

In many cases, it makes sense to leave single-family homes in place, Bump said.

鈥淲hen we look at development feasibility of middle housing, it’s still challenging,鈥� he said. 鈥淭he existing single-family house is the highest and best use in most transactions, most sales. There’s a lot of value in single-family houses, and there’s a lot of demand for that still.鈥�

ECONorthwest is at work on an analysis of middle-housing development potential, but the findings were not yet available.

Bump suggested some of Portland’s close-in suburbs, such as Gresham and Beaverton, may be well-positioned with land values high enough to support middle housing.

Other likely places are those areas newly added within urban growth boundaries, McCurdy said. In December, the Metro Council voted to add inside growth boundaries 2,181 acres that could accommodate at least 1,325 homes in Hillsboro, Beaverton and King City, according to the regional government.

Oregon is not alone in pushing to undo restrictive single-family zoning. Minneapolis made national headlines by allowing middle housing throughout the city, and Seattle recently passed rules to encourage construction of accessory dwelling units. In California, where arguably the nation’s most severe housing crisis is ongoing, legislators recently killed a bill that would have allowed denser housing near transit lines, but housing advocates have vowed to keep pushing for change.

For developers, investors, contractors and architects, middle housing is likely to be the domain of small operators. The projects are not large enough to generate returns that would interest major investors and firms, housing professionals said. Investors 鈥渨ant 40 to 50 units at least,鈥� Spevak said.

Z Design-Build is among the small firms that could benefit from expanded housing options. Owner-operator Pete Zenczak is at work with partners on a townhomes project in the Capitol Highway area of Southwest Portland, and another in Southeast Portland. Early plans for the Capitol Highway project call for two duplexes. It could be even denser, Zenczak said.

鈥淒epending on when the infill project goes through, we’re going to include attached ADUs as part of it,鈥� he said.

Developers may seek small homes of about 1,000 square feet as attractive targets for demolition, Zenczak said.

鈥淚 think what we’re going to see is we’re going to see small cottages get gobbled up by developers and demoed,鈥� he said. 鈥淲e’re going to find a lot of these mid-block little cottages, and I think those are going to get demoed and they’ll build duplexes.鈥�

Some large houses in the range of 4,000 square feet could be converted into triplexes, Zenczak said.

Portland is expected to grow by about 123,000 households by 2035, according to the Bureau of Planning and Sustainability.

鈥淓verybody’s trying to pack into this place,鈥� Zenczak said. 鈥淚t’s either we go out, or we go in. Portland is more inclusive and people are socially wanting to live closer together.鈥�

Preferences are changing too.

鈥淎s long as we’ve got a good parks system, people don’t really care about large yard spaces,鈥� Zenczak said. 鈥淢illennials and urbanites don’t care so much about that. They want something a little more affordable, and (density) is really the only way we can get it.鈥�

The post A new, denser era for housing in Oregon appeared first on Daily Journal of Commerce.

By SARAH ZIMMERMAN
Associated Press

SALEM, Ore. (AP) 鈥� Democrats want to design their way out of Oregon’s housing crisis and are considering a proposal clearing the path for developers to build more apartments and townhouses.

The move comes on the heels of a landmark rent control measure and is meant to be part of a multi-pronged approach to combat the state’s housing shortage.

Speaker of the House Tina Kotek said Monday the effort will “increase housing choice and the supply of more affordable housing.”

The bill would end single-family zoning. Cities with more than 10,000 people would be required to offer, in addition to single family homes, what’s known as “middle” housing options. That means building more residential structures with multiple dwelling units, like duplexes and triplexes.

Proponents hope the idea will give residents more affordable housing options in cities and suburban neighborhoods, while allowing for more development. If passed, Oregon would become the first state to eliminate single-family zoning. Minneapolis voted to restrict the practice last December.

The Oregon measure also responds to criticisms from the state’s recent rent control law, which broadens tenant protections and limits the amount landlords can increase rent per year. Economists have warned that the state needs to focus on housing supply, and that rent control could dissuade developers 鈥� making the housing crisis worse.

Builders in Oregon have not been able to construct enough houses and apartments to meet the demands of the thousands of people moving to the state for jobs and in some cases, for a lower cost of living.

Many people move to the state from California.

The plan is meant to alleviate a rental market that’s reaching capacity. A study from the economic consulting firm ECONorthwest found that only 63 new housing units were created for every 100 new families in Oregon from 2010 to 2016.

And that’s made it near impossible to find housing in the state’s major cities. In Portland, 95 percent of all apartments were occupied in 2018, according to RealPage, which provides data to the real estate industry. The cities of Salem and Eugene also had occupancy rates over 95 percent.

Economists say the high housing demand has caused rents to skyrocket. One in three renters pay more than 50 percent of their income on rent, far higher than the 30 percent recommendation set by Congress.

But homeowners have slammed the idea to ease zoning restrictions, flooding the Legislature with written testimony saying the measure will destroy the character of neighborhoods and lead to overcrowding. Some city officials have also come out against the idea, saying it encroaches on local control.

Meanwhile, lower-income residents maintain that the proposal is necessary, as it’s especially difficult to find diverse and affordable housing options near urban areas. Brandon Narramore, a Portland resident, said he’s just one of the many young renters that can’t afford to live in a single-family home or in any of the luxury apartments being developed.

And his situation isn’t just unique to Portland. Narramore added that his brother, a mill worker from Medford in southern Oregon, also struggles to find affordable housing that fits the needs of his young family.

“I do not believe my nephew should be blocked access to the good schools and amenities of nice neighborhoods because zoning maps outlaw the types of housing his father can afford,” he testified.

The post Oregon wants to make it easier to build affordable housing appeared first on Daily Journal of Commerce.

A combination of low supply and high prices for housing in the Portland-metro area is the foremost economic problem facing policy makers, an economist said Wednesday.

Prices in the Portland area are about five times median household income, putting housing out of reach of many residents and burdening low-income renters, said John Tapogna, president of ECONorthwest, a Portland-based economic consulting firm.

About 34 percent of households in the Portland-metro area are considered 鈥渃ost-burdened,鈥� spending at least 30 percent of their income on housing, Tapogna said. The problem is worst among renters, with 49 percent cost-burdened, he added.

鈥淭hat’s unworkable,鈥� he said.

Tapogna spoke at the Sentinel Hotel to give his annual report on the value of jobs for the Portland Business Alliance.

Mike Wilkerson, an ECONorthwest project manager, said he expects housing construction, which already lags demand, to slow in 2020 and 2021 as the market continues to react to rising construction costs, higher interest rates and policy interventions such as Portland’s inclusionary housing program.

Tapogna said inclusionary housing was 鈥渨ell-intentioned鈥� but 鈥渘eeds to be reconsidered.鈥�

When an audience member asked what trade-offs the business community needs to make to encourage housing, Tapogna suggested it’s up to residents to welcome more housing into their neighborhoods.

鈥淭he trade-off is going to be the parking spot in front of your house,鈥� he said. 鈥淚t’s going to be how many neighbors you have in your leafy, single-family neighborhood.鈥�

There are several legislative proposals in the Oregon Capitol and at Portland City Hall that seek to address the housing crisis. House Bill 2001 and Portland’s Residential Infill Project would change traditional single-family zoning to encourage 鈥渕iddle housing鈥� 鈥� duplexes, accessory dwelling units and the like. Other proposals would cap rent increases and place restrictions on evictions without cause.

Cost-burdened renters are significant contributors to the Portland region’s short-term homeless population, Tapogna said.

鈥淲hat is driving Portland’s homelessness crisis is the high cost of housing,鈥� he said.

The housing troubles come amid a historic economic expansion. In July, barring a recession, the expansion will officially become the longest since World War II. Employment data from January showed 304,000 net new jobs in the U.S. despite a prolonged government shutdown.

In Oregon, construction employment led the way, growing 7 percent in the 12 months ending in November.

The Portland-metro area has added high-wage jobs, improving to 16th in median income among American cities.

鈥淭hese are good numbers,鈥� Tapogna said.

Venture capital investment in Portland still trails such investment in comparable cities such as Seattle, Austin and Salt Lake City, Tapogna said.

鈥淭his is not a huge venture capital town,鈥� he said.

ECONorthwest’s report also looked at East Multnomah County. The portion of the county east of Interstate 205 suffers from commuting churn: 69 percent of residents work outside of the area, while 67 percent of East Multnomah County workers live elsewhere. That creates a strain on workers who log long commute times and expensive child care bills, Tapogna said.

The post Economist: Portland’s persistent housing crisis remains priority appeared first on Daily Journal of Commerce.

A veteran Portland office and multifamily developer is doing something different.

Noel Johnson, a principal at Cairn Pacific, is in the early stages of developing a 14-unit single-family subdivision in Northwest Portland. The homes will be attached, East Coast-style row houses. And they will feature cross-laminated timber in an unusual and potentially influential example of the material’s use in a residential context.

Johnson said he saw an opportunity to fulfill a need for single-family housing for millennial professionals who have outgrown apartments.

鈥淭hey’re all getting older,鈥� Johnson said. 鈥淭hey’re all having families. They want walkable neighborhoods. There’s not much being built for them in Northwest Portland.鈥�

The homes would be built on a vacant lot near Forest Park. The property, slightly more than one block, is roughly bounded by Northwest Wilson and Roosevelt streets and 29th and 30th avenues. The property borders an industrial area to the north and a residential neighborhood to the south and west.

鈥淭here’s a need in the neighborhood,鈥� Johnson said, adding that the homes are intended for people like his sister, who works for Adidas, and his brother-in-law, who works for Nike. 鈥淭hey can’t find anything they want that’s walkable.鈥�

The homes are a small part of a larger mixed-use redevelopment of the area planned by Cairn Pacific, a local developer that has helped transform the Slabtown area of Northwest Portland.

The project will be phased, but at full build-out, the master plan for the approximately 1.5-acre area south of Northwest Nicolai Street includes approximately 300 multifamily units and 20,000 square feet of office and retail space, with a restaurant and shops.

Johnson has enlisted Portland architect Richard Potestio of Potestio Studio to design the row houses. (The pair previously worked together on 120 Clay, the Southeast Portland office development where the online bank Simple is the anchor tenant. Potestio consulted with Ankrom Moisan Architects on 120 Clay’s design). He has not yet selected a builder.

Plans call for the row houses to be either three-bedroom units with about 2,200 square feet or four-bedroom units with about 3,000 square feet 鈥� larger than many Portland row houses. These new ones will likely be built in two blocks, with a passageway separating them.

Johnson and Potestio are considering building ground-floor accessory dwelling units (ADUs) inspired by row houses in Boston, Philadelphia and other cities. In that scenario, an owner could rent out the ground-floor unit to help pay the mortgage.

鈥淚t’s a very logical way to build in affordability and equity in properties,鈥� Potestio said.

Ground-floor ADUs are far more efficient than the typical backyard ADUs built in Portland, Potestio said.

鈥淚t’s a better way to do things,鈥� he said.

Cairn Pacific has applied for a Type III land use review to subdivide the property into 14 lots. Johnson expects the subdivision and permitting process to take as long as his large commercial projects.

Johnson is leaning into the residential market at a time when analysts believe it can support many more homes. In a report released in October, ECONorthwest found Oregon under-produced housing relative to need by about 155,000 units from 2000 to 2015, leading to an affordability crisis and rising homelessness in the state.

In the Portland-metro area, real estate prices have leveled off after a dramatic rise in recent years. The median sale price fell 0.9 percent to $391,400 in November, according to RMLS 鈥� a real estate listing and data service. Inventory grew slightly to 2.8 months.

Johnson said his choice to develop a for-sale residential project does not mean he’s giving up on other development types.

鈥淭hat’s not what’s motivating me,鈥� he said.

New multifamily projects have slowed to a trickle, and developers have blamed Portland’s inclusionary housing program.

鈥淭he apartment market is totally done from inclusionary zoning,鈥� Johnson said. 鈥淭hat’ll be recovering 鈥� I don’t know when.鈥�

Johnson said now, when few other urban single-family projects are being built, is a good time for the row houses to go forward.

鈥淲hen everyone starts to run for the hills is when I sort of wake up,鈥� he said. 鈥淎nd when everyone thinks it’s sure money, that’s when I go skiing.鈥�

The post All in a row in Northwest Portland appeared first on Daily Journal of Commerce.

Politicians, economists, housing advocates and developers have come to a broad agreement that more housing is needed in Oregon. A new report from ECONorthwest attempts to measure the scope of the problem.

The state underbuilt by 155,000 housing units from 2000 to 2015, according to the report. If that number of homes were built in Oregon during the next 20 years, home prices would be 5.5 percent lower than if the homes were not built, the report found.

鈥淥regon is seriously behind 鈥� providing housing at all levels of affordability,鈥� Mayor Ted Wheeler said at an event Tuesday to mark the report’s release. 鈥淭his report shows we have a lot of work to do.鈥�

Wheeler called the report 鈥渧ery depressing鈥� in its depiction of the housing deficit.

The report recommends employing some of the strategies the city of Portland already is, including promotion of so-called 鈥渕iddle鈥� housing such as duplexes and accessory dwelling units (ADUs).

Other recommendations include:

• changing impact fees to be based on a per-acre or per-square-foot basis, instead of per unit (this would improve the feasibility of high-density projects, the report stated);
• holding cities accountable to meeting existing permitting timelines and clear and objective development approval standards; and
• allowing high-density zoning near high-capacity transit station areas.

鈥淲e need a Marshall Plan for housing,鈥� said Mike Kingsella, an author of the report and executive director of Oregon LOCUS, a trade group for developers.

Local governments would garner a $13 billion net benefit if the 155,000 units were built, based on projections of property taxes, system development charges and other revenue sources, said Michael Wilkerson, an economist and partner at ECONorthwest.

Joe Cortright, director of CityLab, questioned the underlying assumption that more housing of any type is needed. Too many large, suburban homes are sitting with empty bedrooms, he said.

鈥淚 don’t think we face a shortage of housing so much as a shortage of cities and great urban neighborhoods,鈥� he said. 鈥淏ig, single-family houses in the suburbs are not meeting the housing needs of people who are more interested in living in urban neighborhoods.鈥�

The report’s release came three weeks before the Nov. 6 election, when Portland-area voters will decide the fate of Metro’s $653 million housing bond measure. Also, Measure 102, a statewide bid, would allow affordable housing projects to mix private and public funding.

Both measures would help address the dire need for affordable housing, advocates said.

鈥淚 really, truly, deeply believe that we can solve this problem together,鈥� said Alison McIntosh, deputy director at Neighborhood Partnerships, a Portland-based nonprofit.

The report is part of Up for Growth Oregon, a pro-housing group that includes developers such as BRIDGE Housing, Cairn Pacific, Holland Partner Group and nonprofits such as 1,000 Friends of Oregon and Oregon Smart Growth.

The group demonstrates developers and housing advocates such as McIntosh can find common ground, said Noel Johnson, principal at Cairn Pacific.

鈥淎t the end of the day, her goals are my goals,鈥� he said. 鈥淭he question is how to achieve it.鈥�

The post Report: Oregon housing production not keeping pace with demand appeared first on Daily Journal of Commerce.

The Port of Coos Bay is preparing to study the feasibility of building a marine terminal served by rail at the bay’s North Spit.

The port last week received a $50,000 grant from Business Oregon to study the feasibility, infrastructure needs and cost of building the terminal.

Port officials point to a need for another West Coast port to ease congestion at the ports of Tacoma, Seattle, Los Angeles and Long Beach, California.

鈥淭he state needs to have multiple outlets and inlets for cargo to travel through,鈥� said Margaret Barber, spokeswoman for the Port of Coos Bay.

The port owns approximately 400 acres of property zoned for marine industrial use on the North Spit.聽The port has a rail spur that connects with the Coos Bay rail link and allows access to Union Pacific’s Eugene yard.

Nearly 40,000 40-foot containers of agricultural goods from the mid- and southern Willamette Valley, southern Oregon and the Oregon Coast travel to the ports of Seattle and Tacoma to be exported, according to a study commissioned by Business Oregon and conducted by ECONorthwest. That increases truck traffic on Oregon’s highways, port officials said.

The port of Coos Bay could offer faster turnaround times and new technologies to a niche market, officials said.

鈥淎s a smaller port, the Oregon International Port of Coos Bay has the capacity to grow, but is not locked into legacy technologies and old ways of operating,鈥� port officials stated in a news release. 鈥淥ur port can be nimble and responsive in a way that the large ports may not, handling a variety of cargoes.鈥�

The port offers access to the federal navigation channel. Port officials are working with the U.S. Army Corps of Engineers to deepen and widen the channel from 37 feet deep and 300 feet nominal width to 45 feet deep and 450 feet wide.

The post Port of Coos Bay looking into marine terminal appeared first on Daily Journal of Commerce.

Bob Whelan grew up on Waverly Place, in Manhattan, fueled by espresso. His Italian mother used it to counteract what he suspects might today be diagnosed as attention deficit hyperactivity disorder.

He’d go on to fall asleep in his college business classes, which didn’t grab him the same as the earth sciences. A technical knowledge base, plus strong communication skills, aided him as a consultant for the oil and gas industry, and later as a mineral economist for the state of Oregon.

Since coming to ECONorthwest 21 years ago, Whelan has authored provocative studies questioning, among other things, the poverty-reducing capacity of a $15 minimum wage and the supposed strength of the Portland job market. He caused a minor panic at Portland State University, he says, after discussing how recycling, rather than saving trees, actually reduces them.

People always try to shoot the messenger, he said.

Whelan recently spoke with the 91视频. This interview has been condensed and edited for clarity.

91视频: Do you feel the credibility of your field is under attack?

Bob Whelan: Well, it’s the same with journalism, but it’s no different than it’s ever been. I’ve been working for 40 years, and I’ve seen a lot. I’ve lived the whole spectrum of things. People often think that what’s happening is unprecedented. That’s all B.S. They’re talking now about fake news. Well, did you forget about the Maine? Or the Gulf of Tonkin? Lyndon Johnson made up an attack to keep money flowing to the Vietnam War.

91视频: Those are examples, but there seems to be a level of distrust in institutions today that runs pretty deep.

Whelan: Yeah there is. Part of it seems to be this big separation. The fact that people here are shocked that Trump won is absolutely stunning. I can’t understand it.

91视频: People in the building industry have a hard time with the fact that young people, by and large, don’t seem to want to pursue skilled craft work.

Whelan: It’s a big problem. And you’re really going to run into it in two years. The thing is, we’ve had a really strong economy. I guess it’s because politicians can’t run on a strong economy. So both Trump and Clinton ran on the economy being terrible, the middle class is disappearing. Really? I mean, really? When I moved here 30 years ago, Ladd’s Addition was a dump, not a wealthy area like it is now.

91视频: Well some might say, Bob, you’re living up here in your liberal Portland bubble 鈥� but is the rest of the country seeing the same gains?

Whelan: Other parts of the country have seen much better gains than us 鈥� we’re actually not doing too well. Portland has just been a basket case in private-sector job growth. We rank near the bottom.

There are a lot of these lies for political purpose. Bernie Sanders was enormous at this. I would roll my eyes whenever he would talk. It was absurd. And Donald Trump, who of course is a whipping boy for everybody here, would do the same thing. He would say he’s going to bring back manufacturing jobs. And then what 鈥� do you want to work in a sock factory? Who the hell wants to work in a sock factory? That’s exactly what would happen if you put a 35 percent tariff on imports from Vietnam. There’s already a 20-something tariff on athletic shoes. There’s a 5-percent tariff on Honda Civics 鈥� I don’t know why.

In the construction world, you got a couple things going. You do have an overbuilding of hotels. There’s no doubt about it. There are openings for a couple different kinds of hotels. The very high-end, luxury hotels 鈥� the city could use, like in the Pearl District. That area is under-hoteled for sure.

But for the most part, tourism is nearing a peak in Portland, if not peaking. In fact, the latest tourism numbers show pretty much flat. This is because Portland benefited from 鈥楶ortlandia,’ weirdly enough. There were ads for 鈥楶ortlandia’ at bus stops in Denmark. It’s big in Europe. And they all come up here and look around. They shop. But they’re not going to come back a second time. Because this isn’t Disneyland; there’s nothing else to do. So that’s peaking and the international tourism is being hurt by Trump, and hotel prices are extremely expensive. A mid-week room at the Marriott here with tax and parking is over $300. Who can afford that?

91视频: Some of these hotels are catering to millennials.

Whelan: Because they’re the hot topic, and the traditional hotel doesn’t cater to them. So what they do is have these very nice lobbies and group-meeting things, [gestures to ECONorthwest’s furniture island] this kind of crap. And that’s 鈥� that’s nothing.

91视频: What about Airbnb and the rise of peer-to-peer room rentals?

Whelan: Airbnb 鈥� half its business is people who stay more than seven days. The average hotel stay is three days. Corporations don’t like allowing their people to use Airbnb, because of security.

We’re just overbuilt. We’re adding in the next two years 25 percent to the supply. The fundamental demand for hotels is only rising 1, 2 percent a year.

91视频: The Columbia River Crossing plan has been revived by the Washington State Legislature. What about tolling to pay for it here in Oregon?

Whelan: We may have no choice. Because right now, you’re depending on gas taxes and charging more for registration, and there’s a limit to what you can do. Plus, people are driving electric cars. Why should a guy who can afford a Tesla not pay anything toward the roads? Why should a guy on bicycle not pay anything for the pavement he’s riding on?

91视频: What about unions, are they going away for good?

Whelan: I don’t know. I think there will always be a need for some unions. The way I look at it is, managements can organize. Why can’t workers be organized? There are still companies that do not do a good job with employee relations, or are abusive, so I don’t think unions are gone.

If you have a union that really takes seriously training and advancement, and just doesn’t sit there, that is optimal. But if you’re part of a union that is just doing what’s basically extortion, like the longshoreman’s union 鈥� by the way, you wanna talk about the 鈥�1 percent?’ Longshore union members earn in the 99.4 percentile of wages in the state of Oregon. They are the 鈥�1 percent’ that Bernie Sanders was screaming about. They literally make more than a pediatrician, more than an experienced lawyer. And they don’t have to work 鈥� if they don’t work they still get paid. And their jobs are all unnecessary because they could all be done by machinery.

One of the problems that the construction unions have to worry about is robotics. Thirty years from now, robots will be doing a lot of the work in construction. It’s a concern.

91视频: CLT is a hot topic in the building industry and in Oregon. Some say new mass timber methods could help revive the timber industry. What do you make of that?

Whelan: The construction industry is very slow to adopt new ideas, because it’s just too risky. If you’re trying to develop an app, and it turns out to be a total bomb, what do you lose? You spend $20,000 worth of labor, and you chalk it up and go on to the next thing. But if you decide to build a building and use a material that is not thoroughly tested and it fails, they’ll take your house away. You’ll lose millions and millions of dollars. If someone dies on the job doing it, oh man, your conscience 鈥� Productivity in construction is slow 鈥� weirdly slow. That’s one problem with cross-laminated timber. Plus, there’s a lot of interest embedded in not using it.

91视频: Some opponents of CLT make the argument that by funding the testing of tall wood building concepts, government is 鈥減laying favorites.鈥�

Whelan: That’s what government does. Your industry isn’t going to do it themselves. If you own a company in an industry, you’re not going to be doing expensive research, because most of the benefits are going to go to your competitors. So you depend on the government to do it.

Fracking, by the way, when it was brought up in the late 1970s, it was the federal government that was pushing the idea. People in the oil and gas industries thought it was a total waste of government money. 鈥淕overnment waste!鈥� they would scream. Now it’s saving them.

91视频: It’s the time in the interview to talk about Trump. His idea for a border wall with Mexico 鈥� leaving aside ethical arguments, is it even feasible?

Whelan: No. It’s an imbecilic idea.

How the hell do you even put a wall in the middle of the Rio Grande River? It’s a waste of money, and here’s a very important fact: If you don’t have immigration, you have a declining economy. Take out first-generation Americans and the labor force in America is shrinking.

The other thing about immigrants: It’s amazing how many new businesses are started by immigrants. The ones who have the gumption and the courage to leave a country and wait in line to get into some other country 鈥� an arduous task 鈥� are the ones that have the most psychologically-predisposed behaviors to start new businesses. There is a 42-to-1 ratio of first-generation Hispanics to non-Hispanics starting businesses in the U.S. That’s huge. If there’s a trend to watch in Oregon, it’s the huge emerging Hispanic middle class. Without immigrants, we’re doomed.

The post A conversation with ECONorthwest’s Whelan appeared first on Daily Journal of Commerce.

Life can be a little more extreme on the Oregon Coast, and with fewer resources, development is a challenge. Infrastructure needs there are great. Contractors have greater trouble finding skilled labor. And of course, the threat of a large seismic event is always close at hand.

Local economies on the coast are varied, which has led to different solutions for funding needed improvements.

鈥淐ities are all fulfilling slightly different roles at the coast,鈥� said Beth Goodman, a senior planner with consultancy ECONorthwest.

Student center

When Oregon State University sought to significantly expand its operations at the Hatfield Marine Science Center in Newport two years ago, the school and the city faced a dilemma aside from whether to build a $50 million research project in a .

They needed to figure out how to provide affordable housing for 500 students without hurting Newport’s own affordable housing efforts.

Much of Newport’s workforce already commutes from bedroom communities like Waldport, Toledo and Lincoln City because they can’t afford the rents in Newport.

鈥淲e really don’t have the capacity to absorb that many students given our limited rental stock out here,鈥� said Derrick Tokos, economic development director for Newport.

Coastal communities in Oregon generally have only a limited supply of workforce housing. Residential construction is predominantly seasonal or second houses.

OSU and the city of Newport have partnered with a private developer to build 130 units of housing intended for students. Construction is scheduled to begin in the fall 鈥� around when ground is expected to be broken on the 80,000 square feet of new Hatfield classrooms and research space.

As with a lot of coastal communities, parts of Newport lie on the Tsunami Inundation Map, which means restrictions on rebuilding or remodeling efforts. The university’s decision to invest so broadly in the inundation zone was from scientists and engineers, but the university responded by saying the location was carefully considered and presented a 鈥渢eaching tool and design opportunity.鈥� Piles are planned to be built 100 feet down to avoid liquefaction, along with other novel design techniques.

But the matter of student housing was considered different, said Emily Picha of ECONorthwest, which has performed work for several coastal communities. For this, the team had to build outside the inundation zone, eventually selecting a site near Oregon Coast Community College, 1.5 miles away.

Newport has a number of advantages over other coastal communities, including good geography and a relatively diverse economy, Picha said. It has ocean observation-based higher education and research, a robust commercial fishing industry and ocean-related tourism 鈥� much of it from Portland. And with lots of retail options, it functions as the commercial hub for its area. Newport is also unique in that much of it is located on bluffs, out of the inundation zone.

Geography matters

For other communities, the Tsunami Inundation Map poses more serious dilemmas, like whether to relocate essential services farther ashore. Yachats, for example, has had to relocate its fire station outside of town.

Basically all of Coos Bay is located in the tsunami zone or a floodplain with many parcels vacant or underutilized. The city has very old infrastructure (wooden pipes in places) and stormwater outfalls. Its leaders are facing a conundrum over whether to relocate its library outside the inundation zone.

But one of the largest tugboat operators on the West Coast is located on Coos Bay’s waterfront. And the city is still attracting new development to meet the economic opportunities it’s now seeing, Picha said.

鈥淚 think in a lot of these communities, success will be about balancing very active industrial uses with tourist forces,鈥� she said.

Many coastal communities also get heavy pass-through traffic on highways, specifically U.S. Route 101. This takes a heavy toll on their roads and other infrastructure. Plus, even though many of these visitors are paying lodging taxes, Oregon has a requirement, passed in the early 2000s, that those revenues be spent on tourism-related purposes.

Coastal communities are rarely situated on flat terrain, like in Oregon’s valleys. This means additional costs for infrastructure such as pump stations.

Plus, geography can affect a coastal economy in other ways. Lincoln City’s housing crunch, for instance, is even starker than Newport’s because it has more seasonal housing in part due to greater proximity to Portland.

Tillamook, meanwhile, is located a few miles inland from the ocean, so it doesn’t have the same tourism opportunities as other communities along the coast. Its economy has historically been agrarian and based on the dairy market.

But now efforts are ramping up to combine tourism and dairy. The Tillamook County Creamery Association has gone public with plans for a major expansion of its cheese factory geared toward 鈥渕aximizing the tourist experience.鈥� The slick, 38,000-square-foot space designed by Seattle firm Olson Kundig will feature a dining hall heavy with reclaimed wood and instructional exhibits about dairy life. It’s scheduled to open next year.

Tourist attraction

As Portland adds more than one thousand residents a month, Oregon’s coastal communities know this will likely translate to dozens, and eventually hundreds, more visitors a year.

Portlanders making weekend trips to the coast is nothing new, but at a place like , the pace has gotten intense, according to Goodman and Picha. The cape, in unincorporated Tillamook County, is fairly small and close to Portland, with roads that lead right to it.

The inundation has escalated so much that leaders there are hoping to start charging visitors a toll for parking. This will help shift the cost of facility maintenance more onto users, said Rachel Hagerty, Tillamook County general services administrator.

Hagerty said the pay-to-park scheme isn’t about hitting an untapped revenue source 鈥� the area has been literally trashed by visitors for years, she noted. Work associated with the first phase of the plan 鈥� scheduled to begin this year 鈥� also includes trash compaction and a beefed-up recycling program, as well as new restroom facilities more 鈥渞esilient to vandalism and heavy use.鈥�

Part of the idea is waking up to the reality that the cape no longer is an off-the-beaten-track curiosity, said Steve Faust, principal at Cogan Owens Greene, which consulted on the master plan.

鈥淎 lot of this has been a long time coming,鈥� he said.

As far as tourism goes, there’s lots of activity in Seaside and Cannon Beach, and some in Warrenton. Farther south, in Manzanita and Lincoln City, Portland’s impact is felt less, Picha said.

The opportunities for southern coastal cities, like Florence and Coos Bay, are much more tied to cities like Salem, Corvallis and Eugene. Farther south, in places like Gold Beach, Brookings and Bandon, more visitors come from California.

Bandon is regarded as more high end,鈥� Picha said, with golf courses and a pricy second home market.

Catching up

Multifamily construction never fully rebounded after the recession. Officials in coastal cities are now looking at incentives like property tax exemptions to spur affordable development. The Newport City Council is also looking at a construction excise tax, in concert with reductions in system development charge amounts. That is because there aren’t many resources for providing housing, Tokos said.

鈥淲e’re working with the development community to control the push-point. We can’t control much of it,鈥� he said.

Tokos and others in Newport are hoping the OSU student housing spurs other multifamily development. There are two additional projects, large for Newport, in the works 鈥� a fourplex and a 60-unit apartment building. One of the few Portland-area developers working on the coast is Landwaves, whose Wilder project involves green, affordable houses. The firm is in the process of developing more than 100 similar apartments.

鈥淚 think it’s a combination of what OSU’s doing and the market finally catching up that are going to play to our favor in the coming year,鈥� he said. 鈥淲e’ll see.鈥�

The post An ocean of hurdles to overcome appeared first on Daily Journal of Commerce.

In a fifth-floor conference room at the Portland Housing Bureau‘s downtown headquarters on Tuesday, Dike Dame gazed at a packet of papers.

Near the end of a three-hour meeting with consultants hired to analyze the economic effects of possible inclusionary zoning regulations, the principal at Williams & Dame Development wanted to make a point.

鈥淲e’re not going to know if this works until it’s out there and we’re trying to implement it,鈥� he said to the consultants sitting across from him. 鈥淚f we mandate a whole bunch of things that aren’t going to work in the real world, nothing’s going to happen.鈥�

That’s the rub for the Inclusionary Housing Panel of Experts, a committee of developers, architects and affordable housing advocates convened by Commissioner Dan Saltzman. The committee’s charge is to evaluate possible inclusionary zoning regulations, and to recommend a set that provides affordable housing without discouraging development.

Developers have warned city officials that their business runs on tight margins, and more expensive regulations could slow multifamily development 鈥� the opposite of what’s needed to ease Portland’s housing emergency.

During a monthly meeting on Tuesday, the group waded into the details of data modeling meant to determine whether inclusionary zoning regulations will be too costly. In some cases, developers on the committee pushed consultants from David Paul Rosen & Associates to accept higher estimates for predevelopment costs.

Greg Goodman, co-president of Downtown Development Group, said the Premier Press building in the Pearl District sold for $660 per square foot 鈥� well above the consultants’ upper-end estimate of acquisition costs. And Mill Creek Residential Trust paid more than $600 per square foot for a Pearl District block where it proposes to build Modera Davis, a mixed-use building with 150 residential units.

Goodman said the consultants’ estimates of less than $300 per square foot 鈥済rossly understates the downtown core values.鈥�

Downtown Development Group has spent $2 million on predevelopment for a downtown proposal, Goodman said. And that’s just to get to the point where the developer can submit a completed planning application to the Bureau of Development Services.

鈥淚t’s real money before you know if it’s a go or no go,鈥� he said.

Goodman urged the consultants to take into account transportation demand management, a Portland Bureau of Transportation program that is under development. The program could levy hefty fees on developers in the Central City, he said.

Dame told the consultants that the figures need to take into account floor-to-area ratio.

鈥淲ithout understanding the FAR, these numbers are irrelevant,鈥� he said.

Dame also urged the consultants to use a real-life case study in their modeling to test how regulations would affect a development.

The looming regulations are leading developers to move quickly on predevelopment. Any project for which a permit application has been made will be grandfathered in, meaning developers who apply before inclusionary housing regulations take effect won’t have to accept less profitable rent-restricted units and uncertain rules.

The Bureau of Development Services is working to hire 23 additional employees to process the expected wave of permit applications, on top of an already heavy workload.

Staffers at the Bureau of Planning and Sustainability are working on how to structure the inclusionary zoning code, the consultants said.

The Oregon Legislature in March passed a law opening the door for inclusionary zoning at the urging of Portland leaders seeking a solution to the city’s lack of affordable housing.

The city of Portland soon hired David Paul Rosen & Associates, a consulting firm based in Oakland, California, and local group ECONorthwest to analyze the potential economic effects of inclusionary zoning regulations.

鈥淲e’re trying to steer a course that doesn’t sink development and provides a reasonable community benefit,鈥� said David Rosen, principal of the consulting firm.

The new law allows cities to require multifamily projects of at least 20 units to include 20 percent affordable units, available to renters or buyers at 80 percent of the area median income. Developers must be offered an option to pay a fee in lieu of building affordable units. And the law requires municipalities to offer a range of incentives, something Portland’s inclusionary zoning committee is expected to delve into at future meetings.

The group will hold a meeting in July and another in August. The consultants said recommendations will be forwarded to Saltzman’s office in early September, and the City Council could consider them in late November.

Some other committee members expressed frustration that they had little to contribute to the discussion on financial modeling. Lisa Bates, a Portland State University urban studies and planning professor, repeatedly asked the consultants when she could weigh in on affordable housing policy.

The developers continued to push the consultants to consider hidden costs.

鈥淭his stuff either pencils or it doesn’t,鈥� Dame said.

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