Q & A with Andy Duyck, Washington County Commission Chair

 

You have served as a Washington County commissioner for 24 years and as the Washington County board chair for the past eight years. In January, you will retire from county politics. Why?

I came to politics in 1994 with of a willingness to serve but no particular desire to make it a career. It has been an honor being elected multiple times, but it has never been my real passion. For several years now, I have yearned to return to a more private life with the hope that I have left the county in a better place because of my service. I believe that the county is positioned well with good leadership and good staff and will continue to lead the state both economically and in livability. It is with mixed emotions that I move on to the next stage in my life.

 

 

In your final months in office you have chosen to the lead the opposition to Measure 26-199, a $652.8 million metro-wide property tax bond measure, proposed by Metro, ostensibly to build affordable housing. You recently told the Portland Tribune, "We see that no matter where we are, it doesn't matter if you're in a dense metropolitan area like Portland or if you're out in the rural area, housing is just not available."

If that's true, why are you against the measure? And why are so many of your colleagues, local and metro office holders, for it?

Although I have become the public face of a campaign called "Affordable Housing for Who?" I joined that organization before Metro put this measure on the ballot. It is our responsibility as elected officials to speak up when we believe that the public is being hoodwinked. Although public housing is our responsibility, we should analyze the effectiveness of our policies and discard those that make the situation worse. An additional tax burden for 30 years will do little to help the overall situation. It suits us politically (who doesn't support affordable housing?), but does little to address the underlying issues of housing supply and cost. Additionally, I believe that we should be as compassionate to those who struggle with housing costs who will see their rents or taxes increase, as we are for those few who will benefit from subsidized housing.

Admittedly, it is difficult for those in office to oppose a measure that purports to address affordability, even when they know that it will have a long term negative impact on the majority of those struggling with housing costs. An added reason that so many elected have either supported the bond or remained silent is that, should the measure pass, many of the local jurisdictions will be beneficiaries of the additional tax revenue.

 

 

Currently Metro's mission involves running the Oregon Zoo, garbage and recycling, and oversight on regional land use issues. Now, because of the affordable housing/homeless crisis in our region, Metro is about to enter the business of building affordable houses via grants to local governments. You call this major expansion "mission creep." Can you expand on that for us?

If passed, Measure 26-199 will become the largest revenue stream controlled by Metro. There is little doubt that this stream will be used to control the actions of local governments as other grant programs have been. Metro is not a recognized housing authority as are the three metropolitan counties and large cities, nor has authority for housing finance or production been granted them in their charter. Yet, this control of tax dollars will put them in the driver's seat if this measure passes by dictating to local housing authorities the conditions under which the grants will be approved. Metro also intends to hold back ten percent of the dollars for its own use, and another five percent for administration costs. This effectively only leaves 85 percent return to the jurisdictions from whom the taxes have been collected.

 

 

To someone driving through the city, it seems that Portland has been awash in construction activity.

Every apartment construction site of five stories or more warrants a tall construction crane, often requiring demolition of old structures, temporary vacation of streets for construction staging, and regular deliveries by construction vehicles. KGW reports 30 construction cranes towering over the city, which is more than San Francisco, Washington, D.C., and New York.

What goes unnoticed, however, is the dearth of single-family construction on the urban fringe. Few residents are aware of the overall decline in housing production in comparison to activity before the last recession.

What can Portland suburbs do to add to the supply of both market rate and affordable housing? What is Metro doing -- or what should Metro be doing -- to increase the supply of housing in our grrowing region?

The solution to housing must be consistent and long term. We didn't get into this situation overnight and we are not going to get out overnight. This housing shortage was actually predicted during the last recession but, because the market was cold, elected leaders acted as if the economy would never rebound. This short term thinking led to policies that actually discouraged forward thinking and planning. It takes on average of 10 to 15 years for land added to the Urban Growth Boundary to be built upon. Most of this is because of planning and financing challenges. Yet, regional leaders continue to constrict the supply of buildable land by either counting acres that are not buildable, or counting the potential for high rise housing without regard to the market affordability of that housing.

Local governments also have a role in affordability by reducing wait times for permits, reducing permit fees, and controlling SDC (system development charges) costs. These measures could help decrease the time to market for housing which would put downward pressure on pricing. Without an adequate supply of housing for all, housing which is affordable to lower incomes will always be out of reach.

 

 

Randall O'Toole of Washington, D.C.'s, Cato Institute told this newsletter last November, "Looking around the country, there is practically a one-to-one relationship between urban areas with high housing costs and urban areas with growth boundaries or similar land use restrictions. This has been proven by many researchers. For example, Wharton Business School put together a database of land use regulations for thousands of cities across the nation. A University of Washington economist compared this database with housing prices and concluded there is 'a tight association between land use regulations and housing price growth.'"

After you criticized the region's Urban Growth Boundary (UGB) as the a main driver of housing prices in the metro area, Portland City Commissioner Nick Fish called your proposal to expand the UGB a "red herring."

OPB reporter Anna Griffin wrote, "[Clackamas County Board Chair Jim] Bernard thinks that Duyck's position -- that if government just gets out of the way, the private sector will build more affordable housing -- is naive.">

Why do you think that so many officeholders in our region (Nick Fish, Jim Bernard, etc.), despite dramatic increases in housing prices, refuse to consider the UGB as responsible for price increases?

Too many elected leaders are "true believers" in the utopia of a tight urban form. While the UGB has some benefits (farmland preservation, open space, walkability), it also has serious negative consequences (housing costs, congestion, higher cost of infrastructure, no backyards to play in). There are those who choose to ignore that land inside the UGB can sell for as much as a million dollars an acre, while land adjacent to it on the other side of the boundary sells for an average of $15 thousand an acre.

It's crazy to say that land price has no bearing on home prices, yet many have said it with a straight face! I've had it said to me that even the rural areas of our State have an affordability crisis, therefore the UGB has no bearing on costs. However, those same individuals forget that our land use laws stifle construction in rural communities as well, creating the same upward pressure on prices. If it is naive to believe that the market works when government stands down, then our founding fathers were pretty naive and I'm in good company!

 

 

You recently said at a Portland City Club debate that you believe the metro area is as many as 70,000 housing units short and that Measure 26-199 is flawed because government should not be in the housing business and the measure "will not produce enough housing -- up to 3,900 more units -- to make much of a difference."

Is Measure 26-199 another example of government chasing one bad policy (getting into the housing business) on top of another existing bad policy (the UGB)? What would be your best solution to solving the housing crisis?

Metro has actually stated that we need as many as 40,000 affordable housing units region-wide. The bond is expected to fill less than 10 percent of that need. Only the market can make a permanent impact on affordability. I do believe that there is a role in government for housing authorities to work with non-profits to provide housing for those with temporary setbacks as we do now. But this does not involve a 30-year commitment of taxes. In fact, Washington County together with nonprofit housing providers, is adding significantly to the public housing stock without having to raise taxes on the public. However, the larger issue of housing must be dealt with through long term market actions and policies including adequate buildable land, lower permit fees, SDC waivers and lower property tax burdens.

 

 

At the City Club debate on Measure 26-199, Lynn Peterson dismissed your attempt to explain basic "supply and demand" housing economics as irrelevant. Her words, "We've heard nothing here."

And the debate's moderator, Karol Collymore, senior manager of community impact at Nike, lectured you on race sensitivity after you objected to an audience question that suggested your opinions on the housing crisis were "rooted in racism."

Why are feelings so high about this ballot measure? And why are the arguments on the left so emotionally driven?

The question that I received was in itself a racist question, implying that because I come from a background of "white privilege" I am unable to represent the position of African-Americans on the housing issues. Our director of housing in Washington County, a man I admire, is himself a man of color. Yet he is unbiased in his position and looks at the issues from an economic rather than racial perspective. Although unfortunate, the comments about race show that this is more about social engineering and racial preferences than it is about the economics of housing affordability for anyone in need regardless of race. I believe that if the proponents of this housing tax feel the need to attack me on the race issue, it is a sign that our arguments cannot be refuted on merit.

The stakes are high because Metro sees this as their opportunity to gain control of a major revenue source. For others, they don't care where the money comes from as long as they get it.

 

 

Portland Mayor Ted Wheeler has been a big proponent of inclusionary zoning and got the city council to pass an ordinance mandating that new multiple housing unit projects set aside a certain amount of units for low income residents. What do you think of inclusionary zoning?

Inclusionary zoning is a way to force builders to take a loss on a certain number of housing units so that they may remain "affordable." Of course, that is a terrible business model, so the builder must pass the cost on to the market rate homes instead. It is a way to make the next homebuyer pay a subsidy to his neighbor which only increases the cost of his own home.

Although not fair, it would be a successful strategy if it were not that inclusionary zoning has been shown to be a disincentive to new housing production and only aggravates the situation in the long term. Anything that restricts the supply of housing is a bad policy if the goal is to have an adequate supply of housing that is affordable to people of all income levels.

 

 

In the contest between Bob Terry and Kathryn Harrington, who is your choice to succeed you as Washington County Board Chair? What is at stake in this race?

Washington County has had a long history of thoughtful policymaking and fiscal responsibility. I have worked with both candidates for many years and see stark differences. Bob Terry is a current County district commissioner and has been instrumental in developing solutions for the mentally ill, transportation, housing and the many, many issues that the county must deal with on a daily basis. In addition, he has shown remarkable fiscal restraint that has put the county on a sound financial footing. Washington County is well positioned to weather the PERS wave, address transportation and congestion, as well as to thoughtfully work on some of our nontraditional challenges such as homelessness.

Kathryn Harrington has a political history as well. She currently serves as a Metro Councilor and has supported tax increase after tax increase. At the same time, I have heard no acknowledgement of the accumulated affects of taxes on housing costs. Her answer is simply to place another tax on the ballot to address it. She has promoted using transportation funding which our voters approved many years ago, for the increase in social programs. This irresponsibility with taxpayer money is why there is so little trust in our elected leaders.

Washington County is a special place. It took years of consistent, thoughtful leadership to make it that way. Based on the past history of both candidates, only Bob Terry is qualified to address the challenges that our county is facing both now and into the future.

Grab Your Wallets

And just say yes, no and hell no
By Eric Fruits

Oregon voters are facing three ballot measures that could have big impacts on their bank accounts. While the governor's race is attracting most of the attention, voters should spend some time considering these three measures.

State Measure 103 bans taxes on groceries. Grocery taxes are among the most regressive and least popular taxes. For lower income households, grocery purchases account for about 10 percent of annual spending. For the highest income households, groceries account for about five percent of annual spending. Thus, a grocery tax would hit poorer households harder.

Opponents of Measure 103 point out that Oregon does not currently have a tax on groceries and that many states with sales taxes typically exempt groceries. Portland Measure 26-201 (discussed below) exempts grocery sales from its proposed gross receipts tax. Nevertheless, two years ago, voters overwhelmingly rejected Oregon Measure 97 largely because the measure would tax sales by large grocers such as Fred Meyer, Safeway, and Costco. Last year, the City of Ontario imposed a sales tax that explicitly included groceries, food, and beverages, but the tax was overturned by voters this year. Over the years, Multnomah County has considered imposing a tax on "sugary drinks." These efforts indicate that groceries are under ongoing threats of sales or gross receipts taxes.

Perhaps the strongest argument against Measure 103 is that it creates a constitutionally protected carve out protecting groceries from future sales taxes. Why exempt caviar and filet mignon from sales taxes, while exposing school clothes, textbooks, and household supplies to the threat of future sales taxes?

Until the PERS crisis is resolved and Medicaid spending is brought under control, Oregonians will continue to face legislation and initiatives to add a sales tax to boost government revenues. Measure 103 draws a clear line that groceries should be exempt.

Portland Measure 26-201 is a gross receipts tax on retail sales in the city. It requires certain retailers operating in the City of Portland to pay a one percent surcharge on gross revenue from retail sales within the city limits. Tax revenues from this gross receipts tax would be placed in a Clean Energy Community Benefits Fund that would distribute the funds to private Oregon nonprofits for renewable energy, energy efficiency, and "green" infrastructure projects as well as job training for traditionally underemployed or economically disadvantaged workers.

If the measure is approved by voters, the average Portland household would face a tax burden of $166 a year. Like nearly all gross receipts taxes, the Portland measure is an unavoidably regressive tax that burdens lower income households more than higher income households. The tax burden for the lowest income residents would amount to approximately one percent of household income, or more than five times the burden faced by the highest income households.

The measure is poorly worded. The measure exempts public utilities from the retail sales tax. At the same time proponents claim Comcast would be subject to the tax -- even though Comcast is a monopoly provider of cable television service in Portland and is regulated as a public utility by the Mt. Hood Cable Regulatory Commission.

There's no nexus between a tax on retail sales and clean energy. It should come as no surprise that the nonprofits who would receive the funds are the same nonprofits that wrote the measure and are campaigning for it. It was designed to generate a steady flow of money from taxpayers to nonprofits.

Measure 26-199 is Metro's $652.8 million affordable housing bond. Money from the bond "could" fund the building of affordable housing, the rehabilitation of existing affordable housing, or the purchase of land for "immediate or future" construction of affordable housing (a practice known as "land banking").

To be sure, the construction of new affordable housing will add to the housing stock. On its face, that's a good thing: more housing, more affordable housing. The real problem comes in Metro's intention to use the bond money to purchase and rehab existing housing. In other words, a big chunk of the money could be spent to buy existing housing, without adding a single new affordable unit.

Washington County chairman Andy Duyck, above, notes that, "An additional tax burden for 30 years will do little to help the overall situation" and "does little to address the underlying issues of housing supply and cost."

Metro estimates the $652.8 million in bond funds would preserve or create as many as 3,200 affordable units that would serve up to 12,000 people. In terms of bang-for-the-buck, that's a lot of bucks with not much bang. Metro estimates the cost of the new projects funded by the bond at more than $253,000 per unit. Private developers indicate they can build affordable units at half the cost of Metro's projections. Take out the administrative costs and the spending on coffee shops, groceries, and other commercial projects, and it seems clear that Metro's numbers don't add up. Metro can't seem to explain its sky-high cost estimates.

Something needs to be done to deal with the affordable housing crisis, but Measure 26-199 is a costly bond that delivers no significant increase in the amount of affordable housing in the region.

 

Why I Oppose Metro's Affordable Housing Bond
By Gerard C.S. Mildner, Portland State University School of Business

 

The Metro Council has advanced an affordable housing bond measure to a referendum this November. This $652.8 million bond measure will fund 3,900 housing units using property taxes that homeowners and business owners in the region will pay over the next 20 years. This measure deserves to be opposed because it is bad housing policy, bad social welfare policy, and a diversion for Metro from its primary mission to regulate land use in the region.

Before I explain my reasoning on these points, I should clarify that I am speaking only for myself. I am not representing Portland State University, the PSU School of Business or the PSU Center for Real Estate.

Housing Policy
One argument for the affordable housing bond is that new housing supply will reduce rents and home prices.

The problem with that argument is that the 3,900 housing units is a very small number compared to a four-county region that builds 12,000 to 14,000 housing units per year. Moreover, these units are being financed by 30-year bonds, so a more meaningful output measure would be 130 housing units per year, which is only one percent of annual housing production in the region. In addition, about half the bond proceeds will pay for the acquisition of existing apartment buildings, and the remaining half are likely to be development sites that would otherwise have been utilized by local developers had there not been a housing bond. As a result, the bond measure will not reduce the rents or prices for anyone besides the 130 households receiving subsidized apartments.

Some might object to my citation of 130 housing units per year, particularly if Metro frontloads that construction when the bond proceeds materialize. However, if you take that approach, then the cost should be advertised as the 30-year cost, or $1,800 for the average homeowner, not $60 per year.

Social Welfare Policy
A second argument is that the housing bond will help the poorest of the poor in our region, who deserve our support.

Again, the small number of housing units being built helps a small fraction of the poor. Approximately 75,000 households in our region are below the poverty line, so 3,900 housing units is only about five percent of the eligible population. It's highly inequitable to select such a small number of recipients to benefit. With programs like food stamps and Social Security, everyone who is eligible receives a benefit.

Since the 1970s, federal housing policy through the Section 8 program has shifted from giving people physical units, known as a supply program, to giving them portable housing vouchers, known as a demand program. Recipients generally prefer cash or vouchers over units in a housing project. For senior citizens or members of the military, for example, we write them a check and let them spend the money as they see fit. Academic studies demonstrate that about one-third of the housing benefit is lost through providing physical units.

Metro's Role
The principal function of Metro is to determine land use policy for the region, oversee local zoning rules, and allocate federal and local transportation dollars, along with a few ancillary roles like supervising solid waste disposal and managing the Oregon Zoo. Metro has no particular expertise in housing provision and plans to outsource that role to the three counties. However, the allocation of housing bond dollars won't provide operating funds for the counties, and the current plan is for counties to reallocate their federal housing vouchers to support these projects, further exacerbating the social welfare problem described above.

In a political sense, the bond measure provides cover for the Metro Council, which has failed to provide sufficient land inside the Urban Growth Boundary (UGB) for housing development and failed to constrain the rise in apartment rents and home prices. While the Council will likely approve some modest UGB expansions this fall representing about 9,000 potential housing units, the reality is that Metro has only expanded the UGB by 10 percent in 40 years, while the population has grown by 78 percent. We need more land in order to build new master-planned communities in our region.

By taking on this new housing role, Metro is deferring the opportunity to submit a bond measure to provide road and sewer infrastructure, which is critically needed for new housing development. In the UGB expansions described above, Metro is requiring cities and developers to provide their infrastructure, even though the housing benefit will spill over city jurisdictional boundaries. Voters should send a signal to the agency that they need to return to the drawing board and develop an infrastructure plan to encourage more private sector housing production.