ReCode Portland Public Comment
To the City of Portland,
On behalf of Maine Policy Institute, thank you for considering public comments and reducing regulatory burdens on Portland homeowners, renters, and property developers. While some of the changes in ReCode Portland’s First and Second Waves show movement in the right direction, they are not as far-reaching or effective as they could be.
Generally speaking, many changes involve shifting only one regulatory variable, such as height or setback. Height restrictions, setback restrictions, and land use restrictions generally restrict the housing supply, which can lead to artificially inflated property values and increased homelessness and poverty. However, studies have shown that only shifting a single regulatory factor while the others remain the same can significantly reduce positive development effects.1 Additionally, it should be noted that the continued existence of policies that have a chilling effect on development, like rent control and inclusionary zoning, will also reduce the positive impact these reforms will have on Portland’s housing market.
The analysis of the changes to specific zones, and how these changes can be improved, follows.
The shift in regulation from the current R-1 and R-2 zones to the new RN-1 zone allows low-density residential neighborhoods to take advantage of reduced setbacks and, for ex-R-2 properties, a minimum lot size reduction from 15,000 square feet to the new zone’s 10,000 minimum. However, the zone’s height, use, and lot size regulations remain unchanged, which will impact development and housing regulation in this zone. Allowing multifamily dwellings might encourage a housing supply shift, but failing to enable innovation in these other categories will reduce the impact of this change.
The new RN-2 zone allows more flexibility than RN-1, but this is largely a result of preexisting zoning rules rather than current reform. Reducing frontage requirements from 25 feet to a five-foot average with adjacent yards is a great reform. Still, without significant change in other categories, this change and the increased allowed property uses will also have a reduced impact.
RN-3, similar to RN-2, only reforms regulations on setbacks and property usage, leaving other regulatory factors the same. Like the above categories, this change may have some positive effects. Still, it does not go far enough to remove the regulations that substantially contribute to Portland’s housing crisis.
The draft rules reform RN-4 far more than the above zones, likely because the city is attempting to focus regulatory reform around transit corridors. These reforms would reduce minimum lot sizes from 6,000 square feet to 5,000, as well as lowering setbacks significantly but keeping the maximum height at 35 feet. While most of these changes increase the flexibility of the use of these parcels, the refusal to change the height maximum will mean that multifamily residences will have to get narrower without getting taller, thus reducing the efficiency of this reform.
RN-5 is one of the zones with the most disappointing changes. The draft rules’ reduced setback regulations are a good improvement, and the preexisting restrictions were quite flexible. However, the changes to this zone are almost nonexistent, and the new rules reduce the maximum height for 1-2 unit properties from 45 feet to 35. Additionally, this more permissive zone is not expanded at all in the new map, and many zone borders throughout the city remain unchanged.
RN-6 and RN-7 are both zones that encourage many high-density residential uses, and some of the reforms here are good in reducing minimum lot area and encouraging variable uses. However, these zones cover a tiny number of parcels throughout the city, and thus, the flexibility these zones and their reforms allow will have limited effects.
B-1, B-2, and B-2b are all zones in the mixed-use category, and the ReCode Portland Second Wave removes a lot of regulatory restrictions, such as minimum lot area and an increase in maximum height for specific properties. While these deregulations, coupled with an increase in allowed uses and a reduction in setbacks, combine to encourage property development effectively, these parcels are few and far between. Portland’s emphasis on transit corridors means that only a narrow portion of the city will be affected by these reforms, reducing the efficacy of any proposed rules. This is where something good occurred, but the impact area is too small. These zones should be expanded.
B-3 is similar in its light-handed approach to building regulation. While the above zones are focused on transit corridors, B3 is focused on the downtown area. Besides increased allowance of various high-density residential uses, very little reform happened in this zone though. The impact this zone has on Portland’s housing crisis would be larger if the zone were larger as well.
B-4 is a zone where allowing more variable uses and reducing setbacks are helpful, pro-market reforms. However, while the zone’s preexisting 65-foot max height allows for flexible development, the same can not be said for the 10,000-square-foot lot minimum and 60-foot street frontage minimum. As stated earlier, altering one or two factors in a zone without a change in a variety of regulations will significantly chill the effects of zoning reform.
For B-5 and B-6, the increased number of residential uses and low building height, setback, and area restrictions are preferable. While the purpose of these zones is to encourage urban development near the downtown waterfront, large parts of the downtown area would benefit from similar mixed-use and market-driven zoning.
The solitary reforms that occur in some zones without bigger changes will not significantly improve Portland’s housing market. In RN-1, multi-family units and increased uses are allowed, but setbacks are changed only slightly, and the maximum height is still only 35 feet. In RN-2, increased uses are allowed and setbacks are reduced, but the same 35-foot maximum applies.
Both of these reforms make small changes but fail to meaningfully change minimum lot size, maximum height, or setbacks. Thus, all these reforms do is let Portlanders build smaller residential buildings rather than larger ones, which is what multifamily properties truly need. Allowing multifamily uses on paper while making it incredibly difficult to build them will not effectively combat Portland’s housing crisis. These zone reforms are two clear examples of how Portland’s reforms are well intended but do very little in isolation from more impactful policies. When facing a housing crisis of this magnitude, Portland should be building up but it is still refusing to do so.
Generally, Maine Policy Institute has several recommendations on how to improve these draft rules. First, reductions in only one or two regulatory factors in a zone are highly ineffective, and reforms in height restrictions or setback requirements should be paired with reducing other regulations in the same zones. Second, greater shifting of zone borders should occur, as the reforms focus too much on transit corridors which will reduce the overall impact the reforms will have on housing quantity and pricing. Lastly, these zoning reforms should be paired with the removal of rent control and inclusionary zoning throughout the city.
Rent control and inclusionary zoning both have chilling effects on the development of multifamily properties and high-density housing. Inclusionary zoning reduces the ability of developers to guarantee profitability from new housing projects, especially middle-class apartments, compared to lower-income or luxury housing.2 Rent control also reduces the ability of landlords to adjust rent to inflation and demand and, therefore, discourages the creation of new rental units.3 While reducing the cost of housing is certainly a laudable goal, a large body of evidence shows that these policies reduce the availability of affordable housing rather than increase it.4
Please consider these comments when drafting Portland’s new zoning codes.
1 “How to Increase Housing Affordability: Understanding Local Deterrents to Building Multifamily Housing” Amrita Kulka, et al., Federal Reserve Bank of Boston, https://www.bostonfed.org/publications/research-department-working-paper/2022/how-to-increase-housing-affordability-understanding-local-deterrents-to-building-multifamily-housing.aspx
2 “Modeling Inclusionary Zoning’s Impact on Housing Production in Los Angeles: Tradeoffs and Policy Implications” Shane Phillips, Terner Center at Berkeley, https://ternercenter.berkeley.edu/research-and-policy/inclusionary-zoning-housing-production-modeling/
3 “What does economic evidence tell us about the effects of rent control?” Rebecca Diamond, Brooking Institution, https://www.brookings.edu/articles/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control/
4 “Rent control effects through the lens of empirical research: An almost complete review of the literature” Konstantin A. Kholodilin, Journal of Housing Economics, https://www.sciencedirect.com/science/article/pii/S1051137724000020#:~:text=Rent%20control%20can%20also%20negatively,participants%3A%20both%20tenants%20and%20homeowners