Seattle developer Vibrant Cities takes a micro approach to Portland’s affordable housing challenge – Puget Sound Business Journal

A Seattle developer believes he has found a way around the city of Portland’s inclusionary zoning requirements that have thus far vexed some of his Portland peers.

And in the process, James Wong of Vibrant Cities is also hoping to provide some relief to the affordable housing crisis the Portland policy was designed to address.

His solution: micro apartments, tiny units that include everything but a kitchen, exempting them from the requirements of the inclusionary zoning policy.

“All this (inclusionary zoning) stuff, it’s killing us,” Wong said. “With the cost of construction going up and now IZ, it’s hard to make a project pencil right now. We believe we can help address the affordable housing problem in Portland with these units, and they’re a market-rate solution.”

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James Wong is co-founder and CEO of Seattle’s Vibrant Cities.

The Portland City Council in 2016 passed the inclusionary zoning policy requiring new multifamily developments with 20 or more units to reserve 20 percent of those units for households making 80 percent of area’s median income. For a family of four, that’s currently $65,100.

The development community warned that the new requirements would render projects financially unrealistic, saying it would slam the door on production of much-needed new housing units. As a result, many of them rushed to get new building permits grandfathered in before the policy took effect.

Something similar is occurring in Seattle where some developers of smaller apartment buildings are rushing to vest their projects before the Mandatory Housing Affordability program is implemented citywide.

Seattle’s MHA program is part of the city’s Housing Affordability and Livability Agenda. “All HALA does is add more complication, confusion, uncertainty, cost and time,” Seattle developer Joe Paar said.

Since the Portland inclusionary zoning policy was enacted, only a handful of private projects subject to the affordable housing component have moved forward, while several developers have looked to the suburbs to pursue new housing projects.

Wong, though, is pursuing two apartment projects in North Portland that will include micro apartments.

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The Brio Lofts will bring 96 micro apartments and six retail spaces to 3912 N. Vancouver Ave. Because the units don’t feature their own kitchens, but instead share common areas, the development does not fall under the city’s Inclusionary Housing rules for affordable housing.

One called Brio Lofts will have 96 units averaging 250 square feet with rents of $1,099 per month, all utilities included. The other, Zeal, will have 216 units, similar in size and price to Brio.

Both will break ground this year and wrap up in late 2019 and 2020, respectively.

Though the Brio and Zeal projects have enough units in them to trigger the inclusionary housing requirements, they fall into a different housing category that’s exempt from the policy. Each unit will have its own bathroom, kitchenette, desk, bed and seating area — but not a full kitchen. Those will be in common areas on each floor, allowing it to be categorized as a “Group Living” use, which isn’t subject to the inclusionary housing policy.

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Zeal, at 3185 N. Vancouver Ave., will have 216 units of micro housing — about 250 square feet per unit.

According to Wong, zoning in Portland only allows one such “congregate housing” project in a 500-yard radius, which helps prevent overbuilding of such high-density projects.

Wong also said the micro approach isn’t solely about working around the city’s policy. He said the micro units will provide an affordable option for renters who want to live close-in but who can’t afford a larger unit.

According to Rent Café, the average one-bedroom rent in Portland is at $1,425, while a studio goes for an average of $1,170.

Wong said young professionals are the target audience for the new projects. He is also an investor in two other micro projects in Portland.

“If Portland really wants to support affordable housing and let the market decide the solution, these are great options,” he said. “If we are building affordable housing — and I mean affordable market rate housing — there is always going to be a market for it.”

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