City Plans Fail Market Test

The Portland suburb of Wilsonville wants to see a mobile home park redeveloped into “workforce housing.” A buyer made an offer on the park, but the deal fell through when the city’s prescriptive plans proved to expensive for the developer.

The city wanted “five- to eight-story buildings with structured parking underneath,” says the developer. Such construction “requires concrete and steel construction,” which is expensive. As a result, “affordability goes out the window.”


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Wilsonville is at the south end of Portland’s urban-growth boundary and is therefore surrounded on at least three sides by thousands of acres of open space. But the planners envisioned “vast open spaces” in the development.

So for now, residents of the mobile home park — who probably have the most affordable housing in the area — can breathe easy that they aren’t going to lose their homes right away. But eventually they will, probably just as soon as Wilsonville planners realize they can use tax-increment financing to subsidize the expensive development they want. Planners believe it is more important that people adopt the New Urban, mixed-use lifestyle than that they have housing they can afford.

If planners were truly interested in “workforce housing,” they would expand the urban-growth boundary. But Oregon planners live in a fantasy world in which you can limit the supply of some good and imagine that the increasing price for that good has nothing to do with your supply restrictions.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

15 Responses to City Plans Fail Market Test

  1. TexanOkie says:

    Developers are [in]famous for being able to read short term market trends brilliantly without being able to foresee past Tuesday. Of course, by then, they’ve already made their millions and jumped ship, so it’s of no consequence to them.

  2. prk166 says:

    TexanOkie —> The first problem with that is it’s wrong. The developer is not meeting short-term needs especially when it comes to residential property. The buyers are looking to their own long term needs. Unless they’re planning to rent the home out or flip it, the buyer wants that home to meet their long terms needs (at least as well as they can afford). That in turn causes the developers to meet long term needs.

    The other issue I have is the implication that somehow government planning every meets any needs, long term or short term.

  3. johngalt says:

    Lots of developers are also bad at reading those trends and go broke Texan.

    Randal is right, if the city forces the developers to spend $200-300 per sq ft for construction they cannot possibly build workforce housing without subsidy.

  4. TexanOkie says:

    I am not condoning the urban standards that Wilsonville forced on the interested developer unless it was legally incorporated in a comprehensive that the community created. At that point, the comprehensive plan is paramount to development law. However, the great thing about comprehensive plans are that, with enough support, in a democratic process the plan can be amended to incorporate darn near any change citizens want.

    Also, mass-produced homes built to last twenty to thirty years are not long-term – they’re merely wasteful. Wasteful of the raw materials, wasteful of the means for any kind of sustainable (which is NOT a bad word AT ALL) economic or social fabric, and wasteful of future tax dollars and economic investment it takes to redevelop blight.

  5. Dan says:

    Good discussion.

    In WA state, affordable housing in the form of mobile home parks is going away in favor of higher-density, usu. townhomes or apartments, as there is a greater premium on those forms of housing & naturally the developer/owner wants to make the most money possible off of the land. Wrt parking garages, I’m sure johng will agree that no one wants to build something at 300.00/sf that doesn’t allow rent (as parking stalls do).

    Wrt fringe single-fam as “affordable housing”, affordable to whom? Laying pipe and local road in greenfield is just a form of subsidy, as general fund money or bond money is usu. used for local road repaving (and if local districts do it, assessing “affordable homes” for repaving at less than economies of scale makes the “affordable” go away right quick). Compact development is far more affordable, hence people liking it. Now, whether 7 stories is appropriate is a different story.

    DS

  6. mmmarvel says:

    While I do not live in Wilsonville, I do happen to live in a mobile home park. My rent (for the space) is $450 a month (which includes water, sewer and garbage). My home is over 1600 square feet. When the ‘planners’ can come up with a home of that size, for that price – let me know; until then – back off.

  7. Dan says:

    When the ‘planners’ can come up with a home of that size, for that price – let me know; until then – back off.

    Tell the person who owns the land under you to back off; when that land is sold, you’ll be looking for affordable housing. Hopefully someone is working on getting some near you.

    DS

  8. mmmarvel says:

    Dan – you are correct, which is but one of the many, many reasons I’m trying very hard to find a job in another area of this fine country of ours. I know the area that I wish to live, you can buy a house (brick), on it’s own land, 1600+ square feet with it’s own private swimming pool for around $150,000. The people there respect private property rights, don’t have income taxes and property taxes are low. While there is a sales tax, overall, I’ll be savings a lot more money (even if I made less) than what it costs to live up here.

    As long as the UGB exists, housing costs in this area will continue to rise. I’ve lived here for many years, the ‘progressives’ have made it an area that I no longer wish to live. It will fall under it’s own weight and then the general population will awaken to the snafu that the planners have condemned this area to.

  9. johngalt says:

    Texan, I have heard that 20-30yr house life for over 30 years and last time I went inside a house from the 70’s, even the cheapest low-end tract house with single wall construction, it was still providing shelter.

    Dan, developers install those lines in greenfields, not municipalities. They are way cheaper than replacing or upsizing lines close in.

    I can build houses for $50 per net sq ft, townhouses for $65 per net sq ft and 6 story multi-family for $350 per net sq ft. It doesn’t take a rocket scientist or planner to realize that in all but the highest end areas, high density doesn’t pencil out.

  10. aynrandgirl says:

    It’s not just the park owners wanting to sell out. Cities & counties want the huge increases in property tax and transfer tax revenues that would accrue to replacing parks with regular residential subdivisions, but they usually can’t force them to sell. Fortunately somebody solved that problem: Melbourne, FL and its surrounding county rezoned every piece of mobile-home land to single-family and/or townhome, with *no* grandfathering. That means that lot owners and parks can’t replace mobile homes that leave. In other words, their rents have disappeared but their taxes & insurance remain the same. This destruction of the economic value of their land means that eventually they will be forced to sell to developers, and the county will get its taxes.

  11. Dan says:

    I can build houses for $50 per net sq ft,

    Hard to believe. When I sold floor covering 20 years ago in CA, 105/sf was good. Around here its double your net.

    DS

  12. johngalt says:

    I just got bids in on a project that I am starting this month. Very nice small houses with attached garages, forced air gas heat with A/C, custom cabinets, tile countertops, hardi-plank siding over a rain-screen, architectural roofs, low e windows, gas fireplaces, etc.

    A 1500 sq ft house (living space so it excludes the garage) will cost me $78,970. A 2000 sq ft house will cost me $96,905.

    This is before value engineering/negotiation that we think will reduce that price by around $5 per foot.

    If I had to pay $100 per sq ft for construction I could never sell them at $150-160 per sq ft after paying for permits, financing, closing costs, etc. which run close to $50 per sq ft, not to mention land and profit.

  13. Dan says:

    What’s your land cost jg?

    DS

  14. johngalt says:

    $60K per unit

  15. Dan says:

    So ~110 total. That’s pretty good.

    DS

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