Ankrom Moisan Architects is scheduled to meet with the Portland Bureau of Development Services on Tuesday to discuss a proposal for a two-block mixed-use development in Lloyd.

The two blocks are surrounded by Northeast Oregon Street to the north, Northeast Irving Street to the south, Northeast Grand Avenue to the west and Northeast Seventh Avenue to the east.

Plans for the project, tentatively named the Landrover Mixed Use Apartments, call for two seven-story buildings. Each one would have approximately 200 apartments on floors two through seven, and commercial space on the ground floor.

Two garages (one in each building) would provide a total of approximately 170 parking spaces.

Each building would feature a U-shaped layout with a central courtyard space. The open end of each ‘U’ would face each other, with Northeast Sixth Avenue splitting the middle.

San Diego-based Fairfield Residential is the project’s developer. It’s nearing completion of the six-story Sandy28 mixed-use building near the intersection of Northeast 28th Avenue and Sandy Boulevard, the five-story ArLo Apartments on North Interstate Avenue and the seven-story Perch mixed-use building, also on North Interstate Avenue. All three of those projects are scheduled to come online in 2019.

The project team will be seeking approval through a Type III design review process.

Tuesday’s pre-application conference will start at 10:30 a.m. at 1900 S.W. Fourth Ave., in Room 4A.

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More than 18 months after inclusionary housing took effect in Portland, the first project to bring affordable housing to market under the policy may offer only a single affordable three-bedroom apartment.

Affordable units have been slow to come to market in Portland as for-profit developers navigate the inclusionary housing process. Not one has been built yet, according to stakeholders and city documents.

Developments that include 362 inclusionary units have received permits or are close to receiving permits, according to a Portland Housing Bureau report dated Sept. 26. Since inclusionary housing took effect Feb. 1, 2017, 8,578 units in buildings of 20 or more units have entered the city’s permitting pipeline.

Yet the permitting data offers an incomplete picture – it does not reflect how many projects actually get built. Developers may withdraw or delay construction for any number of reasons, and commonly do so.

Urban Asset Advisors could be the first developer to bring inclusionary housing units to market. The Portland firm, according to its president, Tim O’Brien, has two projects that should have building permits in the coming weeks.

In the case of Multnomah Station, a 39-unit apartment building in Southwest Portland, the inclusionary housing requirement will likely be satisfied with a single three-bedroom apartment, O’Brien said.

The rules, adopted by the City Council at the height of Portland’s housing crisis, give developers the option of providing 8 percent of units affordable at 60 percent of the Portland area’s median family income or providing 10 percent of units affordable at 80 percent of median family income or paying a substantial fee-in-lieu to the Housing Bureau to fund affordable housing.

A provision that was introduced by former Commissioner Steve Novick to allow developers to convert the requirement to an equivalent number of bedrooms rather than units also comes into play. That provision allows Urban Asset Advisors to satisfy the requirement at Multnomah Station with a lone three-bedroom unit.

Similarly, at Artisan on Division, a 54-unit project planned at 3249 S.E. Division St., the requirement for 8 percent affordable units becomes four bedrooms. That will likely be met by a three-bedroom unit and a studio unit, O’Brien said.

The 8 percent option makes projects more workable, he said.

“For us, it worked better because it’s a smaller percentage (of units),” he said.

The Housing Bureau is encouraging developers to choose the 8 percent option, said Matthew Tschabold, the bureau’s interim assistant director.

“We calibrated the program so the 60 percent option would be attractive as a voluntary option because there’s a great need for affordable housing at that income level,” he said.

The Housing Bureau’s data shows a majority of inclusionary units that have been identified are at the 60 percent income level.

A number of projects that have recently moved into design review come from large, out-of-state developers such as Security Properties of Seattle, Fairfield Residential of San Diego and Greystar Real Estate Partners, based in Charleston, S.C.

The long-term effects of inclusionary housing on the multifamily market remain to be seen. Developers rushed to beat the deadline when the affordable housing requirements took effect, creating a massive overhang of projects vested according to pre-inclusionary housing rules. Once 19,000 units, that backlog has fallen to a little more than 8,000 units – still a massive number.

Developers are “not sure if their projects are going to move forward” because of broader market conditions, Tschabold said.

Higher construction costs and rising interest rates have made profitability difficult for multifamily projects. In some submarkets, rent growth has softened and even gone backward.

Urban Asset Advisors is not looking to begin new multifamily projects, O’Brien said.

“We’re not buying land right now – not even looking,” he said. “The winds of change are against new housing production, in addition to (inclusionary zoning).”

O’Brien predicted it’s only a matter of time before another housing crunch hits Portland as developers refrain from building multifamily projects that are subject to inclusionary housing requirements.

“Without a doubt,” he said. “I think it’s 24 months from now. I think it’s pretty apparent.”

Noel Johnson, principal with developer Cairn Pacific, said inclusionary housing caused a deep pullback in multifamily development.

“It has had a bigger impact than the global financial crisis,” he said.

Tschabold said it’s too early to draw conclusions on inclusionary housing’s effects on multifamily construction.

“We’re watching it closely, but at this point we think it’s still too soon to tell,” he said.

Even the shallow ranks of developers still willing to build multifamily housing face delays. Since inclusionary housing took effect, developers have had to negotiate system development charge waivers and agreements for affordable units for each project.

“It added probably three months onto our permit cycle,” O’Brien said, adding that he hopes to have permits for Multnomah Station and Artisan on Division in about 30 days.

Developers have had to negotiate inclusionary housing agreements with the city attorney’s office, the Housing Bureau and individual city commissioners, Johnson said.

“You have a bottleneck that is unfathomable,” he said. “The city is processing, in a highly negotiated way, every project in Portland.”

The city is working to standardize the process for meeting inclusionary housing requirements, Tschabold said. A number of proposed technical changes will be presented to the City Council in December for approval. They’re a mix of suggestions from city staff and others to make the rules “a little bit more robust, albeit more objective and clear,” Tschabold said.

The Housing Bureau is also delaying a scheduled ramp-up that would cause affordable housing requirements to rise to 10 percent of units at 60 percent of median family income or 20 percent of units at 80 percent of median family income.

The Housing Bureau is open to making changes to the program, Tschabold said.

“We’re continuing to monitor it and make adjustments, and if folks have suggestions to make the program work better, we’re always open to hearing that feedback and assessing what adjustments can move forward,” he said.

Mayor Ted Wheeler, speaking at an Oct. 16 housing event, said inclusionary housing “seems to be showing good progress.”

“If it needs trueing up or refinement, I’m committed to trueing up and refining as necessary,” he said.

The looming slowdown of post-inclusionary housing multifamily projects may not be felt in the housing market for years, Johnson said.

“I am worried,” he said.

Tweaking the program now may not help much, he added.

“It’s awkward for all of us,” he said, “because at this point, the damage is done.”

Editor’s note:  This story has been updated to reflect the correct address of the Artisan on Division project.

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A mixed-use building proposed for Portland’s Central Eastside will return for a second design review meeting after Bureau of Development Services staff identified needed changes.

The project is one of three that San Diego-based Fairfield Residential is working on in Portland. The eight-story, 151,600-square-foot building is proposed for a busy stretch of Northeast Grand Avenue and Martin Luther King Jr. Boulevard. Ankrom Moisan Architects‘ design calls for 170 apartments and ground-floor retail space.

Ankrom Moisan went with an aperture approach modeled on existing modern buildings, including Slate nearby. The aperture design has been a popular signature of Works Progress Architecture (formerly Works Partnership Architecture).

The Portland Design Commission took up the Fairfield Residential proposal on Thursday. Commissioners, and BDS staff, said the design has come a long way but still needs improvements.

Ankrom Moisan’s Ryan Miyahira was the applicant. Trevor Boucher represented the developer.

Much of the discussion centered on the location of white box-like apertures on the building’s façade. Unlike Slate, where the façade is a series of stacked apertures, the apertures on the Grand Avenue building appear sporadically.

The aperture approach is “pinwheeling around the building,” Commission Chairwoman Julie Livingston said.

“It’s a very strong concept,” Commissioner Sam Rodriguez said. “The problem with a strong concept is when you start deviating from the concept, it falls apart.”

The proposal was discussed during three previous design advice request meetings.

“The project has made a lot of progress,” Rodriguez said. “Simplification is working for it.”

The building is subject to inclusionary zoning rules, meaning the developer must include rent-restricted affordable units or pay a hefty fee-in-lieu to the Portland Housing Bureau. The building would offer a mix of unit sizes, from studios to three-bedroom apartments.

The Grand Avenue apartments would take two lots, at 203 N.E. Grand Ave and 206 N.E. Martin Luther King Jr. Boulevard. The parcels currently have a small auto shop and a surface parking lot, respectively.

Commissioners also questioned some of the proposed materials. Most problematic was ground-floor metal paneling. Commissioners said concrete should be used in place of the paneling.

“It cannot have the feel of an industrial building,” Commissioner Jessica Molinar said.

Commissioner Don Vallaster said the metal paneling may not hold up.

“Skateboarders are going to beat the crap out of it,” he said.

The ground floor would include a fitness room. Several commissioners indicated they would accept the gym as a ground-floor use.

The applicant is also seeking a modification to allow a ground-floor height in the retail space of 11 feet, 2 inches. City rules require 12 feet. Rodriguez said he would be willing to accept the 10-inch departure from the design guidelines.

The building would have a floor-area ratio of 6.9-to-1, well below the allowed limit of 9-to-1.

The project will return for a second design review hearing on Nov. 15. Livingston said the designers would do well to think through the aperture concept.

“Focus your comments on the consistency of the big idea that’s driving the design decisions,” she said.

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Fairfield Residential has purchased a one-acre site in north Portland for $4 million.

The property currently holds the 90-year-old Interstate Lanes bowling alley, but approval has been granted for a development with 180 residential units. The property at 6049 N. Interstate Ave. is located along TriMet‘s MAX yellow line in the Arbor Lodge neighborhood, across the street from the Chief Joseph/Ockley Green K-8 public school.

The seller was Interstate Lanes Inc.

Summerfield Commercial Real Estate Services LLC represented Fairfield Residential in the transaction. The brokers involved were Robert Parmar, Greg Wendelken and Ryan Kidwell.

The existing building will be demolished, said Travis Gold, Summerfield’s director of marketing. According to the city of Portland, the bowling alley was completed in 1926.

Previously, a developer considered building at the site a multifamily complex called the Savona Apartments.

Fairfield Residential, based in San Diego, manages more than 60,000 units nationwide.

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