Portland’s industrial land shortage: a people problem that must be solved soon

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In its most recent Economic Opportunities Analysis, the city of Portland discovered it has a shortage of 740 acres of industrial land – including a shortfall of 342 acres in the working harbor. A previous estimate showed a shortage of 1,620 acres – including a shortfall of 459 acres in the working harbor. Whichever estimate is correct, one thing is clear: Portland has a chronic shortage of industrial land that must be solved soon.

Portland’s shortage of industrial land has grown, despite the city’s adoption of an Industrial Sanctuary Policy three decades ago. The policy was designed to maintain a stable base of industrial land near the city’s center, and help achieve long-term livability goals.

At the time, other American cities were converting large amounts of industrial land to other uses, especially along rivers. Building on its reputation for innovative land-use planning, Portland took a different approach. It chose to protect its close-in industrial lands for manufacturing, freight distribution and other heavy uses so that firms would not decentralize or move to other states – taking valuable jobs, tax base and other benefits with them.

But that policy is only as strong as the political will to enforce it. Over time, incremental rezoning and regulatory restrictions have added up and led to the land shortage.

The city’s mismatch between industrial supply and demand matters for several reasons:

First, while Portland has recently become a mecca for the creative class, it is also a port town. Today, its working harbor is home to more than 900 firms that employ approximately 40,000 people at family-wage rates – accounting for roughly one out of eight jobs in the region.

According to the city’s EOA, each of these jobs creates roughly 3.69 jobs in the region. Recent figures show that output has been growing faster in the manufacturing sector than it has in the service sector. In short, manufacturing remains a key sector in Portland’s economy.

Second, industrial land is easy to lose and hard to find. Portland has limited opportunities to annex land for industrial purposes, and rezoning is difficult because of public opposition and significant differences in land value.

Despite its Industrial Sanctuary Policy, this sticky problem has often been compounded by the city’s actions. For example, the city since 1980 has rezoned a significant amount of industrial land for other uses. Also, land inside the city is constrained by environmental contamination, wetlands, floodplains and other natural features.

These constraints decrease the supply of buildable land that can be developed for industrial use. As demonstrated by the North Reach portion of the River Plan, the temptation to add new regulatory constraints to industrial land is high. New local land-use regulations that reduce the supply of developable land inside the urban growth boundary make Portland’s chronic shortage of industrial land even greater than it would be otherwise.

Third, all local governments in Oregon are required under Statewide Planning Goal 9 to maintain an adequate supply of land for a variety of industrial and commercial uses. Portland City Council will review its draft EOA this summer, and then decide how to solve its industrial land shortage, as part of a land-use process known as Periodic Review.

So, what should be done?

First, be vigilant. Portland should keep a closer watch on its industrial land supply. The city’s last EOA was adopted in 1989. An appropriate economic analysis should be adopted at least every five years.

Appropriate resources should be devoted to this task and should have the buy-in of the business community. Accurate and up-to-date economic information that is adopted as part of the city’s comprehensive plan is necessary so that the city and the public have an adequate factual basis to guide future land-use decisions.

Second, be realistic. New land-use regulations that further constrain the supply of industrial land need to be carefully considered and should not be enacted unless there is a broader consensus to do so.

Rezoning industrial land for other purposes will continue to get the city into long-term trouble, because once a significant shortfall in industrial land exits (as it does now) it becomes a chronic problem and is very difficult to fix.

Third, remember the three-legged stool. Economic vitality is an important part of sustainability and is on equal footing with social and environmental vitality. This is especially true in the working harbor. The city should carefully consider opportunities to annex and convert land inside the UGB to industrial use, particularly along the river and near existing industrial areas, so that industrial uses and related infrastructure can remain clustered together.

The city of Portland cannot have a sustainable future unless it realistically resolves its chronic shortage of industrial land, especially along the working harbor, where much of the state’s economy and many of its family-wage jobs are located.

Portland City Council will soon begin a discussion on how to resolve its chronic shortage of industrial land: Hearings will take place this summer, beginning on Sept. 5 at 2 p.m. Your participation is greatly encouraged

Phil Grillo is a partner in the Portland office of Davis Wright Tremaine. He represents the Working Waterfront Coalition. Contact him at 503-778-5284 or at [email protected].