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On heels of unflattering audit, council locks horns on incentives

After being in charge of the Portland Housing Bureau for about a year, Commissioner Dan Saltzman is considering expanding its priorities from primarily low-income housing to include so-called workforce housing for moderate-income families.

“There are a lot of needs for housing in the community, including affordable housing for working families near their jobs and schools,” Saltzman says.

Saltzman is also preparing to ask the City Council to set guidelines for the bureau’s financing programs. The Portland city auditor recently released an audit saying it is not clear how the bureau decides which project qualifies for which program. And, the audit says, the bureau will only collect about $54 million of its total portfolio of $357 million in outstanding loans.

“This limits the opportunity for PHB to invest in new projects in the future, since most loans — more than $300 million — will be spent once rather than loaned, recovered, and used again for additional projects,” according to the city audit.

Saltzman is not surprised so few loans will be repaid. The bureau has been focused on investing in projects that provide housing for the city’s most vulnerable residents. Many of the loans are made to nonprofit organizations that develop or rehabilitate such projects. They could not afford to keep their rents low if they had to generate enough income to repay the loans.

“We shouldn’t call them loans if we know they’re not going to be repaid. We should call them grants,” says Saltzman.

But more than that, Saltzman says the bureau needs to know which financing options should be offered to each of the different kinds of projects it supports. Saltzman has scheduled the bureau to appear before the council to discuss the issue on April 30.

Saltzman says his desire to expand the range of projects backed by the bureau will take longer, however. He says there is a lot of support on the council and in the community to prioritize low income housing projects. Commissioner Nick Fish, who had the bureau before Saltzman, was praised for coming up with city funds to help build Bud Clark Commons during the height of the Great Recession. Located at 655 N.W. Hoyt St., it offers 130 studio apartments for the homeless, including those with drug and alcohol addictions.

Applicants must have an annual income that does not exceed 35 percent of the area’s median family income for their family size. Saltzman agrees this population must be housed, but says even families earning 80 percent to 120 percent of the area’s median family income are having trouble finding affordable housing in Portland these days

According to the federal government, the median income in the Portland area is $48,580 for an individual and $69,400 for a family of four.

Saltzman recently commissioned a study on workforce housing by Amy Edwards, a limited duration employee at the bureau with a background in private financing. Titled “Tools and Strategies for Facilitating Middle Income Housing Development,” it was delivered to his office Thursday.

The study said there is a clear need in Portland for more housing for families supported by construction workers, paramedics, graphic designers, teachers and social workers. It found the city offers a range of incentives for housing serving families earning up to 60 percent of the area’s median family income, but only limited incentives for families earning up to 80 percent and nothing above that.

“Subsidies exist for affordable housing, and the capital markets provide for market rate development, but no incentives exist for middle income housing,” according to the study.

The study found that some other cities already provide incentives for workforce housing, including Austin and San Jose. Saltzman says he will use the study to help prepare a proposal for the council to consider in the future. It could include extending such existing incentives as property tax and system development charge waivers to workforce housing.

“I don’t think I can convince the council to support building housing for those at the 120 percent level at this time, but I’m hoping to get agreement on at least 80 percent,” says Saltzman.

Biggest boom

Saltzman is so convinced the city has a shortage of moderately affordable housing that he is the only member of the council to publicly support Mayor Charlie Hales’ controversial proposal to consider waiving system development charges for developers willing to build market rate housing in the Old Town/Chinatown area. Hales believes waiving the city charges for streets, parks and the like would encourage the construction of new housing with at least some affordable units.

And Saltzman says he is talking to developers about including affordable units in new housing projects.

“We’re in the midst of the biggest boom in multifamily housing construction in many years,” says Saltzman, referring to the numerous apartment buildings under construction or recently completed in various parts of town.

State law prohibits the city from requiring developers to include affordable units in their projects, but Saltzman says the city has incentives it can offer to encourage them, such as property tax waivers.

“I’ve been meeting with

developers to remind them about the incentives. I haven’t clinched any deals yet, but I might going forward,” says Saltzman, who lists the conversations to date as involving Hoyt Street Properties, Key Development and Unico Properties.

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