For the first seven years of its existence, Portland's inclusionary zoning program seemed to be working like the wrong end of a magnet.

Housing projects skidded, twisted, and jumped away from the city's 2017 mandate that a share of homes in most new buildings be sold or rented for less than it had cost to build them. Tens of millions of dollars flowed instead to sites just outside the limits of Oregon's largest city, like the Tigard Triangle and Vancouver waterfront. Multifamily permit filing rates within Portland tumbled 40 percent from their 2016 peak.

Portland's new affordable housing mandate wasn't the only factor in this. The city's population growth slowed in these years, then reversed in 2020-22. As a result, rents in Portland have been more or less flat since the huge run-up in Portland home prices that ended in 2017. But among the projects that did continue to flow into the city's permitting pipeline from 2017-2024, there was one very clear sign that the inclusionary zoning program was underperforming: new buildings got smaller. Because the city's program didn't apply to buildings with fewer than 20 homes, one simple way to avoid it was to stick to buildings of fewer than 20 homes, even if larger buildings would have been allowed. In one extreme example, a project came in with thirteen separate buildings just below the threshold.

The problem wasn't just that a few developers were finding ways to underbuild; it was that sites like Northbound 30 Collaborative were canaries keeling over in a coal mine. If it was worth it for some projects to contort themselves to escape the program, an unknown number of other mixed-income buildings were completely vanishing from Portland's future.

But new data shows that starting in 2024, Portland's affordable housing magnet seems to have flipped around.

Immediately after a round of program changes that took effect in March 2024, new private apartment projects started jumping into Portland's affordable housing program. As we reported last year, projects worth hundreds of homes opted into it in the first six months alone. Even more promisingly, the city's trend toward underbuilt projects reversed, with the share of projects just below 20 homes falling sharply.

What caused the change? The main difference: Portland funded its mandate.

From the day the program launched in February 2017 until the end of February 2024, new mixed-income buildings outside Portland's central city received a relatively modest property tax break, enough to offset some of the revenue lost to discounted rents. But starting in March 2024, the city and Multnomah County both agreed to quintuple the size of that ten-year tax abatement for the neighborhoods ringing downtown. (Within the central city itself, the tax abatement had already been larger.)

That balancing of the scales was effectively a subsidy worth something like $220,000 per below-market home, which is less than the $250,000 or so that it would have cost taxpayers to subsidize a comparably priced home in a 100%-affordable building. But in interviews, some homebuilders said it was enough to flip Portland's program from a dealbreaker to a deal-maker.

Ian Lewallen of Deacon Development, whose Russell Street Apartments is set to open in 2026 with 16 below-market and 138 market-rate homes told Sightline,

"The tax abatement changes were really the big change that brought Portland back in our mind. Without that, frankly we had shut down looking at Portland for 18-24 months. But after that went through in March and April, we started looking at sites."

Reacting in June to an earlier look at these numbers, the Portland Housing Bureau's then-director Helmi Hisserich applauded the results of the 2024 reforms.

"I am extremely proud of the rigorous work the PHB team put into the inclusionary housing program calibration,"

said Hisserich.

"Local developers have leaned into producing larger housing projects under the updated program rules. … The impact will be felt by Port...