This article first appeared in the Spring 2026 Eliot News
Zoning is the practice of limiting development to specific areas/properties. I say “limiting” as that is how it has been used – to limit buildings and uses existing neighbors don’t want. It can go hand in hand with “redlining,” or racial exclusion. It can also be used to “encourage” certain kinds of development, although it is a rather crude tool for that purpose as we will see.
Portland’s Mayor Katz famously said, “We planned. It worked.” It was the use of zoning that led to Portland’s reputation as a model for urban development. That process played out in Eliot as intended by City planners but not as anticipated or appreciated by all residents. Briefly, City planners envisioned inner city neighborhoods as hosts for higher housing densities than the existing single-family neighborhoods. They used “up-zoning” to encourage that future. Up-zoning changes or increases the allowed development on an existing parcel. In this case, from one favoring homeownership to one favoring mid- and high-rise rental housing, consistent with City planner’s density goals.
A single-family home lot that is up-zone to allow 4-6 units is no longer valued for the home on the property, but for the potential to build 4-6 units of rental housing, townhomes, condos, etc. This transformation is evident across Eliot today. The new City Council intends to up-zone Eliot and other eastside inner-city neighborhoods even more! What many people do not realize, potentially including City planners, and certainly not City Council is that up-zoning changes the financial underpinnings of existing properties and the associated owners two, significant ways: first, by financial institutions, and second, by the real estate market.
Financial institutions are the source of almost all money to build, buy, repair, and renovate property. After the ability of a borrower to repay, lenders evaluate their ability to sell the property in case of default. In other words, if you don’t make payments, who will buy the property to repay your debt. In that role they don’t care about the historic accuracy or interior design of a property, only what a real estate investor is willing to pay as soon as it is offered for sale. A large home in an established family neighborhood, like Irvington, will be valued as a single-family home in the eyes of the real estate market. (That is changing in Irvington, with some single-family homes being replaced by townhome development.) Most of Portland’s inner eastside homes are small, old, and not in established family neighborhoods. All of these neighborhoods have also been up-zoned. Consequently, they are now being evaluated based on their development potential more so than the buildings on them. This is evident in property tax assessment records where the “land” is valued much higher than the “improvement,” or buildings. Unironically, this is an old story for most of them and for Eliot specifically as a brief historic review confirms.
The late 1970s and 1980s began the transition of the State’s economy from forestry and agriculture to high tech and sportswear manufacturing. The dislocations from this transition were magnified by the recession gripping the rest of the country. Home prices in Eliot were stagnant because of the recession, the age and size of homes (old and small), and the legacy of redlining that left it a mix of Black and white residents in a housing market favoring majority white residents. Although it was predominantly a single-family home area, it was not zoned as such. Instead, there was a mix of multi-family and small commercial zones under each residence.
As noted, zoning is a two-edged sword. A zone is both a restriction and inducement for certain kinds of development. It acts as a signal for developers and the financial industry where to invest and where to avoid investment. Single family zoning is a green light for mortgage lenders. Other residential zones are a caution sign, as they suggest future development that isn’t compatible with single-family ownership. It can act as a de-facto form of redlining. That was the case for Eliot throughout the 60s and 70s and into the Katz era. One result was that banks looked at Eliot’s mixed-race and relatively low economic status and elderly residents as poor prospects for loans. Consequently, residents were starved of money to repair and rehabilitate their homes, which gradually became ever more worn looking – blighted in the mind of the real estate industry. Accordingly, when it came time to sell, interested buyers had difficulty obtaining mortgages and sellers received low price offers. That created an opportunity for young, mostly white buyers with their own financial resources and “sweat equity” to buy into Eliot and revitalize it as a “starter home” community.
The displacement of elderly, established residents by new residents was decried as “gentrification.” Although Eliot remained a mixed neighborhood it was younger, whiter, and somewhat more wealthy due to the professions of new residents. Unlike “gentrifiers,” most of these new residents came to put down roots, not to “fix and flip.” Ironically, many are now our elderly residents. The point is that up-zoning in the 70s and 80s made home ownership for existing elderly residents economically untenable because they couldn’t borrow to maintain their homes. As a result, they sold their homes for much less than the going rate in the rest of Portland.
Eliot’s new younger residents could finance home improvements and did so in dramatic fashion saving the neighborhood from Mayor Katz’s vision of wall-to-wall apartments. Now, once again, up-zoning is repeating the same cycle. Rehabilitated and well maintain homes in Eliot that might ask $1 million or more in Irvington are being valued at half that just to be torn down to build a 6-unit townhome or apartment block. Worse, multiples of adjacent homes are being purchased to develop even larger apartment buildings. Although delayed, Mayor Katz’s vision is being realized, and the new Council wants to accelerate that process. And once again, long time residents will bear the financial loss due to sales prices lower than they deserve.
