A Hillsboro apartment complex has sold to a San Diego-based investment company for $97.5 million.

Thorncroft Farms, a 340-unit, garden-style complex, was built in 1998. It’s located at 2120 N.W. Thorncroft Drive, fewer than 5 miles from Intel and Nike headquarters.

The buyer was M.G. Properties Group, a San Diego firm that also owns Russellville Commons in Portland and Riverwalk at Happy Valley.

“Having entered the Portland market in 2016, we are excited to continue our growth in the Pacific Northwest,” CEO Mark Gleiberman stated in a news release. “Thorncroft Farms is well-positioned to capitalize on strong regional employment prospects and will allow us to further scale our operations in the region.”

M.G. Properties Group is targeting additional acquisitions in Oregon and other Western states, according to the release.

The seller was Berkshire Group, which is headquartered in Boston. Berkshire Group was represented by Ira Virden and Carrie Kahn of HFF. Financing was arranged by Brian Eisendrath and Cameron Chalfant of CBRE.

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After years of gently encouraging developers to build affordable housing units, municipalities such as the city of Portland will soon have a chance to wield a much bigger stick.

A newly enacted state law enables local governments, beginning June 3, to require multifamily developers to include affordable housing in sizable projects – a regulatory approach known as inclusionary zoning. It does not apply to projects already in the pipeline.

There’s little doubt Portland will be in the vanguard of inclusionary zoning in Oregon. Commissioner Dan Saltzman said the city has already engaged a consultant to shape an inclusionary zoning ordinance.

“The chances are 100 percent the council will go forward and implement the solution as permitted by the Legislature,” he said.

What that means for developers remains to be seen, industry officials said. If Portland passes restrictive inclusionary zoning rules, it could stop projects cold. But developers said they could work with reasonable regulations.

“You have to make it such that it makes sense, because the alternative is you don’t build anything,” said Sam Rodriguez, senior managing director of Mill Creek Residential Trust.

The city will form a committee to oversee the consultant’s work, Saltzman said. The committee will include members of the development community.

Saltzman said developers will have an opportunity to be heard.

“We’re aware of their concerns,” he said.

The new law – Senate Bill 1533 – lifts a previous statewide ban on inclusionary zoning rules. Local governments can now require up to 20 percent of units in a project be affordable. The definition of affordable is broad – 80 percent or more of the median income for the county in which the project is built. And the law exempts single-family homes and multifamily projects of fewer than 20 units.

The law also requires municipalities to offer developers the option of paying a fee in lieu of including affordable units.

For developers, the particulars of inclusionary zoning rules will prove crucial.

“If the city is cognizant of the details, it could be an incredibly helpful program,” Rodriguez said. “The risk is if the city is stingy, or decides to provide a very small incentive, it could just stop a lot of projects, which in essence is going to make housing more expensive overall.”

Portland’s move toward inclusionary zoning comes against a backdrop of increasing concerns about housing affordability. The city of Portland is in the midst of a self-declared housing emergency.

In hopes of accelerating affordable housing construction, the City Council recently approved a streamlined design review process for multifamily projects that include affordable units.

Public officials complain developers have focused on building more-profitable luxury housing to the detriment of the city’s affordable housing stock.

The average monthly rent for new housing units in Portland last year was $1,954, or $23,448 per year, according to information presented by the Portland Housing Bureau to a legislative committee. Renters would have to earn $78,160 annually to afford the average rent, according to federal guidelines.

Portland has some of the nation’s fastest-rising rents. Average one-bedroom rents jumped 14 percent to $1,303 in March, according to Abodo, an apartment-search firm.

Developers generally acknowledge the need for more affordable-housing stock in Portland.

“Rightly so, the pressure to find solutions to help make housing more affordable is a key consideration for our city right now,” said Noel Johnson, vice president of Killian Pacific.

Yet developers fear poorly wrought regulations could slow or halt projects by making them economically unworkable, or interfere with financing.

“It could lead to a significant slowdown in how housing is produced,” Johnson said. “That’s what the skeptics expect, and unfortunately there is plenty of history to suggest that might happen. The optimists, and I’m one of them, hope the policy can be constructive.”

Christian Garner, chief investment officer of San Diego-based M.G. Properties Group, which recently completed the $57.85 million purchase of a 283-unit complex in the Gateway District, said the solution to the affordable housing shortage is to let builders do their jobs.

“If you let the builders build, they will build,” he said. “They’ll probably overbuild and due to that supply, prices will come down.”

Affordable housing is a burgeoning issue in fast-growing, attractive cities across the nation. New York’s City Council passed inclusionary zoning this week after years of debate.

New York City’s rules set more aggressive targets than is allowable under Oregon’s new law. Developers have a menu of options to choose from; one requires 30 percent of units be set aside for renters at 80 percent of area median income. Another “deep affordability” option requires 20 percent of units to be set aside at 40 percent of area median income.

In California, regulations meant to encourage affordable housing haven’t worked, Garner said.

“In California, they’ve tried all kinds of approaches to this,” he said. “They all have unintended consequences, and at the end of the day, they don’t really solve the problem.”

Jon Chandler, chief executive of the Oregon Home Builders Association, said the new law could have been much more stringent.

“Actually, I thought it turned out pretty well, especially compared to what it could have been,” he said.

The new law requires cities and counties that pass inclusionary zoning ordinances to offer developers at least one of a menu of incentives, including whole fee waivers or partial reductions, whole or partial waivers of system development or impact fees or finance-based incentives.

The law also lays out some additional incentives that cities or counties may offer. These include density adjustments, expedited permitting and modification of height, floor area or other site-specific requirements.

Rodriguez said incentives could be crucial to the success of inclusionary zoning in Portland.

“If there’s no incentive, very few if any developers will develop affordable housing,” he said. “If there’s no incentive, it’s just not going to happen. It’s not enough for the city to put a program together without understanding who the user is to make the program successful.”

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