City Center Redevelopment Authority

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0:31 - Okay, welcome to the City Center Redevelopment Board meeting for March 19th, 2026. So, Callie, can we start with the roll call? - Yeah, thank you. President Fazio. - Here. - Board Member Kerpain. - Here. - Board Member Slick. - Here. - Board Member Pisca. - Here. - Board Member Friend. - Here. - Board Member Copenhaver. He let us know that he would be absent. And Board Member Anderton. He also let us know that he would be absent. Just a reminder to turn your mics on before you speak and turn them off when you're done. Thank you. - All right, thank you. So, can I get a motion to excuse David, Copenhaver, and Anderton? Ken?

1:30 - So moved. - Second. - Okay, all in favor? - Aye. - All right, thank you. - Aye. - Oh. - Oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh. - Echo, okay. So, the next item is the approval of the minutes from February 19th. Any comments or motion? - No comments, I'll make a motion to approve. - You have a second? Is that me? - I'll second. - All right, any discussion? Okay, all in favor say aye. - Aye. - So, minutes pass.

2:29 So, we can move with Patrick on the executive director report. - All right, good afternoon everybody. Just quickly, on my list, the subcommittee meeting report, subcommittee did meet and got a preview of the two items that you're about to hear about, both the active ground floor study, as well as the development activity report. Gave us some feedback on the development activity report in terms of kind of what might be of interest to this group, but the subcommittee can weigh in when we have those items presented. Development pipeline report, we're continuing to bring it to you, even though it's still kind of sad. But we do have, we continue to see new projects tickling the residential side that show up in pre-app

3:29 so that it's encouraging when we'll actually, this is the... (indistinct chattering)

3:48 So, we will get into the topic of, yeah, this is, yeah. (indistinct chattering) Can everybody still hear? Michi, can you hear us? (indistinct chattering) Michi, can you hear us?

4:49 Okay, all right, we'll give that a shot. So, as I was saying that some of the issues around the development pipeline part will, basically all the issues we'll be talking about in more depth when we get to the development activity report. But what I was saying is, you know, we continue to see new projects show up in pre-app and not everything that goes to pre-app moves forward, but it is encouraging. I think if we think about the permanent data, you're gonna see the signs are encouraging maybe a few years out, but not in the near term. So, you have those two projects, the Harmony Village, number two on your map and number four, where we're seeing, you know, between those, those are 300 potentially new units. And so that's encouraging. The other thing to highlight that is that we are beginning to see activity at the Vancouver Innovation Center on the residential side.

5:48 So they've begun the permitting process and you can see they're in land use for the early part of their land use site. Is it, anyway, I think Chad may be able to, we can maybe answer this later on, but I think there's more units than what we're showing here 'cause I think they have two different buildings they're talking about. But anyway, we have obviously been working with the owners of the Vic for many years, both on the commercial side, but also the partners they have on the residential side. So we're, it's encouraging to hear them moving forward and that's obviously pretty significant development on the east side. And then we have really the one project that moved into construction since the last time is this Vancouver Clinic commercial building in Columbia Palisades and then projects that were completed. You can see these are the kind of commercial buildings

6:48 as well in the same Columbia Palisades area led by our own David Copenhaver. So that's the update. We'll get, like I said, we'll get into this topic in a lot more detail in a few minutes. A project update side, I don't know there's not much to report of the, and some of it once again will come up in development activity, but we're still, there's still some milestones to reach before Lincoln can move forward on Waterfront Gateway. But we think we're getting close on that. That's the six story wood frame code work that we're doing. We believe we might have a path forward to get that in place in a couple months. So I had the chance, it was a coincidence last night I was sitting next to our building official and our fire, the deputy fire chief who's in charge of buildings at an event and I said, what do you think?

7:45 And they were very optimistic about us getting a code in place so that Lincoln can begin designing to that standard. So that would be great and that puts them on a path to basically begin construction at some point, maybe next year. So that's what we're talking about. 'Cause they need 12 months to get, to design the building to that new standard and then begin the permitting process. So the sooner we can get them started, the sooner in '27 they can start, but it'll be a nice outcome if they break ground in '27, I think is what we're looking at. In terms of, and I guess just a quick update on the height since I was doing, the different projects are really challenged by lack of state funding. So we don't have progress there, but we do have a clear path on infrastructure. We will begin the first major infrastructure project on the Heights sometime in the next few months,

8:45 we've received all the bids and we're, so we should be in a position to award that contract. So that's the McCarthy Mill Plain intersection and then the Grand Loop, which is the big infrastructure project that will provide the, basically the street grid for the first development parcels. We hope to have that out to bid this year and we're actually seeing the pricing on these infrastructure projects, it seems to be coming down. So we're seeing things that are actually coming in within our budget, which has not been the case for the past few years. So we're hopeful that we can get the Grand Loop RFP out and get bids in in that cost environment and then that would allow the Grand Loop to start construction next year. And so you'd begin to see that work ahead of development. And then in terms of our work plan, we're still, it's really in flux right now.

9:44 I think next month you'll likely to get an update on Main Street, the Main Street work, which is gonna complete in the next few months and kind of what that means for downtown. We had on here potentially updating you on some of the work that we've been doing in addition to the tax increment work on the downtown redevelopment assessment. There may not be a lot to report there and then we're gonna be kicking off a downtown wayfinding project, which I think could be of interest to you 'cause it really is more of a comprehensive approach to how do we get people downtown and move people around downtown and take advantage of whether people are coming for events or going to the waterfront, how we help businesses benefit from all that activity and it's kind of outdated our wayfinding. And then CCR business plan is on hold to some other things we're dealing with on that side.

10:43 So a lot of the topics that we've had on the agenda are still kind of up in the air, but I'll give you an update on the agenda for the next few months before next meeting. We also probably need to get you an interstate bridge project update since there was some really public news yesterday or two days ago. We really got our first detailed update yesterday internally. So I'm really not like, I don't have that much more information than what you've heard publicly. There are impacts to what was planned. So the basic news, if you hadn't saw is that because of the growing cost of it, they've decided to more formally phase the project and to really focus in on replacing the bridge as the near term project. And that can bring the project in under $6 billion that phase and because the bridge really is the most critical piece, that would be phase one.

11:41 And so that means that the footprint would really stop just where the bridge lands here on this side and stop on Hayden Island on the Oregon side. So I think conceptually that makes sense. The problem is there's a lot of pieces to what we were expecting to happen in downtown Vancouver. And so some of those we think are happening, some of those looks like they're not happening and it was never really designed to be kind of broken up like that. And so we have to come back with the IBR team and start to find out, okay, have you really thought about the implications of these things? So we're learning that so I can talk to our team and see if we can get maybe an update for you at one of the next couple meetings just so you can hear the latest as well. It's the realities of, I think you saw in the press conference and the announcement that the overall project

12:39 I think is now at 12 to 14 billion. So it's not something that is funded and so there has to be some other way forward to at least get the bridge replacement happening. So I think that's, we agree with that. It's just the impacts of downtown are unclear. So with that, that's my update. I'll turn it back to you, President Fazio. Unless anybody has any questions. - Yeah, thank you, anyone? Any questions for Patrick? Okay, so with that we can move, oh, do we have any public testimony that was either present or signed up? - No, none received. - Okay, so we can move forward. And the next item is the active ground floor study. - Thank you.

13:38 So this active ground floor study is one of our follow-up activities from the downtown redevelopment study. This is really looking at kind of how we continue to, kind of in the context of looking at the comprehensive plan and kind of meeting all of the city's growth goals from a housing and jobs perspective. How do we continue to keep downtown an active environment pedestrian and street, how do we keep an active streetscape without having negative repercussions on continued growth and economic activity in downtown? So if we could, next two slides? Or yes, yeah. So kind of contextually, we understand that a lot of cities, both regionally and nationally,

14:36 have over-prescribed retail specifically to try to activate streetscapes. We see this in rather high vacancy rates and ground floor retail spaces in other cities. And just, it's no longer a market-driven environment, so I think we see that as a potential pitfall of just being overly reliant on retail. We also understand that consumer trends are shifting away from kind of more brick and mortar retail in some circumstances, and I think it's still yet to see how that fully evolves, but creating opportunities for flexibility in how we treat activation on the ground floor and providing, kind of being less reliant on a single monoculture. And then also how do we promote more living wage job opportunities in these ground floor spaces as retail has not been historically a high wage sector?

15:36 So that's really the context that we're looking at this work in. Next slide, please. So to kind of answer those questions and address how to move forward in that context, we brought on BAE, who I think Matt will get into a little bit description of what they do, but to review the current market conditions and economic development goals that the city has put together, identify regional and national trends, just understanding how ground floor uses are being used regionally and kind of nationwide, best practices, particularly in downtown locations, and then identifying actions that other cities have used to both promote active ground floor use, but also looking at alternative ground floor uses

16:33 that may have not been historically as present in these environments, but may achieve some of the other goals that the city's looking to achieve. And then kind of taking all that research, all that analysis, and compiling it into some recommended strategies and actions that we can take to increase activation and living wage job opportunities. And with that, I'll turn it over to Matt. - All right, thank you, Chimchun. So as a reminder, my name is Matt Ferris. I'm a VP with a firm called BAE Urban Economics. We've worked with the city for probably two and a half, three years now, on sort of starting with the downtown redevelopment study, really understanding what the capacity, sort of future potential for downtown is, and I think as Chimchun alluded to, this study about sort of activating the ground floor, thinking about the activation strategies builds off of that assessment that there is a lot of capacity in downtown. We sort of, through the comp plan

17:33 that the team is going through, envision a lot of growth in downtown. And so we wanna kind of think about how that downtown development, how we think about that activation of the ground floor. So we're obviously very familiar with downtown through that whole work, sort of revamped our understanding of downtown, really thinking specifically about the ground floor. So I'm just gonna start with a couple of sort of heat maps of what is going on in downtown currently. So this first one is about restaurants and retail, and just the density. Where are these concentrations of activities? A couple of other notes that we learned, obviously in our downtown redevelopment assessment, in our market analysis, is that downtown actually has a fairly healthy vacancy rate. It's not that high. But when you look at where those places are, they're really quite heavily concentrated in Main Street, sort of south of Mill, and then that uptown neighborhood, again, north of Mill Plain. Then you have some activities, sort of emerging clusters along the waterfront,

18:33 obviously with the new development. Next slide. Then when we look at what else is going on in downtown, when we map where different office users are, this is all office users, not just ground floor. But you start to see this sort of ring around the retail restaurant nodes. Downtown has a, you know, the whole region has a fairly high vacancy rate, availability rate in the office sector. You see a lot of articles about that. Downtown Vancouver has a high availability rate, but it's still below the region. And then, yeah, again, sort of where you see it emerging in the downtown is around those clusters of retail and restaurants. Next slide. What I find makes downtown also very unique is this sort of industrial culture on the west side of downtown, sort of the northwest. And so we have a fairly limited inventory, I guess, on the whole, right? A lot less share of the regional or total industrial inventory in the city or the region.

19:33 But it's still present when you start to map it. And when you go to that west end of downtown, it feels industrial, it feels sort of heavy. And of course, on the outside of the boundary is even more sort of industrial on the other side of the railroad tracks. So they're concentrated in that sort of neck of the woods of downtown. And we also know that industrial poses some challenges in urban areas. There are opportunities to kind of co-locate, and that's sort of what this study is hoping to dig into, sort of how can we balance these mix of uses. Next slide. I wanna keep this, well, we'll talk multifamily first, which is sort of where the residential is surrounding Esther Short Park on the waterfront, some dots, concentrations along the way. And when we go to the next slide, you see how much, and this was sort of the key conclusion of the downtown redevelopment assessment was on the next slide, the inventory of sites and development capacity.

20:33 So the red sites are vacant, sort of ready to redevelop all the way up to yellow, which sort of represents there's something going on. It'll take a little bit more of an effort to turn over and you start to see where these sort of pockets of redevelopment potential are. And you really start to see an overlap between quite a bit of capacity where we have existing industrial and the higher and better uses that are building right next door are multi-story mixed use developments. But with those dense, with those mixed use developments come this sort of need to kind of program and think about the ground floor. Let's see, next slide. So that's sort of what's going on in downtown and how we think about sort of the future of downtown. This is not a city or this is a city with a lot of capacity. I know you're sort of hearing the story on the ground. Today is not a lot of projects in the pipeline, but you can clearly tell from the last real estate cycle

21:29 and the next, this is an area poised for growth. So then let's zoom back out and say, what are we learning sort of nationally about urban areas, thinking about activation, thinking about those ground floors, as Chim-Chin alluded to earlier, there is a clear shift in demand for just like pure traditional retail. And that's historically been what we've built on our ground floors in our urban areas is coffee shops, retail, fairly easy and relatively affordable to build. But if you look at areas that have over-prescribed retail, a lot of that stuff is sitting vacant. And they're figuring out how to sort of after the fact, redesign it for residential, or maybe they're taking on tenants after a year or two that are not quite paying as high rent as they thought. So there's just these sort of challenges. And so when you look at cities that are kind of at the forefront of urban adaptation, they're looking at flexibility. And it's thinking about what else can go in that ground floor.

22:28 Retail and sort of restaurants make sense in certain areas. And that's sort of why we map where they are today. A lot of cities are focusing on those areas. How can we strengthen those known clusters without spreading out retail and restaurants sort of throughout all of the new development? Next slide. So we'll zoom back into Vancouver. And this is sort of where our work fits in, right? The city has done, produced the downtown design guidelines, which is sort of guiding the requirements of what the ground floors need to look like. So that's sort of the, how do we meet this? The comprehensive plan is creating active ground floor required overlays and active ground floor ready. So the city's already thinking about not requiring ground floor activation everywhere. So that's sort of telling you the where do I have to do this? And so the outcomes of this study is really the,

23:24 well, who and what kind of uses can fit in these places? So we're looking, we're really zooming out, looking at target industries, business types that fit into this realm of sort of active ground floor uses. But then we're digging into, if we see these different targets, what do they need? What do their spaces look like? How big, what utilities, what traffic ped counts, what curb control, how do they fit into downtown? 'Cause often we get these ground floor spaces that from the get-go don't have the utility capacity to attract a manufacturer or to do a certain use. So we wanna be setting the city up with an identification of what these different uses need. And we're gonna zoom in both with ourselves, and I should have introduced our team. We're working with First Forty Feet, who's been deeply involved in the conversation here in Vancouver, more of the architect design side. So what are some of the architectural requirements that these need and are there constraints that the city sort of inadvertently has put up to meeting some of these ideas around new ground floor users? What do those constraints look like

24:24 and other opportunities for city support? And then we're working with a local firm called Bricks Need Mortar that really, sort of half of their time is working with businesses in finding locations. And so they're really in tune with what kind of users are looking, what users are looking for in terms of spaces. And what Vancouver, being in the north side of the Portland metropolitan region and being in Washington, what unique attributes does Vancouver have that can attract businesses to open up here and how does that fit into downtown? And then the last thing is just identifying, you know, this isn't gonna be easy. And there may need to be ways in which the city can support through just programming and all of that all the way up through financial incentives. So we're gonna work through those policies as well. Next slide. And one more. So we're here to sort of talk about what are we finding? And we did this same sort of exercise, I feel, with the downtown redevelopment assessment where we came to you all sort of midway through,

25:22 maybe 60, 75% done and said, are we on the right track? And I remember a very pivotal meeting with you all where you said, we wanna find sites that can be catalytic. And so we're using that same approach with you all. This is what we're finding. But you all are involved in your own professions. You have ideas. So we wanna make sure that we're not just coming to you with a PDF and walking away. We're really able to incorporate. We're at a point where we can incorporate feedback. So we created this sort of graphic that helps wrap our mind around what are we trying to do? So as Chim Choon alluded to, well, I'll start with the first one, which is you do look nationally and people are strengthening and focusing on their existing nodes, which again, is why we start with those heat maps. You need to create a unique identity. Downtown is a unique identifier for Vancouver. So how can we strengthen and support those nodes? How can we also look at emerging industries, regionally, locally, that might be able to be accommodated in new development and existing development in downtown?

26:20 And then the last one, which is really critical, is the city has recently adopted their economic development strategy. And with downtown being a focus of development and future growth capacity, how can we also meet our economic development goals in our downtown and how do they align with our active ground floor use opportunities? Next slide. So with that, I wanna talk loose or sort of quickly about, we did a scan, you know, document review, the city's economic development goals, the Columbia River Economic Development Corporation's economic development goals, the Workforce Board of Southwest Washington has goals, and they really start to come together. I mean, I think a lot of those were building off of each other, but from the city's perspective, it's really focusing on economic growth that is equitable. So you think about a key factor in that is living wage jobs. How do we have not just job growth, but job growth that pays living wages, which are sort of defined by a certain income amount and work sort of parameters?

27:20 In that analysis, the city identified several key industry clusters that we have also identified in our sort of revamp of the data, but just listing a few, you know, these aren't traditional uses in downtown, advanced manufacturing, computer electronics, clean technology, software, life science, but those are industries that the city of the region sort of sees as a vision for growth. And then of course, there's this goal to support entrepreneurship and small businesses, which obviously have a role in downtown. Next slide. So another kind of quirky graphic, but just something that's really helped us think about as we dig in and we take this really data-driven approach and we're looking at industries, we're looking at cluster analyses, we're looking at sub industries, how do we filter through all of that data? I mean, we're getting down to, not to get nerdy, but sort of three, four, five digit NAICS codes. You're getting into really these defined industry clusters. And so we wanted to kind of tag each cluster or each industry as an opportunity for downtown if it hit one of four goals.

28:20 And you see these filter down to just yes, is this gonna be an opportunity for downtown that's worth exploring? How can we include that in this sort of matrix that the city can use moving forward? So one is, is this an industry with historic job growth and how does that fit into downtown? Two, is it an industry with projected job growth, right? Is there a shift in a focus in a new industry in this region? Three, is downtown in sort of the, again, a little bit of an economic nerdy comment, but a shift share analysis, does it show that downtown is a unique location for this job industry and how does it fit into the future of downtown? And then a new layer about, again, thinking about jobs in downtown is, is it an industry with high wages and are there ways where we can parse through that data and identify those as opportunities for downtown? Next slide. So there is this sort of massive matrix that is being built that we're opining on from an industry perspective that the architects are opining on,

29:19 but we wanted to zoom out and we'll go through kind of what that looks like in a second. But some of the initial active use industry targets, we can't walk away from retail and restaurants and we know that, but how can we kind of focus on where those are located, create those kind of clusters of activity? We also see a lot of emergence in that kind of experiential activities, arts, entertainment, recreation. You have a climbing gym in downtown, that example is of a sort of interactive art exhibit in the region. Offices can play a role in ground floor if they're the right office tenant. And then some of these other sort of emerging ideas that are coming across the country really is, is there a role for heavy office light industrial in our downtowns? You see a lot of emerging dense areas focusing on beverage manufacturing, food manufacturing that have a little bit of a retail component.

30:17 And then you go all the way up to R&D and advanced manufacturing. And how can those play a role in downtown and what are the needs of those uses? The last segment, we're kind of calling civic and specialty uses. It's a little bit of a catch all, but as downtown grows, we have an aging population as our role for healthcare. We just, I think recently lost a healthcare provider in downtown who closed shop. So now there's this gap in downtown healthcare. And if we're going to increase the amount of people who live down here, having some sort of healthcare would be important. The second photo there is daycare and childcare. And if we're going to accommodate jobs and growth in this region, how can it be multicultural, multi-generational? And how do those sort of uses play a role? The last one is civic uses. So the city plays a role here. We're seeing a lot of cities across the country think about libraries in the ground floor, which we don't need here 'cause we have a great downtown library, but civic centers, multi-use rec centers.

31:16 Is there a city led effort where we see a need for a park or we see a need for a community center and we can approach a future developer and say, how about we sort of P3, public private partnership, and we think about our use in the ground floor. So we're outlining, so we're creating this matrix of all of these different ideas. Next slide. Just to go through, I know I've mentioned this idea of a matrix, but this is just a snapshot of kind of how this big, matrix is gonna be produced. So first we wanna talk about the industry background. How can we make the argument? Why did this even make it into this idea? So has there been employment growth? What are the typical educational attainment requirements and wages? So how does that help us meet economic development goals? And then are there examples? And then we'll also in here will be NAICS codes and how can the city use their own business license data to figure out are there more examples of these businesses here that we might be able to foster relationships with? So just giving a sense in this case, we're zooming into that manufacturing 'cause I think that's kind of a unique idea.

32:15 The second section of that is gonna be space needs. What kind of size ranges, locational preferences, curb maintenance, utilities, power ventilation, and how does it align with these city overlays that we know are coming? So there's some examples of sort of what those different users need so that when spaces come available or new development opportunities come up, the city kind of has an idea of how these fit in. Then the last is what can the city do to support these and how can the city support these? So is it just finding space? Is it infrastructure? Is it tenant improvements? And what is sort of the general level of city support? Next slide. So I spoke a little bit to this and we've been working with Chim Choon and the whole team on how does this matrix correspond to city action? So in my mind, the city can use this to development, to develop programs on activating any vacant spaces as they come up. They'll have this little toolkit, toolbox of, oh, this is a 5,000 square foot space in this neighborhood on a corner.

33:15 Let's go to our matrix and see maybe these three different business ideas fit into it. Does this space have the utilities to do this kind of use? As our development pipeline hopefully ramps up in our next cycle, there may be opportunities to identify potential uses in new development projects as they come through the pipeline. I've already mentioned public-private partnerships. The city owns land in downtown, is sort of actively pursuing some of these developments themselves. So how can they integrate these ideas into future development? And how can this increase jobs, amenities, and help kind of tell the story and build a multi-use area downtown? From the matrix perspective, what the city can do with it and sort of near-term actions is conducting outreach to regional businesses, identify opportunities for bringing businesses to downtown, identifying any infrastructure improvement needs, coordinating with prospective developers, using their own land, identifying public investments. And lastly, I think, and probably most importantly is identifying partnership opportunities.

34:14 A lot of these sort of big moves happen under partnerships with CDFIs, CDCs, healthcare providers, childcare providers, and even looking internal to our own city needs. Next slide. So we're here to kind of present some very initial findings. I guess we've already kind of gone through the industries and that's sort of what we're seeking some feedback on. But the clear answer regionally, nationally about ground floors, there's no clear answer. There's no silver bullet. If we change this zoning or we go manufacturing, like there you go, we've solved it all. It requires multiple approaches. You need to look at your local strengths, which is why we're really zooming into industry cluster analysis locally. What does Vancouver bring to the table in terms of regional strengths? There is a need to strengthen and focus our existing nodes. So how can our growth in downtown support our existing businesses and restaurants? Allowing ground floor residential.

35:14 So that's something that first 40 feet and our architects are working on kind of a best practices for ground floor residential outside of those key commercial nodes. And then also considering this flexibility on ground floor uses, especially as they align with our industry matrix. Next slide. So I'll talk next steps and then turn it over to Jim Chun to sort of tee up some questions. But our next steps sort of here seeking feedback on refining those targets, space needs, how they fit into downtown. We're incorporating a lot of the architect feedback on how these uses align with existing overlays. Is there an ability, we're also giving the city some guidance on these comp plan goals and targets about ground floor ready. And then certainly digging into these constraints. Are there things that the city can do to alleviate constraints to reach some of these goals? And then lastly, refining the ideas and possibilities for the city to invest and support these opportunities.

36:14 So next slide and I'll turn it over to Jim Chun to tee us up with feedback questions. - Thank you, Matt. So we have a few kind of prompt questions here, but obviously feel free to expand beyond that. But I think what challenges exist to accommodate a broad range of ground floor users in downtown Vancouver, in your experience. Are there other barriers to property owners and developers accommodating non-traditional ground floor uses beyond retail, such as small-scale manufacturing or childcare or other uses, or medical for that matter? And then are there opportunity strategies for the city to better support existing or future ground floor tenants? And are there other considerations that we should be incorporating into the analysis that weren't kind of captured or mentioned as part of this presentation?

37:06 - We're good, any questions or comments? - I'll throw a comment out. So this is fantastic what you guys are doing. You're looking for opportunities. One thing I haven't heard is promotion and advertising. Because you've got a great set of circumstances to present to potential customers, but you've got to get the word out. So that's one of the principles of marketing is promotion. And workforce, available space. I mean, all the stuff you're analyzing, and this data can be made publicly available, and that's where it has to connect with the possible users. So I think promotion should be added

38:06 or included into the thought process. Maybe a little later, once the groundwork is really gelled and presentable. - Yeah, and I think part of our thinking was once we have some findings and recommendations was to really coordinate with CREDC, VDA, to really help with that aspect of it. So I think partnerships with local organizations is absolutely something that we will rely heavily on from an implementation standpoint. - And I'd say more than just locally. I mean, you want to grab people from everywhere that this is a great place to live. The lifestyle that we have here along with, again, all the creative aspects of our society and the food choice. People come here to visit, get them here to stay. That's the thing.

39:01 - We talked about the traditional rents. And I know it's probably a task that shouldn't live at the city just from a funding standpoint and so forth. But it would be great to figure out how we can kind of support an organization or somebody who could participate, whether it's CREDC or someone else to connect tenants who are kind of pop-up or smaller, maybe lower revenue businesses to occupy and activate some vacant storefronts. 'Cause brokers aren't gonna bring them 'cause they usually make money off of the rent that the tenant's paying. So if a tenant's not paying much rent, there's not a lot of incentive to matchmake in that way.

39:59 - One of the questions I had as part of this analysis is the sales tax factor being considered in terms of the type of retail tenants. - Yeah. Yeah, the sales tax factor and the opposite, which is the sort of lower business taxes. There are certain income taxes. There are certain elements of the unique Vancouver sitting in the different state that can attract. And we've had some conversations with folks who are, yeah, the bricks-need-mortar is in communications with businesses who are growing and sort of knows what kind of business would wanna be in Vancouver. And so this idea of certain retail types with the sales tax may prefer to be just south of the river.

40:57 Small-scale manufacturing where Washington actually allows more of that smaller business incubation, lower taxes is more attractive. And so we're gonna be doing some of that analysis and factoring that in too, especially as we think about some of those non-traditional retail uses.

41:18 - Aligning with the manufacturing, I think what is really compelling and what I've been hearing, and Matt, we touched on this, emerging out of the Bay Area is AI and robotics and the need for R&D, which I think would go really well in that west side industrial. And I would recommend, there's discussions with Enlight, what's going on within the defense. Washington's uniquely positioned in that you have a military presence and so you have people at the state with that acumen and understanding, Oregon does not. So I think there could be some real emerging opportunities within that realm. I think Columbus, Ohio is a great example of the defense industry going there with Anduril and its booming. So I would recommend looking at that opportunity. - I'm a little, when you talk about manufacturing, I think of Bucky Logger, Boise Cascade, the things that have been replaced.

42:17 So, and then when I think of manufacturing, I think, okay, you're gonna have a lot of truck traffic moving in and truck traffic going out. And the same reason why we don't put like a Chick-fil-A with a drive-through in downtown. Do we want all this activity or is this, are we talking about more like a jeweler? But that's, it's very inconspicuous. - These are smaller, I mean, 10, 15,000 square feet, very high tech, low intensity type. This isn't your traditional big scale manufacturing. So I think we're entering into a whole new realm. So I think Vancouver is uniquely positioned with that industrial element to the west side, which could be poised really well, aligning with downtown. Yeah, no, it's not, but Mill Plain has a lot of capacity, even if you wanted to go there for trucking.

43:15 - Yes, part of me too, is you kind of looked at downtown Portland and they used to have the Morrison Street retail corridor and it was full Abercrombie, Macy's, and everybody there. And it's all went away. So where did they all go? And how come they didn't come to Vancouver? Or why, especially with Vancouver being that the population growth and all the activity that we have, or is there something? - I'm happy to take a crack at it. I don't know that corridor as well, but you mentioned some of the companies that were there. The large scale retailers are worried about sales tax. And they might've gone to 21st or 23rd. There was still kind of this shift to, oh, well, Arc'teryx and Patagonia are over there. I'm gonna kind of go co-locate with them.

44:12 So I think, but I also do think that you're starting to see downtown Vancouver popping up on that radar as sort of the next jump for Portland region companies. You're seeing Loyal Legion just open. You saw Breakside Brewing come. You have these sort of regional companies that are looking at Vancouver. But I think those large scale retailers are worried about that sales tax. But that's just solely based on the companies that you've listed. - Yeah, I think another challenge with retail is that the online market is really starting to take a big chunk out of the brick and mortar shopping activity. So I think with the combination of the sales tax being, and us being right on the border, and then all this online retail, it does make some of those larger vendors, it makes it difficult for those larger vendors to be attracted to Vancouver.

45:12 - Yeah, I would echo that. I just dropped in on Lloyd Center a couple weeks ago, and I don't know if you guys have been there, but you've been hearing about some redevelopment that's being planned. I just wanted to go, I grew up around it. It was the biggest and the only shopping center. It was the biggest in the country, I think, in the early '60s when it was built. And it's just a ghost town. It's like Armageddon there. It's the major retailers are going away. And Washington Square's losing 'em. Town Center's losing 'em. These big shopping centers are online retailing is just crushing it, I think. - I'd just like to say, too, that was already earlier. I think Misha brought it up. But working with the landlords, too, 'cause I do think if a landlord has an office building, he wants to have a cafe for his tenants to eat or a coffee shop or a daycare center or something like that.

46:12 And a lot of times, I know we've done it in the past, we give it away for free just to, in a sense, so you can make your money on the office side or on a different spot. But I think, hopefully, you can get a lot of help from landlords to do that. - Yeah, I think, just to respond to that, I think the goal of this is to create sort of these win-win-win opportunities. Like, how can it be beneficial for the developer? The city gets clear vision for, the city promotes this clear vision of, we sort of wanna have our hands in dictating and shepherding who comes into the ground floor. And to your point, if it's a use that makes the office above more beneficial and now provides daycare and this, how can we understand what those win-win opportunities are? That's, I think, the goal of this and sort of commend the city for trying to get ahead of the next cycle and have that information

47:09 at their disposal, like this site fits this goal and this is what we wanna see here. And I think development community is excited by that. - Yeah, and I think also one of the, especially for smaller projects or smaller landlords, they may not be able to kind of forgive or give away that much rent. So for, particularly for ground floor uses that the city deems as having a lot of public benefit, are there opportunities where the city can provide some sort of assistance, whether it's technical, financial or kind of reduced costs to help promote and make it easier for the landlord to locate those uses, yeah. - And I would also add, the new codes that the city's working on are really gonna help 'cause you hear it from all of us,

48:07 flexibility's the key to everything in the business and to have the codes being updated to accommodate all these different uses in more areas than maybe traditional zoning would allow, I think that's gonna be a real benefit and you'll wanna promote that as well.

48:27 - One other comment, thinking layering on the many studies, are the catalyst sites integrated with this? So you guys can bring that in, I just didn't see that. - Yeah, we don't have a map showing that currently, but I think how we're thinking, if you look at the different kind of heat maps of where things are, the catalytic sites are kind of in the gaps of the heat maps. So it gives us that kind of opportunity to look at those and relative to where things are now and say, okay, and I think that's kind of one of the next steps is saying, based off of where everything else is, what makes sense here? And how do we think about those catalytic sites more strategically in the context of current conditions and current uses? - That's great, and I would just add, and I saw it in there, so I know you're thinking about it, but just reiterating the importance of public infrastructure,

49:26 I think sometimes we forget how critical that is, and you're the only ones who can do it. So I would just emphasize that. - Oh yeah, that was additional, because I think, as you can see, the table has a lot of information that we didn't really want to put on a slide, because it wouldn't be readable, so yeah. - All right, any more questions, or? - So I just want to, just to wrap up, is this, is there a timeline for the final, for like, when will we have something that we can say, this is the final study? - Yeah, we're, you know, we wanted to get to this point and allow some opportunity, even do things like, look at Columbus, Ohio, and things like that,

50:24 so this is perfect, I think we're at a two, three months, we'll be done, probably come back, so quick turnaround, and also providing some feedback on the other plans that are coming out, so making sure this is integrated into the next wave of sort of city documents, couple months. - Yeah, so this becomes, as everyone's saying, kind of a practical filter for us when we think about both strategic sites and other developments, both where we want to reinforce what's going on, but also not every new multifamily project needs to have ground floor retail. Like, that's the flip side of this, is it doesn't serve anybody, and we can, if we can put housing there, then we pick it up and we can really focus our efforts, so maybe, you know, we were, like Waterfront Gateway, heavy on, this gives us a little bit more information to think about that, the city has retail spaces that we control downtown, what do we do with those?

51:23 This helps us think through, you know, not every retail space needs to be retained as retail, right, and then the ones we do, we can really pour kind of our attention and potentially resources into that.

51:44 - Okay, we're good? Well, thank you. - Thank you. - And you're gonna stay though, right? - Okay. Should we, yeah, so we should go to the development activity report, right? Okay, kick this off and we're gonna do a little team effort here between me and Chad and Chim Choon. So we're trying to make this a regular, it will be a regular occurrence, I think we've been doing this now for the past couple of years, and refining it, and so we're gonna give you kind of the, this is all 20, like looking at 25 data, we actually already have some early 26 data, but we don't wanna confuse the conversation. So we're kind of reporting out on what's happened in 25, where we stand in terms of the development pipeline, dig into some of the housing side of it, why don't you go to the agenda there,

52:40 and then talk about, you know, obviously the market condition side of it, and what some of the policy implications are, and then have a conversation about it. As we've done in the past, I just wanna highlight, like you are both audience for this, and we want feedback, 'cause this is, this same presentation will be going to city council the first Monday in April, and we, you know, so we are trying to keep city council really close to this data, 'cause we do think it then informs a lot of other policy discussions, and then Chad and I are also presenting to the city's leadership team, so all of Chad and all of our peers, we meet a couple times a month, and so that's next week, once again, trying to keep this information front and center, so when people think about, when we'll get into some of these issues, like we have the transportation folks who are looking at raising impact fees, that's a housing conversation, right?

53:40 So they're very receptive to this conversation, I'm not trying to like throw them under the bus, I'm just saying example is they're looking at what their impact fees should be, we're successfully getting everybody around the table to say let's look at what it means from a development perspective, but we have to keep doing that every year, and so that's the overall purpose of this presentation, and like I said, I really want you to both, yeah, your reaction to the information's great, but also feedback on how we might continue to push this message out. So with that, I think I'm gonna turn it over to Chad, and Chad's gonna walk you through the permit information. - Yeah, and most of this is, okay, thank you. Hi, Chad Eichen, Director of Community Development, and most of this will focus on residential, but this first slide, well, let me back up

54:40 before I even get into the slide. Looking at our overall development activity for 2025, if you compare it to previous years, I was explaining this to a couple folks before the meeting, the numbers actually don't look that bad, but if you dig a little bit deeper, it becomes apparent that even though the numbers of permits and applications are just a little bit below what we've had in previous years, the projects are much smaller, the valuations are much lower, the residential units are much lower, so you kinda have to dig a little bit below just the strict number of permits and applications. This first slide shows valuation of commercial and industrial permits.

55:36 We use valuation to calculate the building permit fees, and it's really, it can be thought of as a surrogate for how large a project, how large our projects are, how complex they are. As you can see, that number has shrunk dramatically in 2025.

56:03 About $60 million of commercial and industrial projects combined. Our total valuation last year was 483 million, so it's a really small percentage of our overall permit valuations. We had, and so 483 million in total valuations, that's a 22% decline over 2024. So we're in a trough, for sure. There are some signs that we might be climbing out of it, but it may be too soon to know if it's a trend yet. So a lot of uncertainty out there. - For this information, quick question, is this specific to the city of Vancouver? - Yes, strictly city of Vancouver, thanks, good question. - Yeah, and this is based off our actual permitting dataset for permits that we've issued. - Thank you. - What's 2020 with that waterfront?

57:02 - That, I believe, was we had two school bond measures that were approved, about a billion dollars of school renovations and new schools. I mean, that's not showing up at a billion, but I believe that's where that is coming from. - Moving into-- - I think '22 and '23 would be the ZoomInfo building, on the commercial side. - Yeah. - The bulk of that. - Exactly. - Right, and then I think the industrial was a lot of distribution center activity. - And HP. - And HP. - Yeah, then the market got saturated pretty quickly with warehouses and distribution centers that were being permitted, so that number fell off. Okay, next slide. This is the residential building permits that were issued.

58:00 You can see it's trending in the wrong direction. The production goal is about 2,500 to meet our population targets by 2045. We are, as this shows, 51% below the six-year historic average for number of units.

58:22 Some of this was due to the very low number of land use applications for residential projects that were submitted in 2024. So that trough in 2024 will sort of march forward and for at least a couple of years until we see those numbers improve. Couple things I wanted to mention here that, as I mentioned, the number of units received in 2025 was somewhat better than 2024, and those are still making their way, some of those are making their way through the permitting process. We had 760 compared to, let's see, 214 units were proposed in 2024. Just to give a little bit of context,

59:22 this might be a way to picture on a citywide basis the number of units that we need to hit, 2,500. It would be about more than one waterfront being built every year throughout the city. So we've got about 1,600 units down there now. So we need to do better than a waterfront each year. Also, I wasn't sure where to make this comment, so I'll just say it here. Pre-application conferences is also something that we look at as an indicator of future large projects. Those dropped to 80 last year, which is a new low post-pandemic. So that's not good news for the development pipeline

1:00:22 going forward. So just a couple of troubling signs there. Next slide. The MFT, this is pretty self-explanatory. The MFT pipeline has dried up, issued one MFTE approval last year. And I think maybe Chimchun wants to weigh in on this, but I think the takeaway from this slide is that the MFTE program, which has in the past been effective at closing the gap on financing, is no longer enough to move projects forward. - Yeah, I think, like Chad said, it's just not as effective in this market because of how much of a gap there is in feasibility. We did make some changes to the program in 2023.

1:01:20 So I think that's part of why we saw a big influx in 2023 of applications. But as you can see in the bullet points, not all of those projects actually came to fruition. So it was more of kind of hope that things would get better, and they have not. - So I wonder, part of it was, remember it was a straight MFT. You did the project and you got the property tax exemption. But then we did public benefit, and then we changed it to contributing to a little affordable housing fund. So when we say it's, do we make it more complicated to get the MFT, or is it because of the circumstances? - I certainly think there's an argument you made that the changes probably weren't timed well, but I still, as Jim Chu mentioned, that point still overrides all of it. Even if we had left the program unchanged, I think we would still see this.

1:02:20 We just wouldn't have seen that spike in applications. If you recall, last year we brought through another set of temporary changes to MFT that delayed the fee-in-lieu payments for six years. So we still don't know the impact of that, but we tried to take the burden off of the fee-in-lieu off of the market rate projects. We weren't statutorily allowed to give them a longer-term exemption, and the affordability, the 12-year exemption still holds. And we liberalized that in '23, meaning you got a longer-term exemption for less affordability. So the changes weren't all meant to raise the bar, but just the market conditions are still the primary driver here. - Yeah, and I know we're focused on 2025, but I think some interesting information in early 2026

1:03:17 is we're seeing a lot of, or several, maybe not a lot, projects that are rolling off the market rate MFTE actually reapplying for affordable MFTE for 12 years. So I think market rates are close enough to the affordability level at 80% that it's becoming attractive for existing product. Okay, next slide. This shows the residential units that are under construction. So this is sort of a rolling quarterly number. The same project will show up in a number of these quarters for like 12 or 18 months. You can see there's a trough there in the fourth quarter of 2004, slightly climbing out of that. But all that white space that you see below the gray,

1:04:15 at the top line, is future deficit that in our number of housing units and housing production that will continue to plague us in the future. So really, if we were hitting that 2,500 mark, every quarter should be at least at 2,500. - So in looking at that goal, just for my own knowledge, how do we set the goal of 2,500? Is that based on population or-- - It's based on the state's population projections for Vancouver, yeah, great question. - And I will say the, I think if you do the math from our goal over the next 20 years in the comp plan, and today it's actually around 1,800, but we understand that we currently have a deficit of housing. So that 2,500 is to help catch us up to our deficit, or from our deficit, and the annual need, and then it levels off to a lower amount.

1:05:14 But yeah, so that's why we're at 2,500 and not 1,800. - Just out of curiosity, could you overlay population growth on top of this to see if there's any correlation? - That would be interesting, yeah. I don't know if we have quarterly population data, but-- - Yeah, I mean, that would be tough, I would say. (laughing) Are you taking the next one? Yeah, okay, okay, next one. - Well then I guess, and maybe I'm opening, I can't remember this, so does that deficit cause people to relocate out of Vancouver city limits then based on housing not being available? - I think it's, so I think this might talk to it a little bit as well. - Okay, thank you. - So this is vacancy rates in Vancouver for multifamily housing. So I think to the extent that the price point, the vacancy drives a price point

1:06:11 that compared to other regions is more expensive, I think you would see people leaving. I don't know if we've seen that happen yet because the price point between other areas around Vancouver and Vancouver itself is not different enough to warrant that additional travel. I'm sure some people have, I just, yeah. We don't have as much data on that. - But it's also just, I mean, there's been a lot of studies on this. It just pushes everybody down in the housing market. So a lot of studies have been done on like, what's the cause of homelessness? The cause of homelessness, you can, there's all sorts of ancillary factors, but the main cause of homelessness is lack of housing supply. So when you underproduce housing, it just is cascading impact down. And so people who should be in like buying a home or stuck in rentals, or they should be in bigger rentals or in smaller rentals, and it pushes everybody down, pushes prices up. And the folks at the bottom of the rental market

1:07:09 are the ones who get pushed out into unsheltered. So you have that and obviously you can see it in all the different data, so vacancies and whatnot, but. - Thank you, that helps understand the gap. - Yeah. - Yeah, and for our comprehensive plan, they're targeting a 7% vacancy rate for our housing supply as considered, as what they've identified as what would be a healthy market for from a renter's perspective and a resident's perspective. I think oftentimes for development that's flipped where a lower vacancy is better. And when you get to 7% vacancy, that's a little nerve wracking to make an investment in that kind of market. So here I've kind of shown from a renter's perspective, the green, yellow, red of what's healthy kind of more dynamic from a price standpoint and very difficult

1:08:05 to decrease or a highly dynamic pricing environment in terms of vacancy. But this graph shows kind of historically where vacancy, both stabilized vacancy and overall vacancy has been in Vancouver in the multifamily. You see a dip quite low in 2021. I think as you see pandemic migration away from urban centers, probably Portland and Seattle, and then a larger spike, particularly in overall vacancy, which includes kind of new product from deliveries in the waterfront and today it's kind of, they're leveling out, stabilizing around 5% vacancy. So if we go to the next slide. And so this is when we look at rent growth, which is often related to vacancy rates.

1:09:03 So this is rent growth adjusted for inflation. So it is a little bit different from a different perspective but I think it really points to one of the core reasons why we are seeing a slowdown in particularly housing development activity, because we are seeing pretty consistent negative rent growth over the last few years and forecasted continuation of that negative rent growth. This rent growth also does not consider concessions, which are additional offerings to help attract new tenants to lease. So likely the effective rent is lower than this. But, and this is, I mean, if we're hovering at kind of

1:09:58 one to one and a half to 2%, that's still a decrease that I think other inflationary factors are still putting pressure on residents that they aren't necessarily feeling this decrease. But I think from an investor standpoint, attracting new development, attracting new projects, this is a bleak outlook for the next few years. I think part of that context is also looking at whether part of, or I think part of the conversation is kind of the question of whether this negative rent growth is partially driven by what people can afford locally. And I think we see here that construction appears to be outpacing, or the cost of construction really appears to be outpacing wage growth.

1:10:58 This isn't a perfect comparison. The building cost index that we have access to are focused on commercial development. So steel, there's more steel and concrete in those. Residential tends to be more driven by wood market, wood and labor markets. But I think at a high level, there are similar trends. And we're just seeing construction costs creep higher and higher. And wages are just not keeping up at the same rate. Yeah. - I would consider, I imagine Seattle's a lot higher. So it might be, for council to see that other regions are, the income growth is exceeding construction might be helpful. - Yeah, so I think that's why I included the national percent change. And this is percent change. So I find it pretty interesting that Seattle

1:11:58 and Portland percent change were very consistent, even though Seattle is a lot higher, like a lot higher density, probably a lot higher per square foot costs. But the percent change from 2010 is pretty close. Obviously, both of those cities are above national, which is in yellow. - Oh, you put Seattle, I'm sorry. - Yes. So yeah, Portland's in blue, Seattle's in, I guess, orange. And then national is in yellow, so. - Nothing to know, but I was kind of curious. What happened to Portland and Seattle? - Mark? - Yeah. - Mark, could you turn on your mic? - Sorry. - Thank you. - I'm not sure if you would know this, but if you, starting in 2020, Portland and Seattle diverted so much from the national cost. I wonder what happened.

1:12:56 - Yeah, I mean, I think there's a lot of potential reasons. I think sometimes national trends can vary a lot from coast trends in terms of price of materials or things like that. But I believe that is also when we saw some of the more recent building code be adopted in both Oregon and Washington. So I'm sure there's several other factors, but that would be my best guess at this without diving into it too deep. - Yeah, I think you're on the right track there's lots of things that affect the cost of construction. It's the cost of materials, it's the cost of the Washington energy code, labor rates, and how busy people are. If they're busy, they're gonna put more markups. Markups in construction are really, really small.

1:13:53 So it's not, you say costs are going down because people are getting hungry. Well, there's some other factors than that because the fees on construction are so small. But there's also competition for the materials in the market. I think I've mentioned before that we were putting up, the company I used to work for was putting up industrial buildings, a lot of flat roof buildings and all the trusses and plywood and roofing materials were being gobbled up by large, large projects during that time. And we saw roof structures and roofing and roof insulation materials go up 100% in a couple of years. It just, it was crazy what was going on and they don't seem to go down either. So construction costs is not just one thing, it's such an, there's such an extensive web of things that affect the construction cost. - Yeah, and I think on that note,

1:14:51 we're starting to see aluminum and copper prices really skyrocket because of, partially due to the drastic increase in data center construction and the high demand for those materials that those developments are costing in this region, so. - And like I said, the energy code is forcing apartment buildings to use a totally different type of HVAC system. So you're gonna be spending twice what you used to be spending on heating and cooling your apartment buildings. So that's gonna be something that's just mandated onto the industry. - Okay, we're gonna switch now to the affordable housing side. And before I do that, I just wanna highlight, so we included in your, in the packet of materials for this meeting that this is one of the annual reports that we've been doing.

1:15:51 So this is really, it overlaps, obviously there's some market information, but this really is a report out to our city council and to the public on the whole collection of activities that we engage in around affordable housing. So this is a more detailed summary of that activity. This will also be shared with council and everybody. So, you know, our affordable housing production is kind of stuck in this kind of 250 to 300 range. And it's largely because of all of our projects require multiple sources of subsidy and we have dramatically increased our resources, particularly through our affordable housing fund, the levy that we have, but other funds we've put, you know, we're putting together, you know, we adopted this construction sales tax exemption. So we have a lot of different tools, but these projects still need to go through,

1:16:49 get state funding, particularly the ones that have the deepest affordability. And I think on, so the next slide has this, but I just wanna say that number there will be stuck because of the state bottleneck. So I can't push more units through the system is the basically the issue that we have. We know we have the capacity 'cause we have a whole pipeline of affordable housing projects with qualified affordable housing developers. We have committed the funding that we need from the local side to at least double that production and there's just no money at the state level. Next slide. So this is the state issue and we've been, this is a new slide this year because this really is the single issue on the affordable housing production side is that the state of Washington has tremendous need and for affordable housing and it has, you know, decent programs, but its main source of subsidy,

1:17:47 both the 9% low-income housing tax credits and then there's something called the housing trust fund, which is basically the state's kind of grant program. It, you know, probably meets about 1/10 of the need for the state. And then on top of that, we get, there's only a few counties across the country, across the state that really are, that they get underfunded at our level. So we get about half of what we probably should get from a population standpoint. So there's some inequities baked into the system in terms of how this money gets allocated. It's allocated, the legislature sets the formula and then the Department of Commerce allocates it. So we've been trying to advocate, but it looks like next legislative session next year, we will take a crack at a number of folks around the state to see if we can redo the formula. So this year we got one project funded, last year we got no projects, year before one.

1:18:45 So our average is to say one, if we change the formula, we might get two. We had six that applied, we could probably do three to four a year on our end. So this is still not gonna be the answer, but right now it's one of the things that is, that's holding us back. Next slide. So before we get into kind of some of the other actions we're doing, just wanna kind of pause and talk about what are the implications of the data that has been shared on the previous slide. So obviously we've been highlighting this with that line going across the top of all the bar graphs. The housing deficit's gonna continue to grow. As long as you have the white space in there, it's gonna continue to grow. Even with, if you have, like you see vacancy went up, those are kind of temporary lapses when new units get absorbed in the market

1:19:43 that we know from the population trends in our production that that deficit is gonna grow. And we're just gonna continue to see it popping up in different parts of the housing market. The leveling off of increases in price, like at the beginning I mentioned, you know, we are getting bids on infrastructure for the heights that look like prices coming down. There's still this unpredictability to the cost side of the construction market that's gonna continue to plague us, right? We just talked about data centers sucking up important commodities. You're still oil shocks, right? All of a sudden we have proposers ask us if they could have a contingency for the cost of oil in their proposals. So things like that will continue to shock the system. So even if costs come down, we still have that. When we talk to developers and what we see and what Chad sees in the permit data, what we hear from them directly is they're not,

1:20:41 like they're not out there looking to do five over one projects. Those are the most expensive projects for them to do, you know, without getting into taller projects. They add a lot of extra costs that the economics don't work. So where they, the ones doing multifamily, like where they found the cost structure works is in the lower density three story walkup type projects that can eliminate a lot of the other costs in podium type projects. So our goals are different. We wanna see higher density projects, particularly in areas, our commercial corridors around transit, certainly downtown, our strategic sites. So we have this kind of mismatch, but we need housing bill. We want development activity. So I think part of this is we're gonna have to just kind of come to the realization that we're, like this is what, this is development that can happen and we should not fight it. We should be, you know, helping make these projects happen.

1:21:41 And then to the extent that we are determined to achieve either deeper affordability or density or both, we have to change our investment in projects. It doesn't, like our formulas that we set up for how much we put into projects or how much we price land on affordable projects or the MFTE stuff, that formula doesn't work anymore. So we, if we wanna pay for these outcomes, then we have to do that. And then we have this ongoing issue on the other side where every time we do this report, the next report is here's the budget picture for the city and it ripples throughout, you know, everybody's got this problem. So it's this reality for us that we're losing a lot of revenue. There's also this ongoing pressure. Like we have a construction sales tax deferral program for affordable housing. The legislature actually just eased it this session. We can expand it, but that's sales tax is not,

1:22:41 is like is immediate revenue for us and construction sales tax during the 2020, 2021, that drove a lot of revenue growth for the city for us to say, okay, we're gonna expand the eligibility for construction sales tax exemption that like that could get more housing built, but that's a real revenue impact for the city. There are other, you know, impact fees, SDCs, if we delay impact fee increases, those all have real impacts on our ability to fund new roads and parks and things like that. So the revenue questions come up, become really significant as we go forward. Next slide. So we have been doing a lot of work on the housing side, where, you know, these are all the little things. So the other document that was included in your packet is this summary of the housing action plan. We put this together probably three years ago now, and it's now ballooned to about 65 actions.

1:23:38 And we actually have a pretty robust spreadsheet that we track. This is the condensed version, the user-friendly version, but you can see, you know, we're pretty happy that some of the things that we pulled off and we continue to work on are significant changes. You know, so, you know, things like we just approved, well, it's on here, but, so you can see some things we just did there, but we're making, we're using development times, we're changing things like the single stairwell code. So these are all things that we're slowly making progress on. They all have this really incremental impact on the cost of housing, but collectively, we hope they can make a big difference. And then you can see where we have our priorities for the coming year. So we already mentioned the first two earlier. We did reduce development review times on the engineering side of things, and Chad's team is gonna continue to look

1:24:36 at other parts of the development review process, or other words we can squeeze out time there. Single stairwell code, like I mentioned, we are working on the six-story wood frame code, as I mentioned, so hopefully that's something that we can add to this list. And then we are on track to adopt the comprehensive plan I guess it's going to, I heard yesterday it's going to Council-- - June 1. - June 1, right, so and it gets, so then effective date of it would be-- - I guess 60 days after that. - So 60, so it's a massive change in land use for the city, and so you can see this is just a highlight of some of the things that are gonna be coming through there. Elimination of most parking requirements. There's gonna be substantial change of single-family zoning that will allow for this middle housing to happen

1:25:34 in a lot more places, and then there's some of the things. So massive changes coming, when we look across the state and say okay, who's doing what on housing when you look at the broad spectrum of things from on the land use side, on the investment side, fees, and then kind of our own advocacy on this. We're not sure there's many communities that are doing more, and so there is a frustration on our part that we really are, negative rent growth is still dominating, it overrules everything that we do. - Patrick, could I add-- - Yeah, please do. - One thing, it doesn't show up here, but another way we're reducing development review timelines as part of the comprehensive plan is any projects that's 200 units or fewer will be classified as a type one land use action, which is a 28-day land use review instead of 90.

1:26:33 So a huge decrease in time spent by the developer. We're gonna have to really improve our processes and make our, instead of a staff report that you have to write a story about, you can maybe have a checklist. And so we're just gonna expedite the process for these projects that are up to 200 units. - And those types of efforts also allow a developer to spend less on consultants to, so if you're allowing these kinds of things, some of the environmental things you're doing to make it more efficient to get through the SEPA process, those are things that'll lower the development cost, 'cause those all go into the formula. - Yeah, so the reason, the way we ended up at 200 units for type one is that aligns with the maximum SEPA exemption allowed by the state.

1:27:31 So we've already adopted the maximum SEPA exemption for residential. We'll also be adopting the maximum SEPA exemption for commercial, which is 30,000 square feet. And then those all will align with type one processes, so. - Yeah, so I was really impressed with that list, that 60 item list. - You talk about the things you have levers for. That's a lot of levers. And anyone in itself may not, deferring a cost is a little, just a tick on it, but they do add up for sure. - All right, so once again, looking forward to the conversation with leadership and council, kind of wanna highlight some additional options that we might have. A lot of this is focused on the affordable housing side of things, but the top bullet is really kind of the big one,

1:28:29 which is, yeah, this is like, if we continue to work on this list, particularly the things that keep costs down, that streamline processes, that shorten timelines, we are stripping costs out of projects, we're making projects more feasible. So gonna continue to push that and the internal stuff, our conversations with leadership that Chad and I have really are about that, like keeping everybody aligned so that we don't have to like kind of react to some policy change that we weren't in the loop on, that's gonna make it more difficult to get housing done. And really we've had great collaboration. So we just wanna continue that. The other ones really are on the affordable housing side, like we have this pipeline of projects that we know are ready to go on the affordable housing side that can't get state funding. So what else can we do to maybe move some of them forward? So we do a lot of ground leases on affordable housing,

1:29:27 so we can use a sliding scale for valuation. So the deeply affordable basically are getting property for nothing, but ones that are doing our workforce, we're trying to get it closer to 50, 60% valuation. We convened a whole group of developers on the workforce side. Maybe we're not discounting enough. Maybe we need to discount property valuations more. There's a, you know, when council looks at that, the way that they think about it is what am I getting, right? And so getting 80% AMI units doesn't feel like you're getting a lot. And so that's part of what we have to work through is how do we make sure that everybody understands getting units locked in at that rent level actually is a benefit. It fills out the spectrum of housing options and gets projects built too. So valuation of land, obviously I've already mentioned the density expectations, but you know, like the Heights in particular, back here behind city hall, like density is one of the main goals of those.

1:30:25 So are we gonna step back from those goals for those projects? I don't know the answer to that yet, but we have other city properties that we've been acquiring in different locations where we actually don't have the same, you know, kind of massive planning effort that has created a lot of expectations there. We probably can experiment more in other properties and see how long this set of market conditions continues. We probably need to increase our direct investment in projects. So put more of our affordable housing fund dollars into projects. So we're probably gonna be taking changes to council on that. And then we've heard from a lot of folks that are out there trying to move projects forward without funding locked in, that they're taking on a lot of costs on the pre-development side. We've never had a pre-development program. There's been pre-development funding out there from other places. The VHA has been doing it, some of the foundations, but we feel like maybe we can, we have a funding source to make that happen

1:31:23 and see if that will help some projects move forward. We don't have the depth of funds to do a, there's, you know, there's other kind of multifamily lending ideas that might, that would make sense in this market. We don't have the depth of funding to do that. The state needs to step up with that. So pre-development is really the one area I think we can step into that we're not into right now. And so, yeah, so that's the update. And I, we shared with the subcommittee that we, we have a limit on presenting to city council 15 slides. This topic needs about 30. So there's a lot of other topics that are out there. So happy to delve into any other kind of side issues that you feel like we didn't touch on, but then yeah, there's a set of questions up here. You know, what else could we be doing? What other observations on the market?

1:32:21 You know, how should the city be thinking about prioritizing its work and just any other, any other thoughts? And then once again, with an eye toward, we're gonna be presenting this to city leadership. And so any insights you have, we can bring along, we can share those too. - I think this is great. And I appreciate that you all are thinking about even the incremental and every element that goes into reducing costs. One thought in presenting this to council, it seems what I'm hearing is really trying to get to this message of all housing is good. Is that correct? Maybe, and I don't know if that is clear, but just in that description of I know trickle downs an awful way, but maybe in a graphic of that limitation. And I don't know if city council has embraced, but I think that's gonna be a big shift of where we're going and thinking is all housing is good.

1:33:20 So that's something I would recommend maybe conveying. - If you recall a few years ago, when we had Mike Wilkerson present, he also presented to city council and he doesn't use the term trickle down, he uses the term filtering. And that was presented. I think that there's a recognition of that concept, but they're still like, then what's the city's investment in all forms of, like should the city be investing in market housing? So I think that where it becomes the question then gets to, are we willing to put money into non affordable housing? - And I guess I would say no, but in some communities just saying all housing is good is a very important step. So that's why I'm bringing that forward. - I think just some of the stuff I brought up just a minute ago is something you ought to really present because these are deregulating, I guess,

1:34:20 or lowering the regulation pressure on cost doesn't cost the city anything. It's not cash out of your pocket. So there's some levers you can pull that city doesn't have to fund. And I think those are really meaningful for both the city and the development community. - Any other comments or looking at Nishi? - I just want to say, I think the city has done a really amazing job at being really practical and forward thinking about this. I brought up some of the city of Vancouver's efforts with the city of Portland yesterday during a meeting we had between the private and public sectors. And I think they were really interested in learning more.

1:35:19 So I really appreciate all the work that's been put into this and all the foresight. Thank you.

1:35:32 - No further comments from me. I think you're doing great. Hopefully you build more. - And one of the things that, just the small point, but I'd forgotten to bring up this MFT renewal topic. I think it's worth even a small presentation to this group since you're actually doing your charter, have oversight over MFT. But it's a brand new dynamic in that the state changed the law a few years back and allows existing projects to apply for a second, a renewal. And what's really interesting about it is that it allowed any MFT project, including market rate projects to apply. When they apply for the renewal, you're applying for the affordable renewal. So we have, so we actually have a list of all these eight year market rate MFT projects that are within a couple of years of their exemption expiring. And they, as you mentioned, the market conditions for them,

1:36:31 it's like kind of an almost a no brainer, take the 12 year exemption, set aside 20% of your units at 80% AMI, which is kind of market. And then you pick up another 12 year exemption. So that's a whole new dynamic for us. The city's councils already, I think approved one. We'll have a few else of those projects coming forward, but it's probably worth the conversation just to keep you up to speed on what's happening there. - So you're gaining affordable without having to build it. - But we're also losing and like, so that project now gonna have 20 years of not paying property taxes. Well, it's already had eight and it'll get another 12. So, and I think one of the debates and council had really serious questions about it 'cause there was a question about what are we buying? 'Cause when we do the MFT for a new project, we're helping get it built. Now it's built. So what are we getting for 12 years?

1:37:31 And we do a typical analysis for them that is like, what's the market and what's 80%? And there's not a lot of difference. So if you do some kind of like NPV on it, it doesn't look good. They're getting kind of a $4 million net present value MFT exemption for less than a million dollar of actual rent benefit. The problem is you can't foresee rent growth and what the Delta between market and 80% will be 10 years out. So there's a lot of unknowns about it. And there's also this whole idea that 80% of AMI units don't just control rent. They control who can qualify for a unit, which is this filtering concept. So now we're getting really, like, so in a tight market, people who are one income level are basically competing for housing that is priced for a lower income level.

1:38:30 So that's what happens, they could push down. So when you have a rent restricted unit, not only do you keep the rent at a certain level, you basically keep all those other households from competing for that housing. So that's a benefit that we can't quantify in a way that says that's what we're buying here, but that's the argument we've been making with those. But it's certainly a topic that there are differences of opinion about what we're getting. So it's not a slam dunk kind of conversation, but we can bring this to you and have this conversation more in full, because like I said, there could be, I mean, over the next five years, there might be a dozen projects that get this. And a lot of them are downtown, so. - And there's the transit overlay district bill that was passed last year that has some MFTE implications too. Thank you.

1:39:23 - Okay, if there's any more discussion or comments, I guess we can go ahead and say we're adjourned. Thank you guys for all your work.