Portland’s latest housing report for 2023 has sparked debate among developers, city officials and housing advocates. The report reveals that while the city approved a record number of new housing units, the actual completion of these units has significantly lagged behind. This raises questions about the factors influencing housing development and the role of inclusionary zoning and other local policies in shaping the city’s housing landscape.

About Portland’s 2023 Housing Development

According to the report, Portland’s planning board approved 1,281 new housing units in 2023, the highest number since 2010. Despite this record-breaking approval, only 26 of these units have been completed. Additionally, 570 units approved in previous years were finished in 2023, highlighting a broader trend of delayed project completion. These numbers point to a growing gap between approved and built units and raises concerns about the city’s ability to meet its housing goals.

Community Reactions to the Report

Developers and members of the Portland Regional Chamber of Commerce argue that the city’s inclusionary zoning requirements under the Green New Deal are stifling housing development. Jonathan Culley, managing partner of Redfern Properties, noted that only two projects meeting these requirements have been completed since the policies were introduced, suggesting that the rules may be discouraging development.

“And on page 19 of the report, it says that only two [inclusionary zoning] projects have been delivered in the four years since the Green New Deal. So it’s absolutely had a dampening effect on housing production,” Culley told the Press Herald. 

Former Mayor Ethan Strimling, on the other hand, believes the inclusionary zoning policies are not to blame for the delays. Strimling points out that the number of completed units has increased in recent years despite the new regulations. He argues that the policies are essential for promoting affordable housing and that more units are being built than before the Green New Deal was enacted.

“Every year the chamber of commerce claims inclusionary zoning and rent control are killing housing in Portland. There is just no data to show that. You look at these numbers and, literally, we have more housing in the last three and a half years than we did in the four years before the Green New Deal and rent control,” Strimling said. 

Potential Factors Leading to the Delay Between Approved and Built Units

Several factors could be contributing to the delay between approved and built units. Economic conditions, such as rising interest rates and challenges in converting existing buildings, are likely playing a significant role. Additionally, some developers may be opting to build smaller projects or pivot to different types of developments like hotels to avoid the costs associated with inclusionary zoning requirements. Eamonn Dundon, director of advocacy at the Portland Regional Chamber of Commerce, recognizes how inclusionary zoning requirements discourage housing development.

“York Street is a good example, because they were going to build 14 units of housing, but to do that, they were going to have to pay $666,000 in fee-in-lieu if they didn’t provide the (workforce) units onsite,” Dundon said. “Switching to a hotel, you have to pay $66,000. So it’s a huge deal, and unfortunately, it’s what our ordinances currently incentivize.”

Inclusionary Zoning and the Portland Green New Deal

Inclusionary zoning refers to policies that require developers to include a certain percentage of affordable units in new housing projects. In Portland, the Green New Deal mandates that 25% of units in developments of 10 or more units must be affordable or “workforce units.” This means that they should not cost more than 80% of the area median income. Alternatively, developers can opt to pay a fee of $150,000 per unit to the Portland Housing Trust Fund, which supports affordable housing initiatives.

While these policies aim to increase the supply of affordable housing, some argue that they create financial challenges for developers, which potentially slows overall housing production. Critics suggest that the high costs associated with meeting these requirements or paying the fee-in-lieu deters developers from pursuing larger projects in Portland. This may lead them to consider other towns with fewer restrictions. 

Conclusion

The 2023 housing report highlights some important issues in Portland’s housing market. The debate around inclusionary zoning and the Green New Deal reflects broader tensions between promoting affordable housing and encouraging new development. As Portland continues to navigate these challenges, the city will need to acknowledge the impact of its local rules and the role they play in reducing much-needed housing development.

Afua Kwarteng is a graduate student at the University of Maine pursuing a dual MBA and Global Policy degree. She graduated from the University of Ghana with a BA in Political Science and Swahili. She is passionate about state and international policy and is serving as Maine Policy Institute’s 2024 communications intern.