Affordable housing funds could stretch
Mayor Ted Wheeler may not ask the City Council to spend any more affordable housing bond funds until next January — more than two years after Portland voters first approved the $258.4 million measure at the November 2016 general election.
That is because bond counsel has told the mayor's office that the money can go a lot farther if Oregon voters approve an amendment to the state constitution this November. The amendment would remove spending restrictions on such funds and take effect on Jan. 1, 2019.
"The amendment would apply to all (affordable housing) bonds that have not been issued by the time it takes effect," says Carol McCoog, the Portland lawyer advising the city on the bonds.
The amendment was referred to the ballot by the 2018 Oregon Legislature. It would repeal a prohibition against governments partnering with private businesses on projects supported by property tax-backed bonds for affordable housing projects. The current restriction is why the council has only promised the bond would preserve or build 1,300 units, far fewer than what the city would normally help support with $258.4 million spent on traditional affordable housing projects.
But that does not mean Wheeler might not ask the council to approve more affordable housing projects before January. McCoog says the city could use interim financing from other sources to start them and repay that financing with bond funds if the amendment is approved.
Wheeler first talked about the proposed constitutional amendment during his State of the City Address on April 12. He urged people to vote for it, saying its passage would allow the city to increase the number of units to be preserved or created with the funds.
"If voters approve it in November, our bond dollars will go much farther. We might be able to double, or even triple, the number of units created by the affordable housing bond," Wheeler said.
The city so far has received $37,480,566.75 in affordable housing bond proceeds. All of it was spent to purchase the 263-unit Ellington Apartments in Southeast Portland when it went up for sale in late 2016. The council has purchased the former Safari Club at 3000 S.E. Foster Road with other funds for a future bond project that is now being designed.
Other possible projects are currently being considered by the Affordable Housing Bond Oversight Committee appointed to help the council select them. It could recommend one or more new projects to the council in the coming months.
Despite the limited bond spending so far, during his address, Wheeler said 600 new affordable units opened in 2017 and more than 700 others are under construction and scheduled to open in 2018 — the largest number ever produced with city help in a single year in modern history.
Amendment could help
Metro, the elected regional government, is also hoping the measure passes. It is drafting a potential affordable housing bond for the November ballot. Although many details have yet to be resolved, discussions are revolving around a $500 million measure.
During a meeting of a stakeholders committee advising Metro on the measure last Monday, staff said that if the amendment passes, such a bond could preserve or build up to 3,654 units, depending on their configuration. If the measure doesn't pass, the number would only be 2,200 units.
Both those numbers are higher than ones discussed during a March meeting. Since then, Metro staff has reduced the average estimated per unit cost from around $237,000 to about $205,000.
During the April 16 meeting at Metro headquarters, one of the hottest subjects was how the money will be distributed within Multnomah, Washington and Clackamas counties if the measure passes. Based solely on assessed value, Multnomah County would receive 48 percent of the housing, Washington County would receive 34 percent and Clackamas County would receive 21 percent.
But if the distribution was based on severely cost burdened renter households of color, Multnomah County's share jumps to 64 percent, while Washington County drops to 30 percent and Clackamas County falls to a mere 7 percent.
Other possible distribution methods — such as the number of families with children making less than 50 percent of the region's median household income — fall in between the extremes, as does a blend of them. The Clackamas County Commission has sent Metro a letter saying the filter should be poverty, which was not broken out by itself in the discussion draft.
Metro is scheduled to release a potential framework for the measure on April 26, and the Metro Council is expected to vote on the referral on June 7.