Metro mulls taxes for affordable housing
The Metro Council may ask voters to create a regional funding source to preserve and build more affordable housing, especially outside of Portland.
Ideas under consideration include a regional construction excise tax, a property tax measure, or some authority to dedicate property tax increases caused by new developments to such projects.
Such sources would need to be approved by voters in Metro's jurisdiction, the urbanized areas of Multnomah, Clackamas and Washington counties. Construction tax and development-related proposals also would have to be authorized by the Oregon Legislature.
The elected Metro councilors talked about the need for such a funding source at a work session last Thursday. No decision is expected until next year at the earliest, following discussion with the 24 city councils and three county commissions in Metro's jurisdiction.
During the session, Metro President Tom Hughes said the regional government should respond to the affordable housing crisis because the urban growth boundary it administers creates "upward pressure" on home prices. The UGB, as it is commonly called, limits where new development can occur.
"We want to save farm and forest land, but at the same time not price people out of the region because it is such a desirable place to live," Hughes said.
The discussion is part of the Regional Equitable Housing initiative launched by Metro in 2015 and spearheaded by Councilor Sam Chase. It grew out of the realization that the lack of affordable housing is a regional crisis, even though most of the attention has been focused on Portland.
According to an Aug. 28 memo to the council from Metro Planning and Development Director Elissa Gertler, a construction excise tax could raise $10.8 million a year and a general obligation bond could raise $500 million or more. The development-related proposal — similar to the urban renewal program in Portland and other cities — was raised by Hughes at the session and not included in the memo.
All three proposals would fall short of meeting the need. Gertler's memo says it would cost approximately $5 billion to provide the 36,000 units needed by households currently earning at or below 30 percent of the area median income ($1,867 monthly for a family of four) in the region. It would cost about $500 million more to provide the 11,100 units needed by those making 30 to 50 percent of median income.
The federal government considers households "rent burdened" if they pay more than 30 percent of their income for rent.
According to the memo, although more than half of all severely cost-burdened households live outside Portland, only one-third of the region's 41,353 regulated affordable housing units are outside the city.
And that is not likely to change without additional funding.
Only 6 percent of the current $149 million a year available for new affordable housing projects is for areas outside Portland.
"Tackling the region's shortage of affordable housing will require new dedicated revenue tools, coordinated investment strategies, and a mix of short- and long-term approaches," Gertler's memo says.
Metro staff met last month with planning, community development, and housing authority directors from across the region to get their perspectives on the need for a regional approach to the affordable housing crisis. Gertler says there was widespread recognition of the crisis and the need for regional solutions that include both the preservation and construction of more affordable housing.
"Participants expressed general support for Metro to convene a conversation about opportunities," she wrote in her memo.
Her memo also discussed several challenges to preserving and building more affordable housing, both inside and outside of the city. Portland leaders have much more experience with affordable housing than those in most of the rest of the region, and even persuaded voters to approve a first-ever $258.4 million affordable housing bond last November. But land and development costs are more expensive in Portland. Less costly locations are not likely to be as close to jobs and transit, increasing travel costs and congestion. And, regardless of where they are built, the most affordable units require the largest subsidies, meaning fewer of them can be built for the same amount of public money.
At the end of the session, the council authorized Metro staff to discuss the proposals with the Metro Policy Advisory Committee, which includes representatives from local governments in Metro's jurisdiction, on Sept. 13. The council also agreed that each councilor should begin discussing the proposals with local elected officials in their districts to help create consensus for moving forward, especially since legislative approval will likely be necessary at some point.
You can read the memo at tinyurl.com/yd3sy9ur.