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Updated: 8 hours ago

Escalating costs and zoning restrictions sideline Portland housing projects

proposed condo building Courtesy / Benchmark Realty The proposed condominium build at 64 Pine St. in Portland's West End has been paused.
By Tina Fischer

Several planned housing projects for Portland have been postponed due to rising costs and buyer hesitancy, further shrinking an already-tight housing market in the city. 

Two high-end condominium developments and a 327-unit apartment complex targeted to middle-income households are all now on hold.

Tom Landry, owner of Portland-based Benchmark Realty is lead developer on a luxury condo project planned for 64 Pine St. in the West End, on the site of the shuttered Aurora Provisions cafe. The original concept, projected for completion in summer 2026, is not currently an affordable build, Landry told Mainebiz. 

Landry blamed escalating costs, including the city’s inclusionary zoning fee, which requires all housing projects (new or repurposed) with 10 units or more to commit 25% of the units to lower-to-middle income (“workforce”) households or pay a fee to the city’s Housing Trust Fund, which supports affordable housing development.

An in-lieu-of fee of $182,830 per unit would apply to all units that comprise 25% of the total build, under the zoning ruling approved by Portland voters in 2020. 

“We initially designed a nine-unit building, just under the ‘IZ’ threshold, but rising costs made the margins too tight," Landry said. "We then explored adding units — one additional unit per floor for a total of 12 — to drive down the overall per-unit square footage, making these smaller and therefore more affordable. 

“The issue is that these three units when taxed through the inclusionary zoning fee would add $548,490 to the overall cost.” 

Landry and his partners looked too, at adding another floor and more units, to further spread out construction costs and make the condo more affordable to more buyers. “Once again, the IZ fee makes this a non-starter,” Landry said.  

The Aurora condos were expected to be priced in the $1.5 million to $2 million dollar range.

'Devastating to development'

Another project that’s been paused is Redfern Properties' 327-unit apartment building, Tavata, to be built at 165 Washington Ave.

Managing partner Jonathan Culley told Mainebiz shortly after the project had received planning board approvals that economic factors — including tariffs, interest rates and inclusionary zoning — were driving costs too high.

“Our plan and hope had been to go forward and meet these requirements, but we now need other cost considerations to improve to meet the workforce pricing requirement," he said.

Rollback of the inclusionary zoning provision is under review by the city, according to Greg Watson, director of Housing and Economic Development for Portland, and could potentially be altered by the city council, after it passes the five-year mark next January. 

“We can only hope that the City Council votes to remove all IZ requirements," Landry said. "It will be five years since the IZ fees increased to 25% under the Green New Deal, and this has been devastating to development. We sincerely hope that it is removed fully versus returned to past 10% levels, and this will unlock a wave of housing, which we desperately need.” 

parking lot with project sign
PHOTO/TINA FISCHER
A five-story mixed use building planned for 185 Commercial St. in Portland has been put on hold.

 

 

Elsewhere in Portland, a condo project planned for 185 Commercial St. has also been sidelined. Falmouth-based Compass Commercial Brokers developer Steve Baumann did not cite inclusionary zoning specifically but referred to economic factors, concerns over crime and a slowing of the condo market on the peninsula, for the project’s pause. 

“I’m sorry to say that the project is on hold. It is a challenging site to navigate, which increases the cost of construction, which is already high. That’s coupled with a slow down of condo sales in downtown Portland due to a variety of factors. The changing environment of the downtown landscape relative to safety is a real concern. Buyers for residential units seem to be looking for alternatives to the downtown area.  

“Approvals and construction drawings were ready to go to move the project forward,” Baumann said. For now it will remain a parking lot.” 

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