In recommendations released today, Metro Chief Operating Officer Martha Bennett recommends holding the line on the region's urban growth boundary in 2015. The Metro Council will make a final decision on the boundary in November.
A group representing single-family housing developers in the Portland region has released a draft analysis of whether the region needs more land to serve its 20-year housing needs. The Home Builders Association of Metropolitan Portland commissioned the report from PNW Economics, a local economics consultant, and sent it to Metro Council President Tom Hughes and Metro staff two weeks ago.
The Home Builders' draft analysis criticizes some findings in Metro's draft 2014 Urban Growth Report, a peer-reviewed document the Metro Council uses to determine whether an urban growth boundary expansion is necessary. Metro completes such a report every six years under state law.
Metro's most recent report uses extensive modeling and market analysis to conclude that, collectively, the region's cities have plans that can accommodate expected household growth over the next 20 years without expanding the region's urban growth boundary. This determination factors in the thousands of acres inside the urban growth boundary that are either vacant or likely to redevelop.
Read the Home Builders Association's draft report
By contrast, the developers' report uses an alternative set of assumptions to argue the region needs to expand the urban growth boundary to accommodate roughly 40,000 new single-family homes. That's about as many households as there are today in Gresham.
"Metro has said all along that [the conclusions in its urban growth report] are one possible outcome. We thought it'd be important to look at the possible ramifications of that outcome," said Dave Nielsen, the homebuilders association's executive director.
The builders' main question: will future residential development in the region be as dominated by apartments and condos, and as concentrated in Portland city limits, as Metro's report says? Or will past trends of primarily suburban development hold into the future?
Related: Is Portland's growth spurt for real? MPAC continues debate on growth forecast
The Metro draft report predicts that currently-adopted state, regional and local plans, along with demographic and economic changes, will produce a major shift in the types of housing that get built in the next twenty years, essentially reversing past trends of the percentage of new construction that's detached homes or apartments and condos. Metro's report also forecasts that slightly more than half of new homes in the region will be built inside Portland city limits – most of them multifamily.
That adds up to considerably less land needed at the edges of the region for suburban single-family housing, according to Metro's draft report. Though expansions of the urban growth boundary might be needed in the future, the report concludes there is no need for an expansion in 2015.
Nielsen agreed that a shift in housing demand is happening – but he has doubts about the magnitude of the shift described in Metro's urban growth report. "We're trying to prepare our industry for what those shifts look like," he said. "Our concern is – if we're wrong, then by the time we make the decision [to expand the growth boundary], that kicks off action on new construction until even later."
Smaller households, smaller homes?
Metro's predictions were developed through a peer-reviewed process that incorporated the best information available about changing economics and demographics and how those factors might affect communities' local plans, said Metro planner Ted Reid.
Both reports make some similar assumptions about the region's future demographic change. For instance, both expect considerable growth in single-person households in the region. Despite those demographic shifts, the Home Builders' draft report suggests that the region should more or less continue to build the same share of single-family homes as the region has built in the past, when families were larger.
The builders' draft analysis also suggests that most low-income households will need a single-family home, despite conceding that the market cannot likely build single-family homes cheap enough for those households to buy. Metro staff and the Home Builders have begun discussing those assumptions.
Nielsen blamed rising home prices primarily on the cost of land and local development fees. Many cities have construction fees to pay for new schools, streets and sewers that new residents require. Metro also charges a tax on new construction, totaling about $300 for a building that costs $250,000, which it uses to help cities plan for growth.
Together, these costs per house can reach "$150,000 or more before someone digs a hole," Nielsen said. "If that's your starting cost, there's no way you're going to be able to build affordable housing."
Metro Council President Tom Hughes said in a statement that he welcomed the Home Builders Association's input, but defended Metro's approach to forecasting, which he said "uses the best market-based modeling available."
“Every month we host delegations from other cities that want to copy what our region has accomplished in maintaining a high quality of life while growing at one of the nation's fastest rates," Hughes said. "While the Home Builders have been great partners as our region discusses the future, the PNW Economics report seems to suggest we ignore changing trends and plan based on the way things were.
"Nostalgia is not a good planning principle; it’s like driving a car while looking in the rearview mirror," Hughes added. "Having said that, we look forward to discussing it further with the Home Builders as they develop a final version."
The Metro Council expects to continue conversations about the urban growth report's findings and conclusions through 2015.
Learn more about the 2015 growth management decision