Why the City of Portland can't restrict FAR transfers any more

The Butler Block / Allegro Condominium Tower story (see my previous post) gave me an idea tonight.  (My drinking companion remarked on the dangerous glint that came into my eye when the idea struck.)

Portland's zoning code allows developers to acquire unused floor area ratio ("FAR") from landmarks, and from other properties in the same recognized neighborhood or within two miles.  I think these are recent changes to the zoning code.  I surmise that the City will eventually realize that it's been overgenerous with these transfers and will amend the code to limit these transfers. 

Let's say that I can buy an underdeveloped site, maybe a small building that isn't redevelopable by itself, but which has FAR of 9 to 1 and is using only 3 to 1.  On a 10,000 square foot site near the city center, the market price for the FAR appears to be about $10 per square foot, which means that the 60,000 unused square feet of FAR has a market value of about $600,000.  That might -- mind you, I say might -- be almost what I pay for the building.

Now when the City amends the zoning code to restrict my ability to sell this FAR to the highest bidder, it's reduced the value of my property by $600,000, because I can't sell the FAR any more.  Here comes my Measure 37 claim, as I ask the City to pay me the amount by which its code change has devalued my property.  The City can't afford to pay me and the other claimants, and as I see it the City may be locked into its bad policy decision because it can't afford to change it.