Impact on Building Owners
If City Council approves the mandate, the clock will start on 1,640 buildings.
Last Proposed Enforcement
- Step 1 - Fine - $6,000. per year.
- Step 2 - Fine - $12,000. per year
- Step 3 - Fine - $24,000. per year
- Step 4 - Fine - 1% RMV per quarter
- Step 4 - Occupancy Permit - revoked.
The Proposed Mandate
- Step 1- Engineer - ASCE 41 and Estimate.
- Step 2 - Bracing parapets, cornices, chimney, roof sheathing, ties & wall to roof attachment.
- Step 3 - All bearing and exterior wall to floor attachments, in-plane shear attachments.
- Step 4 - Upgrades completed
- Residents will be Displaced.
- Businesses will be Displaced.
- Main Streets will become Rubble.
- Exacerbates Gentrification.
- Higher Rents.
- Loss of Affordable Housing. (1,800 of 7,000 units - public-financed affordable housing)
- Loss of Small Businesses.
- Incentivize Demolitions.
- Erase Historic Character.
- Challenges vary by building and location.
Building Owner Challenges
- Building need to be Empty for 9-12 months
- Many Retrofit Costs will Exceed building value
- Costs will increase - Supply and Demand
- No oversight by the City or State of anyone claiming to be a seismic expert.
- Lack of seismic contractors for 1,640 buildings on same timeline.
- Building owner is unable to afford the retrofits.
- Buildings will have to be sold at a reduced value, demolished or pay crippling fines.
- Challenges vary by building.
Additional costs not included in retrofit estimates:
The City has refused to do an all-inclusive study to determine the full and possible impact on URM building owners, businesses, residential tenants and commercial districts. Costs Include:
- Building need to be Empty for 9-12 months. (Estimate)
- Architects, Consulting
- Breaking Leases or Other Contracts
- Loss of Income
- Relocating Tenants
- Storage, Utilities, Lead and Asbestos Abatement
- Unforeseen Costs
This mandate has more questions than answers. More problems than solutions. It's a policy without a plan. Portland must do better.
THE CITY OF PORTLAND'S EXAMPLE OF COSTS
These costs reflect INCONCLUSIVE retrofit costs. They do not include tenant relocation, architectural finishes, fixtures, mechanical, electrical, lead and asbestos, loss of income or unforeseen costs.
Calculate your estimated retrofit cost by using the following formula:
Building Square Feet x $105.50**
**Average ($105.50) based on the two examples presented by the City of Portland. The truth is that there is no way to know what calculation is accurate so the average was taken. Building owners have no idea what the costs will be to comply with the Mandate. Coincidentally, the City found the on-site cost estimates infeasible and inconclusive.
Reminder: This average cost represents "estimated" costs reported by the two buildings below. It does not include soft costs or other realistic costs associated with a seismic retrofit.
Proposed Financial Tools - None Are Guaranteed.
There is no guaranteed support for buildings or tenants that will be impacted by the conditions, costs, economics, logistics, hardships and displacements caused by this mandate.
TAX ABATEMENT: (Currently not Encoded at State Level)
SB-311. Does not help Non-Profits or nnn Leases - No guarantee of percentage and would defund revenue from schools and programs. Would give City the authority to create a Tax Abatement program. Requires the 75% sign-off of Tax Revenue stakeholders. This would defund local or state school funds, parks, transportation and other tax-revenue programs.
This tool is inadequate compared to costs. It is not equitable for all buildings. It would not benefit a non-profit or nnn commercial buildings. Buildings in lower economic neighborhoods who pay lower taxes will receive less benefit than their higher economic counterpart. Retrofit costs would be lateral.
CPACE: More expensive financing than conventional - Current Mortgage would have to agree to be in second position. Banks are saying NO. Condos and Non-Profits are not eligible.
A potential funding source. The program, called Property Fit in Oregon, is administered by Prosper Portland and funded through private capital providers. Finance is secured by a "benefit assessment lien" against the property. By statute, an existing lender's consent is required. Once filed, the "benefit assessment lien" is superior to all liens other that property taxes. It's collected through annual assessments, similar to property taxes. The financing is attached to the property. In a sale, the loan would transfer with the property.