Want more housing? Build a landlord.

Posted in

By Joe Cortright

If we’re going to have a lot more missing middle housing; we’re also going to have a lot more landlords

Accessory dwellings, duplexes, triplexes and fourplexes are suited to “mom-and-pop” landlords, but tough tenants rights requirements may discourage many homeowners from creating more housing.
By Ethan Seltzer

City Observatory is pleased to feature this guest commentary by Ethan Seltzer. Ethan Seltzer is an Emeritus Professor in the Toulan School of Urban Studies and Planning at Portland State University. He previously served as the President of the City of Portland Planning Commission and as the Land Use Supervisor for Metro, the regional government. He has lived and worked in Oregon and the Portland region since 1980 and is a contributor to City Observatory. For the past 8 years he has been the co-owner of one rental unit in the City of Portland that has been in the family for 11 years.

Portland, like a few other states and localities in the US, is rethinking it residential zoning. Single household zoning occupies about 40% of the land in Portland, and the lion’s share of land zoned for residential use. Today, Portland is growing rapidly, but the new housing to accommodate that growth is largely being built outside of the single household zones.
Sure, Portland has had zoning to allow Accessory Dwelling Units (ADUs) on the books since 1980, and has long allowed, by right, duplexes on corner lots in single household districts. However, those housing types have amounted to a mere trickle of new housing capacity in the last 40 years, particularly when compared with the rate of population growth and its associated growth in the demand for new housing.

In recognition of the role that every residential zoning district and every neighborhood has to play in meeting the needs of Portland residents for suitable, affordable housing, the City embarked on its “Residential Infill Project.” The Residential Infill Project, or “RIP,” was created to devise new rules for adding missing “middle” housing types to existing neighborhoods:
By updating the rules that govern the types of housing allowed in our neighborhoods, we have an opportunity to accomplish two main goals: 1) Expand housing choices in residential neighborhoods to help ensure a more inclusive and diverse community. 2) Limit the size of new buildings to bring them more in line with existing homes. (https://www.portlandoregon.gov/bps/article/738843, page two)

Far from a wholesale demolition order for existing neighborhoods, the Residential Infill Project envisions an orderly and incremental addition of new housing types to existing neighborhoods, including the retention and modification of existing structures to contain more than a single dwelling unit.

However, missing completely from the RIP is the fact that the creation of new “middle” housing units brings with it the creation of a vast number of new landlords. Phrased another way, the success of Portland’s Residential Infill Project rests entirely on the emergence of a large number of individual land and homeowners willing to become landlords. Build an ADU, and you are now both a homeowner and landlord. Convert a single household dwelling into a duplex or triplex, and you’ve become a landlord.
Because of the incremental nature of the changes, and the relatively small scale of the infill, economies of scale are hard to come by. Certainly someone will figure out a business plan to take advantage of this new development capacity at scale. For the most part though, it is dependent on individuals willing to assume the risk of being a landlord. In short, meeting the goals of the Residential Infill Project to expand housing choices in all neighborhoods and for all households, and to keep new development small in scale, requires a new cadre of committed landlords.
Interestingly, just as the City and the State of Oregon are taking steps to require “middle” housing development opportunities in all single household zones, they are also taking steps to enact new tenants’ rights laws at the behest of the same coalitions advocating for the zoning changes. In Oregon a desire to sell a unit is no longer a legal reason to ask a tenant to leave. In fact, tenants now have a right to stay until the owner has a signed sale agreement with a new buyer. In Portland, no-cause evictions are, for the most part, illegal.

If you are a large landlord, this is simply adding to the cost of doing business. Leases will change, lawyers will be involved, and rents will rise to incorporate and cover these new costs of being a landlord.
However, for small landlords, owners of single rental units, or those contemplating using their existing properties more intensively, these new controls on the real excesses of corporate housing rental companies will also apply, for the most part, to them. This means that the uncertainty associated with owning rental property has just shot up for those considering becoming a part of the “middle” housing movement in Portland and Oregon.

The reaction on the part of small, prospective “middle” housing landlords could take several forms. They may decide to skip it entirely. Or, they might make affordable rents much less affordable to cover the risk. Or they might not put the units they create on the market, renting instead through AirBNB or simply through word of mouth to friends and family.
In all cases, the lack of attention to the needs of small landlords in both the tenants’ rights acts and the Residential Infill Project does not bode well for encouraging a large new group to become the landlords that Portland needs. In short, we’re on a path to become a city of impersonal, large, corporate landlords when what we’ve been working towards, apparently, is just the opposite.

Of course, it doesn’t need to end up this way. Portland could take steps to encourage and incentivize small landlords. It could recognize that there is a world of difference in capacity between those owning 4 or fewer units and those building 50 units at a crack. It could do more to bridge the gap between small landlords and tenants, creating programs to help them find each other and to negotiate mutually fair and supportive leasing agreements. It could even be so bold as to create nonprofit, neighborhood-based housing management associations to make it easier, simpler, and more transparent for investors and tenants to find and hold places in our City.

Unfortunately, the City is pursuing none of these, or to my knowledge, any others. To date, the City is seeking “middle” housing at the same time that it’s villainizing the landlords it’ll need to be successful. Tenants’ rights are important and needed. But more landlords are needed now. Landlords and tenants need each other, and simply changing the zoning is, at best, less than half a step in the right direction.

Posted in

Leave a Comment