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In a new element of city's 'Right of Return' strategy, plan aims to keep North, Northeast residents, especially African-Americans, in the community

PHOTO BY JIM HEUER, COURTESY KOL PETERSON  - This basement in a Northeast Portland home was recently remodeled as an accessible dwelling unit.The city of Portland might help long-term North and Northeast Portland homeowners build "granny flats" or accessory dwelling units, to help lower-income people — particularly African-Americans, stay in their homes.

Details are still being hashed out, but the city has discussed loans to homeowners to finance conversion of their basements into separate dwelling units. Homeowners could rent those accessory dwelling units to earn more income, or move into the ADUs and rent out the rest of their homes, says Kurt Creager, Portland Housing Bureau director.

The idea is one component of the city's grand strategy to stem gentrification in inner North and Northeast Portland and right some of the wrongs committed over several decades, when thousands of low-income people, particularly African-Americans, were displaced by a series of improvement projects.

The Albina area of inner North and Northeast Portland, the historic heart of Portland's African-American community, was in the path of least resistance — and cheapest land to condemn — when it came time to site and build Interstate 5 and Memorial Coliseum and expand Emanuel Hospital, though that expansion was later canceled. Property values in the area later skyrocketed, resulting in more displacement and gentrification, after creation of the city's Interstate Corridor Urban Renewal Area built around the new Interstate MAX line.

Now, as part of the city's N/NE Neighborhood Housing Strategy, it's embarking on the nation's most aggressive "right of return" policy, to lure back some of those displaced people or their descendants. Some money will be used to help those people buy homes or rent subsidized apartments in North and Northeast Portland.

The ADU pilot program is the flip side of that, an effort to prevent more displacements.

Building family wealth

Studies show that home equity is the largest chunk of many families' financial assets, and vital to their ability to pass on wealth to their children.

"In looking at the household wealth accumulated by different ethnic groups, the difference between African-American households and Anglo households is largely the value of the single-family home," Creager says. It's hoped that having a rentable unit will keep more lower-income people in their homes as their neighborhoods are gentrified.

"Eventually, their household value will be increased and their resiliency, if you will, will be expanded," Creager says.

Doling out loans may be tricky

Eligible homeowners must have resided in the boundaries of the urban renewal area since at least 2001, he says. It's not clear what other eligibility criteria are being considered, though other parts of the city's "Right of Return" project give people "points" if they or their families were displaced by past projects. The city can't legally dedicate funds just to African-Americans, despite the disproportionate impact of past policies.

One proposed restriction for the pilot program is barring use of the ADUs as short-term rentals, such as for Airbnb. There already are plenty of short-term rentals in North/Northeast and most hosts aren't getting required city permits, Creager says. Some blocks have so many short-term rentals they are starting to feel like transient communities, he says.

The city also wants to increase the supply of affordable housing.

Creager evaluated some 2,700 properties being used as short-term rentals in the city. "I estimated that 1,000 had previously been affordable on the month-to-month market," he says.

Airbnb disputes that number, especially after it removed more than 500 listings by hosts who were using multiple properties as short-term rentals.

"Even if it's 500, it's 500 too many units that have been lost," Creager says.

Easier said than done

"The concept makes a lot of sense, and the theory behind why they're trying to do the program makes a lot of sense," says Kol Peterson, a Portland ADU consultant and organizer of the annual ADU tour that took place last weekend.

PHOTO BY JIM HEUER, COURTESY KOL PETERSON  - This is the bedroom in a recent basement conversion for an ADU in Northeast Portland. Peterson, who discussed the pilot project with city officials, says the early notion was to restrict the loans to basement conversions, on the theory that those are the cheapest way to add ADUs.

But basements often have cracked foundations that are costly to fix, he says, and some conversions might require the homeowner to move furnaces and other home features out of the basement. Such conversions can cost up to $50,000 or even $100,000 or more, he says.

Peterson urged the city to also allow conversions of garages to ADUs, because those also can be among the cheapest ways to add apartment units to single-family lots.

Though the ADU pilot sounds rather narrow, it could turn out to be very ambitious and complicated, like the rest of the city's emerging Right to Return policies.

"No program like this has been done anywhere around the country, as far as I know," Peterson says.

"The challenge is going to be finding the right candidates."

Steve Law can be reached at 971-204-7866 or This email address is being protected from spambots. You need JavaScript enabled to view it., or Twitter at twitter.com/SteveLawTrib

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