Portland’s Affordable Housing Challenge

By Don MacGillivray

Many believe the housing problem is a function of poor life choices and resulting circumstances of those that can’t afford housing. Forty years ago, this was not a problem because there were affordable short-term housing options for most people. The housing might not have been attractive and some were not up to building and fire codes, but they could be rented by the day or week for very little money.

How did we get in this situation? It is caused, in part, by our market economy. The city has lost many of its affordable units in spite of city promises and efforts to preserve these buildings. Some were lost to new development while others were brought up to modern standards thereby requiring increased rents.

In 1988, Portland City Council acknowledged the loss of affordable housing in the Central City and set a goal to increase the number of units for poor people to 5,183. Today Portland is still over a thousand units from this goal. If one of these old hotels is privately-owned it is an attractive candidate to be demolished and replaced by a modern building thereby dislocating residents.

Portland has been good in keeping such actions to a minimum and improving and keeping many older residential hotels for low income folks. The problem has been studied by local government, the Portland City Club, and in numerous other documents over the past thirty years without finding satisfactory solutions.

Another important factor was changes in the Federal government housing assistance. In the 80s, the war on poverty was over and Federal block grants to local regions were discontinued. New public housing programs ended and there was a desire to reduce costs.

Many of those institutionalized were given their medications and released to care for themselves. As crime and drug issues increased, the incarceration rate multiplied with the eventual problem of dealing with the return to society by ex-convicts often without the skills needed to support themselves. In addition, workers wages remained stagnant even with increases in productivity and profits.

In 2016, there are 125,000 households in Portland that rent their homes. This is approximately one half of the housing units here. There is a great need for housing that is affordable to those with incomes less than 30 percent of the Median Family Income (MFI) of $73,000 for the Multnomah County. Of course the amount varies depending on how many make up the family. Fourteen percent of Portland citizens have incomes of less than 30 percent of the MFI. This amounts to over 80,000 people that are struggling to live comfortably.

Portland needs 31,665 affordable units for those in the 0-30 percent range of MFI, but there are only 8,370 units, leaving a lack of 23,295 units. In the 51- 80 percent range of MFI, there is an excess of 23,565 units over the need. For a family of four, 30 percent of the MFI would be less than $24,250.

This illustrates the need for affordable housing. When the Section 8 voucher ten day application period opened in 2013, there were 21,000 applicants within two weeks for 3,000 chances to be chosen. Due to the Federal budget sequestration, all of these people were denied a voucher.

The Federal Section 8 program administered by Home Forward (the Housing Authority of Portland) allows renters to find apartments where the renter pays one third of their income for rent while the remainder is provided for by the government. There is never enough money in this program and many landlords will not accept Section 8 vouchers.

There is a great need for a local Housing Trust Fund and it needs to be as close to $50 million a year as possible. With this amount it will take at least twenty years to solve the affordable housing problem. One unit of housing costs approximately $100,000 therefore a billion dollars buys only about 10,000 units.

The Tax Increment Financing (TIF) set aside is the funding mechanism in Portland’s Urban Renewal Districts. Forty-five percent of this source goes to build new affordable housing. There are $61 million in local and Federal funds available here which is expected to have an impact of $180 million in the local market. This program is managed by the Portland Housing Bureau in cooperation with the Portland Development Commission.

The Housing Bureau rental unit portfolio is 13,200 units that use funding from tax credits, tax abatements, and Section 8. Half of these units house those with less than 50% of median family income. It is simply not possible to create enough housing for everyone without major changes in the way housing is financed, planned, built, and managed. In Portland 30% of renter households earn less than $20,000. The actual minimum wage for full time employment is $1,603 a month before taxes so single persons often end up paying as much as 78 percent of their income for housing. Over half the renters in Portland are overburdened by their rent. In other words, they pay more that one third of their income for shelter.

The Central City is the best place to for low-income hosing, but it is competing with current developers that wish to build new market rate housing. This is where the profit is, and with land, labor, and materials increasing all the time, more expensive apartments are what the market demands.

There are many non-profit organizations working hard to address the need such as: REACH Community Development, Northwest Housing Alternatives, Hacienda, Central City Concern, Human Solutions, ROSE CDC. The housing they provide remains as affordable as possible, but without subsidizing rents, housing options will still be out of the range of many low income renters.

It will take many different housing solutions to address the overwhelming deficit of affordable housing. All of them will involve finding economic resources needed to solve these challenges.

Portland’s Affordable Housing Challenge

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