Solving Portland’s Homeless Challenge: a Long-Standing Conundrum

By Don MacGillivray

The challenge of homelessness has always been part of Portland. During the depression and World War II, housing development was restrained. The late 1940s, 50s and 60s were boom years for suburban housing, although many people still lived in the low rent, substandard housing in the inner city.

In the 1970s several facilities for the homeless were operated by the Burnside Consortium in Portland’s Old Town/Chinatown. After disagreements among business, government and social service providers, their infamous Baloney Joe’s shelter for men was moved into an old hotel on the east side of the Burnside Bridge in 1981. 

The 80s saw the homeless situation become a serious problem due to the reversals in federal funding for housing as well as the de-institutionalization of the mentally ill.

It is worth noting that the charismatic Michael Stoops, leader of Baloney Joe’s, was instrumental in the creation of the McKinney Federal Grants program that supports care for the homeless nationwide. He went on to become a founder and the executive director of the National Coalition for the Homeless.

During the Bud Clark mayoral administration, serious work to end homelessness began in earnest. Clark’s nationally recognized 12 Point Plan to End Homelessness described: Planning, • Housing, • Person Down, • Alcohol and Drug Treatment, • Involuntary Treatment, • Sanitation, • Jobs, • Case Management, • Access to Services, • Street Safety, • Mental Health Treatment and Public Participation. Complications of being homeless were well known, but solutions were not.

The City’s 10 Year Plan to End Homelessness was released in 2004 To qualify for federal funding, cities and counties created their own plans to organize support for local efforts to address homelessness. It was then the “housing first” concept was adopted as a primary way to end homelessness.

Four years later, the country went into a recession caused by an inflated housing market. This greatly exacerbated homelessness with many people losing both their jobs and their homes.

Due in part to that 10 Year Plan, in 2011, the city opened the Bud Clark Center in Old Town. It was a LEED Platinum building constructed at a cost of $46 million. It provides the homeless with a day center, education facilities, a medical clinic, temporary housing for ninety residents and permanent, supportive housing for 130 residents.

After ten more years, a plan titled A Home for Everyone was published. It added to the previous work and encouraged the entire community to work collectively to end this 30 year problem. Great strides have been made, but the annual statistics still show only minor improvements.

Late in the administration of Mayor Charlie Hales, a “Housing Crisis” was announced and a “State of Emergency” declared that would require extraordinary efforts and resources to bring normality back to Portland.

Hales said, “We’ve tried slow-and-steady. We’ve tried by-the-book. It’s time to add the tools we currently lack.”

He announced the city would: 1. waive zoning codes, 2. convert public and private buildings into shelters and 3. speed up the creation of a psychiatric emergency center. 

Demand for a clear plan with the necessary financial commitments soon followed and shortly thereafter, Hales decided not to run for re-election. This left the field open for Ted Wheeler who campaigned on solving homelessness, fixing roads, finding affordable housing solutions and creating good, family-wage jobs.

The Joint Office of Homeless Services was created in 2016 as the coordinating center for the many services needed to provide for needs of the homeless population. Its annual budget is approximately $70 million with equal parts coming from the city and county, 11 percent from state and federal sources and the remainder from elsewhere. They have a staff of 21 and 85 percent of their funds are passed on to local community providers.

Last year, 722 households left homelessness and a year later, 587 of those remained housed.

Each year Home Forward (Portland’s Housing Authority) helps more than 11,800 households avoid homelessness by providing long-term rental assistance at a cost of $103 million. Thousands more households are on waiting their lists.

This year the County purchased a building near the Benson Hotel to open a behavioral health resource center which will include showers, laundry services, peer resources, shelter, and additional transitional housing for a completed cost estimated at $20 million.

Voters approved a bond measure in 2016  dedicating $258.4 million to build or acquire permanently affordable housing. It will produce 1,424 units exceeding the original goal of 1,300 units. However, to meet the affordable housing deficit for low-income people, many other such bond measures must be undertaken over the coming decades.

Mayor Wheeler has been in office for three years and while the efforts and work to end homelessness have expanded and much has been accomplished, the fundamental problem remains. 

Perhaps the next administration will have more answers or perhaps local government is not able to end homelessness. We seem to be doing the same things over and over with no end in site.

The United States has a deficit of seven million rental homes. This forces people with low-incomes people to pay more for housing than they can afford. 

Rents are high because too many renters are chasing too few units and the size of households are decreasing, which further increases the need and the cost of new housing.

According to data compiled by Metro, the average rent for a one-bedroom apartment in the Portland region increased by 52 percent between 2010 and 2016. 

That’s more than twice as fast as the growth in the incomes of renters, who make up 40 percent of the households in the region. Their average annual incomes increased by only 19 percent and for those with the lowest incomes it was by just nine percent.

For people earning less than $25,000 per year (30 percent of median family income) Metro states that there is a shortfall of 36,000 units. At the current rate of local government spending on low-income affordable housing, it will take decades to build enough units to supply the need.

One half of these renters pay more than 30 percent of their income in rent making them, by definition, “rent burdened.” 

Either lower rents or rent assistance is perhaps the most effective way to help people quickly find stable housing. Rent subsidies help many individuals and families afford the rent, but only one-quarter of the households who qualify for rent subsidies receive them.

We consider food to be more important than a home, but with the experience of the last 40 years it is clear that people, and especially families, cannot thrive without a decent place to live. 

People not adequately housed cost society more than it costs the government to house them. The savings would come from their increased human potential, decreased law enforcement, lower health costs and a more educated workforce.

As long as there are higher profits in building luxury housing, developers will not build the affordable housing this country needs. The League of Oregon Cities statistically illustrates the housing situation. 

A little over half of Oregon’s 633,000 rental housing units are comfortably affordable for people with annual incomes of $70,000. About 138,000 Oregonians are earning over $100,000 a year and can afford luxury apartments, but there is a shortage of 104,000 of these rentals. 

There are 123,000 “rent burdened” people because they make less than $30,000 a year and there is a shortage of 63,000 of these units. 

As long as the development industry favors building more profitable luxury housing, it leaves the government to build affordable housing and they are nearly as expensive to build as luxury housing because of the costs of land, labor, development fees and building codes.

The federal administration’s answer to the nation’s homeless situation is to place people living on our streets in large facilities where they can more easily improve their lives and move productively into society again. 

They want local authorities to do this without any increase in federal investments. The Haven of Hope in San Antonio, Texas is a model of this type of facility serving 1,500 people daily. The local Wapato Jail site has been rejected for this purpose by local leaders, but the idea is still under consideration by private individuals.

Over half of the multi-family apartments in the US are owned by institutional investors looking to expand. It is known as “financializing” rents, and it is part of a modern search for wealth by world wide corporations with billions of available funds to buy affordable housing where they can find it, including here. 

Wall Street corporations are involved and so are financial interests from overseas. The Blackstone Group, founded by Peter Peterson in 1985, has $157 billion in real estate and is the largest landlord of single-family rental homes in the United States. 

According to the National Association of Realtors, Chinese investors purchased $27.3 billion in United States real estate between 2011 and 2015. 

In Portland $6.3 billion has been invested in acquiring nearly 30,000 units of affordable housing in the past four years. 

These investors pay less than two thirds per unit of what it costs local government to build new affordable housing and the mortgages are backed by the federal government. 

These investors also have access to advantages of low cost financing and economies of scale in marketing and maintenance. They create highly profitable new assets called “rent-backed securities” that are similar to mortgaged backed securities that were a cause of the financial downturn in 2008.

The federal government’s largest housing expenditure and subsidy is the “Mortgage Interest Deduction,” targeted for Americans able to purchase their own single family homes. 

There is no equivalent help for marginalized, “rent burdened” working class families and a national housing reset is needed. 

Oregon Congressman Earl Blumenauer in his recent report titled, Locked Out: Reversing Federal Housing Failures and Unlocking Opportunity, describes the history of the federal government’s role in housing. 

Blumenauer suggests solutions for our ever present housing policy challenges. It points out many little known facts about the federal role in housing and how it might be improved.

Read Congressman Blumenauer’s entire report online at

Solving Portland’s Homeless Challenge: a Long-Standing Conundrum

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