Spending of affordable housing cash slow coming
The Portland Housing Bureau is soliciting proposals for spending the affordable housing bond funds approved by Portland voters in November 2016.
But according to PHB Director Kurt Creager, the City Council might not receive the first proposals until March — five months after it approved the policy framework for spending the money and 16 months after the $258.4 million bond measure was first passed.
"We need to vet the proposals and forward the most promising ones to the mayor, who is in charge of the bureau. He will then submit them to the council," Creager said.
And even then, the first proposals to go before the council are not likely to include the option of buying any newly completed, ready-to-occupy developments. Creager said the PHB is still working with the City Attorney's Office on a pilot project for buying so-called "turnkey" developments to be submitted to the council for approval before the end of the year.
Some think such projects could reduce the cost of them significantly, allowing more units to be built or acquired than the 1,300 called for in the bond measure.
"I'm encouraged the city is willing to consider turnkey projects. We are in the middle of a housing emergency. If the city can reduce the cost of its projects, it can build more units," said Rob Justus, co-owner of Home First Development, a private company that builds projects for affordable housing developers.
The company's most recent project, the Maple Vine apartments in east Portland, cost an average of around $90,000 per unit to build. That compares to more than $200,000 per unit in affordable housing projects traditionally supported with city funds.
"The question is, do we want to build the most affordable housing units at the lowest cost?" Justus asked.
Land, existing buildings sought
For now, the PHB is only soliciting proposals for land where projects that can be built and existing buildings can be preserved or converted to affordable housing. The drawn-out schedule reflects the complexity of approving rules and procedures for what is essentially a new city policy for providing affordable housing. In all other cases, the city has contributed a share of the cost of projects proposed by other partners, including both nonprofit and for-profit affordable housing developers.
But because of restrictions in the Oregon Constitution, the city is prohibited from partnering with private partners on projects funded by the affordable housing bond. The city also will own and operate the completed projects, although it can contract out the management of them.
To help work out the details, the council appointed a 22-member Stakeholders Advisory Group that drafted the framework the council approved on Oct. 11.
That does not mean the city hasn't spent some of the bond money, however. In February, it bought the existing 263-unit Ellington Apartments in Northeast Portland for $47 million after it was put up for sale. PHB pledged $37 million in bond funds toward the purchase and is working to raise the remaining $10 million from other sources.
Creager said PHB is developing a policy to submit to the council for transitioning the apartment complex to affordable housing while minimizing the eviction of current tenants earning more than 60 percent of the area's median family income. It will apply to future purchases of existing residential properties, too.
The city also has paid administrative costs with bond money, leaving around $205 million available for additional purchases and construction costs.
Other projects underway
Despite the delay in spending the bond funds, more and more affordable housing projects are opening, under construction, being announced, or are in the planning process.
The most recent one to open is the 148-unit Vine Maple apartments at Southeast 146th Avenue and Burnside Street. It is the fifth affordable housing complex built by Home First Development for Relay Resources, the nonprofit affordable housing developer and operator formerly known as PHC Northwest.
"I'm thrilled we're able to add significant inventory to East Portland. Our largest property to date will increase the supply of affordable housing in Portland, which helps us serve our mission," said Relay Resources President Alysa Rose.
No public funds were used to finance the new complex. Relay Resources declined to accept them because they include strings that increase project costs, such as having to pay workers government-set "prevailing wages" that equal union wages.
Despite the lack of public subsidies, the Vine Maple rents are affordable to households earning 60 percent or less of MFI. Studio apartments rent for $535 a month, while one-bedroom units go for $726 and two-bedroom units are priced at $868 a month.
Justus said the recently completed project is an example of the kind of turnkey project the city could buy with the affordable housing bond funds. It has many of the amenities the council says it wants in affordable housing developments, including easy access to transit. Justus said it also meets Earth Advantage standards, although it did not go through the costly certification process.