Re-ReCode – Let's Make ReCode ReMarkable

Where We Are

On December 4, 2024, Portland made significant strides by passing ReCode, aiming to simplify and enhance zoning regulations. Despite this progress, the anticipated surge in permits and the corresponding increase in housing supply have not materialized. To truly unlock housing potential, we must examine and address the cost, constraints, roadblocks, and disincentives. Developers are eager to meet the moment, but existing city policies and processes impede progress.

Why Haven’t We Seen More Development/Housing?

It all comes down to economics. While ReCode, in most locations, allowed or more height and density, there are underlying deterrents, in and out of our control, affecting whether projects pencil out. Here are a few:

• Landowners increased prices – with the up-zoning came corresponding price increases. We can’t blame these property owners, and there is nothing we can do about this.

• Record high cost of construction – from labor, materials, and tariffs, this is the macro-level stuff that is out of our control

• Near record high and more conservative lending, banks are more conservative and charging more for money. This is a massive hit to the bottom line for condo projects (they now need pre-sales or more pre-sales to even obtain this costly funding) and those that would be listed for rent (the ongoing cost of capital evaporates the return on investment.

• Softening demand for commercial space – both office and retail vacancies

• Rent Control – even though new developments can set their initial rental rates where they choose, this is, along with IZ, one of the major factors pushing development outside Portland.

• IZ – this is the BIG ONE and it’s within our control to change or hopefully eliminate.

It's About Supply & Demand Being Out of Balance

Fundamentally, to meet past, present, and future housing demands, we must substantially increase supply. Given a 20-year supply slump and escalating re-urbanization and in-migration, urgent and ambitious action is required. To achieve this, we need to unlock land potential, provide maximum flexibility to housing providers, remove disincentives, and streamline processes. ReCode was a massive step forward but, its clear that more is needed and needed now.

The Time is Now – The Crisis is Real

Portland faces a housing shortage of near biblical proportions. State data indicates a need for ~80,000 new units by 2030, with the demand most acute in Greater Portland and coastal southern Maine. If we think about Portland’s ‘obligation’ in this crisis, we should plan to carry 1/4 of this obligation and plan to build ~ 20,000 new units (that’s 4,000 units per/year over the next 41/2 years). The addition of 200-300 units here and there, and even the promise of Franklin Street (with as many as 2,000 units), is cause for celebration, but doesn’t come close. Beyond this, and likely due to the Green New Deal and rent control, rental and purchase prices have tripled over the past decade. According to MREIS, the median sale price of a single-family home reached $584,500 in 2024 (a 150% increase in the last decade), and the average cost of a 2-bedroom apartment hovers around $2,442 (according to Zumper, this represents a 6% increase in the last year). Consequently, many have been priced out, seeking affordability in suburban and rural areas, leading to longer commutes and negative environmental impacts due to increased vehicle emissions and the conversion of natural landscapes into housing.

Eliminate Inclusionary Zoning (IZ)

Currently, Portland's IZ policies disincentivize the very development we aim to encourage. For example, developers building 10 or more units face fees of $182,830 per additional unit beyond nine units. This structure deters and disincentivizes larger-scale developments that are crucial for addressing housing shortages. Fun fact – IZ not only applies to new construction condos and rentals, but to those who might want to convert vacant office buildings and warehouses to units to housing.

The Math – when we layer on IZ to the elevated cost of land, construction, lending, and more, this pushes projects into the red. This is the #1 deterrent to development of scale in our city, and changing it is within our control (the 5-year moratorium on changing, under the Green New Deal, ends at the end of 2025).

Example – someone wants to build 100 residential units

The 2025 fee-in-lieu is $182,830 per IZ unit, but that amount only applies to 25% of the total units in a project—the portion required to comply with the IZ ordinance. So, for a 100-unit project, the fee would apply to 25 units, resulting in a total of $4,570,750 (25 units x $182,830), or a developer could construct the units on-site.

If we just can’t give up on IZ (eliminating is the ideal), we should reverse the approach: impose fees on smaller developments to incentivize larger projects. For instance, constructing a single-unit development (the last thing we should be building more of in our city) could incur a $200,000 fee, decreasing incrementally with each additional unit, reaching zero at 10 units. Let’s incentivize the behavior we want!

Rethinking IZ: From Developer Fees to Homebuyer Support

Currently, those IZ funds are primarily used for “last mile” or bridge financing for affordable rental projects. While important, this approach keeps renters locked in a cycle of renting rather than offering a path to ownership and long-term stability.

We propose a smarter use: reallocating IZ revenue to help renters break free from the forever-rent cycle and realize the American Dream of homeownership through down payment assistance. 

By investing directly in helping residents buy their first homes, we can build generational wealth, stabilize neighborhoods, and create true affordability, without adding costs to new housing production. Cities like Denver and Boston have shown that expanding access to ownership is one of the most effective ways to strengthen communities. Portland now has the opportunity to stop taxing the supply side and start empowering the demand side—and create a city where owning a home is possible for more of our neighbors. See my separate white paper.

Increase Allowable Heights in On-Peninsula B Zones

ReCode increased allowable heights in many zones, but this didn’t go far enough. We should boost heights by an additional 20 feet (2 stories) across all on-peninsula B zones, and couple with requirements for first-floor commercial or retail use that would promote mixed-use developments. Additionally, permitting 10-foot appurtenances for features like elevator access, solar panels, and rooftop gardenswould enhance building functionality, sustainability, and provide much-needed and immediate access to the outside for residents.

Change All ILB (Industrial Light) to IL/B5

Reclassifying ILB zones to IL/B5 would allow for a mix of industrial and residential uses, reflecting the modern trend of integrating living spaces with light industrial and commercial activities. This change would unlock large tracts of land for development, particularly in areas like East Bayside, without displacing existing businesses.

Simplify Permitting

Portland's permitting process is often cited as a barrier to development. To streamline this process:

• Increase staffing in the Planning & Urban Development Department, assigning dedicated staff to projects of four or more units to expedite approvals.

• Eliminate public notice and comment requirements for developments that comply with existing zoning, aiming to approve 80% of such projects within 60 days.

• For projects requiring zoning changes, consolidate public comment to a single Planning Board meeting, targeting approvals within 90 days for 80% of cases.

• Further expedite processes for developments of 10 units or more.

Edit the Planning and Historic Preservation Board Process

The current process for project approval, especially within historic districts, is lengthy and complex. Recommendations include:

• Implementing the aforementioned permitting simplifications to reduce the Planning Board workload. This will decrease the workload.

• Establish two Planning and Historic Preservation Boards vs one. Drop the required number of board members to 3 and ensure each board meets once per month (so 2 Planning Board and 2 Historic Preservation Board meetings each month).

• Ensuring board members focus on compliance with zoning and design standards, avoiding subjective preferences.

• Streamlining the approval process within historic districts to a maximum of two meetings, with collaborative presentations by developers and HP staff.

Establish Pre-Approved Property Types for Specific Zones

Within six months, develop a catalog of pre-approved, pre-permitted building designs for multi-family or mixed-use structures of four or more units. These designs should be applicable in all B and TOD zones, allowing for permits to be issued within 60 days, thereby reducing design costs and permitting delays.

Simplify and Expand TOD Zones

Transit-Oriented Development (TOD) zones are instrumental in creating complete neighborhoods. To enhance their effectiveness:

• Merge existing TOD zones into a single, comprehensive category – TOD2

• Eliminate step-backs and setbacks, allowing for 10-foot appurtenances to accommodate modern building features.

• Expand current TOD zones by 500 feet in all directions along major intersecting streets.

• Introduce new TOD2 zones in strategic locations, including:

  • Washington Ave (from Congress Street to the I-295 overpass)

  • Washington Ave (from Congress to I-295 and along Ocean Ave, Canco Rd, and Jackson St)

  • Forest Ave (from Stewart St to Westlawn Rd and from Hannaford Rd to the Westbrook line)

  • Congress St (along Douglas St, Stevens Ave, and Jetport Access Rd)

  • Brighton Ave (along St John St, Stevens Ave, Woodford St, and Capisic St)

  • Riverside Golf Course – South Course (9-hole course only). 1158 Riverside Dr.

  • Portland Technology Park – Technology Park Dr.

Create Financial Incentives

To encourage the development of affordable and attainable housing, Portland can:

• Provide low-interest loans, grants, or Tax Increment Financing (TIF) to offset high development costs.

• Leverage the Housing Trust Fund to extend financial support, similar to Maine Housing's approach of offering $70,000 subsidies per unit for below-market-rate ownership units.

• Offer financial assistance to homeowners constructing up to two Accessory Dwelling Units (ADUs) per lot, now permitted citywide.

• Open up more city-owned land to development, and don’t limit the buyer to those proposing affordable housing. ANY housing, at any price point, helps meet the ever-increasing demand.

By implementing these recommendations, Portland can position itself as a leader in addressing the housing crisis, fostering sustainable growth, and enhancing the quality of life for its residents.