Staff Columnist

What Iowa City can learn from Portland

The liberal hub of Oregon accidentally found a way to decrease rent prices

Construction is underway on an apartment building next to Big Grove Brewery and Taproom, near the site of the new Riverf
Construction is underway on an apartment building next to Big Grove Brewery and Taproom, near the site of the new Riverfront Crossings development on the northwest corner of U.S. Route 6 and South Gilbert Street in Iowa City on Tuesday, Jan. 30, 2018. The site will eventually include multiple housing units and retail spaces aside a park with walking paths. (Rebecca F. Miller/The Gazette)

I never thought I would have to say this, but let’s make Iowa City more like Portland, Oregon.

The Iowa City City Council is scheduled today to once again consider preliminary approval for a massive new rental housing development, the largest in city history with 15 stories and as many as 1,000 units. City officials have discussed the proposed Pentacrest Gardens project several times this year, but deferred action due to several council members’ concerns about the size of the buildings.

Supporters of large rental developments say more units will drive down Iowa City’s rental costs, now among the highest of small cities in the Midwest. That theory is supported by recent events in Portland, another progressive bastion which has struggled with housing affordability.

Two years ago, Portland adopted an inclusionary zoning ordinance to require a portion of affordable units in new developments. Now there are signs that policy has indeed led to lower rents, but not in the way city leaders hoped.

Between the time the ordinance was approved and the time it took effect, there was a huge surge in the number of building permits by landlords hoping to pre-empt the affordable housing requirements, according to an analysis by the Portland-based urban planning think tank City Observatory. All that new housing supply has not only slowed Portland’s quickly rising rental rates, it has actually driven prices lower by about 3 percent over the past year.

“Landlords are notoriously loathe to cut advertised rents, but in addition to tolerating longer vacancy periods, there’s evidence that there’s considerable discounting going on in the local marketplace, with landlords offering one- or two-months free rent, waiving fees and deposits and even offering preloaded debit cards,” City Observatory leader Joe Cortright wrote in an analysis published last month.

Iowa City is already experimenting with limited affordable housing mandates like Portland’s, the impacts of which remain to be seen. However, the key take-away from the Portland case study is that an abundance of apartments will increase competition and pressure developers to lower rents in order to keep their buildings full. In short, it’s shifting from a landlords’ market to a tenants’ market.


Rental supply is already on the rise, with the vacancy rate growing from about 1.4 percent in 2015 to about 4.4 percent in 2017, according to market studies from Iowa City-based Cook Appraisal. That growth has made some stakeholders skeptical about the need for more units.

“I wonder, to be blunt, why a developer would want to build 800 to 1000 residential units in a context here vacancy rates are already higher than they were just a few years ago, projected to be higher in the near-term future and knowing that some landlords are worried about that,” Mayor Jim Throgmorton said at a meeting earlier this year.

Instead of second-guessing business calculations, politicians should let developers — who aren’t asking for subsidies — assume the risk that comes with such a massive investment. If supply does indeed grow too high, landlords with empty units will have no choice but to drop prices.

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