Apartment Investor Newsletter, November 2020 Edition

APARTMENT INVESTOR

A Recap of 2020 and a Look Ahead at 2021

By Greg Frick and Lee Fehrenbacher, HFO Investment Real Estate With thousands of new units coming online in 2019 and 2020 in the Portland/ Vancouver metro area, overall market rents remained relatively flat. Certain submarkets saw rents increase as others declined. Vacancies now average about 5 percent due to the pandemic and the delivery of new units.

There are residential eviction and foreclosure moratoriums in Oregon, Washington, and at the national level through 2020 and maybe beyond. Despite requirements for residents to make payment arrangements for unpaid rent, those stipulations result in some uncertainty over resolution of outstanding rent.

2021 FORECAST Up Down

Flat

• Employment • Permits • Interest Rates • Vacancies • Rents • Transactions

SPONSORED IN PART BY

Some cities added additional restrictions. Portland is mandating payment of relocation fees to any tenant facing increased rents. In Washington State, the City of Olympia has banned late fees and requires landlords to set payment plans through July of 2021.

While some investors are removing equity from the market due to these developments, others are looking to take advantage of historically low interest rates by preparing themselves for the long haul through investments and refinancing. Our deficit of affordable housing units, continued business expansion in some sectors, and an expected influx of climate refugees all add to the expectation that the Pacific Northwest’s housing market will remain strong well into the future.

HFO HFO Investment Investment Real Real Estate Estate LLC LLC •• 2424 2424 SE SE 11th 11th Ave Ave •• Portland, Portland, OR OR 97214 97214 •• (503) (503) 241.5541 241.5541 •• www.hfore.com www.hfore.com

November 2020

A RECAP OF 2020 AND A LOOK AHEAD AT 2021 (CONTINUED)

INDEX

Government Intervention in the Free Market

1. A Recap of 2020 and a Look Ahead 5. Portland/Vancouver Tax Comparison 7. Apartment Development Pipeline 8. Government Activity Timeline 10. Regional Market Round-Up 14. Oregon’s Economy is in Bad Shape, but Doing Better than Feared 15. Submarket Vacancy Rates and Concessions 16. Portland’s Inclusionary Zoning 17. News from Sponsor J.R. Johnson LLC 18. Eviction Moratoriums and Other Pandemic Measures 20. Clark County’s Economy 22. HFO-TV & Marketwatch Podcast 22. Important Reminders About 1031 TaxFree Exchanges

After years of failure to offer leadership in the production of housing, governmental entities have turned to various measures including rent caps, relocation fees, and zoning restrictions as their way of addressing the housing affordability issue. What could have happened long ago— the encouragement of new housing supply—never occurred. Instead, state and local governments continue to saddle developers and owners of rental properties with additional costs and regulations that make building and operating rental housing prohibitively expensive for the private sector. The effect will be a lower supply of housing—the exact opposite of what elected leaders are trying to achieve.

Market Vacancy and Rents

The Portland MSA market is seeing some softening with an increase in vacancies through the fall of 2020 as we begin to see the effects

28. Financing in 2020: Bridge to Success!

30. Washington State’s Multi-Family Housing Update 32. 2020 and Beyond: Trends That Shape Recruitment Discussions

5.04%

8.0%

4.42% 4.40%

6.0%

4.37%

4.0% 2.0% 0%

24. Portland City Council Quietly Dissolves Unreinforced Masonry Workgroup 26. How Oregon’s Commercial Activities Tax Impacts Multi-Family Real Estate

VACANCY

10.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (Oct.)

Source: Multifamily NW Apartment Report

RENTS/SQ FT

$2.0 $1.80

$1.57

$1.60

$1.62

$1.74

$1.76

$1.40 $1.20 $1.00 $0.86 $0.80

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Multifamily NW Apartment Report

(Oct.)

of doubling-up as a result of the pandemic and subsequent loss of employment.

Rent per square foot is relatively flat in the Portland metro area. Fall Multifamily NW data indicates 2020 year-over-year rent increases of 1.15 percent, which was heavily influenced by rents at new assets and doesn’t 2 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

account for concessions. The Seattle MSA meanwhile has seen year-over-year rent decreases of 1.3 percent which also does not account for concessions.

Institutional Transactions of ($10 million and up)

In 2019, there were 45 apartment transactions priced over $10 million in the Portland metro area. Through the end of September 2020, there had been 22 apartment transactions priced over $10 million.

Annualized 2020 sales to date have resulted in 29 projected transactions accounting for roughly $988.57 million in sales. If trends hold, that would fall short of 2019’s $1.81 billion in institutional sales volume by roughly 45.3 percent.

Institutional transactions this year include:

• Silverwood Apartments; 164 units in Gresham sold for $30 million • Bethany West Apartments; 82 units in Portland sold for $24.5 million

HFO Sale: Four Seasons and Westfair

• Four Seasons/Westfair; 151 units in Eugene sold for $15.8 million

Transaction Volume $ (Billions)

Turning to Portland metro noninstitutional transactions below $10 million, we have seen 63 transactions through the end of the third quarter, accounting for over $261.01 million in dollar volume, with projected sales for the year at $348.02 million. Projecting for the remaining quarter, sales for 2020 are estimated to close out roughly 20 percent below 2019’s sales volume of $435.38 million.

$3.0

PORTLAND METRO AREA TRANSACTIONS

$2.5 $2.0 $1.5 $1.0 $0.5 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Proj.

Transaction Volume $

(See Recap and Forecast, next page)

$10 Million Plus

Source: CoStar Multi-Family 10+ Units – Portland Metro Area

Permits

Portland Metro Area permits for 5+ units have risen steadily from a low of 1,007 units authorized in 2009 to 9,979 in 2017, 7,274 in 2018, 8,719 in 2019 with 6,346 projected for 2020 based on 4,231 applications through August. Still, experts say housing has not accelerated enough to meet the estimated regional demand of at least 25,000 new housing units.

200 180 160 140 120 100 80 60 40 20 0

Number of Transactions

Non-Institutional Transactions (under $10 million)

151 Units in Eugene, OR • $15.5 million

Under $10 Million

MULTIFAMILY PERMITS ISSUED PORTLAND MSA

12,000 10,000 8,000 6,000 4,000 2,000 0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Proj.

Source: US Census Bureau

THE NORTHWEST APARTMENT INVESTOR 3

A RECAP OF 2020 AND A LOOK AT 2021 (CONTINUED) Affordable housing is an issue we all need to work together to address.

Elected officials continue to put the burden of providing it on the shoulders of private property owners and developers.

It does not make sense for elected leaders to expect the private sector to subsidize housing costs to those in need while simultaneously making it more expensive to operate and deliver those homes. Indeed, our state’s housing issues can best be solved by encouraging development rather than constricting it.

EFFECTS OF INCLUSIONARY ZONING 2/17-9/20 DEVELOPMENT PIPELINE (AS OF 10/1/2020)

6,000 5,000

5,024

4,412

4,000 3,000 2,000 1,000

589

0 6 Months Pre-IZ 43 Months Post-IZ Submitted Submitted Vested Units

Approved

(Including 1 condo)

286

115

Pending

Completed

Affordable Units

Source: City of Portland Housing Advisory Commission

We need elected officials to work with all stakeholders to develop ideas and solutions that address our market’s challenges with affordability, instead of implementing regressive policies that look good in the press yet have significant consequences. These policies have the opposite impact of the desired outcome and often hurt the very people elected officials are attempting to help.

Regardless of our connection—as property owners, renter, urban or rural dwellers—we in Oregon and Washington need to work together to implement effective, long-term solutions to the complex challenges faced by our market.

HFO Sale: Bethany West

82 Units in Portland, OR • $24.5 million 4 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

PORTLAND – VANCOUVER TAX COMPARISON 2020 Tax

WASHINGTON: Clark County

Corporate Income None (Excise) Tax

OREGON: Multnomah, Washington, and Clackamas County Greater of: 1. 6.6% on taxable income of $1 million or less + 7.6% on taxable income greater than $1 million; or 2. Minimum tax ranging from $150 to $100,000 based upon Oregon sales (approx. 0.1% of sales)

Gross Receipts (Corporate Activity)Tax

None

Applies to businesses or unitary groups with greater than $1 million of Oregon-source taxable “commercial activity” at a rate of $250 plus 0.57% of Oregon-source gross receipts minus 35% of labor and input costs

1% Gross Profit Tax None (Effective 1/1/21)

1% on businesses with gross receipts over $5 million and individuals (resident or nonresident) with gross receipts over $200,000 joint filers/ $125,000 single filers

Business & Gross receipts tax with various percentages and exclusions Occupation (B&O) by classification: Tax

None

Personal Income Tax

None

Various brackets ranging from 5.00%-9.90% of taxable income

Minimum Wage

$13.50 per hour

Multnomah County: $13.25 per hour

Retailing – 0.471%; Wholesaling – 0.484%; Manufacturing – 0.484%; Service & Other Activities – 1.5%; Other specialized classifications – various rates apply

Washington County and Clackamas County $13.25 per hour (inside UGB); $12.00 per hour (outside UGB) Initial State $180 Registration Fees

$100

Annual State $60 Registration Fees

$100

Real Estate Transfer Taxes

Graduated state rate ranging from 1.10% to 3% for taxable amounts + local rate of 0.5% for all jurisdictions except Yacolt (.25%)

Other Real Estate None Licensing Fees

Multnomah County : None Washington County: Rate of 0.10% of sales price Clackamas County: None Multnomah County : $60 per unit in Residential Rental Registration fee, annually (City of Portland)

Washington County: $75 for < 40 units + $1.25 per additional unit (apartments, hotels, motels), annually (City of Beaverton)

Clackamas County: None

Tax comparison chart reprinted with permission from CREDC Economic Development.

THE NORTHWEST APARTMENT INVESTOR 5

PORTLAND – VANCOUVER TAX COMPARISON 2020 Tax

WASHINGTON: Clark County

OREGON: Multnomah, Washington, and Clackamas County

Business License $0 through 3/31/2021 for businesses with gross Multnomah County: 2.6% of net business income, $100 minimum, annually Fee/Local Business annual income > $12,000; $200 + $90 per FTE, (City of Portland) Tax annually (City of Vancouver) +2% of net business income, $100 minimum, annually (Multnomah County) Washington County: $75 for 0-4 employees and $8.50 per additional employee, annually (City of Beaverton)

Clackamas County: $55-$240 depending on number of employees, annually (City of Tualatin) Sales Tax (State and 8.4% (7.7% for certain unincorporated areas) Local Combined)

None

State Transit Tax

None

0.10% withheld from all employee wages for Oregon residents and nonresidents performing services in Oregon

Local Transit District Tax

None

0.7737% employer payroll tax on employee wages for services performed within TriMet District Boundary

Unemployment Insurance Tax

Average rate of 0.99% on the first $52,700 in Average rate of 1.73% on the first $42,100 in wages; Rates range from 0.7%-5.4% wages; rates range from 0.13%-5.72% with new with the new employer rate of 2.1% employer rate of 90% of their industry average

Workers’ Compensation

Industrial Insurance Average Rate, per hour worked $0.6396

Broken down into three taxes:

Sample Rates by Industry:

2. 8.4% Premium Assessment fee of the annual total premium for insured employers, 8.5% for self-insured employers, 8.9% for self-insured employer groups

Misc. Manufacturing: $0.7765 Dealers & Wholesalers: $1.1239 Misc. Professional Services: $0.1968

1. Pure Premium averages $1.02 per $100 of payroll

3. Workers Benefit Fund, paid to the state at 2.2 cents per worker hour

HFO Sale: Westview Terrace

26 Units in Portland, OR • $3.635 Million 6 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

HFO Sale: Midmont Station

10 Units in SE Portland, OR • $3.025 million

HFO PORTLAND MARKET DEVELOPMENT PIPELINE Units Under Construction and Planned Units

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Prospective 26,924 units Requested early assistance or design advice

Planned 10,720 units Submitted building permit application

Under Construction 15,589 units Building permits issued for project

Close-in Eastside 4,922 Units | 19.24%

Kalama

Outer Eastside 4,159 Units | 15.81%

Woodland St Helens

Close-in Westside 3,535 Units | 13.44%

Battle Ground

Outer Westside 5,174 Units | 19.67% South Waterfront 360 Units | 1.37% North Portland 3,096 Units | 11.77% Washington (Clark County) 5,063 Units | 19.24%

WASHINGTON

Scappoose

Vancouver

Banks

OREGON Forest Grove

Hillsboro

Camas

Portland Gresham

Beaverton Milwaukie McMinnville Oregon City

HFO research staff track the total number of all known units currently under construction and planned. Currently, these total 26,309.

The chart above was last updated in October 2020. If all of these units were built, the chart shows where they would be located.

Source: Newspaper reports, city permit offices, HFO research. Copyright 2020 HFO Investment Real Estate.

All rights reserved. Reproduction without permission strictly prohibited.

THE NORTHWEST APARTMENT INVESTOR 7

Government Activity Timeline 2014

URM Upgrades

City of Portland 1/2014 City establishes URM Seismic Retrofit project/building policy committee.

9/2016 Portland holds hearings on mandatory URM upgrades.

10/2017 First City Council review of URM Policy.

11/2017 Final URM building policy meeting and final draft report.

6/2018 Portland City Council votes to work on financing options, timelines, and temporary exemption for educational and religious nonprofits. The council decides to take a final vote on seismic retrofitting timeline requirements in 2019, spinning off warning signs/tenant notification for immediate action (see URM Placards/Warnings on following page).

Recommendations ultimately fail under public pressure and litigation.

9/2019 Back at square one, the City works to establish new, more representative committee after embattled first committee’s recommendations fail on multiple counts. Problems include errors in URM list, failure to notify and involve non-profits (including churches), and a mandatory timeline without any funding that would result in numerous demolitions that include historic buildings.

5/2020 City removes controversial URM list from its website.

10/2020 City quietly disbands URM policy committee. (See story, page 24.)

2015

UGB Expansion

Portland Metro Government 1/2015 Metro decides against expansion of Urban Growth Boundary.

Residential Infill

City of Portland | State of Oregon 7/2015 Project begins.

4/2018 Public review and testimony concludes.

10/2018 Metro anticipated to expand the urban growth boundary by 2,181 acres in Beaverton, Hillsboro, King City, and Wilsonville.

7/2018 Portland Planning and Sustainability Commission delays vote on increasing homes in single-family neighborhoods to fall 2019.

8/2019 Oregon eliminates single-family zoning in Oregon cities with populations over 25,000, effective 2020.

8/2020 Portland adopts Residential Infill Project.

2016

Inclusionary Housing

City of Portland 6/2016 Concept development.

10/2016 Public hearing.

12/2016 Council hearing on program and code.

2/2017 Effective date.

9/2020 Through September 30, 2020, Portland received 102 market-rate permit applications for projects of 20 units and over for 5,989 units. There are a total of 589 affordable rental units approved and 286 pending and 115 currently on the market.

(See story, page 16.)

8 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

Affordable Housing Bond

City of Portland | Metro 11/2016 Voters pass $258.4 million levy to create 1,300 units of affordable housing.

10/2020 Portland has acquired or completed 314 units and has 1,180 additional units in pre-development for a total of 1,494 units.

Metro 11/2018 Voters approve Metro’s $652.8 million bond levy to create/acquire/renovate housing for 7,500 - 12,000 area residents.

8/2020 Metro reports pre-development of 1,539 units (39.5% of goal) with $166.6 (26.9%) of resources committed.

2017

Security Deposit Policy

City of Portland 2/2017 Commissioner Chloe Eudaly begins work on Security Deposit Policy.

Renter Relocation Fee

City of Portland 2/2017 City passes renter relocation fee requirement.

3/2018 Relocation fees made permanent and applicable to all owners.

9/2017 The City has feedback from tenants, advisory committee, and elected officials.

09/2020 City expands relocation fees as due and payable on any rent increase taking effect between 09/17/20 and 03/31/2021.

8/2018 Hearing postponed multiple times.

6/2019 City Council adopts new deposit regulations effective 3/1/2020.

3/2020 New deposit regulations take effect.

8/2020 City of Portland adopts new interim rules on security deposits.

Tenant Screening â&#x20AC;&#x153;FAIRâ&#x20AC;?

City of Portland 10/2017 Commissioner Eudaly begins work on screening criteria policy.

8/2018 Commissioner Eudaly announces plan.

6/2019 Portland City Council adopts mandatory screening policy effective 3/1/2020.

8/2020 City of Portland Releases new interim rules on tenant screening.

State of Oregon 1/2020 Oregon limits number of screening charges one single applicant has to pay to same management company within 60 days.

2018

Landlord Registry

City of Portland 7/2018 City Council requires landlords to register all rentals with tax returns filed beginning April 2019; 100% mandatory

by April 2020.

8/2019 City implements $60 per unit housing tax retroactive to Jan. 1, 2019.

04/2020 $60 per unit rental housing tax due for 2019 rental units.

Rent Caps

2019 2020

2020 COVID-19

State of Oregon 2/2019 Oregon becomes the first state in the nation to pass statewide rent caps, capping rent increases at 7% + CPI.

Note: Chart prepared by HFO research based on news reports and data available from the City of Portland, reliable news outlets, and other sources. It is believed to be accurate to the best of our ability. We encourage your independent verification of these facts.

OREGON (excluding local moratoriums) Foreclosures and residential evictions banned through end of 2020.

WASHINGTON (excluding local moratoriums) Residential evictions banned through 2020 statewide.

NATIONWIDE: U.S. Residential Evictions banned by the Centers for Disease Control and Prevention through the end of 2020.

COVID-19 HUB at HFORE.COM: HFO is maintaining a hub of information with government and industry links, and important news updates.

THE NORTHWEST APARTMENT INVESTOR 9

Regional Round-Up WASHINGTON Tacoma / Pierce County Population Growth Population City: 222,603 (up 12.3% since 2010) County: 919,495 (up 15.6% since 2010)

Multifamily Permits Seattle-Tacoma MSA 2020: 8,138 (Aug. YTD) (12,207 annualized) 2019: 16,426 2018: 17,450

Vacancy Rates* Pierce County 2020: 4.5% (Q2) 2019: 4.64% (Q4) 2018: 4.3% (Q4)

Unemployment Rate Tacoma Area 2020: 10.1% (as of August) 2019: 5.6% 2018: 4.9%

*Source: CoStar

Tacoma (pop. 222,603) is currently the third-largest city in the state. Its growth rate is exceeding that of Spokane (pop. 223,266). If current trends continue, it could soon become Washington’s second-largest city.

Multifamily Construction

The U.S. Census reported that, at the end of 2018, the median rent in Tacoma was $1,106. Rent per square foot has been steadily climbing in the city over the past few years. According to CoStar, rent as of August 2020 was $1.56 per square foot – up from $1.49 a year earlier.

Gentrification

In March of 2018, Tacoma’s downtown, Hilltop, and Dome District were among the top 20 fastest gentrifying areas, according to Rentcafe. The area’s zip code has seen several new museums, hotels, and waterfront improvement projects—resulting in a 103 percent increase in home values over 15 years.

Spokane / Spokane County Rental Rates Population City: 223,266 (up 6.56% since 2010) County: 532,037 (up 12.7% since 2010)

Multifamily Permits Spokane MSA 2020: 957 (Aug. YTD) (1,436 annualized) 2019: 1,181 2018: 1,013

Vacancy Rates* Spokane County 2020: 4.42% (Q1) 2019: 2.0% (Q1) 2018: 1.3% (Q1)

Unemployment Rate Spokane County (Sept. Benchmarks) 2020: 9.3% (August) 2019: 4.9% 2018: 4.4%

As of August 2020, the average rent in Spokane is $1,083— up from $784 in 2016.

Job Market

The largest employer is Fairchild Air Force Base, followed by the Providence hospital system. Spokane County is the fifth-largest aerospace cluster in the U.S. Last year, Spokane County added $1 billion in new construction to the tax rolls—the second-highest amount in history. Delta Air Lines says it will offer daily nonstop service from Spokane to Atlanta beginning November 20. Collins Aerospace announced a $145 million expansion by 2021. Spokane has been ranked by Redfin as one of the four most attractive metro areas primed for growth in the next decade. *Source: CoStar

10 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

REGIONAL ROUND-UP (CONT.) Olympia / Thurston County Renter Population Population City: 54,427 (up 15.6% since 2010) County: 291,000 (up 15% since 2010)

Multifamily Permits Olympia-Lacey-Tumwater MSA 2020: 179 (Aug. YTD) (269 annualized) 2019: 846 2018: 726

Vacancy Rates* 2020: 4.0% 2019: 4.0% 2018: 3.7%

Unemployment Rate (Q3) Thurston County 2020: 8.3% (August) 2019: 4.8% 2018: 4.1%

54.4 percent of households in Olympia are renteroccupied, and 44.6 percent of residents have a bachelor’s degree or higher.

Employers

Due to Olympia’s status as Washington’s state capital, roughly a quarter of all jobs in Olympia are in Public Administration. The largest private employers in Thurston County are Providence Saint Peter Hospital, Walmart, Safeway, South Puget Sound Community College, and Xerox.

Multifamily Construction

According to CoStar, between 2010 and 2019, over 2,000 units opened in the Olympia-Tumwater Metro Area, with a confirmed 769 units currently under construction. The vacancy rate in the City of Olympia was 4.9 percent as of the second quarter of 2020. *Source: CoStar

Tri-Cities / Benton & Franklin Counties Population Growth Population MSA: 299,612 (up 18.3% since 2010)

Vacancy Rates* Benton | Franklin County 2020: 3.9% (August) 2019: 1.6% 2018: 1.1%

Multifamily Permits Kennewick-Richland MSA 2020: 69 (Aug. YTD) (104 annualized) 2019: 339 2018: 330

Unemployment Rate (Q3) Kennewick-Richland-Pasco Area 2020: 8.5% (August) 2019: 4.7% 2018: 4.2%

The Tri-Cities area population has grown by 18.3 percent since the year 2010.

Employment Growth

The Tri-Cities area includes significant employers in the scientific community, including Battelle/Pacific Northwest National Laboratory, Lockheed Martin, Bechtel National, CH2M Hill, ConAgra/Lamb Weston, Amazon, Tyson Fresh Meats, AREVA, and URS. According to the Tri-City Development Council, 82.8 percent of the metro area population has a high school, college, or graduate degree. There are more scientists and engineers per capita in the area than anywhere else in the nation. According to ZipRecruiter, the average hourly wage in the Tri-Cities is $25. *Source: CoStar

THE NORTHWEST APARTMENT INVESTOR 11

REGIONAL ROUND-UP (CONT.)

Oregon

Eugene-Springfield / Lane County Population City of Eugene: 178,329 (up 14% since 2010) City of Springfield: 64,717 (up 6.9% since 2010) County: 387,599 (up 10.2% since 2010)

Multifamily Permits Eugene/Springfield 2020: 337 (Aug. YTD) (506 annualized) 2019: 304 2018: 492

Population

Vacancy Rates Lane County 2020: 4.03% (Multifamily NW Fall 2020 Apt. Report) 2019: 4.0% (Multifamily NW Fall 2019 Apt Report) 2018: 1.3%

Unemployment Rate (Q3) 2020: 7.7% (August) 2019: 4.5% 2018: 4.5%

Lane County’s population grew by more than 10 percent between 2010 and 2020, as the city of Eugene saw population growth of 14 percent.

Eugene is home to the University of Oregon, and 52.1 percent of housing units are renter-occupied.

boast over 100 employees in the metro area, including 3Cinteractive, Alacrity Solutions, Datalogic USA, Inseego, and Thermo Fisher Scientific. Eugeneans are well educated, with 41.3 percent of residents having attained a bachelor’s degree or higher. The median household income in Lane County is $49,958.

Employment

Housing & Local Politics

The Eugene-Springfield Metro Area is also home to an emerging technology sector, known locally as the Silicon Shire. Several local tech companies now

Eugene has recently only expanded the urban growth boundary to accommodate parks, schools, and office space. The city has not passed legislation providing additional protection for renters above what is required by state laws, despite a chronic housing shortage.

Government, education, healthcare, professional services, and leisure and hospitality sectors make up more than 50 percent of the MSA’s total workforce.

According to multiple data sources, the largest employers in Lane County are PeaceHealth, the University of Oregon, the Eugene School District, US Government, Lane Community College, Lane County government, the City of Eugene, the State of Oregon, the Springfield School District, McKenzie-Willamette Medical Center, and Walmart.

Between 2012 and 2020, the average sale price for a home in Lane County increased from $200,900 to $349,449. Despite the need for new housing, the city permitted 188 fewer single-family houses in 2019 than it did in 2018. As of August 2020, 337 permits were issued for multifamily units in the Eugene-Springfield Metro Area. If this pace continues for the rest of the year, just 506 new units will be permitted.

Please welcome a new co-sponsor for 2021 HFO is pleased to welcome Gantry as a new sponsor for the calendar year 2021. Gantry is the country’s largest independent mortgage banking firm with offices throughout the West Coast and in NY. Gantry’s focus is solely on commercial real estate capital solutions, primarily debt. In Portland, they offer the largest stable of exclusively represented capital sources in the market.

12 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

REGIONAL ROUND-UP (CONT.)

Oregon

Medford / Jackson County Population City: 83,072 (up 10.8% since 2010) County: 220,944 (up 8.7% since 2010)

Multifamily Permits Medford/Jackson County MSA 2020: 56 (Aug. YTD) (84 annualized) 2019: 175 2018: 232

Population

Medford’s population grew by 10.8 percent between 2010 and 2019, while Jackson County’s population grew by 8.7 percent over the same period. Over 27 percent of Jackson County residents over the age of 25 have a bachelor’s degree or higher, and 48.2 percent of Medford homes are renter-occupied. The median income in Jackson County is $50,851.

Employment

The largest employers in Jackson County are Amy’s Kitchen, Asante Health System, Harry & David, Lithia Motors, Pacific Retirement Services, and Providence Health Systems.

HFO Sale: Brentwood Village Apartments 88 Units in Medford, OR • $8.3 Million

Vacancy Rates (Q3)** Medford 2020: 2.0% 2019: 1.7% 2018: 1.7%

Unemployment Rate Medford Area 2020: 7.9% (August) 2019: 4.7% 2018: 4.9%

*Source: Census Bureau **Source: CoStar

Housing

Between July 2012 and 2020, the median home price in Jackson County increased by 66 percent. As the county continues to grow, housing affordability is a growing problem for residents. Approximately a third of Jackson County residents spend more than 50 percent of their income on rent. In February 2018, the Medford City Council passed a 0.3 percent construction excise tax within the city limits—lower than the 1 percent allowed in Oregon. Medford plans to give 15 percent of the funds generated to a nonprofit for nutrition, housing, and senior programs, 35 percent on lowincome housing projects, and 50 percent to fund programs that build houses for residents making up to 120 percent area median income.

HFO Sale: South Vista Apartments 30 Units in Salem, OR • $3.35 million

THE NORTHWEST APARTMENT INVESTOR 13

Oregon’s Economy is in Bad Shape, but Doing Better than Feared

By Josh Lehner, Economist, Oregon Office of Economic Analysis

The Fastest Economic Drop Since the Great Depression The economy is rebounding from the deepest recession since the Great Depression. To date, the recovery has been stronger than expected. The impact of federal policy and the shock’s nature means incomes and consumer spending overall is in better shape than first feared. However, the economy is not out of the woods yet. There remains a multi-year recovery ahead.

Federal Stimulus

Nationally the CARES Act injected $2 trillion into the economy over a few months. Here in Oregon, local businesses and households have received $14 billion.

This support has been more than enough to offset the economic-related income losses for families. Personal income today is higher than it was before the pandemic.

When combined with pent-up demand to resume previously suppressed activities during the shutdown, this means consumer spending has mostly held up. The economic picture brightens accordingly.

The Two Americas

Another reason the overall economy is doing better than expected is income inequality and the recession’s nature. So far, low-wage workers, including those in the retail and leisure and hospitality industries, have borne the recession’s brunt. Conversely, middle- and highwage sectors have not experienced severe job losses.

Furthermore, asset markets remain strong. Given that higher-income households account for an outsized share of total income and spending, this is one key reason the overall economy is faring relatively well. However, these top-line indicators mask underlying distributional concerns, especially now that the federal support has expired. This divergence in outcomes also feeds directly into the housing market where rental delinquencies are rising, but ownership and home sales remain strong.

Effects of Permanent Layoffs and Business Closures

The primary economic concern is the growing number of business closures and permanent layoffs. This cycle is different, given the majority of the initial layoffs were 14 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

temporary due to the shutdown. As these workers are recalled, unemployment declines. However, it usually takes a year or two for the recessionary shock to work its way through the economy. As the easy gains from reopening the economy plays out, this traditional recessionary dynamic will weigh on the data more. When combined with the lapse in federal aid and concerns over the virus in the colder, wetter months ahead, economic growth will slow further as winter approaches.

Faster Rebound Requires Virus Control

That said, growth will accelerate once the pandemic is managed and brought under control, particularly by mid2021, when it is expected a vaccine or medical treatment will be widely available. The current outlook calls for the economy to return to health in 2023, making the current cycle relatively short in duration when compared with past severe recessions.

2020 vs. 2008

Previously, when Oregon faced double-digit job losses and unemployment, the recovery took five years once underway. One key reason this recovery is expected to be faster is that the economy was healthy before the pandemic. Oregonians of all backgrounds around the state were finally seeing the fruits of the decade-long economic expansion. Incomes were at historic highs on an inflation-adjusted basis, and poverty rates were the lowest they had been in decades. There were no structural imbalances, like the household debt overhang from the housing bubble—so if today’s permanent damage is relatively minimal, the overall recovery will be faster.

Oregon’s Comparative Advantage | Telecommuting

Over the long run, Oregon’s ability to attract and retain skilled, working-age households remains the state’s comparative advantage. An ample supply of workers allows local businesses to hire and expand at faster rates.

This influx of new residents increases local demand and boosts business sales. Unfortunately, 2020 hath wrought near-term economic and humanitarian costs in addition to long-run population risks.

First, few people moved during the shelter in place phase of the cycle. More importantly, as job opportunities dry up during a recession, fewer people migrate. As a result, the population forecast for this year and next have been lowered relative to pre-pandemic forecasts. However, as the economy recovers and job opportunities become more plentiful, migration will pick up in the years ahead.

The current outlook assumes no permanent impact in the state’s ability to attract and retain working-age households over the extended forecast horizon. How the pandemic, wildfires, drought, or protests and clashes of violence impact this ability remains to be seen. They all represent downside risks to the outlook.

Second, should telecommuting and remote work increase due to the pandemic and changing business practices, Oregon stands to take advantage. Every corner of the state is average or above average in working from

home. Places like Bend and Hood River are among the highest in the entire country in telecommuting.

A key question is whether firms will allow increased telecommuting a few days a week or month or on a fulltime basis. The answer likely varies by company, but it has significant implications for the broader economy and housing markets. If employees are required to be in the office once a week, relative housing preferences may shift away from close-in neighborhoods to the suburbs or even nearby rural communities. Larger homes and yards may offset the increased commute times if those commuters are less frequent than they used to be. So far, there is no indication that housing demand or preferences are changing today. But one could reasonably expect some changes in the future, depending upon where working from home ultimately lands.

Submarket Vacancy Rates and Concessions for Greater Portland, the Valley & Bend According to Multifamily NW’s latest survey of nearly 59,000 units, the Portland Metro fall 2020 vacancy rate of 5.04 percent is up about one percent from a year ago, despite the pandemic and the opening of thousands of new units. Incentives in most areas have increased.

Vacancy Rates – Portland/Vancouver Metro

Current vacancy rates are highest in areas with new vacant units including North Portland (10.9 percent) Downtown Portland (9.8 percent), NW Portland (7.1 percent), inner & Central SE Portland (6.7 percent), and in suburban areas like Lake Oswego/West Linn (6.7 percent), and Oregon City/Gladstone (5.71 percent).

Rent Rates – Portland/Vancouver Metro

In the past year, rent rates in the Portland MSA have increased by 1.15 percent overall but at significantly variable amounts ranging from a decrease of 4.9 percent Downtown to a high of 9.6 percent in North Portland and St. Johns.

The submarkets demonstrating significant overall rate increases in the past year are N. Portland/St. Johns (9.6 percent), Inner & Central SE (8.6 percent), Wilsonville/ Canby (7.4 percent), Oregon City/Gladstone (5.6 percent), and West Vancouver and SW Portland which both had increases of 3.6 percent.

Concessions

Hillsboro/North of Highway 26 in Washington County is the only submarket reporting zero concessions but elsewhere in the Portland metro area concessions in the range from 1.7 percent (outer SE Portland) to more than 21 percent (downtown Portland, NW Portland, and SW Portland). Concessions of 10-18 percent are being offered in Aloha, Beaverton, Tigard/Tualatin, Wilsonville/ Canby, Clackamas, Troutdale/Fairview, Outer NE, North Portland/St Johns, and East Vancouver.

Valley Update

In the Willamette Valley, Salem has a vacancy rate of 4.8 percent, Eugene/Springfield reports a flat vacancy rate of about 4 percent and Bend/Redmond has a rate of 6 percent.

Rents in the Salem area have increased approximately 3.8 percent, and in Eugene/Springfield about 5.8 percent over a year earlier while rents in Bend/Redmond have remained flat.

THE NORTHWEST APARTMENT INVESTOR 15

Inclusionary Zoning Update – Portland

By Jennifer Shuch, Senior Research Analyst, HFO Investment Real Estate The City of Portland implemented its Inclusionary Zoning (IZ) requirement in February 2017. Now, as the policy prepares to enter its fourth year, it continues to have only a modest impact on the availability of affordable units.

Market rate rental units - 5,989 unit permits sought in 102 applications.

Affordable housing units added (from IZ) as of October 1, 2020: • 115 affordable rental units have been completed • 589 additional rental units have been approved by the city • 286 more units are pending Of the rental units that have been built or are still in the pipeline, the vast majority are studio or one-bedroom units. None of the units are available at 30 percent MFI. By comparison, separate from market-rate rentals, the Portland Housing Bureau is constructing 1,320 affordable units in 17 separate projects.

The city had expected to begin work on a three-year review of the Inclusionary Housing program. However, funds for the study were diverted to emergency rent assistance in light of the COVID-19 pandemic. According

HFO Sale: Park Place North

42 Units in Portland, OR • $5.375 million

16 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

to Jessica Conner at the Portland Housing Bureau, the planned market analysis would have included: • A review of the program’s homeownership portion, • An evaluation of a full tax exemption outside of the Central City for properties zoned at 5:1 FAR, and • A potential recalibration of off-site options.

At this time, it is unclear when a comprehensive program review will occur.

Earlier this summer, to keep projects from dropping out of the development pipeline, the city approved a change to Title 33 of the Portland Zoning Code, which extends expiration dates for some development deadlines. The expiration date for land use reviews was extended to January 1, 2024, while the pre-application conference expiration was extended to two years. The lower inclusionary housing rates outside of the Central City and Gateway Plan Area have been extended by an additional year. These changes went into effect on August 10, 2020.

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THE NORTHWEST APARTMENT INVESTOR 17

Summary of Eviction Moratoriums and Other Pandemic Measures

By Ciaran Connelly, Partner, Ball Janik LLP

The COVID-19 pandemic has inspired government officials at every level to prohibit residential evictions and otherwise restrict landlords’ rights. Below is a summary of the restrictions applicable in Oregon, Multnomah County, and Portland as of mid-October. Given these restrictions’ shifting nature, landlords should consult with counsel before pursuing any eviction or taking other potential actions against their residential tenants.

Federal CDC Order:

The Center for Disease Control has issued an order prohibiting landlords from evicting tenants for nonpayment of rent if the tenant sends the landlord a sworn declaration attesting to the tenant’s inability to pay.

The CDC moratorium came into effect on September 4, 2020, and currently extends through December 31, 2020. The CDC order does not relieve the tenant of any obligation to pay, does not prevent eviction for reasons other than non-payment, and does not apply if greater tenant protections are available under state or local law. Violation of the CDC’s order can result in fines, imprisonment, or both.

HB 4213

Earlier this year, the Oregon Legislature passed HB 4213, which established a moratorium on residential and commercial evictions between April 1 and September 30, 2020. A residential tenant need not make any representation to receive the protections of HB 4213.

HB 4213 banned most no-cause evictions and evictions for non-payment and prohibited charging late fees during the moratorium. HB 4213 further established a six-month grace period between October 1, 2020, and March 31, 2021, during which tenants could repay any unpaid amounts from the moratorium period without penalty. Violating HB 4213 could subject the landlord 18 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

to liability for three months’ rent. While HB 4213’s moratorium period expired on September 30, its other provisions—including the repayment grace period— remain in effect.

Governor Brown’s Executive Order 20–56

Just before HB 4213’s eviction moratorium expired on September 30, Governor Brown issued Executive Order 20–56. This new order creates a further moratorium on residential evictions through December 31, 2020. EO 20–56 includes many of the same provisions of HB 4213, including prohibiting most no-cause terminations and prohibiting the charging of late fees for non-payment during the moratorium.

But EO 20–56 does not extend all HB 4213’s protections.

It does not apply to commercial tenants and does not extend HB 4213’s grace period for repaying amounts owed from April through September 2020. Nor does EO 20–56 establish any grace period for amounts owed for October through December 2020. Those amounts are presumably due January 1, 2021. EO 20–56 does, however, extend the “first year of occupancy” for nocause evictions through January 30, 2021, if it would otherwise have expired during the moratorium. Finally, E0–26 contemplates potential additional extension by Governor Brown, which landlords should look for near the end of the year.

Multnomah County Ordinance 1287

Multnomah County’s latest response to the pandemic includes the adoption of Ordinance 1287. That ordinance incorporates most of HB 4213 into county law, thereby largely mirroring EO 20–56. But the county ordinance includes some critical differences: first, the county moratorium period extends for eight additional days—through January 8, 2021, rather than December 31, 2020. Second, the county ordinance extends the repayment grace period to six months after the moratorium period (i.e., to July 8, 2021). Like EO 20–56,

Ordinance 1287 contemplates a potential extension of the moratorium period beyond January 8, 2021.

Portland Ordinance No. 190122

Finally, the Portland City Council passed Ordinance 190122 on September 16, 2020. The ordinance is not an eviction moratorium. Instead, it extends a landlord’s obligation to offer relocation payments to tenants under PCC 30.01.085. Before the ordinance, landlords were obligated to provide tenants with relocation assistance payments if they raised the rent by 10 percent or more in 12 months. Ordinance 190122 temporarily lowers that threshold such that relocation assistance must be offered for any increase in rent that would become effective before March 31, 2021. The ordinance contains provisions allowing landlords to rescind rent increases sent before its passage, subjecting the landlord to relocation assistance liability.

Conclusion

Oregon landlords—especially those with properties in Multnomah County and Portland—face a shifting and complex set of regulations. These landlords should consult with counsel to ensure their actions comply with the latest national, state, county, and city regulations.

Ciaran Connelly is a partner at Ball Janik LLP. He can be reached by phone at (503) 944.6010 or by email at cconnelly@balljanik.com.

Since its founding in 1982, Ball Janik LLP has become widely recognized as an industry leader in the areas of real estate and land use.

We serve public and private clients in all phases of commercial development, leasing, acquisitions, dispositions, financing and equity arrangements, restructuring, and workouts. info@balljanik.com www.balljanik.com 503.228.2525

HFO Sale: Quatama Woods

30 Units in Hillsboro, OR • $6.95 million

THE NORTHWEST APARTMENT INVESTOR 19

Clark County Economic Update

By Scott Bailey, Regional Economist, Washington Employment Security Department

Like the rest of the country, Clark County was hit with the double-whammy of COVID and a recession in March. The local trends have been similar to the national trends: a massive loss of jobs in April followed by a sharp but slowing employment recovery.

The official unemployment rate rose from 4.4 percent in March to 14.4 percent in April and has slowly declined to 9.4 percent in August. Some comparison rates are shown in the table below. Clark County has basically been in line with the Portland metro area, the two states, and the nation. Note the asterisks for April and August. According to the U.S. Bureau of Labor Statistics, the official rate was likely 5 points higher in April and 1 point higher in August because of a misinterpretation of a question on the monthly household survey used to measure unemployment.

Area February 2020 3.5% U.S. 3.8% Washington 3.3% Oregon 4.2% Clark County 3.2% Portland Metro

April 2020

August 2020

14.7%*

8.4%*

14.4%*

8.5%*

14.9%*

7.7%*

14.7%*

9.1%*

14.3%*

8.3%*

According to preliminary estimates, Clark County has lost 13,500 jobs since August of 2019. The percentage decline (7.9 percent) was close to the loss for the Portland metro area (8.1 percent), the states (Washington, -6.2 percent; Oregon, -7.1 percent), and the nation (-6.8 percent). These preliminary estimates will be revised in the coming months and so should be used with caution.

We’ll have much more precise data for April, May, and June in two months.

What the preliminary numbers show should not be too surprising. The most extensive loss by industry in Clark 20 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

County was in accommodations & food services. Low occupancy rates at hotels and a combination of consumer caution and public health protocols at restaurants have led to a 23 percent drop in employment in this industry.

Construction and manufacturing have both taken a 10 percent cut in payrolls. Health care, which was hit hard early as people stayed away from medical offices barring an emergency, has mostly recovered, but was still down 500 jobs over the year. Finance & insurance, on the other hand, has added 200 jobs since last August. Most of this industry’s activities can be done online or without close human contact.

The latest unemployment claims data show that the number of claimants has dropped sharply since mid-May but remains at a very high level. In Week 37 (the week ending September 19), 9,418 claimants received regular unemployment benefits, along with 5,368 claimants in the Pandemic Unemployment Assistance (PUA) program.

The latter is a unique benefit for the self-employed and others who usually would not qualify for unemployment benefits. Both of these types of claimants have been falling over the past few months. The third type of benefit, Pandemic Emergency Unemployment Compensation (PEUC), provides additional coverage for those who have exhausted their regular or PUA benefit. These are the long-term unemployed, and their numbers have been slowly increasing. It’s been about six months since the first big burst of joblessness, so it would not be surprising to see the PEUC numbers grow even faster.

Note that there is not an exact match between the unemployed and those filing claims. People who are new to the labor market—such as recent graduates—or who are returning after to the labor market after an absence (due to going back to school, child or elder care, etc.) will not be included in the claimant counts.

The rate of improvement in the labor market has slowed over the past few months, both nationally and locally. Going forward, the pace of recovery depends on three factors.

1. COVID and vaccine development. There are several strictly health/science questions out there. Will COVID mutate? What will winter bring in terms of COVID + the flu? How soon until a vaccine is approved and available to all?

2. Behavior. Too many people have refused to participate in the essential public health measures of social distancing and wearing a mask. That has prolonged the epidemic and prolonged the recession.

3. Congress. It is unclear if or when another assistance program will be approved. Personal income in the U.S. declined by 3.0 percent in August, due to the decline in unemployment benefits being paid out. In Clark

County, benefit payments dropped from $113 million in July to $36 million in August due to the ending of $600 in weekly Federal Pandemic Unemployment Compensation program benefits. There was a temporary supplement paid out in September, but that is now expired. At the end of the year, PUA and PEUC are set to expire. Unless Congress acts, many people will be left in the lurch, which will impact businesses and landlords. Unless business assistance is extended, we could see more permanent business closures, especially in the food service industry, as restaurants will not be able to offer outdoor seating as we approach winter.

AWARDS STAFF AWARDS: Congratulations to director of operations Donna Brunner on being recognized by Connect Media as a 2020 Women in Real Estate award winner.

Congratulations to senior research analyst Jennifer Shuch on receiving a 2020 Next Generation award from Connect Media.

Both Donna and Jen were selected from among over 500 nominees.

BOARD CHAIR: Congratulations to marketing director Aaron Kirk Douglas on being elected chair of the nonprofit Face-toFace Portland. The organization is working to improve relationships between police and the community through its liaison family program for new officers. For information visit www.facetofacepdx.org.

COMMUNITY GIVING 2020 Business Journal Philanthropy Award: HFO ranked #8 for corporate giving in its revenue category. HFO has ranked tops among Portland metro corporate donors since 2010.

THE NORTHWEST APARTMENT INVESTOR 21

MULTIFAMILY MARKETWATCH

HFO-TV

[youtube.com/user/HFObrokers]

• We offer a library of hundreds of videos on topics of interest to multifamily owners with local economists and other housing industry experts.

• Let us know if there’s a topic you’d like to see covered.

Weekly Podcasts Join HFO Senior Research Analyst and host Jennifer Shuch for a 10-15-minute weekly update on news of interest to the industry.

COVID-19 Hub Important links and updates at hfore.com.

RECENT POPULAR VIDEOS

HOUSING EMERGENCY: THE CRISIS IN PORTLAND’S REAL ESTATE

Featuring Dr. Gerard Mildner, Director, PSU Center for Real Estate.

ASBESTOS IN MULTIFAMILY HOUSING: ENFORCEMENT AND REMEDIATION

J.R. Johnson’s Clint Arp and Jason Ramsey discuss the government’s stepped-up enforcement of new asbestos regulations.

Important Reminders About 1031 Tax-Free Exchanges

By Mark Adams, Staff Attorney, Beutler Exchange Group

The Past and Future

As Section 1031 concludes its 99th year in the Internal Revenue Code, the prospect of it celebrating its anniversary in the years ahead is anything but certain.

But, as Senator Mark Warner (D-VA), a 1031 supporter, recently remarked on a phone call, “I wonder how many times over the years different groups have gone after 1031.” The answer is many, and yet, the 100-year milestone is just months away.

The reasons for its longevity are a combination of many things, including: • Its utility and value to the real estate market, and • Unrelenting advocacy of a cross-section of the business community.

22 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

And while the metrics illustrating the importance of 1031 are too voluminous to detail here, the following few critical points are essential to understanding the role 1031 plays in the real estate economy. By every objective measurement, its repeal would have a more significant negative impact than any repeal’s intended benefit.

1. 1031 is an economic driver because the data supports that property buyers spend money and employ people to improve a purchased property, whereas property “holders” pay far less to simply maintain the property.

2. 1031 is only a tax deferral, and in most instances, tax is eventually paid. However, the deferral’s critical aspect is that it allows the owner to make a business decision without the “tax friction” as a material consideration.

Simply put, it supercharges the real estate market by not sucking out tax dollars when additional capital enhances the exchanger’s purchasing power.

3. 1031 can be a vital component of the transformation occurring and will continue to appear in commercial real estate post-COVID. Facilitating the redevelopment and re-purposing of properties to attain their highest and best use may serve as a strong pillar for rebuilding the economy.

The Present

Since May and the semi-normalization of the real estate purchase and sale process, the real estate market and 1031 exchange business for residential rentals have soared to their highest level in many years. The commercial market will eventually stabilize, but the demand for properties remains consistently elevated and very competitive. Thus, with a tight market, the most common and understandable concern expressed by potential exchangers in residential and commercial real estate is the uncertainty surrounding the identification of replacement property within the 45-day window.

To eliminate the inherent uncertainty in identifying property during a forward exchange, people search for the replacement property first because that is the more difficult task. When they find a property to buy and time is tight to close, they call us and ask how to make it work—buy first and sell later.

Because the taxpayer cannot own both properties simultaneously, the option is a reverse exchange in which the replacement property is parked with a single purpose entity (i.e., LLC with the exchange accommodator as the single member). This is allowed under IRS Revenue Procedure 2000-37. This type of exchange can be a reasonably straightforward transaction involving cash and two properties—one

purchase, one sale. It can get quite complicated with lenders, multiple properties, and even improvements to be made to the purchased property.

A reverse exchange generally requires the involvement of advisors (e.g., CPA or attorney), advance planning, and justification (i.e., significant gain to shelter) for the increased amount of time and money necessary to successfully execute this transaction.

Ultimately, it is an advantageous option in a dynamic real estate market and one that every real estate investor should consider if the circumstances dictate.

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THE NORTHWEST APARTMENT INVESTOR 23

Portland City Council Quietly Dissolves Unreinforced Masonry Work Group

By Aaron Kirk Douglas, HFO Marketing Director

After a long history of stops, starts, and missteps, the City of Portland dropped its attempts to mandate seismic retrofits of Unreinforced Masonry (URM) buildings at a City Council meeting in October.

2014-2017

In 2014, the City of Portland assembled a seismic standards and a separate policy committee to work out requirements and figure out a timeline for requiring important seismic upgrades. A 2017 report by the Unreinforced Masonry Building Policy Committee sought to have owners of most unreinforced masonry buildings complete full retrofits within 10-20 with some having 25 or 30 years to comply based on type of use.

These timelines were relatively long compared to many earthquake-prone California cities that had already adopted timelines of 11-13 years.

The Portland mandate forced URM owners into a quandary. They had to decide whether to tear down and/or rebuild when they were being offered zero financial support or incentives in the middle of a declared housing emergency that had no end in sight. Seismic work requires displacement of renters.

One unfortunate result of the ongoing uncertainty surrounding Portland’s proposed requirements was a tightening of financing of URM assets by banks.

2018

In June of 2018, rather than adopting the seismic retrofit mandates, the City Council decided to study the issue for another year. In September of 2018, they ordered URM owners to post signage by March 1st, notifying people entering URM buildings that it would be unsafe in an earthquake. Warnings of a URM owner lawsuit in November of 2018 did nothing to persuade the council against moving forward with its placard requirement.

Instead, the City announced enormous fines for failure to post the signage.

24 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

2019

In January of 2019, the NAACP called the City of Portland placarding contract a “coercive policy of dispossession and displacement.” (Ouch!) In February of 2019, in response to the promised lawsuit against the City of Portland, Federal Court Judge John V. Acosta issued a 60-day injunction on the URM signage requirement. Despite the injunction, the City of Portland mailed letters to URM owners mandating compliance with the placard order.

Two months later, in April, Judge Acosta ruled that the City of Portland had violated his restraining order and required the City to send a letter of retraction to URM owners.

In May, there was a hearing on the lawsuit for a preliminary injunction, and on May 21st, 2019, following the City Attorney’s closing argument at trial, the Judge appeared unimpressed with the City’s reasoning. Finally, on May 30th, 2019, he issued a preliminary injunction against the City and subsequently ordered the City to pay $350,000 in attorney’s fees to the URM plaintiffs. The Judge also mandated that the placard ordinance be repealed and ordered Mayor Ted Wheeler and Commissioner Jo Anne Hardesty to appear before him in Court if the City Council failed to repeal the law by October.

The Strange Case of the City’s URM List

A complicating factor throughout the process was the City’s original compilation of its questionable list of URM buildings. During the two-day trial in 2019, URM building owners learned in testimony how buildings ended up on the City’s “official” list: • From 1990 to 1993, the City of Portland had three Portland State University students conduct the survey throughout three summers.

• The students were not the same each summer and conducted their official survey on foot.

• The areas only included downtown. Its exact perimeters were unknown.

• The City did not survey buildings on the east side, Multnomah Village, St. Johns, or other areas.

February of 2019, McMenamins legally challenged the fact that the Crystal Ballroom was on the URM list because it had already completed seismic upgrades.

McMenamins eventually won after spending a fair amount on attorney’s fees.

• The students eyeballed a building and checked a box.

Portland’s Seismic Plan Crumbles

• They did not realize that the list would be used 27 years later as the City of Portland’s official list, and they did not know that by accidentally checking the wrong box they could impact real people.

• They had no significant training for the job, and there was no field manual.

• Their work was “spot-checked” by an actual engineer.

• The project had no budget.

Challenging a building’s placement on the list by the PSU students’ untrained eyes came with a price. In

In May 2020, the City of Portland removed its list of URM buildings from the Internet.

Portland’s URM owners are left contemplating whether to file suit over the existence of the list itself. The future of seismic upgrades remains uncertain. What is known is that the City owns the greatest number of unretrofitted URM buildings, and that it admitted it had not enforced retrofit codes so it could catch up while it was trying to add additional requirements on private owners.

Perhaps what was most discouraging is that the City never delivered on its promise to locate funding or financing assistance for this critical work.

HFO Sale: Theory33

30 Units in Portland, OR • $11.5 million

THE NORTHWEST APARTMENT INVESTOR 25

Oregon Commercial Activities Tax and MultiFamily Real Estate

By Trent Baeckl, CPA, Perkins & Co.

On May 13, 2019, the Oregon Senate passed House Bill 3427A, which included a new Corporate Activity Tax (CAT) that became effective January 1, 2020. The Oregon Department of Revenue has been extremely busy over the past 12 months, getting feedback and writing the rules that will guide the new tax, so let’s check in on what we’ve learned so far.

Fundamentals

This new tax is in addition to the state’s income tax regime.

And contrary to its name, it applies to all businesses deriving revenues from Oregon customers, not just corporations. The fundamentals from HB 3427A and the resulting statute (ORS 317A) include: • A tax of 0.57 percent will be assessed on businesses with taxable commercial activity above $1 million, plus an additional $250.

• Businesses with commercial activity above $750,000 must register with the state.

• Gross receipts from commercial activity sourced to Oregon are subject to the tax.

• A subtraction against gross receipts of 35 percent of labor costs or 35 percent of cost inputs, whichever is greater.

• Standard exclusions from commercial activity, including interest, dividends, and receipts from the sale of capital assets subject to §1221 and §1231.

Regulations

The Oregon Department of Revenue (ODOR) spent fall 2019 soliciting feedback from taxpayers and tax practitioners to finalize regulations in April 2020. The impact of COVID-19 delayed this process, but at this point, the bulk of the expected guidance has been issued.

26 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

Let’s take a look at the items that have the most significant impact on multi-family real estate.

Apportionment. The tax is assessed on revenues from

Oregon sources only. For those invested in rental real estate outside of Oregon, the gross rents received are excluded from commercial activity. Property managers only include fees earned on Oregon properties under management. Keeping track of total revenues may be needed for purposes of calculating the subtraction, as discussed next.

Subtractions. In the federal tax code, several provisions

are incredibly beneficial for real estate investors.

Unfortunately, the CAT is not so kind to real estate.

For most multi-family properties, there will not be any available deductions when determining taxable commercial activity. The cost inputs deduction relates to selling inventory, and depreciation on a rental property does not qualify. The cost of labor deduction refers to amounts paid to employees. It is common for a property manager to be hired, which is not considered labor when determining eligible deductions. The entity must hire the employee directly to qualify for the deduction unless they are part of a unitary group, as discussed next. When either the cost of inputs or cost of labor deduction are present, the amount is further reduced by the apportionment percentage of Oregon revenues over total revenues.

Unitary Groups. The $1 million threshold in determining

if CAT is due is not analyzed simply on an entity by entity basis. The tax is assessed on unitary groups that are engaged in a unitary business. This can be a trap for the unwary. Therefore, it is essential to understand and identify these “unitary” concepts. According to the statute, a unitary group is “a group of persons with more than 50 percent ownership, either direct or indirect, that is engaged in business activities that constitute a unitary business.” Unfortunately, to date, the ODOR has not

provided additional guidance on how indirect attribution is to be applied. There are related concepts in the federal tax code, so it is recommended that managing members work with their tax practitioners to determine any impact of this concept.

As we’ll see in the examples below, unitary groups can be punitive for both minority and majority investors, but equally punitive is the broad definition and application of unitary business.

The examples in the administrative rules issued by the ODOR confirm a broad interpretation of what constitutes a unitary business. They may result in CAT due from small taxpayers that would not meet the filing requirements on their own. Further, the statute states that all members of a unitary group are jointly and severally liable for the CAT owed by the entire unitary group.

Example 1: Ron and Ben are 50/50 partners in ABC LLC

and DEF LLC, which both own apartment complexes.

Ron’s management company handles the property management of both apartment communities. In 2020, ABC LLC’s gross rents received are $800,000 and $600,000, respectively. On their own, both LLCs would be under the $1,000,000 threshold and would not owe any CAT. Ron and Ben combined own more than 50 percent of both LLCs, and they share common management and will be considered a unitary group subject to the tax. The tax liability for the group would be $2,530 ($1,400,000 total gross rents - $1,000,000) x 0.57 percent + $250)].

Example 2: Same as Example 1, except DEF LLC is a

commercial rental property. The ending result is the same even though the rental properties are of a different class since the owners own more than 50 percent of both entities, and there is shared management.

Example 3: Same as Example 1, except Ron and Ben invest

in XYZ, LLC, another apartment complex with $900,000 of gross rents, and Ron’s management company handles the property management. Ron & Ben each own 45 percent of XYZ, LLC, with the remaining 10 percent owned by Jerry. The unitary group has now expanded to include all 3 LLCs since Ron and Ben have more than 50 percent ownership in all 3, and they all share common management. The tax liability for the group would be $7,660 ($2,300,000 total gross rents - $1,000,000) x 0.57 percent + $250)]. Even though Jerry does not have any ownership in ABC, LLC, or DEF, LLC, his 10 percent interest in XYZ, LLC, will owe CAT.

beneficial application in the rental real estate industry.

Those investors with a management company may benefit from the cost of labor deduction for those properties that meet the more than 50 percent ownership test for unitary groups. Further, the statute excludes from commercial activity any revenues charged between members of a unitary group.

Example 4: Same as Example 1, except Ron’s ownership in

ABC, LLC and DEF, LLC is 51 percent. The unitary group now includes Ron’s management company which has $500,000 in revenues, of which $70,000 were paid by ABC, LLC and XYZ, LLC. The management company also paid $300,000 in labor costs to its employees. The tax liability for the group would be $4,382.50 ($1,400,000 total gross rents + $500,000 management fee revenue - $70,000 excluded revenues between unitary group members - $105,000 cost of labor deduction - $1,000,000) x 0.57 percent + $250)]. The cost of labor deduction of $105,000 = $300,000 labor costs x 35 percent.

Estimates

The administrative rule issued requires estimates for each taxpayer that expects to have a tax liability of $5,000 or more. The estimates are required regardless of when the taxpayer exceeds $1,000,000 of commercial activity.

This equates to estimates needed for any business that expects to have commercial activity of at least $1,833,333 for the year.

In 2020, the first year of the CAT, there are a couple of modifications to these general rules for estimates. First, as a response to COVID-19, the ODOR has increased the requirement to those businesses expected to have $2,710,526 of commercial activity—or $10,000 in CAT liability—for the year. They also will not assess penalties if companies make a reasonable effort to comply and pay their estimates. Taxpayers considering not paying estimates should consult with their tax advisor on how to properly document that good-faith effort. This documentation may be necessary since, for 2020, only a 20 percent penalty may be assessed if at least 80 percent of any required estimates are not paid. For tax years after 2020, there will only be interest levied on the underpayment of estimates if 100 percent of the needed estimates were not timely paid.

Trent Baeckl is a CPA and shareholder at Perkins & Co. where he specializes in real estate. You can reach Trent by email at tbaeckl@perkinsaccounting.com or by phone at (503) 802-8626.

The unitary group concept does have one potentially THE NORTHWEST APARTMENT INVESTOR 27

Financing in 2020: Bridge to Success By the team of AMF Capital

We can agree that 2020 has posed significant challenges to all Americans across every class, race, and location. We do not anticipate it ending anytime soon.

The real estate market has seen some unique and significant challenges in the Portland area and, to a slightly lesser extent, throughout the Pacific Northwest.

Investors face an uphill battle trying to support their financial obligations, meet the requirements of governmental agencies, and collect on the commitments that have been made to them by tenants. The combined results of continually increasing renter protection requirements, COVID-19’s impact on all income brackets, and recent forest fires have had undesirable ramifications for the performance of all commercial real estate classes, including multifamily.

As expected, lending requirements and options have changed, creating difficulties for borrowers. Interest rates are low and will remain low for a significant period.

However, these impacts on income and property performance can make it challenging to obtain a loan at the required or desired levels. If you are fortunate to have— • Strong credit • A surplus in liquidity

take a short-term or stop-gap approach to achieve the solutions needed. In fact, bridge-to-stabilized lending approaches offer a direction for many investors, and this approach allows for success to many challenges.

Bridge lending: • Provides financing options for owners, contractors, and investors; • Considers situations of challenged credit with more certainty of execution than most traditional lenders; • Allows financing properties that do not meet the criteria levels for permanent financing, yet (with emphasis on YET).

• Is flexible as it can be used to purchase or refinance assets that have considerable vacancy and would include commercial, mixed-use, and multifamily properties; • Can be used for newly constructed or existing properties that do not yet meet the occupancy levels to be considered “stable” for permanent debt;

—then rates below 3 percent for long-term debt should be attainable. If not, lending criteria can be daunting, if not overwhelming.

• Generally avoids prepayment penalties. Bridge loans can also be used to refinance a maturing loan and allow an owner to sell the asset in the short term without incurring a large prepayment penalty. Some owners may be trying to decide whether to refinance or sell, and without a prepayment penalty, it buys them time to consider their next step;

As AMF Capital addresses these concerns for our clients, we are continually seeking and finding new approaches and options. In today’s market, it may be necessary to

• Offers swift transactions, allowing clients to take advantage of circumstances where a fast decision and closing is required to capitalize on an opportunity;

• A well-performing property, and • Are eligible for a low leverage loan

28 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

• Provide leverage for investors by supplying a loan for an immediate need and funds that can be earned out, as the property is improved and stabilized to meet a desired structure in the future;

Market Changing?

• Allows for an owner’s capital to be infused in the project upfront. Those funds can be recovered later as it stabilizes.

Are you unsure about what impact that has on your loan options and investment strategies?

These approaches tend to cost a bit more in the process, but they allow for opportunities by funding projects that are not ready for “prime-time” lending. The slightly higher cost to succeed and close versus the lower price of not achieving is an easy pill to swallow.

As part of your team, AMF CAPITAL works closely with our clients to evaluate, strategize and deliver loans. It’s simple!

By understanding the changing markets, we set realistic expectations for our partners, allowing them to plan their strategies more accurately and safely.

Flexibility, speed, leverage, and less conservative underwriting are advantages of this type of lending and provide a successful solution for many projects. Given our current economic climate, this is an approach that investors should consider when looking into the options they face today, as they may find it to be the best direction to take.

Our team is in the market day in and day out. With over $500,000,000 in closed loans under our belt, AMF Capital is your source for information and loan success.

AMF Capital is a seasoned brokerage team supporting clients in the Northwest markets. Reach out and talk with us. Our firm has over 50 years of collective experience in commercial real estate transactions and can source a solution for your project. We do it successfully!

AMF Capital consists of trusted advisors to investors in the Northwest market and is a finance partner that can help deliver on your plan. Learn more at amfcapital.net or ask any HFO broker for a referral.

HFO Sale: Crystal Shores

25 Units in Portland, OR • $4.0 million

Expand your team of professionals with AMF Capital.

For current rates or a quote, please visit our website at www.amfcapital.net or call (503) 659-3399 for more information.

HFO Sale: Edy Road Townhomes 14 Units in Sherwood, OR • $4.3 million

THE NORTHWEST APARTMENT INVESTOR 29

A Washington State MultiFamily Housing Update from the Washington Multi-Family Housing Association

By Brett Waller, Director of Government Affairs

Next year we can expect to see renewed efforts to the progressive agenda in the legislative arena. We must continue our work to defeat any measures to enact rent control, just cause eviction, tenant screening limitations, occupational licensing requirements, perceived pandemic needs including extended payment plans and drawn out defenses to removal. Solving the affordable housing crisis will require more money but taxing the very capital used to create more housing is not right.

Pandemic: State of the Industry in Washington

Multifamily housing in Washington is under immense pressure. Affordability is one of the highest legislative priorities for policymakers. As a result, housing providers face challenging legislation, including citywide, statewide, and nationwide eviction moratoria, in addition to threats to the expansion of affordable housing through onerous regulations such as rent control.

The impacts of the COVID-19 pandemic are being felt in all aspects of our personal and professional lives. The rental housing industry has changed how we respond to protecting our residents’ health and safety and serving our apartment communities’ residents.

Homes are more critical now than ever. People use their homes as a vital part of work, school, physical exercise, leisure, and many other things. That’s why housing providers need to support policymakers to keep homes safe and sound for the millions of Washington residents who choose to rent.

We have heard many stories of how housing providers have changed their residents’ lives through exceptional service and compassion, demonstrating the valuable role rental housing plays in everyday life and our economy’s strength. Whether in a pandemic or not, our goal remains 30 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

the same: maintain and expand access to quality rental housing for all residents at every price point.

Data Collection

Since March, the proliferation of the COVID-19 pandemic in our state and across the country has brought about tremendous struggle. It has also created opportunities for us to serve our industry and local communities. Our advocacy successes include establishing WMFHA as the premier source of local monthly non-payment of rent data for media outlets and policymakers.

Successfully Lobbying Efforts

WMFHA works to advance rental housing interests in our state. We have made considerable strides in the past five years thanks to our government affairs team’s work, spearheaded by Brett Waller, Director of Government Affairs. The team has formed key partnerships with the Governor’s Office, city councils, and other elected officials.

Thanks to their tireless efforts, we helped to defeat statewide policies that were brought forth during the 2019-20 legislative session, including: • Rent control • Just cause eviction • Capital gains taxes • Individual utility metering • Tenant screening limitations and • Transfers of damages at tenant move-outs Even with our industry having many seats at necessary tables across Washington jurisdictions, extensive eviction moratoria have passed and been expanded all over the state. Nationally, the Center for Disease Control leads a federal order through the end of 2020. The City of Seattle’s legislation is also active until the end of the year, with other laws extending moratoria for non-payment of rent through June 2021.

We are witnessing suburban cities using the guise of the pandemic to pass additional tenant protections.

Washington state’s population has grown by 12 percent over the last decade. However, between 2000 and 2015, we under-produced 225,000 homes – everything from apartments to ADUs to singlefamily houses.

Washington Multi-Family Housing Association (WMFHA) is Washington’s trusted rental housing resource. Our mission is to: • Advocate for legislation equitable to the industry and community; • Provide educational opportunities to promote career development, and • Celebrate and support the multifamily housing industry.

Instead of creating more housing opportunities, these policies inhibit affordable housing and further constrict the housing market. For example, in the city of Auburn, a sweeping package of restrictive housing laws recently passed will add to the mounting challenges that housing providers and renters face.

Public policy as a result of the pandemic needs to be balanced. The rental housing industry cannot be made to shoulder this pandemic’s burden, including non-payment of rent. The entire housing infrastructure will collapse if this burden is the housing providers’ to bear exclusively.

We need equity and fairness from our elected officials.

Washington State Legislature

Statewide, the 2020 legislative session passed many new laws that continue this trend. Under certain conditions, housing providers must now require installment payments for move-in costs. The assessment of late fees will not be allowed before the seventh day of the month, and particular Social Security recipients will be permitted to delay their rent for three additional days.

The acceptance of cash for rental payments may be prohibited. Attorney fees will be awarded when a tenant responds to the complaint but fails to appear at the order to show cause hearing. Finally, landlords will be required to accept a community pledge.

more resilient, and more equitable rental housing opportunities for all. Policies that impede those goals should be avoided in preference of practical solutions that expand housing access for everyone who needs it.

Our Work on Tenant Financial Assistance

Earlier this year, WMFHA successfully lobbied for additional funding for the Tenancy Preservation Program, which pays past due rent owing and allows the tenant to remain housed. We’ve also created the Landlord Mitigation Fund, covering a landlord’s losses for damages left unpaid by tenants. To date, the program has reimbursed landlords more than $3.7 million.

We advocated for rental assistance and helped to secure $100 million to be dispersed across the state. We successfully made changes to the moratorium to permit termination for owner sale and occupancy. We worked on clarifying the role sheriff’s offices play in a writ of restitution. Additionally, we were able to place two critical members on the Governor’s moratorium stakeholder group. We continue to highlight the issues we face as multifamily housing operators, and the message is loud and clear.

Get Involved!

We must continue to oppose a capital gains tax on property in our state. What can you do to help defeat these overreaches? Vote. Election outcomes this year will determine policy successes in 2021.

If any of the issues mentioned in this article are essential to you, it is now crucial to get involved with your multifamily housing association. Whether it’s Multifamily NW in Oregon or WMFHA in Washington—the rental housing industry needs your participation and support!

Our votes can also address the urgent need for affordable housing in Washington state. WMFHA is part of a coalition called the Partnership for Affordable Housing (PAH), a 501(c)4 nonprofit, formed out of strong and shared interest to provide practical solutions to Washington’s housing affordability.

Join us today to make sure you are (a) engaged in the issues that affect your business, (b) are on the cutting edge of career development opportunities, and (c) are amongst like minds to celebrate our people and profession’s successes. Visit https://www.wmfha.org/ member-benefits to learn more.

There is clearly a lot of work for our state and local policymakers to tackle as we strive to build stronger,

You may reach Brett Waller at brett@wmfha.org or by phone at (425) 656-9077.

THE NORTHWEST APARTMENT INVESTOR 31

2020 and Beyond: Trends That Shape Recruitment Discussions

By Larry Holt, Chief Operating Officer, Columbia River Economic Development Council

While it is still difficult to estimate the full impact of the COVID-19 crisis, the latest official report from the Washington Employment Security Department (July 2020) shows Clark County’s unemployment rate is 11.7 percent, with nearly 30,000 members of the labor force currently unemployed. For comparison, at the height of the Great Recession, Clark County experienced a 16 percent unemployment rate.

Columbia River Economic Development Council (CREDC) surveyed Clark County businesses at the beginning of the crisis and found that 51 percent of business respondents had temporarily closed, and 95 percent of those saw drops in revenue of more than 50 percent. The ripple effect from lost sales will have profound implications, with cities across Clark County projecting sales tax revenue losses between 20 and 40 percent.

CREDC has responded to the crisis in numerous ways. First, with state and federal dollars, we made over $800,000 in grants available to small businesses throughout Clark County. Also, we have hosted multiple interactive sessions with experts on critical topics such as guidance on applying for Small Business Administration assistance, smart taxation planning, and how to leverage state programs to retain workers. Finally, CREDC has acted as a convener and clearinghouse for information for businesses large and small throughout Clark County.

As we focus on the path to economic recovery, CREDC is focused on two key trends that align with Clark County’s strengths.

Trend 1. Quality of life indicators wield increasing influence over companies’ relocation and expansion decisions.

Commercial real estate professionals and relocation consultants lead the industry at tapping into big data to inform companies’ relocation and expansion decisions.

Through investment in developing and interpreting data analytics, these firms help client-companies navigate the most contemporary relocation trends. These trends include what creature comforts their employees value, 32 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

how far and by what modes of transportation employees are willing to commute, and easy access to relevant community amenities that resonate with their workforce.

Of course, not all data sets are attractive to all company executives. Traditional categories of analysis usually include land and utility costs, transportation infrastructure, wage rates, access to quality education, and healthcare systems. However, site selection analyses increasingly detail very specific extracurricular quality of life considerations such as miles of bike trails, the number of yoga studios, availability of electric vehicle charging stations, the prevalence of civic organizations, walkability score, and a “cool” factor.

Yes indeed—some companies place a premium on coolness!

Trend 2. The one critical site selection factor nationwide is the availability of skilled workers.

But what matters the most? Where should we lend our energies to attract and retain company investments?

According to the most recent area development site selectors surveys, the most critical factor in selecting a new corporate location for four years in a row is talent. It makes sense that without the ability to tap into, train, and retain a skilled workforce, a company’s productivity and bottom line will suffer. But why has a skilled workforce remained elevated as companies’ top consideration in recent years?

Population growth and the pace of technological advancement are two standout variables driving companies’ focus on access to a talented workforce.

Even with population growth in Clark County at twice the national average, the high demand for skilled workers continues to be the key differentiating factor for competitive corporate expansions.

expand, relocate or open new facilities in the next 12 months, 64 percent chose suburban areas.”

Cultivating top talent across industries and retaining that talent in the region continues to be paramount to economic development efforts. These two critical trends are vital to the continued success of Clark County, particularly during a time of crisis.

CREDC will continue to work on highlighting area amenities through our Just North marketing campaign.

Additionally, our team works with educational leaders to deliver value to our current Clark County employers.

CREDC is committed to supporting both current and future businesses in Clark County throughout the crisis and beyond.

A July 2020 survey from the Site Selectors Guild reported that suburbs like Clark County are the leading choice for company expansions, noting that “[w]hen Guild members were asked about locations that are ‘likely’ or ‘very likely’ to be considered by corporations looking to

CREDC is the state-designated Associate Development Organization for Clark County, charged with advancing the economic vitality of the region through business growth and innovation. Larry Holt can be reached by email at lholt@credc.org or by phone at (360) 567.3180.

HFO Sale: King James / King Gate

80 Units • Vancouver, WA • $13.575 million

HFO Sale: Andresen Park

82 Units in Vancouver, WA • $11.3 million

THE NORTHWEST APARTMENT INVESTOR 33

REPRESENTATIVE HFO TRANSACTIONS

Golfside Apartments

Fairwood Apartments

Sherman Oaks

53 Units • Gresham, OR • $7.75 million

49 Units • Beaverton, OR • $6.15 million

49 Units • Albany, OR • $5.212 million

Menlo Parc

Hidden Village

Mountain Crest

41 Units • Beaverton, OR • $8.2 million

27 Units • Milwaukie, OR • $3.5 million

24 Units • Gresham, OR • $3.45 million

Savoy

Boston House

Paragon Plaza

23 Units • Portland, OR • $8.55 million

Island Park

17 Units • Springfield, OR • $1.182 million

20 Units • Portland, OR • $3.3 million

City Link Apartments

14 Units • Portland, OR • $2.65 million

34 HFO INVESTMENT REAL ESTATE • (503) 241.5541 • WWW.HFORE.COM

18 Units • Portland, OR • $2.35 million

Le Maison de Jardin

12 Units • Portland, OR • $2.05 million

YOUR HFO TEAM

Cody Hagerman Partner

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Michelle Swan Broker

Donna Brunner

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Director of Operations

Jennifer Shuch

Senior Research Analyst/Podcaster | Newsletter Contributor |

Marketing Director â&#x20AC;˘ CCO | Newsletter Editor |

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Customer Service Specialist

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THE NORTHWEST APARTMENT INVESTOR 35

INVESTOR ROUNDTABLE A 2021 Virtual Event John W. Mitchell Economist

Wednesday, January 6th, 2021 11:30 am - 1:30 pm Multifamily investors are invited to sign up for our annual event which will be held online due to the ongoing pandemic.

Victor Calanog, PhD Moody’s Analytics/REIS

Speakers Economist John W. Mitchell and Victor Calanog of Moody’s Analytics REIS offer regional and national economic forecasts for our region and the national multifamily market.

E-mail Claudia@hfore.com or call (971) 717.6340

RSVP today!

HFO Investment Real Estate (503) 241.5541 • www.hfore.com Sponsored in part by

Greg Frick Partner, HFO

HFO Investment Real Estate (503) 241.5541 • www.hfore.com