Leaders across Oregon want developers to build more homes. Governor Tina Kotek set a statewide housing production goal in 2023, aiming to add 36,000 units per year, and although that goal was not met, it remains a key talking point for the administration. Locally, past and present Portland City Council members, along with the Mayor, have tried to reorganize the City’s permitting structure and suspend specific fees to incentivize housing construction, which has declined post-pandemic. At a time when housing production targets and efforts to increase affordability would benefit from high-unit-count apartment construction within the Urban growth boundary, developers have reduced multifamily unit production, with outside investors choosing to build in other cities instead. Regional housing creators have likewise experienced diminished production, but recently, some Portland builders are finding a way to put crews back to work by reducing project unit counts to lessen permitting hurdles and bring in specialists who can navigate the convoluted City permitting process.
DK Homes owner Damir Karin began building Portland projects in 1991 and has remained a prolific housing developer in the region over the last 35 years. He points to the complex and opaque permitting process as the reason many of his projects have stalled over the past five years. However, he feels this is changing and anticipates a return to pre-pandemic levels of development for his company. Karin explained this change was not due to streamlined building code or reduced fees. Instead, he points to a new role within his company that focuses on breaking through the building permit bureaucracy while scaling down projects to get past “unexplained” rules that have caused years of delay. “What helped me is I hired a guy who just does permits for me, nothing else. He is running around, calling the City, and bothering them,” explained Karin.
Utilizing the added staff support for building permits, DK Homes intends to break ground in the next few months on three multi-unit developments in the Montavilla and surrounding areas, with a fourth from 2020 potentially reactivating as a smaller project. Karin appreciates the State and City efforts to make Middle Housing more enticing for housing producers. The Residential Infill Project (RIP), parts one and two, in effect since June 2022, added rules allowing many housing density options on parcels formerly restricted to single-family residences. It also ushered in Middle Housing Land Divisions within Single-Dwelling zones that allow houses to be on their own lots even if they are not directly connected to a city street, avoiding the need to create a condominium with homeowner fees. That has provided DK Homes with an avenue to convert its larger-unit projects into detached single-family homes that can sell for enough to cover the added expenses of holding high-interest-rate construction loans for a prolonged period and meeting the growing costs required by the City code.
DK Homes purchased a nearly three-quarter-acre property at 2721 SE 101st Avenue in 2017 with the intention of creating 11 homes. Now, the project will offer eight units off a shared driveway along the south edge of the property, with each house featuring a small garage, three bedrooms, two full bathrooms, and a half bath on the main level. “It was supposed to be 11, but going through the permit process and dealing with the City, fire code, this code, that code; they cut me to eight,” said Karin. “I want to do 11, but they cut to eight, I guess because of some fire rules.” He felt City staff never fully explained to him why the only way forward on this project was to offer less housing. Particularly because all homes on the 380-foot-deep-by-80-foot-wide property will have sprinkler systems to reduce the risk of fire spreading. Additionally, the driveway will extend to the back of the property in both designs. However, he is less interested in pushing against the rules and is instead trying to focus on moving these projects through the permitting process so he can start building again.
The delay in development on the SE 101st Avenue project allowed him to use a new form of land division introduced through the RIP updates called cottage clusters. This project will not be a condominium with a Home Owner Association (HOA). Each home will have its own lot. The driveway and utilities will cross the adjoining homes’ easement, allowing access to the buildings located in the center of the large block. “It’s going to be separate houses, average is 1,400 square feet each,” said Karin. “But they are counting the garage, so it is 1,200 plus 200 [square feet] for the garage.” Most of the projects DK Homes has underway in the area will include attached vehicle storage as part of the design. Karin acknowledges that garages take up space in the home’s footprint that could serve as living space, and says his approach may be “old-fashioned,” but he feels it better serves his customers. “The City is pushing for no garages. I think Portland is not ready for that; people still have cars, especially in that area. So I decided to do houses with a garage. The people can park their car or use it like a storage unit,” explained Karin.
DK Homes will start a similar project one block over on the southwest corner of SE 103rd Avenue and Clinton Street. Because that site is on a corner, three houses will face SE Clinton Street, each having a driveway connecting to the city street. The other three homes will use a shared driveway accessed from SE 103rd Avenue. The 14 new homes on SE 101st and 103rd Avenues will use the Homebuyer Opportunity Limited Tax Exemption (HOLTE) Program. That affordability program for Single-unit homes lets qualified buyers take a property tax exemption on structural improvements for up to 10 years, as long as the property and owner remain eligible per HOLTE Program requirements. This provision will limit homebuyers for these projects to those earning at or below 100% of the Median family income for a family of four in the area. That income cap can increase for larger households.
Whenever possible, DK Homes will preserve the original homes on the development site and add newer units within the undeveloped yard space. However, the lack of building during COVID and the slow recovery left its structures south of SE Division Street unoccupied, attracting squatters who damaged the homes significantly. Karin opted to demolish the nearly unrecoverable original homes and remove the incentive for people to trespass.
The dangers of sitting empty did not impact DK Homes’ project on NE 87th Avenue. The team worked to preserve the interior of the 1909-era house at 47 NE 87th Avenue as much as possible and refinished the basement for added living space. Karin Split that property back into two distinct lots and is now selling the renovated century-old house. On the vacant lot at 43 NE 87th Avenue, DK Homes will create two attached homes. One of the common-wall homes will have four bedrooms with three and a half baths. It will have one bedroom on the ground floor with a full bathroom, making it suitable for multi-generational homebuyers or those with other accessibility needs. On the top floor are the other three bedrooms and two baths. The neighboring unit will have a similar layout without the lower-level bedroom and ensuite bathroom. They will both have attached garages with a split driveway running down the center of the property. A later land division will create separate properties for the new houses.
This project, just off os East Burnside Street, is different than his other work south of the site. It is less focused on maximizing land and may not include affordability incentives. “I can go all the way to four [units on the property], but then you bring four families [on a smaller lot], and it’s gonna be a problem for neighbors,” remarked Karin. “I’m still trying to figure out all my costs to see if I will be able to build under the tax abatement.”
Damir Karin said that he feels the overlapping and contradictory building codes, along with infrastructure improvement requirements placed on housing creators, are driving up costs and incentivizing people to build for higher earners. “They’re talking about affordable housing and a shortage of space for people to live, but on the other hand, all the rules they bring up just hold back developers and make each project cost more. More requirements add more expenses,” explained Karin. “When we have to spend an additional hundred thousand to improve the sidewalk and curb or add a bioswale, somebody needs to pay. As a professional trying to make my living, if I spend $100,000, I have to somehow get some money back.” He points to years of changing requirements that have added to the cost of a detached home, and he feels it is even harder to make apartment projects profitable.
Karin points to his long-delayed apartment project at 2444 SE 90th Avenue as an example of one he could not get built in Portland. It started as a 12-unit apartment building with tuck-under parking. It faced delays and eventually became a smaller, five-unit project for sale rather than as a rental near a commercial corridor. “We have five attached townhomes, and my permit is in its fifth year with the City,” said Karin. After downsizing the unit count, the permits began moving forward. However, he said officials recently told him he will need to build a half-street improvement on the curbless section of SE 90th Avenue. He explained that this provision will require more engineering and further drive up costs, leading to fewer units at higher prices for future buyers.
Some builders are getting back to work as recent City programs have helped drive the creation of middle housing. Still, even a developer like Karin will point out that the number of projects underway is not the best measure of a successful housing policy. When the building permit process discourages apartment building density by adding costs and delaying project approval, builders will target lower-density land uses to get the project moving. He wants to build more housing units per property where it is appropriate, offering more affordable options for price-constrained buyers. He notes density is needed within Portland, recognizing that “no one is making more land,” but he needs the City to help builders like him navigate the system to deliver those projects. Not many local development companies can afford a dedicated person to shepherd projects through the permitting process, and they may still need to make unit-count concessions to gain approval.
People can expect to see work underway at the three DK Homes project sites in 2026.
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