MINUTES OF THE METRO COUNCIL GROWTH MANAGEMENT COMMITTEE

Thursday, May 20, 1999

Council Chamber

Members Present:  Susan McLain (Chair), David Bragdon (Vice Chair), Rod Park

Members Absent:    None

Also Present:    Bill Atherton

Chair McLain called the meeting to order at 4:15 P.M.

Chair McLain thanked the committee for agreeing to an extra meeting.

1.  URBAN GROWTH REPORT

• CONSIDERATION OF PEER REVIEW

Environmentally Constrained Lands

The committee continued its discussion of the memo of environmentally constrained lands which it began at its May 18, 1999, meeting. A copy of the memo from Mark Turpel, Long-Range Planning, Growth Management Services, to Elaine Wilkerson, Director, Growth Management Services, is included in the meeting record.

Councilor Bragdon referred to the table on page four of the memo, comparing history and zoning potential. He noted the limitations of both methods: historical data does not incorporate Title 3 regulations, and zoning potential does not reflect market reality. He asked if there was a more accurate way to predict the future.

Mr. Turpel agreed that there are problems with both the historical and zoning potential methods. He said the Metro Policy Advisory Committee (MPAC) recommended using zoning potential because of the option for density transfers. At the Metro Technical Advisory Committee (MTAC) meeting, however, a few members felt it was overly optimistic to assume that all of the capacity potential would be captured through density transfers, due to other restrictions. He said he could not think of any way to better forecast what will happen in the future, although staff could do more analysis. He added, however, that further analysis may prevent staff from completing its current work before the June deadline. He offered to do a small sample.

Councilor Bragdon said that a blend of historical and zoning potential rates may be the best method, with an explanation of why the future will be different from history, and why the potential has not been fulfilled.

Larry Shaw, Senior Assistant Counsel, said House Bill (HB) 2709 clearly instructs Metro to start with its last five years’ experience, and not the zoning potential. He said Metro may start with the five-year experience, and then take into account the impact of new regulation, such as Title 3.

Ms. Wilkerson said MTAC felt the historical rates were a reasonable place to begin, and the rate should be closely monitored over the next five years as staff collects data. She noted that on the flood plains, staff is not using the entire history; staff looked at certain areas that have been developed over a four-year period in the 1990s, and looked at the permitting process to see what kind of density was generated in those areas. She said the floodplain rate is a much better representation of what will occur in the future.

Kelly Ross, Home Builders Association of Metropolitan Portland (HMBA), highlighted and reinforced the cautionary notes in Mr. Turpel’s memo. Mr. Ross said HMBA believes Title 3 regulations will definitely reduce the capacity of Title 3 lands outside of floodplains. He said HMBA did a quick, unscientific sampling of platted subdivisions to see how Title 3 would have affected the subdivisions, and found that all subdivisions would have experienced a minimum reduction of 15 percent in housing unit capacity, and in some subdivisions, the capacity reduction would have been as high as 33 to 55 percent. He added that Title 3 regulations would have also made the alignment of roads and access much more difficult. He urged the committee to adjust the historical rate to reflect the impact of Title 3. He said the only information on density transfers at this time is purely anecdotal, but HMBA members have said density transfers are extremely difficult to work with, and result in transfers far less than one-to-one. Regarding steep slopes, he agreed that easier slopes probably developed first, and in the future, remaining slopes will become more difficult, or impossible, to develop, especially when accounting for additional regulations for erosion control and hazard mitigation. On the floodplains, he reinforced Mr. Turpel’s comments on the effect of balanced cut and fill. He said HMBA members are extremely intimidated by the balanced cut and fill requirement, and it will significantly discourage development within floodplains.

Councilor Atherton asked if Metro is required by statute to make an analysis of the impacts of Title 3.

Mr. Shaw said the statute is not clear, but if Metro has data which shows a different result, then the data cannot be ignored. He recommended asking Mr. Ross to submit a written copy of HMBA’s sampling. He said any information that shows the degree to which Title 3 will reduce capacity will help the committee make an estimate based on data. Without any data, the committee would have the discretion to decide that anecdotal information is not enough data. If there is data which the committee considers reasonable, however, it cannot be ignored. He said all parties have agreed Title 3 will cause some reduction in capacity.

Councilor Park said anecdotally, he knows a developer in Gresham who was going for final plat, but now that Title 3 is going into effect, the capacity will be reduced to the point where the project is not feasible. He asked Mr. Ross what HMBA would like to see done in terms of compensation.

Mr. Ross said the issue of takings and compensation is extremely delicate. He said the fairest action, of course, would be to compensate the owners for their lost value, but paying for it would be a problem. He said he is interesting in discussing the issue further.

Chair McLain thanked Mr. Ross for his answer, and said the members of the Metro Council want to be fair both to private industry and property owners. She recommending discussing the question more at a later date. Chair McLain said the committee’s initial direction to staff was to use Title 3 as a starting place for the first run of numbers. She asked the committee what direction, if any, it wanted to give staff on how to estimate the effects of Title 3 in a way that is defensible.

Councilor Bragdon said that by asking if an accurate forecast is possible, he meant is there a way to be legally defensible while capturing the volatile changes that are occurring.

Chair McLain said there are two goals: 1) to decide what lands are not protected that should be protected, and how to protect them, and 2) how can the buildable lands inventory be fair about the true potential to use as a base line. She added that the work on the Urban Growth Report, Goal 5, parks inventory, and Endangered Species Act needs to be integrated.

Councilor Park asked Ms. Wilkerson if it would be possible to quickly ask local jurisdictions for data on proposed or recently completed development which could yield approximate development numbers.

Ms. Wilkerson said staff tried to do an analysis of some actual development in the field, but the geographic information system had difficulty identifying sample parcels, and staff ran out of time before the analysis was completed. She said staff could continue its work and report to the committee by June 1. She it would not be a scientific sampling, but it would give the committee examples to consider. She asked Councilor Park to give her the specifics of the example in Gresham to which he referred.

Chair McLain agreed, and thanked Ms. Wilkerson for the offer to do the analysis. She said the raw data must be connected to jurisdictions’ compliance plans.

Ms. Wilkerson said staff will look at actual cases and how it has been handled, and then consider whether Title 3 would have made any changes to it. In some cases, the setback might mean that smaller lots would still achieve the same density, if the zoning permitted the smaller lots.

Mr. Shaw said if the committee chooses to use the historical rate, without estimating any reduction for Title 3, a note should be added to the UGR stating that Metro is working on a reduction, or else a 10 or 15 percent reduction should be added as a placeholder. He said it is important to communicate that Metro is not simply using a number six times greater than experience without looking at the effect of Title 3.

Chair McLain agreed that there should be a footnote that Metro is refining its work, and felt this was a reasonable place to start.

Ms. Wilkerson noted the difference between the historical number and the number staff assumed as capacity in the Title 3 analysis last year was about 5000 units.

Chair McLain said Ms. Wilkerson’s comments should be included in the footnote as reasoning behind the decision.

Councilor Park said architects and engineers could quickly estimate the reduction factor in capacity for many of the areas under consideration, based on Title 3 regulations.

Peer Review

Lydia Neill, Senior Regional Planner, Growth Management Services Department, gave an overview of the peer review and members of the panel. A memo from Elaine Wilkerson to Mike Burton regarding the 1999 peer review of the Urban Growth Report (UGR) includes information presented by Ms. Neill and is included in the meeting record. Ms. Neill noted a new member on the committee, Judd Kirk, Chief Executive Officer of Port Blakely Communities, a development firm in the Washington area specializing in neo-tradition design and complete communities.

In reference to the panel’s recommendation on monitoring/supply, Chair McLain said the suggestion to separate out the newly added lands appears logical, on its face. However, Metro is using a complete, comprehensive approach, and dividing it out could be problematic.

Ms. Neill said her understanding was that the panel recommended dividing it out for numerical purposes only.

Ms. Wilkerson said the panel was not proposing a direct comparison of how it used to be with how it is now. The recommendation was to highlight certain factors that are influenced by the addition of acreage in the urban growth boundary (UGB).

Chair McLain said the panel’s recommendation should not replace subregional analysis.

Ms. Wilkerson said the recommendation would not be used as part of the subregional analysis, only in the Urban Growth Report. For example, if staff was trying to explain the number of acres of park land or the amount of undeveloped acres, there would be potentially quite a change this year due to addition of the UGB lands. The peer review therefore recommended that, for the 1999 Urban Growth Report only, staff should highlight that the UGB amendments caused a particular part of a change.

Chair McLain agreed and thanked Ms. Wilkerson for her explanation.

During discussion of the peer review’s comments on refill, Councilor Park asked how splitting the refill assumption by industrial and non-industrial categories would affect the final product.

Ms. Wilkerson said it makes a difference because industrial uses take more land for the same number of jobs. If the assumption is lower for industrial, then more vacant land is needed to accommodate the same number of jobs, and the output in the model will be a greater demand for land than there would have been if staff used the 40 percent constant rate. She said she supports splitting the numbers because it is a much more accurate description of the market place. She said staff will not know the exact impact of the output until the numbers are run with this year’s numbers. She said staff, MTAC, and the peer review group all support this approach as more reliable and legally defensible.

Chair McLain said the committee will discuss it further after June 1, when staff runs the numbers.

Councilor Park said he was concerned that Metro may be trying to predict market trends and economic change, which are beyond its control.

Mr. Turpel said the refill rates are historical rates, and to a certain extent, Metro is looking in the rear-view mirror to predict the future. In his opinion, however, Metro has already assumed that risk in its forecast of which kinds of employment will grow more or less rapidly than others. In this particular case, the refill rate in industrial is substantially lower than the non-industrial, but staff is also assuming that manufacturing increases are not going to be as great as other uses. He acknowledged that it is very difficult to predict which industries will grow rapidly, but added that the forecast is also peer-reviewed.

Ms. Neill noted that a peer review member felt that church land holdings should not be treated differently than corporate land holdings.

Chair McLain asked if the peer review member understood that the land has a different potential because of zoning.

Ms. Neill said yes, she believed he understood, but he thought Metro should assign whatever amount of jobs are necessary on those lands, and anything the church is holding as vacant should be put in the vacant land inventory, and if it is zoned for residential purposes, it should be assigned capacity.

Chair McLain said she did not agree with the peer review’s recommendation.

Mr. Turpel said staff calculated the total acres owned by places of worship, regardless of whether the land is developed, established that as a ratio, and then projected on that basis. He understood the peer review member’s question to be why is Metro taking places of worship and fundamentally using a different process than it used with any of the other uses. The review group did not feel the process was consistent with Metro’s overall approach.

Ms. Neill concluded that the peer review was a good experience, and staff received worthwhile information. She said staff would continue to refine the comments from the peer review panel as the panel becomes more familiar with the Portland metro region, the urban growth boundary, and Metro’s methodology.

Ms. Wilkerson noted that the meeting record is still a draft as staff is waiting for approval from the peer review panel. She said she anticipates doing more detailed work on this, and attaching the panel’s written comments in the final version of the peer review document. One of the panel members asked her to convey that the panel was thrilled with many of the things done by Metro, such as the employment changes, and the recommendations were focused on the five percent of the report that could be improved.

Chair McLain asked Ms. Wilkerson to state in the report that Metro has used a peer review group for the past two years, and to list the suggestions that were incorporated each year. She said it should be part of the record, and will strengthen Metro’s factual basis.

Councilor Bragdon noted the one panel member from a comparable government in Minneapolis/St. Paul, Minnesota. He asked if there are other governments in the United States which have undertaken an effort like the Urban Growth Report.

Ms. Wilkerson said Metro is the only agency that has done this type of comprehensive work. She said Washington state may move toward this type of analysis. She noted that a staff member from Clark County has been taking detailed, technical notes at MTAC meetings.

Councilor Park said he was concerned about the panel’s suggestion, under monitoring/supply, to try to include services, such as sewers. He said while it may be nice, it does not help Metro comply with state law, and Metro is not required by law to provide sewers. Sewers are part of the cost of growth: Metro’s responsibility is to provide the opportunities for growth, but the economy must make it happen.

Ms. Wilkerson noted that in staff comments, she wrote that the panel made a valuable observation, but it should be incorporated in the performance measures process, not the Urban Growth Report.

Ms. Neill said the comment came from the panel’s developer, and in his perspective, it does not do any good to have a large supply available far off in the future. He was concerned with the short-term picture, because housing cannot be provided if there are no services available.

Councilor Park said Metro is not required to supply the housing, only the possibility for housing.

Chair McLain thanked Ms. Wilkerson for highlighting the staff comment, and asked her to strengthen it in the final report.

Ms. Wilkerson agreed, and said staff would add more detailed comments to all the recommendations.

Chair McLain added that in the 2040 Growth Concept, Metro has tried to deal with service and infrastructure issues, looking for the most efficient way to utilize the current infrastructure. She suggested that the final peer review document refer to the 2040 Growth Concept.

Councilor Park commented on the panel’s suggestion that refill may not be sustainable at that rate. He noted that buildings naturally age, and it is important to know how many years it takes to redevelop the entire region.

Councilor Atherton said he is trying to reconcile the needs of HB 2709 with what he read in his first analysis of the methodology of the econometric analysis. He asked if staff has tried to blend the academic interest in developing a model with the law.

Ms. Neill said Dennis Yee, Senior Economist, Data Resource Center, would be able to answer Councilor Atherton’s question.

Councilor Atherton said the econometric analysis clearly states that it should not be used to make land use decisions; it is useful for comparing factors. Then, Metro has to plug the needs of the state into the econometric methodology. He said the peer review group summarized some of the conflicts on page two, when one member identified the need to link capacity, compliance, and the actions of agents in the market place. He noted that Councilor Park alluded to the costs of growth, and he asked if there is any way to include market experience, such as what happens if the costs increase. He said he was disappointed that the academic model did not include the cost of growth. He asked if state law allows for the cost of growth to be estimated or included in the model.

Mr. Shaw said he agreed with the first part of Councilor Atherton’s comments: if an econometric model is projecting the future, versus reflecting the experience of the past, is there a potential conflict with state law? He said he would think about it and discuss it further with Councilor Atherton. He said the cost of growth issues, on the other hand, are absorbed in the market. The state statute tells Metro that its five-year experience is its market, so the cost of growth issues that might be a projection, or reflection of the past, are absorbed in what the state says is Metro’s market.

Councilor Atherton asked what would happen if Metro changed the parameters by eliminating growth subsidies.

Mr. Shaw said changing the parameters would require regulations, so the prediction would be a combination of experience plus regulation.

Councilor Atherton said for example, if he was peer reviewing the model, he would have plugged in more market factors, such as the number of houses on the market five years ago, relative to the population, versus that number today.

Chair McLain said Councilor Atherton’s suggestion may relate more closely to performance measures.

Councilor Atherton said as the committee talks about how to make forecasts and models that are useful, it may wish to consider using survey data in the modeling. As an example, he recommended asking people to rate their communities as a place to live today, and as a place to live ten years from now.

Chair McLain said that suggestion would also be good as a performance measure indicator. She said the committee will discuss performance measures after it completes its work on the Urban Growth Report.

Mr. Morrissey asked for clarification on whether the committee agreed with staff’s recommendation to split the job refill.

Chair McLain said yes, and the committee would look at the result more closely after June 1.

Mr. Morrissey noted that staff is still working on issues related to both environmentally constrained lands and the Zonal Employment Land Demand Analysis model (ZELDA). He said after June 1, the committee may wish to discuss how staff arrived at its assumptions.

Chair McLain noted that while staff will complete the first run of numbers on June 1, the committee will not meet again until June 8.

Mr. Morrissey clarified that of all the peer review comments, staff is only implementing the split in the jobs refill.

Ms. Wilkerson said that was correct, and added the refill recommendation was the only one that would affect the UGR numbers.

Chair McLain agreed, and added that there were other ideas which the committee and staff may wish to monitor or add to another documents or research in the future.

2.  COUNCILOR COMMUNICATIONS

There were none.

There being no further business before the committee, Chair McLain adjourned the meeting at 5:35 P.M.

Respectfully submitted,

Suzanne Myers

Council Assistant

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ATTACHMENTS TO THE PUBLIC RECORD FOR THE MEETING OF MAY 20, 1999

The following have been included as part of the official public record: