Expectations exceeded: Portland's affordable housing bond
Portlanders desperate for some good news should welcome the progress that has been made on the city's affordable housing bond projects.
The City Council has now committed to building nearly 200 more units than promised when voters approved the $258.4 million bond in November 2016. A larger percent of them will be big enough for families. In all but one project, the bond subsidy will be $150,000 or less, far below the originally estimated average cost. And social service workers will be assigned to hundreds of the units to help assure the chronically homeless remain housed.
In fact, as many as 10 bond-funded projects are expected to be under construction next year. Work is expected to begin on a 138-unit project at Southeast 115th and Division this October.
"I know some people thought we got off to a slow start, but we are now ahead of schedule and have more units open and in process than originally promised," said Portland Housing Bureau Director Shannon Callahan.
Many of the improvements to the program were made possible by two other measures approved by voters. State voters amended the Oregon Constitution in November 2018 to allow private partners to help finance bond-funded affordable housing projects. And Metro voters approved a $250 million-a-year measure in May 2020 to fund homeless services, including counsellors and treatment providers to help keep the mentally ill and those with substance abuse problems in their homes.
On top of that, on Aug. 12, the council approved an Intergovernmental Agreement with Metro to ensure its share of the $652.8 million affordable housing bond approved by the regional government's voters in November 2018. The Metro Council approved it on Sept. 3. The first project in Portland to be funded in part by the $211 million in Metro funds was previously authorized.
Because work has yet to start on most projects, they will not immediately reduce the number of people living on the streets. But the decisions mean Portland voters eventually will get more for their money, and the lessons learned will help the Metro bond funds go farther, too.
"I am proud of the work the Housing Bureau is delivering on Portland's affordable housing bond and in partnership with Metro on the regional housing bond," said Mayor Ted Wheeler, who is in charge of the bureau. "Everyone in our community deserves a safe, healthy and affordable place to call home. This is a top priority for my administration. Together with our partners, we are creating new housing across the city to serve and support the diverse needs of Portlanders."
Work continues through pandemic
Don't be surprised if you missed the news about the housing bond progress. Although it's almost hard to remember now, homelessness and the lack of affordable housing were the top issues in Portland before COVID-19 shut much of the economy down in March, and before George Floyd, an unarmed Black man, was killed by Minneapolis police on May 25, sparking ongoing nationwide anti-racism protests. Since then, polls show Portland area resident have become more concerned about the pandemic, the resulting recession, and systemic racism. The local media has struggled to keep up with ever-changing developments on those fronts, meaning a lot of other stories have fallen through the cracks.
But the Portland Housing Bureau has kept pushing the projects forwards, even though the staffers are working out of their homes and holding the meetings of the appointed Bond Oversight Committee online.
"Our team and partners and contractors have been working hard under extraordinary circumstances. The Bureau of Development Services deserves credit, too, for keeping the projects on track," Callahan said. The partners in such nonprofit affordable housing providers as Catholic Charities, Central City Concern, Hacienda CDC ad Home Forward. Project are complete or in process in all parts of town except Southwest Portland.
The progress was documented in a July 16, 2020, memo from Callahan to the oversight committee members.
When the council referred the measure to the ballot, it only promised to build 1,300 units. The average cost was estimated at just under $200,000, including administrative expenses. Now the bureau is promising to build at least 1,494 units. The average bond cost will be at least $50,000 less than the original estimate, despite the fact that many of them will be larger than originally projected.
Before the Oregon Constitution was amended, the bureau awarded nearly $52 million to four projects. Three of them can only be financed with bond funds. They are the purchase of the existing Ellington apartments, the purchase of the new 105 East Burnside apartments, and a commitment to the 3000 Powell project to be built on the site of the former Safari Club. Per-unit costs will range from $140,630 to $280,392.
After the constitution was amended, the housing bureau approved a policy limiting bond costs to $150,000 per unit in future projects. It then awarded nearly $149 million to nine projects, all of which also are being financed by private partners, predominately with Low-Income Housing Tax Credits. Their support will reduce the city's bond subsidy from $86,436 to $150,000 per unit, depending on the project.
"The constitutional amendment made all the difference in the world," Callahan said.
Out of the 1,494 units, 689 will be large enough for families; 622 will be affordable to households earning up to 30% of the area median income; and 313 will be supported by services, making them what are known as Permanent Supportive Housing units.
And that still leaves $25 million in bond funds, not counting remaining reserves and delivery allowances, for cost overruns or adding units at projects that have been approved.
See the chart below for more information on the projects. You can find additional details on all city-funded affordable housing projects at www.portland.gov/phb/boc.
Metro bond funds up next
Metro approved the first project in the city for its affordable housing bond funding last July. It authorized $22.3 million to rebuild the 40-unit Dekum Court Apartments in Northeast Portland in stages. A total of 160 additional units will be added without displacing the existing residents. The total project is expected to be in the $50 million range with most of the additional financing coming through the federal Low Income Housing Tax Credit program. The apartments are owned and operated by Home Forward, formerly known as the Housing Authority of Portland. Plans for the renovation and expansion have been in the works for years.
Callahan said the bureau now is reviewing projects that have been proposed but which have stalled for lack of funding the next round of Metro bond funding. She said she believes four projects could be approved for "gap funding" to move forward in coming months.
And Callahan said the bureau is planning to solicit proposals for new projects to be financed in part with Metro bond funds by the end of the year. Portland has promised that 300 of the units will be Permanent Supportive Housing.
"The need for supportive housing has never been greater," Callahan said.
Metro also committed to three projects in Clackamas and Washington counties last July. Predevelopment already is underway on 504 units. A little over $53 million already has been committed to projects. The first — the Mary Ann Apartments in Beaverton — is expected to be completed in May 2021.
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