Transcript
Automatically generated transcript. It may contain errors and includes testimony in languages other than English that is not individually marked up for assistive technology.
Candace Avalos
Okay, good afternoon.
I will call the meeting of the Housing and Permitting Committee to order.
It is Tuesday, May 5th at 2:01 PM.
Diego, please call the roll.
Unidentified speaker
Good afternoon.
Candace Avalos
Pirtle-Guiney.
Unidentified speaker
Present.
Mitch Green
Here.
Elana Pirtle-Guiney
Here.
Unidentified speaker
Here.
Avalos?
Candace Avalos
Present.
Unidentified speaker
And I see Councilor Pirtle-Guiney.
Tiffany Koyama Lane
I'm here.
Candace Avalos
Okay, Claire, can you please read the statement of conduct?
Keelan McClymont
Good afternoon and welcome to the meeting of the Housing and Permitting Committee.
To testify before this committee in person or virtually, you must sign up in advance on the committee agenda at www.portland.gov/council/agenda/housingandpermittingcommittee or by calling 311.
Registration for virtual testimony closes 1 hour prior to the meeting.
In-person testifiers must sign up before the agenda item is heard.
If public testimony will be taken on an item, individuals may testify for 3 minutes unless the chair states otherwise.
Your microphone will be muted when your time is over.
The chair preserves order.
Disruptive conduct such as shouting, refusing to conclude your testimony when your time is up, or interrupting others' testimony or committee deliberations will not be allowed.
If you cause a disruption, a warning will be given.
Further disruption will result in ejection from the meeting.
Anyone who fails to leave once ejected is subject to arrest for trespass.
Additionally, the committee may take a short recess and reconvene virtually.
Your testimony should address the matter being considered.
When testifying, Please state your name for the record.
If you are a lobbyist, identify the organization you represent.
And finally, virtual testifiers should unmute themselves when the clerk calls your name.
Thank you.
Candace Avalos
Thank you, Claire.
We have 4 items on our agenda today.
First, we will have some time for public comments on housing and permitting issues of concern or interest.
Then we will have 2 executive items, an emergency ordinance from the Housing Bureau on a property conveyance and Portland Permitting and Development's updated fee schedule.
And for the second half of the meeting, we will have a panel discussion with the affordable housing providers on the current conditions of our affordable housing system.
We'll take a quick break before the panel as well.
Um, Diego, please read the first item.
Unidentified speaker
Item 1, housing and permitting community feedback.
Candace Avalos
All right, so we are now going to hear from community members on their concerns, ideas, or feedback regarding housing and permitting issues.
Each testifier will have 3 minutes.
Diego, please call up the first person.
Unidentified speaker
We have 3 individuals signed up.
First, Andrew Mendenhall, MD, Molly Hogan, Benjamin Gilbert.
And you're welcome to begin when you're ready, once you're at the dais.
Candace Avalos
Yeah.
Thank you.
Go ahead.
Loretta Smith
Good afternoon, Chair Avalos, Vice Chair Greene, members of the committee.
Thanks for the time today to talk about the affordable housing challenge that is thank you.
Thank you, Mayor.
Thank you, Councilor Smith, for the introduction.
I'm Dr. Andy Methenhall.
I serve as the executive director and CEO of Central City Concern.
And in Central— at Central City Concern in 2025, we provided housing to more than 4,500 people across a portfolio that is 2,400-plus units in size.
We also provided healthcare to almost 12,000 folks during that time.
And more than two-thirds of the folks that we are housing and providing healthcare services to are just a month ago, I was here speaking to you about the destabilization that is being experienced by not just Central City Concern, but many other deeply affordable and affordable housing providers.
You're gonna hear from many others today.
So I'm privileged to be able to speak first today, at least in this segment.
And we are very grateful at Central City Concern for the $8.8 million that was allocated for stabilization.
Unidentified speaker
But I wanna point out that the need is much greater than that.
Elana Pirtle-Guiney
Thank you.
Loretta Smith
Network for Oregon Affordable Housing has published an assessment in early 2025 that the Portland region needs over $200 million in just the metro region alone for stabilization of affordable housing and affordable housing providers.
And this is because of the inflationary costs that are associated with doing this work.
And those inflationary pressures have very much pressed beyond any individual nonprofit or affordable housing provider's ability to fundraise and/or address gaps on a grant-by-grant basis.
It's important for us to be thinking about how do we fully sustain and meaningfully sustain affordable housing across the industry.
Since the pandemic, costs for staffing at Central City Concern for our workforce, insurance, security needs related to behavioral health acuity that's going untreated in these environments, growing healthcare and case management needs, as well as construction and maintenance on many other older buildings, have outpaced the growth of public funding, and that's very much why I'm here.
It's important to know that the staff that work in these environments are truly the unsung heroes.
I get to be a leader.
I'm privileged to be a leader and a spokesperson, and those staff are doing their best to connect tenants with the right services.
But unfortunately, far too often, Councilor Smith.
Those services don't have a lot of options, and that leads to a lot of the challenges that place people at risk for reentry into homelessness.
One-time funding has become overly commonplace, but it is not a structural response, which is very much what we're asking to be elevated today.
We're asking for a structural preservation strategy to be a priority of interest for the committee, if you're open to that, we're grateful.
And really thinking about long-term investment as a core strategy for preservation, in particular for the 0 to 30% deeply affordable housing continuum within our region.
Thank you very much.
Thank you.
Hello, Chair Avalos, Vice Chair Green, and committee members.
Thank you for the opportunity to provide public comment today.
My name is Molly Hogan, and I'm with the Welcome Home Coalition Housing Justice Alliance in the Portland Metro.
I want to thank Councilor Avalos and Councilor Green for both responding to our Finding Home petition signed by over 2,000 people that we brought to all council offices in December 2025.
The petition asked that the city fund eviction prevention to stop the flood of families and individuals losing their housing every month.
It also asked that the city use more public funds to purchase existing apartment buildings and hotels from the private sector and and convert them to non-market housing to make more truly affordable apartments.
The ordinance Council passed on April 15th has funding for both these solutions, so thank you both again for your leadership.
That said, I'm here today to make sure you all hear that the way you ensure the next crucial step— getting the money into real-world action— is essential if you hope to earn back trust from a very disillusioned public.
Community members and organizations getting requests for housing help have been asking me how they can access the funds the city passed.
I have no answer for them.
Please use your positional power to ensure that the Portland Housing Bureau either use its existing infrastructure from COVID times or send the money to Multnomah County.
Both already are systems that are set up to get rent assistance funds out and into orgs working directly with households.
There is no need to wait another 5 minutes— 5 minutes, no, 5 months to help people stay and get housed.
I also want to uplift some of the recommendations from our Finding Home report that came from input of over 600 people experiencing homelessness in the Portland Metro that we released last October.
These are related to system experience of transitioning from homelessness to housing.
Number 1, streamline the housing access process, simplify eligibility requirements, and use universal intake forms across all 3 counties and organizations.
Create a publicly available centralized single list of available non-market and below-market rate housing that's updated regularly.
Universal lease language required for publicly funded housing providers— same lease language for everybody, simplified.
We know that people need support after transitioning to housing after homelessness.
And when you listen to people who have recently made the transition, folks often talk about the loneliness of being in a studio apartment and living next door to strangers that they feel like is judging them.
The following are some creative and logical ideas people have to address the issues that affordable housing providers like Central City and their tenants are experiencing.
One, when clearing encampments, social workers should identify if there are residents of the encampment who would like to stay neighbors.
And house them on a floor together in an apartment building.
2, Make sure public funding supports non-market housing providers to be able to hire multiple onsite staff, onsite staff to coordinate social activities and connect residents to services.
3, Make sure public funding supports non-police responders that can show up at apartment buildings, not just on the street, to assist in conflict and mental health crisis.
Community safety increases with more social cohesion in apartment complexes, and neighbors feel better equipped to help neighbors in crisis if they have reliable professionals professionals to call upon.
So at the end of the day, housing alone is not going to cure all society's crises that our society has created, but it is an essential human need to create safety and better health and to allow someone the breathing room to concentrate on thriving instead of surviving.
Thank you.
Candace Avalos
Thank you.
Unidentified speaker
Hello, committee members.
My name is Benjamin Gilbert, and I'm a volunteer lobbyist for the Portland Democratic Socialists of America.
And while I am a familiar face, I apologize that I'm not wearing my specialist interest t-shirt.
In a historic move, the Portland City Council created and capitalized a social housing revolving loan fund.
Please protect this money.
It is small and should be expanded, not dipped into as a funding source.
Furthermore, we need a renters' bill of rights.
Costs for tenants are out of control, and the number one reason why people are ending on the street— ending up on the street is because they're evicted.
Thank you for your work.
Thank you for your time.
That concludes testimony.
Candace Avalos
Thank you 3 for being here and sharing your perspective.
Um, if you have any follow-up materials, please do send those over.
Okay, um, Diego, can you please read the next item?
Item 2, authorize conveyance of city-owned real property to Habitat for Humanity Portland/Metro East, all right, so next we're going to move into the True North Habitat Conveyance Ordinance.
This item authorizes the city to transfer property to support the development of permanently affordable homeownership opportunities.
It's an important piece of our broader strategy to expand access to homeownership, especially for first-time buyers and communities historically excluded from the market.
I also want to note that this is a time-sensitive item tied to the approval of the development agreement.
So timely action is critical to keep the project on track.
The project is being advanced in partnership with Habitat for Humanity with a focus on long-term affordability and stability for families.
And we're going to hear today about the site, the development plan, and the overall impact.
So I will go ahead and turn it over to staff for the presentation.
Thank you for being here.
Unidentified speaker
Thank you, Chair Avalos, Vice Chair Green, councilors.
Michael Bonaccor, interim director for the Portland Housing Bureau.
It's a pleasure to be here today to tell you about the project.
True North, which is a project that Habitat for Humanity Portland Region will develop as a new affordable homeownership development in the University Park neighborhood of North Portland.
The development will be on a 3-acre site currently owned by the city, which will be transferred at financial closing.
The proposed transfer of city-owned land will deliver 50 affordable homeownership units, 100% of which will be family-sized.
Second.
We want to thank Habitat for being here today and for their partnership in developing much-needed affordable homeownership opportunities with us, with Metro, and other funders.
So the purpose of this ordinance, under the new form of government, the city administrator is authorized to approve Portland Housing Bureau financing and delegate authority to the PHB director to execute PHB financing documents.
However, property dispositions require an ordinance and approval of City Council to authorize the city administrator to delegate authority to the PHB director to execute those disposition agreements.
And that's why we're here today.
The purpose is for you to authorize the transfer of the 3-acre parcel currently owned by PHB to Habitat for the construction of True North.
A bit of background.
In 2019, the Portland Housing Bureau purchased a 3-acre parcel in North Portland from the Portland Water Bureau to support the development of new affordable homeownership opportunities.
PHB also sought to meet the North Northeast Neighborhood Housing Strategy to acquire land for permanently affordable housing and address the community's strong desire to preserve property within the interstate corridor urban renewal area for the development of affordable housing.
In 2022, we made the land available as part of a notice of funding availability and paired the land with Metro Housing Bond and Interstate Corridor Urban Renewal Tax Increment Financing funds.
PHB, along with a selection committee of community members, selected Habitat's proposal for True North.
PHB and Habitat executed an award letter conditionally awarding Metro Housing Bond and ICRA funds TIF funds in addition to the transfer of the site.
In June 2025, Portland Housing Bureau's, uh, Housing Investment Committee approved financing of up to just over $8 million and the transfer of the site to Habitat for the purchases of constructing True North.
Uh, True North will be located in the University Park neighborhood of North Portland, and Habitat will partner with Proud Ground, a local nonprofit community land trust, who will provide long-term program stewardship, which will include homebuyer education and monitoring homebuyer eligibility and home sale affordability.
The project will be 100% family-sized units with all units restricted to North-Northeast Preference Policy households at initial sale.
Habitat will enter into a regulatory agreement with PHB in accordance with city policies to maintain affordability for 60 years.
Next slide.
So at initial sale, 25 units will be affordable to households earning up to 60% of area median income, which is about $74,460 for a family of 4.
25 Units will be affordable to households earning up to 80% of area median income, which is around $99,000 for a family of 4.
After initial sale, all homes will be regulated at 80% AMI, So PHB will regulate the property for 60 years, but an affordability covenant will be recorded on each home, which will guarantee affordability in perpetuity.
The total units will include 20 2-bedroom, 19 3-bedroom, and 11 4-bedroom units.
Amenities and timeline.
Amenities will include 50 off-street parking spaces, 3 shared outdoor common areas, as well as a small— as well as small landscaped areas off for each unit and centrally located walkway that connects to Peninsula Crossing Trail.
The project is pursuing Earth Advantage Net Zero Ready certification and will be solar ready.
Some specific features include high-efficiency heat pumps for heating and cooling, WaterSense plumbing fixtures, and Energy Star appliances.
Construction will start this June, and the first phase of homes are projected to begin selling in 2028.
Thank you.
Construction is scheduled to be fully completed in 2029.
So our request to all of you is to approve the conveyance of city-owned property to Habitat for Humanity Portland Region and to authorize the city administrator to execute a disposition and development agreement and any other documents as may be required to convey the property to Habitat, subject to the approval as to form of such documents by the city attorney's office.
Second.
So with that, I will stop probably having stolen all of Steve's talking points and turn it over to him.
Mostly.
Chair Avalos, Vice Chair Green, members of the committee, thank you for your service to our city and for your support of affordable housing and affordable homeownership.
I'm Steve Messinetti, President and CEO of Habitat for Humanity Portland Region, and I've been— had the privilege of serving in this role for about 22 years.
During which we've built about 500 homes for over 2,000 people in our region, with a majority of those being sold to households under 60% AMI, which I'll highlight a little bit more.
We were thrilled a couple years ago when we were selected to be the developers for the Cary Boulevard site that later became known as True North.
This will be our 3rd project in partnership with the city through the the first 2 were completed and sold between 2020 and 2023.
41 Of the 42 families who've purchased those homes are still in their homes successfully.
One family decided to move out of state, so also a success.
As Michael shared, we are building 50 homes on this site, all family-sized homes.
We expect over 190 people to be living in this community when it's fully done.
2 Of the homes will be fully ADA-accessible single-story homes, which is a need in our community, and many of the other homes will also be visitable.
We'll also have 52 parking spaces in the community, including 2 accessible spaces.
And I think what's maybe most exciting about this for me is, is how this is a coming together of public and private at the public level, in addition to the city through TIF and Metro bond funds, we have a large grant from the state of Oregon, Oregon Housing Community Services LIFT funds of $6.7 million, and through Senator Merkley and Wyden, appropriations of $1 million towards the project.
And all of those resources come together combined with private donations and support from OnPoint Credit Union, our Bank for the project, which will provide not only financing at below market but also financing to the buyers at below market with their mortgages, allow us to serve lower-income households.
The average homebuyer of our homes that we're building right now have an income of under $58,000 a year.
As was shared, our goal is to have at least half of these homes sold to households under 60% AMI, and I think you know what that means folks at that income level are much more at risk of displacement.
They're typically paying more than 50% of their income to afford rent in our community and are experiencing all of the other challenges of being rent burdened, including frequent moves and not really having enough for other basic life necessities.
What that also means is that our target of serving communities of color are also more easy to meet when we're serving serving a majority of lower-income households, which is what we've been able to see in terms of over, over our history of serving more than 70% of households of color.
Finally, I just would share that we've already gone through an extensive community engagement process on this project.
We engaged Camille Trummer from Interplay to do a community engagement which ended in both the naming of the thank you.
So we had a very small pilot project, but we had over 200 participants, mostly through folks who've applied to the preference policy.
84% were African American households, give input, which helped to define the design of the site.
I think I'll close there and entertain questions.
Thank you very much.
Candace Avalos
Thank you very much for the presentation.
So Colleagues, any questions?
Before, as people get in the queue, I'll just say thank you.
I think this is a really great opportunity to really plus up our homeownership opportunities in the city.
So I'm grateful that that's part of our portfolio.
So thanks for that work.
We've got Vice Chair Green in the queue.
Go ahead.
Mitch Green
Thank you, Chair Avalos.
I'm actually going to defer to the councilor from District 2.
To go first?
Elana Pirtle-Guiney
Apologies, I'm not in the queue for questions, just for when we get to the opportunity to talk about this project.
Candace Avalos
Okay, great.
Mitch Green
Then I'll proceed.
I just have a question.
So just based on the background, PHP purchased the site in 2019.
I know that you were not the director at the time, but I'm sure there's some staff here.
Was this contemplated, was this transaction contemplated as part of a sort of like proto land banking strategy to support specifically this type of thing, or was it sort of a convenience purchase, or were you working with Proud Ground all the way back then?
I'm just curious to understand a little bit more about how we got to here and how that connects to our kind of future thinking on how land banking supports stuff like this.
Unidentified speaker
Sure.
Well, without the benefit of full institutional knowledge, as you acknowledged, Councilor, I'll do my best.
Kara, do you feel like you have this history as well if I mess it up?
Candace Avalos
Mm-hmm.
Unidentified speaker
Okay, great.
So I believe that the intention when this was purchased was for— with the intention that it would be for homeownership.
I don't believe any specific partners were identified because there would be a solicitation process.
And I think the other thing that this touches on from a strategic perspective, as I mentioned earlier, is that this was a purchase, I believe, from the Portland Water Bureau.
So, you know, I know there's interest in understanding what sorts of public lands are available, both from the city and other, potentially other jurisdictions, as we look to develop a land banking strategy.
So I feel like this is an example of some early leadership that could be looked to around some of what we're contemplating moving forward.
Is there anything I missed or misrepresented?
Elana Pirtle-Guiney
Thank you.
My name is Cara Hamilton.
I think also, you spoke to earlier that the goal was to address some of the goals of the North Northeast Housing Strategy and to preserve land to be permanently affordable for homeownership.
Yes.
Mitch Green
Yeah, thank you.
So, so it does seem like this was sort of an early recognition that if you want to preserve affordability, you need to kind of make hay while the sun shines, take advantage of opportunities to purchase, recognizing that in the future prices almost always rise.
They're not— we're not making new land.
Right.
So kudos to the foresight there.
On a technical basis, I'm curious, you know, obviously there's no property tax for this, but I'm curious what the sort of real market value of this transaction would be and how that kind of plays into the capital stack.
And obviously that's a big part of how you get to the affordability metrics you are there.
I see on the Portland Maps Online there's an exemption of 5.
$4 Million for 2025, that seems large.
It was 9— it was almost $1 million a year prior to that.
So just kind of trying to get a sense from a capital stack financing piece, how much of this makes a difference in the total final cost?
And it's okay if you don't have an answer right now.
Loretta Smith
No, that's okay.
Unidentified speaker
There was the, uh, uh, staff did a great job of anticipating some questions, so I'll answer I'll provide what I have here and see if that gets fully at what you're asking, Councilor.
So the Water Bureau and PHB agreed to a transfer price of $3.35 million, which was based on appraisal done in 2017.
The actual amount PHB paid the Water Bureau at the time of transfer was $138,400.
$2,400,000, which was the value of the asset that the Water Bureau had in their records at the time of transfers so that both bureaus' books were balanced.
The current appraised value in December of 2025 was appraised at $2.8 million.
Mitch Green
Okay, that's very helpful.
So that's about $40,000 per unit that you would've otherwise had to come up with for your capital stack that you don't have to.
In this case.
All right, uh, that's it for now.
I'm just really grateful to see this coming here.
I think this is a step in the right direction for, um, our— we've had a lot of conversations about homeownership opportunities in the city of Portland.
So, um, thanks.
Looking forward to the discussion and debate.
Candace Avalos
Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
And are you wanting to do full discussion now, or—.
Candace Avalos
Oh, and is that public testimony?
And I was about to say, and I forgot to there is no public testimony, so we can go ahead into questions and discussion.
Elana Pirtle-Guiney
Perfect.
Um, colleagues, as you may have picked up on, I'm often very skeptical of us disposing of property, and in this case, I am so very excited that we are disposing of this property that I signed on as a co-sponsor.
Um, we've talked a lot about how to help stabilize families and how to ensure that families can afford a place to live in the long run.
And homeownership is one of the ways that we can do that while also helping families build wealth.
And the idea that we can help families who are earning under $60,000 a year have the choice, have the option of homeownership, is an incredible one.
The fact that every single every single one of these homes, every single one of these, of these homes is built for a family.
Not just 2 bedrooms where you're squeezing your kids into sharing a room, but up to 4 bedrooms for many of these homes is incredible.
The fact that we're looking at not just 1 or 2 of those larger units, but a quarter of the units almost on the property as those 4-bedroom houses and pretty evenly split between 2 and 3 bedrooms for the— for the others is incredible.
And I so appreciate that this is being done through the North Northeast Preference Policy, a policy that we hear all too often housing providers struggle with, and that Habitat for Humanity has said over and over again we will be a part of.
What we have before us today is a property that the city has done a lot of different things with over the years.
I had the opportunity to tour this space last year and learn more about the project, learn more about what neighbors think about the project.
This is a space that was for a short time one of our, one of our shelter villages.
This is the space where the Portland Goats were located.
Until recently, and it was serving as a productive space for our city while we waited for this project to be ready, knowing that the end goal here really was to provide housing opportunities for more Portlanders.
And I think about the kids who are going to get to go through— I believe this is in the Aster K-8 catch area.
Thank you.
And who are going to get to be in that school for their entire 9 years of education there because their family will own their home and have that stability.
And the benefit that that provides to those families, to that school community, to the community at large.
And so I, I wanted to jump in the queue first to let you all know that as a District 2 representative, I'm very supportive of this project.
When I got the opportunity to tour the site previously, we heard about neighbors knowing this was coming, and generally there's always questions when there's development, but generally feeling good about the project, and I hope that it can earn all of your support today as well.
Thank you.
Candace Avalos
Councilor Koyama Lane.
Tiffany Koyama Lane
Thank you, Chair.
This is so exciting.
I know this is a project that I— it's been talked about all over.
I heard people in Seattle talking about it, um, as a really great example for local governments partnering with community land trusts and using land banking as a strategy.
Um, so very, very exciting.
Um, I'm wondering how many other Is this— how many times have we done something like this?
And do we have other things in the works at the city level?
Unidentified speaker
Sure.
In terms of how many times we've done this—.
Tiffany Koyama Lane
How many times we've done something like this where we're contributing land like this for homes and land banking in this way?
Unidentified speaker
Yeah, yeah.
Well, maybe I'll start with the second question, which I'm more sure of, which is that we currently have solicitation out with a property in the Mount Tabor area where we are hopeful to see a similar kind of project like this.
So we are prioritizing homeownership for that parcel of land.
So it is something we want to, you know, continue to see as part of our strategy.
I know Steve has said this is the third.
Candace Avalos
Yes.
Unidentified speaker
I guess I would add, this is the 3rd project in partnership with the city for— through the North Northeast Preference Policy with TIF funds.
There's over a dozen projects that we've done in partnership with the city.
We have a 50-home site that also has Metro bus Bond stops.
We have a 50-unit project that also has Metro bus stops.
Funds through the city in Southwest Portland right now, but that this is the only— that only one that has the land contributed.
The previous projects had the funding from the city, but we purchased the land, or in many cases actually received donations of land through churches.
Tiffany Koyama Lane
Oh, neat.
And the one in Tabor, is that one similarly where we'd be providing the land or providing funds for purchasing the land?
Unidentified speaker
Both.
Elana Pirtle-Guiney
Land?
Unidentified speaker
Yes, both.
There will be both funding and land.
And as we find ourselves sort of in this interim period where we have not yet adopted the social housing study, the findings from that, we are thinking about ways that we can start to bring in some of those elements.
In the meantime.
And so there is strong consideration to depart from what has been our most recent model of awarding the land fully to a development versus retaining ownership.
So I think when it comes to multifamily housing, you know, we're going to look more at retaining that public ownership on the, on the on the property.
And then in the case of homeownership, look to more of a community land trust model.
So again, that ownership is retained sort of in the public good.
Tiffany Koyama Lane
Thank you.
And you mentioned in the past, like, a church has donated land.
Have we had conversations around school districts doing that ever?
Unidentified speaker
Hmm, we've talked a lot about it.
Yeah, we haven't seen it happen yet.
Tiffany Koyama Lane
Seems like there could be more conversation, maybe some opportunity there.
Loretta Smith
Yes.
Unidentified speaker
Great.
Candace Avalos
All right, Councilor Novick.
Steve Novick
Um, I actually don't have anything to add about this project.
It sounds great, but I wanted to take this opportunity to apologize again to Steve for being a lousy fundraiser when I was on the Habitat board.
Candace Avalos
It's not accepted.
That's right.
Um, Councilor Green.
Mitch Green
Thank you, Chair Avalos.
Obviously, I'm going to support this.
I think this is great.
I'm going to echo what I just heard from Councilor Koyama Lane, trying to articulate how this connects with our broader CLT strategy.
I do have a question though.
So can you walk me through how the sort of equity piece works?
If this is under a regulatory agreement for 60-year affordability, how does that work when someone decides to sort of move on?
They don't want to live there anymore, they sell out their piece.
I'm a little bit dumb on that question, so if you could help me out.
Unidentified speaker
Want to take that?
Sure.
So yeah, so this is sold through a land trust model.
These will be condominium ownership, which makes it a little bit more confusing from a legal perspective, but the same resale restriction applies.
And these will not only be affordable for 60 years, but really in perpetuity.
So that's our standard model.
Of course, That's right.
That meets the 60 years and beyond.
The way that essentially gets structured is that the original buyer is able to resell the house at the equivalent of a 2% appreciation, if you will, share every year.
So if the house was purchased at $200,000 and they wanted to sell it after 1 year, they could sell it for $204,000.
And it's just that simple math.
2% Per year is the sharing formula.
They of course also get all of the equity they pay into that house, which actually is higher than typical because they have lower taxes because of the land trust model.
They have a lower interest rate because we purchased down the interest rate.
So most of their principal is going to pay down their mortgage, which is earned equity as well.
Mitch Green
Thank you.
I, I, I, I think I was like 80% there.
Now I'm, uh, now I'm 100% there.
That's really important for me to understand and for folks looking along.
As we talk more broadly about affordability, or I should say homeownership in the context of affordability, we only have so many dollars to go around.
And this sort of model, I think, allows us to scale the primary benefits of ownership to more people.
And so kudos, kudos on bringing it and partnering up with the administration on this.
I'm going to support this.
And, um, yeah, I think I'm the only one standing between a vote on this, so I'll shut up.
Tiffany Koyama Lane
Great.
Candace Avalos
Well then, I— unless there are no other folks, I'd like to entertain a motion to move the emergency ordinance document number 2026-151 to the full council with a recommendation to pass.
Elana Pirtle-Guiney
So moved.
Candace Avalos
Moved by Councilor Pirtle-Guiney.
Tiffany Koyama Lane
Second.
Candace Avalos
Seconded by Councilor Koyama Lane.
Any further discussion?
Okay, Diego, please call the roll.
Unidentified speaker
Pirtle-Guiney?
Elana Pirtle-Guiney
Aye.
Unidentified speaker
Koyama Lane?
Tiffany Koyama Lane
Aye.
Unidentified speaker
Novick?
Steve Novick
Aye.
Unidentified speaker
Greene?
Mitch Green
Aye.
Unidentified speaker
Avalos?
Candace Avalos
Aye.
Unidentified speaker
With 5 ayes, the motion carries, and the ordinance document number 2026-151 moves to the full council with a recommendation to pass.
Candace Avalos
Thank you so much for being here.
Cannot wait to see people moving in and enjoying this new land.
Take care, have a good day.
Diego, please call the next item.
Unidentified speaker
Item 3, amend Portland permitting and development fee schedules to improve cost recovery to ensure an adequate level of service.
Candace Avalos
All right, so we are going to, uh, move to talk about the FY26-27 PP&D fee change ordinance.
So this item updates the fee schedule for permitting and development to align with the mayor's proposed budget.
These updates are necessary to ensure the bureau can continue to provide core services and keep up with the cost of operations.
I also want to flag that this is a time-sensitive item.
These fees are already assumed in the proposed budget, so approval is needed to keep that budget whole and avoid service impacts.
We're going to hear more from staff about the specific changes, the rationale behind them, and how they impact customers and operations.
So I will go ahead and turn it over to staff for the presentation.
Mitch Green
Thank you, Chair, Vice Chair.
Unidentified speaker
Good afternoon, committee.
My name is Don Oliveira, for the record.
Thank you for the opportunity to present Portland Permitting Development's proposed fee schedule.
I'm joined by Director Arkoosh, who will walk through the proposed fee changes, what influenced the need to— for those increases, and how those fees stack up to other localities.
As the front door of all development in Portland, it is important that we maintain services at levels that meet the needs of our current demand and also do not hinder our ability to respond when production inevitably kicks back up.
Fee cost is not the most significant financial impact permitting bureaus have on the cost of getting things built in our city.
It's time.
As this committee contemplates adopting the fee schedule, please note that we balanced fee increase with the alternatives of layoffs, which would have an impact on service delivery.
We looked at different scenarios but ultimately came proposed Uh, propose— excuse me— a fee schedule that reflects that balance of maintaining costs that are measurable and manageable for our small businesses, our home builders, our communities that access the services, but also ensure that we have the people there to deliver timely permit reviews.
Last thing I just want to share, just for the public's notification, this process is also on the timeline for the budget, but we have notification requirements for the state of Oregon.
Okay.
So we're kind of following that pathway as we delta back into the budget process, which is why we're here in a distinct moment in time.
But with that, I'll hand it over to Director Kooch for the presentation.
Thank you.
Good afternoon, Council.
My name is Eric Kooch.
I'm the Director of Portland Permitting and Development.
Today we're here to walk through our proposed fee adjustments and more importantly, why they are necessary to maintain the level of service our customers and this Council expects.
This proposal is not about expanding services.
It is about maintaining predictable, timely permitting in a challenging economic environment.
Next slide, please.
PP&D operates very differently than most city—.
Do you have any suggestions?
We have technical pop at this Huh?
No, there you go.
Mitch Green
I guess—.
Unidentified speaker
Sorry about that.
PP&D operates very differently than most city bureaus.
About 94% of our ongoing funding comes directly from fees and charges for services.
Only about 2% comes from the general fund, and about 4% is supported through PISA for tree permitting work.
What that means, our financial health is directly tied to the construction market and the construction market is inherently volatile.
Over the past several years, we've seen a significant shift in that market.
Construction valuations declined during the pandemic and have not fully recovered.
That is being driven by a combination of factors: high interest rates, low investor confidence, declining property values, and broader uncertainty in the financial markets.
There's also a continued perception challenge around building in Portland that we cannot ignore.
One of the most important dynamics to understand is that our revenue is heavily dependent on large, high-value projects because our fees are valuation-based.
As those larger projects have slowed down, we've seen a disproportionate impact on revenue.
At the same time, the workload coming into the bureau has not declined at the same rate.
We're continuing to see smaller, lower-value projects come in, but those projects generate less revenue and often require a similar level of staff time to review.
So what that creates is a structural imbalance.
Our workload remains relatively steady while our revenue declines.
To manage through that, the Bureau has relied on reserves to maintain service levels during this downturn.
Even with staffing reductions through layoffs, retirements, and attrition, we've continued to draw on those reserves in order to keep services moving and avoid major impacts to our customers.
But that approach— No, go back to this.
Mitch Green
Last slide.
Unidentified speaker
But that approach is not sustainable long-term.
Additional staffing reductions would have a direct noticeable impact on permitting timelines and service delivery.
And that's really the core issue this proposal is trying to address.
How do we maintain service levels in a market that is producing less revenue?
Next slide, please.
Building on that, the next question is, what do we expect moving forward?
The reality is that the construction market is highly volatile and very difficult to predict.
That makes financial planning for a bureau like ours especially challenging because our revenue is directly tied to that activity.
To address that, we go through a very rigorous forecasting process each year.
One of the key components of that process is our Financial Advisory Committee.
This is a group made up of local economists and development industry experts who provide independent insight into where the market is headed over the next 1 to 5 years.
We use their input to inform our projections, and they also review and validate our assumptions around both revenue this year, the primary focus of those discussions was how long the current downturn is likely to last.
The guidance we received was clear: we should plan conservatively and operate under the assumption that current conditions will continue rather than expecting a near-term rebound.
In other words, we should not build a budget that depends on recovery until we actually see that in the data.
And that's exactly what this proposal reflects.
Their proposed fee adjustments are intended to allow the Bureau to maintain current service levels under those conditions rather than taking on additional risk based on uncertain projections.
Next slide, please.
I also want to take a moment to ground this conversation on what these fees actually support.
At PP&D, fees are not just revenue.
They directly fund the services that our staff provide to the public every day.
Nearly all the work we do is supported through permit fees and charges for service.
That includes everything from early assistance meetings, plan review, to inspections, to enforcement and customer support.
So when we talk about fees, we are really talking about the capacity of our staff to deliver these services.
Our teams are working directly with homeowners, contractors, small business owners, and developers, helping them navigate the process, answering questions, reviewing plans for code compliance, and ensuring that construction is safe and meets all applicable codes and standards.
These are core public services that ensure life safety, structural integrity, and overall livability in Portland.
And importantly, these services are not optional.
They are required for development to move forward.
So when staffing levels are reduced, the impact is immediate.
It means longer review times, slower permitting, and increased uncertainty for our customers.
And that ultimately translates into higher costs and delays for the very people we're trying to serve.
And that is why maintaining staffing levels and the service capacity behind them is so critical.
Next slide, please.
I also want to address what's driving these cost increases.
The majority of these are not discretionary.
They're ongoing structural cost pressures that we face every year.
These include things like mandatory PERS contribution increases, rising health and benefit costs, and increases tied to labor agreements and staff compensation.
In addition to that, we are seeing increases in internal city service costs.
Things like rent, technology support, and insurance, as well as broader inflation in materials and services.
So even in a flat or declining market, our costs continue to rise.
The other major factor is the growing complexity of the regulatory environment.
As regulations become more complex, it requires more staff time both to review permits and to work directly with customers to help them understand and navigate those requirements.
That means each project takes more time and effort to process than it did in the past.
So when you combine rising structural costs with increased time per review, it creates additional pressure on the system that we have to account for.
And again, because we are primarily fee-supported, those costs must be reflected in our fee structure in order to maintain service levels.
Mitch Green
Next slide.
Unidentified speaker
I also want to provide some context on how we've approached fee changes over time.
As you can see from this slide, for a number of years, from roughly 2013 through 2019, PP&D did not propose fee increases for most programs, and in one year we actually reduced fees.
That period coincided with a very strong construction market.
Activity levels were high and the bureau was able to achieve full cost recovery and build reserves without increasing fees.
At that time, we were very mindful of council's desire to keep costs down for customers, and we intentionally chose not to increase fees when it was not however, during that same period, our underlying costs continued to rise year over year.
As the market began to slow and permit activity declined, the bureau's revenue dropped, but those costs remained.
That's what led us to begin relying on reserves to maintain our current service levels.
We've been drawing on those reserves significantly, especially in the current year, in order to avoid major impacts to customers and our permitting timelines.
What you're seeing now is a more gradual and measured approach to bringing fees back in line with the actual costs of providing services.
That is not a sudden shift, it is a necessary correction for several years of holding fees flat during stronger market conditions.
Next slide.
I also want to provide some context on how our fees compare to other jurisdictions.
While no comparison is perfect, this gives a fair and consistent snapshot of where Portland stands.
To keep this consistent, we're looking specifically at building permit and plan review fees.
Fees, since those are the most comparable across jurisdictions and are consistently charged on development projects.
The example shown here is a new single-family residence with a valuation of approximately $275,000.
As you can see, Portland falls well within the range of comparable jurisdictions and in several cases is actually below them.
So while we are always mindful of keeping fees as low as possible, we also have to consider the broader picture.
For most projects, predictability and permitting timelines are just as important if not more important than the fee itself when it comes to overall project feasibility.
Our goal is to strike the right balance, keeping fees reasonable while also maintaining the staffing and service levels needed to deliver timely and predictable permitting.
Elana Pirtle-Guiney
Next slide.
Unidentified speaker
Now I want to walk through the proposed fee adjustments.
Overall, most PP&D fees are proposed to increase in the range of 5 to 9%.
There are some programs where increases are higher to address specific cost recovery issues, and others where there's no increase proposed.
I'll walk through those details on the next slide.
On this slide, I want to focus on what this means at a project level.
For a typical new single-family residence, the proposed increase is approximately $1,000, moving from about $10,700 to roughly $11,700 in total PP&D fees.
While any increase is important to acknowledge, it is also important to put that into context.
Thank you.
The cost of delays caused by reduced staffing and longer permitting timelines would far exceed that increase on any individual project.
In other words, maintaining predictable and timely permitting has a much greater impact on overall project costs than this level of fee adjustment.
We also want to ensure that these fees remain accessible.
PP&D has a fee waiver program in place for low-income applicants, and we are committed to keeping the cost of obtaining a permit within reach because it is a critical part of ensuring building safety.
Thank you.
Next slide.
This slide shows the fee changes by program, and I want to walk through this at a high level rather than going line by line.
Overall, most programs are seeing a base increase of about 5%.
There are also a few programs where no increase is proposed, including the facilities permit program and cannabis licensing.
Beyond that, the higher adjustments you see here are targeted and tied to specific conditions within those programs.
For example, building and mechanical is proposed at 9%.
That program has been significantly impacted by the decline in larger, higher-value projects, but still requires the same level of staffing to support ongoing activity.
You'll also see environmental review, water review, and urban forestry at 9% because those programs are currently operating below full cost recovery.
Transportation review shows a larger increase that reflects a structural change moving away from interagency agreements and transitioning that program to be fully self-supported within PP&D.
You'll also see higher increases in areas like accessory short-term rentals and noise.
In both cases, those fees are currently well below the cost of providing the service, and these adjustments are intended to bring them back closer to cost recovery.
So overall, the approach here is balanced.
Most programs see modest increases while targeted adjustments are made where there are clear gaps between costs next slide.
This slide highlights some of the more typical fees our customers encounter to give a clearer picture of the actual dollar impact.
As I mentioned earlier, PP&D has hundreds of individual fees across many programs, so rather than showing everything, we focus here on commonly charged fees that customers are most likely to see.
The key point I want to emphasize is that while some of the percentage increases may appear higher, The actual dollar impact in many cases is relatively modest.
For example, you'll see that the accessory short-term rental application shows a 26% increase, but that equates to about $104 over a 2-year period.
You'll also see that many of the standard permitting fees like electrical, plumbing, or site review are increasing by relatively small dollar amounts, often in the range of just a few dollars to a few dozen dollars.
It's also important to note that not every fee applies to every project.
The total cost to a customer will depend on the scope and type of work being done.
So overall, while the percentages may look high, the actual dollar impact to most customers is relatively small and tied to the specific services that they use.
Next slide.
I'll close with the impacts of not moving forward with these fee adjustments.
As we've discussed, PP&D is operating in a very challenging financial environment.
Without these adjustments, the bureau would need to continue relying on reserves to maintain current service levels but those reserves are limited and cannot be sustained indefinitely.
If we do not take action, we would be forced to make significant reductions.
That would mean reduced staffing, slow— slower permitting timelines, and a decreased ability to support development activity across the city.
It would also make it much harder to recruit and retain staff when the market recovers, putting us at risk of falling behind just as demand starts to increase.
This is a scenario we need to avoid because the impacts would extend beyond the bureau.
Thank you.
Affecting customers, project timelines, and the broader economic recovery of Portland.
One way to think about this is that every 1% of revenue is roughly equivalent to 3 staff positions.
So this proposal is directly tied to maintaining the staffing and service levels needed to keep the system functioning effectively.
In closing, this proposal is about stability, ensuring we can deliver consistent, reliable permitting now and be ready when growth returns.
We believe this is a balanced and responsible approach, and we respectfully ask for your thank you so much for the presentation.
Candace Avalos
Um, we have nobody signed up for public comment, so we'll go ahead into questions and deliberations, starting with Vice Chair Green.
Mitch Green
Thank you, Chair Avalos.
Uh, thank you, Director Kooch, for, um, presenting the fee structure.
Uh, can you go back to the slide that shows where we rank to those other jurisdictions?
A question.
Yeah, perfect.
So is this net of the proposal or is this just existing prior to the proposal where we rank?
So like for instance, the $32.11 for Portland, would that be the effect after it's provided council adopted this new fee structure or is it letting us understand where we're at today before the fee increases?
Unidentified speaker
Yeah, that's an excellent question.
Let me check with my team real quick.
I'm not sure if that was done with the newer fees or with existing.
It's with our current fee structure.
Mitch Green
Okay.
You know, I think that it's a good slide because it shows that we're sort of— we're not outside the norm.
I think the one piece I'm trying to anticipate is you know, we've had a lot of development activity leave Portland and go to Vancouver, Washington.
And so just from an optics standpoint, if we adopt a fee schedule that places us at a more expensive place than Vancouver, maybe not great.
But I wanted— it looks like, Donny, it looks like you're eager to weigh in as well.
Unidentified speaker
Yeah, Councilor, thank you for the question.
I think that's one of the notes that we're trying to hit here too is, Councilmember Herbold.
It's not just the fee costs that we're dealing with.
It's the optics that the director mentioned that Vancouver is friendlier to build in.
But there is frankly a time element here where people, perception or reality, feel like they can get through permitting more quickly in Vancouver versus Portland.
But I really don't want to overstate, because I don't think we can, just the dynamic right now of getting investor dollars in for those larger institutions.
The waterfront over there looks amazing.
Those dollars are supported by investments, and there just seems to be an interest in getting things built over there right now.
And so we have to improve the optics there because we don't think the fees are going to have as material of an impact compared to that.
Mitch Green
I appreciate that, and I want to be clear, I'm going to support a fee proposal because I agree with the premise that we cannot— we can't gut our capacity And have it not be there when the rest of the market conditions change and enable development to be happening.
We need to be able to turn this fast.
The other question I had was, so it looks like you took a very sort of like directly connected cost of service approach to the fee updates, but I'm curious if your team looked at what would happen if you sort of cross-subsidized across all the permitting activity and sort of peanut buttered this around all of the work.
I'm curious if that blunts the effect on some areas.
If you didn't study that, that's okay, but I'm sort of raising it now.
Unidentified speaker
Yeah, that's an excellent question.
If it's okay, I'm going to ask my staff to—.
Mitch Green
Yeah, phone a friend.
Unidentified speaker
Good afternoon, councilors.
For the record, Elshad Hajiev, Deputy Director for PP&D.
Candace Avalos
We—.
Unidentified speaker
The bureau operates 2 distinct sets of programs.
There are state-mandated programs and there are local programs.
So the state-mandated programs are usually larger ones.
We're talking about building, mechanical, electrical, plumbing.
So these programs, the state statutes does not allow us to intermingle any funds.
Tiffany Koyama Lane
Ah, okay.
Unidentified speaker
So the expenditures and revenues are tracked separately.
They have their own buckets and they only can support the activities in those programs.
Then we have local programs like land use, site development, cannabis.
You heard Director Kooch talking about them.
Even for those, there is some in the city code that specifies that some of the funds cannot be intermingled.
I think that's a good point.
There are restrictions on the usage of those funds.
So we prepare a monthly cost recovery report that separates every single program.
That's why when Director Kooch was talking about that the fee increases, they vary across programs because different programs are doing differently and they're influenced by the construction cycle differently too.
So right now, for example, you saw that FPP, the Facilities Permit Program, that mostly not mostly.
It does the commercial remodel.
So that program is at 0% because during the downturns, the remodels are up.
People are not building as much, but they continue remodeling the existing buildings and structures.
So that's why the approach of intermingling those funds, it's not allowable at this point.
Mitch Green
That's extremely helpful, and I'm glad that you were able to answer that question.
So what I'm hearing is we're basically operating within some legal constraints to deal with a situation that we have basically drawn our reserves down to the point where we can't ignore that anymore.
We need to raise some fees to keep our functions operable so that way we can send the right signal that we need to send.
That Portland is open for business if you want to develop here.
That's the through line.
Great.
Thanks so much for this.
I'm going to support this fee schedule increase, recognizing that it is— there's some areas that are a little painful, but it's more painful to not have anyone answer the phone when you call.
Candace Avalos
Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
Thank you, Chair.
I very much understand and support the need to make sure that this bureau stays solvent and that we do so without dipping further into the reserves.
I have some questions, like my colleague, about how we're doing that and making sure that we understand and that Portlanders understand the impact as we move forward.
So did I just hear correctly that there are no fee increases for remodels?
That's correct.
Or is that just for a specific area of fees on remodels?
And in other areas, there are increases for remodels?
Unidentified speaker
That's for a specific program.
Yeah.
So, so to be clear, there are still fees for remodels, interior remodels.
So what we spoke to was just for a specific program.
Elana Pirtle-Guiney
So what do the fee increases— I know there are fees, but what do the increases look like for an individual yeah, that's a good question.
Unidentified speaker
As far as like the individual impact on a bathroom project, I wouldn't have that.
I don't know if I have that information in front of me.
Elshad, do you have that information?
We don't, but I think that we had that comparison on one of the slides.
If we're specifically talking about the bathroom, that will depend on the size of the bathroom.
It's a plumbing permit, so it will depend on the number of fixtures.
And I believe we had one of the fixtures on that slide.
I think it's—.
I can't remember what slide.
Keep going, I think.
Going.
Elana Pirtle-Guiney
Was that on slide 10?
Plumbing per fixture, an increase of $3?
Unidentified speaker
Yes.
If I could just weigh in real quick, Councilor, I think the important thing to note is that every project's different.
So even with just something like a bathroom project, it really depends on the scope of work within the bathroom, right?
Because like, you know, say like if I do some work in my restroom, maybe I keep all the electrical, but I'm only rerouting the plumbing, right?
So it really depends on the scope of work within the project itself.
It's kind of hard to answer questions like that.
Elana Pirtle-Guiney
To that end, I'm not looking for specific numbers.
What I'd like to understand and what I'd like to make sure that we have clearly available in the conversation today for Portlanders is the difference between cost increases for an individual doing a remodel project, a person looking to build an ADU on their property not for a short-term rental but for long-term rental housing for an in-law to live in, something like that.
Yes.
A developer who is developing a duplex or a quad on a single parcel of property and a large-scale developer.
And I'd like to understand if the percent increase— obviously the costs are different because we're dealing with different scales of construction here, but is the percent increase in those 4 different scenarios roughly equivalent or have you weighted this one way or another so that the percent increase hits harder on that individual doing a remodel, on the large construction project, one of the two in between?
Unidentified speaker
It would definitely hit the larger projects more, right?
Since our fees are valuation-based, the larger the project, the more in fees that you're going to be paying.
So the impact on the larger developers would be much more than your homeowner doing like a smaller remodel project or something like that.
Elana Pirtle-Guiney
Is the percent increase different?
Or is the percent increase across the board?
Unidentified speaker
Well, again, it would vary by program, right?
Because electric, it depends on the scope of work.
So it's kind of hard to answer that because again, there's so many fees within our fee schedule that it would vary on the percentage increase depending on which specific permit we're talking about and program we're talking about.
Elana Pirtle-Guiney
Let me back up here then.
I've heard very clearly over the last year, and like I said, I understand the need and my intent has been to support this, but I'm growing a little concerned right now.
I have heard over the last year that time is more important than the dollar amount for large developers.
That's very clear to me, and you repeated that as well.
Mm-hmm.
But I've also heard over the last year that individual homeowners looking to do that remodel, looking to put in that ADU, looking to build on their large oversized lot a unit behind it, sometimes struggle with the fees, that that can in fact be a barrier for that individual.
And so I'm trying to understand if we are increasing that disparity and that barrier, if those costs are up proportionally compared to everybody else, compared to inflation, but not going up proportionally more where that barrier exists.
Or if in fact we are continuing what I think you've said we do now, which is to tilt the opposite way, where we in essence subsidize the cost for those smaller projects with and I'm— what I'm looking for is an answer that is about the relative impact after these increases compared to now.
Unidentified speaker
So essentially, I guess I'm trying to understand the exact question here.
The impact is going to be between 5 to 9% increase on those projects.
So specifically for like a remodel, for a smaller project, for like a, you know, your average customer, not a larger development, would be between 5% and 9% increase.
I don't know if that answers your question.
Maybe I'm not fully understanding the question, I think is the problem.
Elana Pirtle-Guiney
So these percent increases are the same for all construction types?
Unidentified speaker
Correct.
The fee schedule that we have does not differentiate the fees are not different between, let's say, a residential project or commercial project.
Let's say if we take the building permit or building plan review, it's based on valuation.
So, and the fees, the percentages are applied consistently across different levels of valuation.
So if the value of the project is $100,000, the fee will go by 5%.
If the value of the project, $1 million, the fee will go by 10%.
So the fees are not different?
So that 5% is applied equally across all levels of— I'm not talking about one fee right now, so, but all across all of those fees.
The other thing is that traditionally lower valuation projects, a lot of times they are not at the cost recovery.
And one of the reasons why we are not right now not at the cost recovery is because the predominant use of the property is residential.
I'm not talking about the cost recovery.
Of those smaller projects coming to us and lack of the larger projects.
If you look at any jurisdiction in the United States, that there is, there is this subsidy that comes from the larger projects to subsidize smaller value projects because the goal is compliance with the code.
So that's why we actually do not charge a full cost recovery at those smaller projects.
Thank you.
And that kind of a relationship will continue.
Candace Avalos
Okay.
Elana Pirtle-Guiney
We are not trying to get closer to cost recovery on those projects.
We are maintaining that subsidy.
Unidentified speaker
We're maintaining the balance that exists right now.
Elana Pirtle-Guiney
Okay.
That's what I needed to know.
Thank you.
Unidentified speaker
But Councilor, I just want to note though, but we're— part of the reason we're in that— this dilemma we're in is because we are so dependent on the larger projects.
Elana Pirtle-Guiney
Understood.
And we're maintaining that risk.
We are maintaining that risk.
Yes.
On the slide that Councilor Green was discussing that shows our ranking with other cities, should I assume that if most of the increases we're seeing are between 5% and 9%, and some are higher, so I'm going to round up just for the sake of making sure we don't get it wrong, is it fair to assume, let's say, a 10% increase would put us then at $3,500 for the cost moving forward, and that would probably be the, the high end because I'm estimating high here, and that, that would then put us between Beaverton and Gresham, or maybe a little below that after these new fees are incorporated.
Unidentified speaker
It might.
Uh, the, the information that you see on that slide are current fees that are charged by those respective jurisdictions.
We do not know if Beaverton or Vancouver or any other jurisdiction are considering fee changes.
I assume they do because they, just like us, they are under cost pressures too.
So what you see is the current, what we charge right now, what they charge right now.
Elana Pirtle-Guiney
But if I want to compare us after this change to where they are now, because we don't know what they're changing, I would add that 5 to 9% or whatever the number is.
Unidentified speaker
That's exactly right.
Elana Pirtle-Guiney
And it would put us somewhere above Sacramento and well below— somewhere above Sacramento and below Beaverton, and where in there, we're not quite sure.
Correct.
Okay, thank you.
I appreciate the information.
Thank you, Chair.
Candace Avalos
Okay, Councilor Koyama Lane.
Unidentified speaker
Thank you.
Tiffany Koyama Lane
Thanks for this presentation.
Thanks for all of your work.
I assume that permitting is an area that if things are going smoothly, people probably don't notice much, but you get a lot of complaints if people are frustrated.
So I wanted to tell you some good news, which is that my parents recently were interacting with your office to get some permits, and they told me it was smooth and positive and there was good follow-up and clear communication.
So—.
Unidentified speaker
Fantastic.
Tiffany Koyama Lane
Wanted to share that.
Wanted to hear a little bit about the fee waiver program.
Who qualifies for that?
How does it depend on the type of permit?
Unidentified speaker
Yeah, no, actually, can you speak to the specifics of like what the qualifiers would be for— I know they apply, but I don't know if it's income-based.
So it is income-based.
It's also based on the type of the institution.
There are a couple of examples.
If it's affordable housing, if it's—.
And I'm looking at you, Colleen, since you've yeah, it's nonprofit, affordable housing, community benefit, and low income.
And then we have our empowered neighborhood empowered communities that also get reductions.
Tiffany Koyama Lane
And do they find that information just through your office?
Unidentified speaker
People, yeah, we have a website where they can apply and it has some information and then there's a, there's a form.
Tiffany Koyama Lane
Thank you.
Thinking about adequate level of service, can you remind us how many FTE are proposed to be cut in your office in the mayor's proposed budget, and if there's any also with the core realignment?
Unidentified speaker
Sure.
So with our proposed budget, we'll have 300.9 FTE, and we currently have 337.9.
So what is that?
So that's a cut of 37.
However, 6 of those positions are full and then the rest are vacant.
Tiffany Koyama Lane
So we're currently at 349, it'll go down to 337?
Unidentified speaker
No, we're currently at 337.9 and we'll be going down to 300.9.
Tiffany Koyama Lane
300.9.
Elana Pirtle-Guiney
Okay.
Unidentified speaker
And again, 6 of those positions are filled.
The rest are vacant.
Okay, 6 filled are perm trees.
Yeah, that's not this.
The mayor's proposed budget includes 2 cuts.
There are 14 FTE, 6 of them are filled positions like Director Kutch mentioned.
And then due to realignment, there are positions— the rest of the 37 minus 14, those are the positions that are moving to BTS, to procurement, and to BHR as part of the realignment.
So we're not losing those positions.
They're just moving into their core service bureaus.
Candace Avalos
Okay.
Tiffany Koyama Lane
Can anyone speak at all to how things have shifted by moving tree permitting into your department?
Has it made— how it has changed things?
How's that going?
Unidentified speaker
Yeah, it's an interesting question.
You know, I've been with the City of Portland now 4 months.
So in the 4 months I've been here, it's been going great.
I think there's a lot of opportunity for improvements, of course, but for the most part, I think it's been going well.
I think that there's been some— of course, with everything going on with the budget, right, they're, you know, the team's anxious with this upcoming budget cycle because there's going to be reductions within that team.
But other than that, I think that, you know, we're on the way to making improvements there.
But I'd be lying if I said there wasn't some anxiety within the team right now with the upcoming budget proposal.
Tiffany Koyama Lane
Okay, that's it for now.
Thank you.
Unidentified speaker
Thanks.
Candace Avalos
Councilor Novick.
Steve Novick
Thank you, Chair.
So this is a completely out-of-left-field unfair question, but I've been meaning to ask it for you for a while.
I cannot.
So every once in a while we get random things from our friends saying, hey, how can you explain this?
And I got a random thing from a friend a couple of months ago saying, so I wanted— I was trying to compare Los Angeles and Portland permitting offices and how much work they do and how many people they have.
And I like Googled it, and AI told me that Los Angeles has 450 people in their permitting department and they processed 3,300 applications last year, and Portland has 300 and they processed 648.
What's the deal?
Now, that doesn't match up at all with what you showed us about the relative fee cost in relative cities.
And maybe this is like something you've heard numerous times, or maybe it's just out of nowhere, but I just wanted to see if you had any gut reaction.
Unidentified speaker
I'm sorry, what exactly is the question?
Steve Novick
How we compare to— what this person came up with on AI is that Los Angeles had 450 permitting people that processed 3,000 permits last year, and Portland had 300 that processed 648.
So why the heck can Los Angeles do so much more with, with so much more per person?
Unidentified speaker
Councilor, that's— sorry, that sounds like that's specifically just a housing number, but the housing— the permitting development bureau processes way more permits than that number.
So, okay, we probably need to be comparing the right fruit.
Um, and kind of what Director Kooch was speaking to is a lot of the permits that they're processing are sort of TI improvement stuff, renovations.
So we're not seeing the big development.
But those numbers, I don't— we'd have to dig into where those numbers are being drawn from.
But that number is woefully short of the reality.
Steve Novick
Okay.
That sounds like a reasonable speculative answer.
Thank you.
Candace Avalos
I was like, hmm, interesting.
Thank you for the presentation.
I'll also just say a bit of good news.
I have recently interacted with the permitting department personally after my house fire and have been pleased with their speediness.
Um, so I think there's some improvements on the way, but I appreciate what you are doing here to ensure that we can continue to grow the department, make sure that we're not— that we're staffed up and ready, um, when it comes time to start getting more of those housing units built.
So, uh, any other comments?
If not, I would like to entertain a motion.
Um, there is a specific motion.
Hold on.
Entertain a motion to move the ordinance document number 2026-152 to the full council with a recommendation to pass.
Mitch Green
So moved.
Steve Novick
Second.
Candace Avalos
All right, moved by Vice Chair Green, seconded by Councilor Novick.
Any further discussion?
Seeing none, let's call the roll.
Tiffany Koyama Lane
Pirtle-Guiney.
Elana Pirtle-Guiney
I appreciate getting to the bottom of ensuring that we're not, um, changing the balance here on who is paying these fees.
Unidentified speaker
I will vote aye.
Was that an aye vote?
Yep.
Elana Pirtle-Guiney
Yes, aye.
Loretta Smith
Thank you.
Unidentified speaker
Koyama Lane.
Novick.
Aye.
Steve Novick
Uh, I should note that the same friend who forwarded me the Los Angeles question also said that he heard that permitting is I appreciated your line of questioning, Councilor, and thanks for your dialogue.
Aye.
Tiffany Koyama Lane
Aye.
Unidentified speaker
With 5 ayes, the motion carries.
The ordinance document number 2026-152 will move to the full council with a recommendation to pass.
Thank you.
Thank you.
Candace Avalos
Thank you so much for being here.
All right, committee, so we are right about on time, which is great, but we will take a quick 10-minute break for staff.
So that will bring us back at 3:27 PM.
All right, we are going to bring this meeting back to order.
Diego, can you go ahead and read the next item for us?
Unidentified speaker
Item 4, Affordable Housing Properties Panel Discussion.
Candace Avalos
All right, so I'm going to get started with some intro remarks.
While I do that, let's go ahead and have all of the panelists who are here to speak, come on up.
We've got enough chairs for all of you.
We will figure out the mic situation, but go ahead and grab a seat.
Thank you for being here.
All right, so colleagues, today's discussion is focused on the state of our affordable housing system, specifically the conditions providers, agencies, and partners are navigating right now and what that means for the people who this system is intended to serve.
We've been hearing consistent concerns across the system— staffing challenges, increasing tenant needs, safety issues, aging buildings, and real constraints on the ability to deliver and maintain high-quality affordable housing.
That includes concerns about vacancy rates in affordable housing, which we know have real implications for both access to housing and overall system performance.
I also want to acknowledge that there have been recent headlines and public conversations related to Home Forward and those concerns are real and accountability matters.
At the same time, I want to be very clear about the purpose of today's conversation, especially when we have limited time.
This is not about any one organization or individual issue.
What we're here to do today is to step back and understand the system as a whole, how it's functioning, where it's under strain, because the reality is that many of the challenges that we're hearing about, including the vacancies, are not isolated.
They're showing up across providers, across funding structures, and across the broader housing ecosystem in our country.
So today we've invited a group of partners representing different parts of that system— operations, development, finance, policy, and services— to help ground us in what they are seeing on the ground.
And so the goal is to better understand what has changed in recent years, what challenges are shared across the system, and where there may be opportunities for the city to better align policy, funding, and coordination To improve the health and sustainability of the system, and ultimately to make sure that we are focused on what matters most: whether people in our communities are able to access and stay in safe, stable housing.
With that, I want to thank all of our panelists for being here today and for the work that you're all doing in our community.
Thank you.
So before we start, I want to just talk through how we're going to structure this conversation.
We're going to begin with about 10 minutes of introductions.
Where each panelist will have about a minute or 2 to briefly describe their role and the scope of their work within Portland's affordable housing system.
And then from there, we're going to move into about 45 minutes of facilitated questions where I will guide the discussion across a few key topics.
And the goal is to cut— have a broad spread of discussion from all of our panelists.
During that portion, I'd ask that committee members hold questions to clarifying questions So that we can make sure we hear from everyone and move through the full set of questions today.
And then we're going to transition into essentially whatever is remaining in the committee.
We have about 20 minutes budgeted, but we have more time in the rest of the meeting.
So whatever we need to take up until the end of the meeting, where councilors will have the opportunity to ask follow-up questions and engage more directly with this panel.
So with that, let's move into the discussion.
Thank you again, panelists, for being here.
Thank you.
And we're going to have you each introduce your organization, the scope of the work within Portland's affordable housing system, so that that can ground the rest of our conversation.
So I'm actually going to call you by name and go from there.
So we're going to start with Michael Bonaccor representing the Portland Housing Bureau.
Unidentified speaker
Thank you, Chair Avalos.
Candace Avalos
It's a little awkward.
Unidentified speaker
Yeah.
Loretta Smith
Squeeze.
Unidentified speaker
Yeah.
Thank you.
Michael Bonaccor, interim director for the Portland Housing Bureau.
Probably worth emphasizing that point because everyone knows that I will be transitioning to the interim director role at Home Forward, but we are all sort of clearly delineating that transition.
So I'm here today specifically and solely in my role as the Portland Housing Bureau director the Housing Bureau funds affordable housing, sets housing policy for the city, supports homeownership and homeowner retention throughout the city of Portland.
As it relates to today's conversation, the Housing Bureau provides regulatory oversight and support to a portfolio of about 19,000 apartments within the city, including for thank you, Michael.
Candace Avalos
Next we'll do Ian from Home Forward.
Unidentified speaker
Thank you, Chair.
Ian Davey, Chief Operating Officer with Home Forward.
Home Forward is the housing authority serving Multnomah County.
We house thousands of tenants throughout the community.
We own over 7,000 units of affordable housing, some deeply subsidized such as public housing, some without deep subsidies, low-income tax housing tax credit, but we do provide affordable housing to all Portlandians.
Housing.
We also administer over 10,000 Housing Choice Vouchers.
Some of those are project-based, meaning they're tied to a specific unit.
Many of those are also tenant-based, meaning a tenant can reside with those either in affordable housing or in market-rate housing.
In my role as Chief Operating Officer, oversee our property management team, our asset management team on the portfolio side, oversee on the rent assistance side homeless initiatives and our Housing Choice Voucher programs, and then also oversee our legal and communications teams.
Thank you.
Candace Avalos
Next we'll have Madison from REACH CDC.
Unidentified speaker
Hi, Council Chair Avalos, Vice Chair Green.
Thank you so much for the opportunity.
My name is Madison Moskowitz and I'm Government Relations Manager for REACH Community Development.
REACH was founded in Southeast Portland in 1982 and now owns, uh, just about 2,700 homes across Portland.
Um, most of those are low-income housing tax credit regulated affordable housing, um, sort of in the, in the middle of the, um, income band.
And, uh, a lot of our residents are seniors, and all of them are low-income folks who are facing, um, barriers to economic empowerment, um, barriers to healthcare access, and the rest.
Um, and really happy to be here.
Thank you for having this conversation.
Candace Avalos
Thank you.
Next, we have Tracy from the Housing Development Center.
Unidentified speaker
Thank you, Chair Avalos.
Thank you for having me.
My name is Tracy Manning.
I am the executive director of the Housing Development Center.
We're a statewide nonprofit.
We've been around for 33 years, and we specifically work with other nonprofits, housing authorities, and local governments.
To help them build and sustain affordable housing.
And that sustain part is really what we're here for today.
We're probably best known for our development work.
We work with a lot of small rural BIPOC organizations, but really all kinds of folks all over the state.
But an executive director of HDC maybe a couple decades ago got really passionate about sustaining affordable housing and, you know, what we call asset management.
And it's—.
Thank you.
It's underfunded and under— it's not the sexy part at all, but it's really important.
So I really want to thank the committee for being willing to dig into this, the unsexy side of this work.
A couple things I want to highlight about what we've been doing more recently.
We did PHB's portfolio analysis in 2025.
We've been consulting with Metro to help them set up their asset management systems for the bond.
We recently completed training for all of OHCS's asset management and compliance staff and those management teams.
The last Oregon long session, Oregon legislative long session, they allocated specifically to address portfolio sustainability, allocated $3.3 million to be contracted between OHCS to HDC to impact urgent issues.
In property and asset management capacity, and also to do the work to figure out how to impact those causes.
And so I'm hoping we can build some partnerships there.
And I guess I just want to mention that I've personally been in the industry for 33 years, and at one point was hired by Commissioner Nick Fish to run the relatively young Portland Housing Bureau, and worked with him for a couple years, and Commissioner Saltzman for a couple of years.
Thank you.
Thank you.
Candace Avalos
Next we have Brian from Housing Oregon.
Unidentified speaker
Chair Avalos, Vice Chair Green, my name is Brian Hoop, Executive Director of Housing Oregon.
We've been around since 1993.
We're the statewide association representing about 150 member organizations, mission-driven community development corporations that build, finance, and operate affordable housing.
We represent the nonprofit affordable housing industry spectrum from homeless service providers to multifamily rental developers and homeownership organizations and a number of for-profit affiliate businesses.
About half our members are based in the Portland metro area.
Our mission is to strengthen the collective voice and capacity of mission-driven organizations that serve the needs that of low-income families and families share in need.
A commitment to housing justice.
And through our statewide network, we build the affordable housing sector by offering education, resource development, and policy advocacy.
And our Portland Metro Policy Council is our primary table where our members engage in developing policy positions, and many city, metro, and state officials often come and are in dialogue with our members on important issues.
And lastly, Lastly, it's important to remember that the mission of nonprofit housing organizations is to keep people housed, and nonprofit housing providers are eager to continue working with the city on these issues and to help find solutions.
And we know, recognize that we're not going to solve these issues, challenges on our own.
Candace Avalos
Thank you.
Next we have Elsa from Our Just Future.
Unidentified speaker
Good afternoon, Chair Avalos and Vice Chair Green.
My name is Elson Atal.
I serve as the Affordable Housing Director for Our Just Future.
I appreciate the opportunity to be here today.
At Our Just Future, our work is rooted in safe, stable, and affordable, affordable housing, and it is a fundamental foundation for thriving communities.
We focus on expanding access to affordable housing, preventing displacement, and ensuring that historically underserved residents, particularly low-income households and communities of color, have an opportunity to remain housed.
Our Just Future primarily focuses on providing services, preventing— owning and operating affordable housing, and preventing housing loss and eviction in East Multnomah.
We have approximately 900 units of affordable housing in our portfolio.
Most of the units in our portfolio are large family units comprised of 4 or 5-bedroom family-style older thank you.
We pride ourselves in primarily focusing on housing large families and families of color and providing a stable, safe place for residents that are the most vulnerable.
My role at Our Just Future is to oversee the development of our projects, to oversee the asset management of our our various communities, as well as providing resident services for, uh, the— for the, um, residents of our communities.
Our organization directly works with community members, listening to their needs and experiences and translating those into practical and equitable solutions.
Uh, I am here today to share our thoughts, uh, from our community and to work, uh, on providing solutions.
Thank you for your time and your commitment to this work.
Thank you.
Candace Avalos
And last but not least, Erica from NEA.
Unidentified speaker
Yes, uh, good afternoon, Chair Avalos and committee members.
My name is Erica Silver, and I'm the director of Housing and Stabilization Services for NEA, which is the Native American Youth and Family Center.
And we are a wraparound agency serving the urban Indigenous community we serve people from more than 380 different tribal affiliations, and a lot of our mission has to do with the success of Native youth.
But it was realized a long time ago that in order to accomplish that, housing had to be a major part of that puzzle.
We right now are probably the smallest provider in this table.
We have a little over 280 units.
Um, we have a mix of permanent supportive housing, project-based vouchers.
We also have some Indian housing block grants through a partnership with the Confederated Tribes of Siletz Indians.
And then we also have just some regular affordable housing, uh, at 50% and 60%.
Thank you.
Candace Avalos
I'm so sorry, I accidentally looked over my list at Angela.
My bad, Angela.
Unidentified speaker
You are not I thought I was getting out of here early.
Chair Avalos, Vice Chair Green, thank you, and the rest of the committee, thank you so much.
Loretta Smith
Angela Martin.
Unidentified speaker
I'm the executive director of Here Together Coalition, a regional coalition of homeless service providers, affordable housing organizations, advocates, businesses, community partners, groups that came together to champion and help pass this regional supportive housing services measure.
We continue operating as a coalition to focus both on implementation and on renewal, something that we're all very much depending on.
I also serve on several oversight roles which inform some of the response that you'll hear from me today.
The new Metro Regional Policy Oversight Committee, which manages Supportive Housing Services Fund, the Multnomah County Homeless Response Community Advisory Committee, and I serve as the board chair of Hacienda CDC.
I've served on that board for 15 years.
All of this means I just go to a lot of meetings, but more importantly, it means that I get to do a lot of listening to people who work throughout the continuum of affordable housing and homelessness.
Thank you.
Candace Avalos
Great, thank you.
So I've got a couple of categories of questions, just committee members, so you know, and the panelists have these questions in front of them ahead of time.
We'll start with an opening question and we'll talk a little bit about occupancy challenges, occupancy trends, in particular with HDC and PHB, community safety, systems alignment involving tenant needs and solutions.
So those are the kinds of categories of our discussion.
And in each one, I'll— some of them I might point to particular people that I'd like to answer.
But I'll just kind of manage time and we'll get through the facilitated discussion.
So the first question is, how would you describe the current state of affordable housing in Portland comparing pre-COVID to today?
And what are the greatest challenges to housing stability for the households that you serve?
And I wanted to kick that off with Brian, if you could.
Unidentified speaker
Thanks, Chair Avalos.
So I would characterize it as the old affordable housing model is broken.
Before COVID mission-driven or mission-based affordable housing providers made the numbers work.
Rents covered operations.
The small margins that they made supported resident services, community organizing, and long-term stewardship.
That model is now broken.
After COVID, The cost of operating housing shot up.
Insurance, labor, maintenance, and utilities all became more expensive due to inflation.
Fentanyl use spread.
More people came indoors directly from the street with much higher acuity needs.
Our mental health and behavioral health systems were nowhere near strong enough to meet those realities and serve those residents.
A few of the challenges organizations are facing right now, tenant needs have increased well beyond what current funding levels can support, creating a structural mismatch between what housing is expected to do and what it is resourced to deliver.
Many of our members have been asked to serve residents with high acuity needs without U.S. Housing and Urban Development or state or local local jurisdictions providing the necessary rent assistance that's needed to stabilize those housings over the long term.
Portions of the behavioral health system have contracted, shifting responsibility for individuals with unmanaged mental illness or substance use disorders onto housing providers.
Again, while operating costs, the staffing, safety, insurance, and maintenance costs have risen significantly without corresponding increases in funding.
In units serving the lowest income and highest need residents in Portland, rents do not cover operating expenses even in buildings without debt service.
Tenant needs have shifted as well in recent years.
There's again thousands of residents with high or worsening medical and behavioral healthcare needs including substance use disorders, psychosis, traumatic brain injury.
And aging-related conditions.
It's my understanding in the Portland metro area roughly about 27,000 individuals, about 10% of Medicaid members, account for approximately 24% of healthcare costs and 40% of inpatient utilization.
Many individuals in this group are also experiencing housing instability.
And lastly, some of the key barriers that are impacting our members members' work.
When individuals are housed that are not matched with the right services, our members face increased cost, risk, retention, and morale challenges for staff, resulting in turnover and recruitment challenges and operating deficits.
Without actions, the consequences are clear.
Housing providers will be forced to reduce services.
Units will destabilize or go offline.
And some providers will exit altogether at a time when they are needed most.
I could say more, but others have more to share as well.
Candace Avalos
Thank you, Brian.
Let's hear from Ian next.
Unidentified speaker
Sure.
Well, I'll touch on 4 points.
I think by far the biggest challenge facing residents right now in remaining housing stable is affordability.
We just see a trend where despite thank you.
So I'll just make a couple of brief comments.
One is, I think it's important to note that we're here tonight being at this table talking about affordable housing.
We know that for a lot of the folks needing supportive housing or folks exiting chronic homelessness, rents at the fixed levels that exist in a lot of our unsubsidized housing is not affordable.
The second piece that relates pretty closely is the ability to access tenant services.
While folks around this table and our region as a whole has done a commendable job in aligning new affordable housing construction with supportive housing services, those often don't appear for everyone and they don't exist in all types of affordable housing.
So on the tenant side, those are 2 pretty massive challenges that they face.
Now those relate to some of the biggest challenges on the provider side, some of which Brian highlighted there, right?
The first is rising costs that were never anticipated in terms of how our—.
Steve Novick
Yeah.
Unidentified speaker
Housing developments and our broader housing, affordable housing market was established, right?
Those include security, insurance, maintenance, labor, and then those tenant services that I highlighted up front, right?
Which are a benefit to tenants, but also benefit to the providers in that they maintain the stability of those communities.
And then the second piece there is it's just a challenging market.
And I do believe that some of these items are cyclical.
But what we've seen right now is a reality where many of the broader market rents, because of a slight dip or a leveling in the market, mean that they are as competitive sometimes as affordable housing rents.
That is wonderful in one respect because it represents a lot of choice for tenants and families, right?
They could choose to live maybe a little bit further out from downtown, maybe closer to parks or schools or jobs, and maybe just pay a little bit more.
They don't have to deal with regulated housing and paperwork and all the pieces of the puzzle that exist for regulated housing providers.
But that said, it then creates more competition for us and results in potentially less revenue coming in, some of the lower occupancy rates that Chair highlighted up front.
And so I think when we combine those 4 things together, And we look at that over time, we are seeing real impacts post-COVID.
And that is in part due to some of the ways that our society has really shifted.
But I think it also is just a reflection of the pretty bold and audacious work that we did as a community, right?
We created thousands of units of housing.
We passed big bonds that were focused on construction, but also services.
And while we have achieved a lot, We're sort of in the settling period that I think the providers around the room would see in any given community, right?
As a community comes together, we often see it takes a couple years for the property management companies and the residents to really get to know each other and gel.
I think we're seeing that more broadly as a region right now where, to Brian's point, we know we have items that we really need to fix within the broader system, and yet we've done a lot of great work to get there.
So those are a few of the challenges that we're seeing.
Loretta Smith
Thank you.
Candace Avalos
Thank you, Ian.
And then lastly on this opening question, let's hear from Madison, and then we'll keep going through a couple other topics.
Unidentified speaker
Yeah, thank you, Chair Avalos.
I think Ian and Brian are spot on that the pandemic kind of created this triple whammy of rising costs, and whether that's insurance, security is, is a big one that doesn't often go in the pro forma when you're doing a development that you're going to maybe need security, ongoing security costs.
But that adds in, like, could add in multiple FTEs of a new labor cost, right?
So, um, a lot of nonprofits, not just REACH and not just in Portland or in our metro area, are struggling with this.
This is something we've seen across California and Washington, Minnesota, New York.
So it's more than just Portland, but it's very acute here.
And I think this conversation points to that.
I think I would just sum it up that the gap between the resources we have and the needs of our residents is just broadening as federal resources disappear and our local budgets are strained.
Um, local, state, everywhere in between.
Um, so the gap is— it's wider, uh, than ever, and it, it seems to be continuing to grow.
Candace Avalos
Thank you.
So this next, um, area of questions is around, um, vacancy.
So definitely want to start with Home Forward.
And if you can talk to us about what are the primary and a sub-question, which is, you know, we're often asked why rents are not reduced to attract tenants to vacant units.
Could you speak to that question?
I think you started to get to that.
And I want to line up that I'd like to hear from Tracy and Erica and Madison if we have time on this question.
Go ahead.
Steve Novick
Sure.
Unidentified speaker
Thank you, Chair.
I would say there are 3 main trends that we are seeing coming up in terms of the occupancy rate.
Thank you.
So when we look at the total affordable unit vacancies in Home Forward's portfolio, half of those appear in 8 buildings in the urban core.
Home Forward owns over 100 buildings, right, throughout the county.
So we see a real concentration there.
And when we dive into those numbers, which is hundreds of vacancies, not insignificant, We see that 97% of those vacant units are unsubsidized, meaning they have a fixed rent that is just unaffordable to a lot of households.
Again, to the example I provided earlier, who could choose to live a little bit further outside the city and have a pretty different environment than living downtown.
And we see that 89% of those vacant units are smaller bedroom sizes, SROs, Right.
So we've tried to really focus a lot of our attention on those units, recognizing that those are not low-hanging fruit, but those are the biggest challenge that we face and probably a lot of the folks at this table face.
So then you asked the question about rents.
I will start by saying that we have reduced rents at well over a half dozen properties.
Many of the properties that It ultimately is an exercise in balancing mission with financial prudence, right?
Madison highlighted some of the ways that we were not expecting that rents would not meet costs when these buildings were set up 5, 10, 20 years ago.
And so we've had to make sure that we're being very careful there, recognizing that a lot of these market cycles are not predictable.
Loretta Smith
Yeah.
Unidentified speaker
Yes.
And we are actually already seeing that even in the urban core.
And so probably the other side of the coin here is debt coverage ratio, which you probably have read about recently.
And the reality of debt coverage ratio is it is just a function of rents coming in and costs going out, right?
So as we reduce rents and as we increase costs, Yes.
That debt-to-coverage ratio is going to shift in a tough direction from a lender standpoint.
When we look at our debt-to-coverage ratio over years, we see that we have invested more in tenant-facing supports.
A lot of those are direct resident services, and we have kept rents as steady as possible in our housing.
And I think Home Forward is unique in that we do not increase rents every year to the maximum level we would be able to increase to.
But we try to make sure that we can maintain that housing stability for tenants.
And we're at a point now where we are taking a hard look, building-specific, where we can reduce those rents.
And then finally, you asked about solutions.
The first is taking a hard look at where a given building or our broader operating incomes can support rent reductions.
The other pieces are tenant concessions.
Elana Pirtle-Guiney
Yeah.
Unidentified speaker
Those are both move-in concessions.
And so we've begun offering a free month of rent and seeking no application fees.
We're also looking at property management company incentives, providing a bonus for every unit leased, providing a longer-term bonus for maintaining stable staffing at a property, both on the maintenance and the property management side.
We see that where there's over a year of stable staffing, We have much better outcomes both in terms of community safety and occupancy and a lot of the sort of core operational metrics.
And then in general, just property management supports and transitions, right?
So we've tried to really dive in and understand what are the challenging properties for which property management companies and is this gonna work long-term?
If it's not, let's talk about what a transition could look like and where it is, you know, how can we continue to support?
So I would put rents and tenant concessions at the top of that list.
And then there are a few other items that we're really focused on and have been for a number of months and certainly are in the months ahead.
Thank you.
Candace Avalos
Thank you, Ian.
Let's hear from Erica next.
Unidentified speaker
Thank you.
Some of our properties don't really struggle with vacancies as much as other properties.
So similar to what Ian was saying.
And I would say some of the reason is a little out of our control, and it more has to do with what's going on in the surrounding neighborhood and where it just is not as attractive a property for people to want to live.
But as, as we've been talking, I really believe like everything is interconnected.
Keelan McClymont
Yeah.
Unidentified speaker
And so the word gets out.
It takes— if we definitely want, and we work really hard to support people to stay housed, but sometimes in a building, if you have 1 or 2 tenants that have really actually committed some egregious violations and it's affecting the livability and the safety of the whole building, it takes a lot of work to get them out.
And I think that's It takes such a long time to help those tenants to not live there anymore.
So, and the word gets out on the street about that.
And so that is one thing that I wanted to bring up that hasn't been brought up yet.
It's property management and kind of the margins for property management at low-income housing is a real struggle to find quality property management that will stick with it, have staff retention, help work with us together to build a nice, positive, healthy community in the building.
It's just sometimes so challenging.
And again, like the margins just aren't there.
So that's one thing.
And then I think it can happen so fast where vacancies then lead to financial stress, and then it— some of the things at the property don't get addressed in the way that we would want them to.
And it could be something so simple as shampooing the carpet, you know, but then when a prospective resident comes to look at it, they're like, I don't know about this.
Loretta Smith
Place.
Unidentified speaker
And, um, and, and like, it's just sometimes very, um, subtle things like that, but that kind of can make a downward spiral.
Um, and I think as far as solutions, um, debt restructuring, um, is definitely one, um, that the state is helping us with right now at a few properties, and we're definitely like looking forward to seeing the actual result of that.
I think another one that has been mentioned a little bit, but maybe not as much, is just resident services have to be above the line or there has to be another funding source for resident services.
Like it's just, it's a necessary thing.
And I will actually say that at one building that we partnered with Home Forward on, our resident services coordinator was the person who saved somebody's life yesterday.
And like, and they— it is a necessary function.
And we shouldn't be having to always looking for what grants can we get to fill in for this and how do we package it so that it seems like something new.
Like resident services is just a necessary thing.
So those are some of our thoughts.
Thank you.
Thank you so much.
Candace Avalos
Thank you, Tracy.
Unidentified speaker
Thank you.
I'll be quick.
I'm going to save some of my sort of zoom-out comments for the next question, but we are working with PHB to collect vacancy data for the mayor's vacancy activation committee.
And so I can share a couple additional things that we've heard from folks, Home Forward's been real forthcoming about the fact that the properties in the central city, downtown, Northwest, are some of the properties facing the biggest vacancy challenges.
It's also true for some providers in outer Southeast and Northeast.
Those exact same areas have the highest vacancy percentage in the Multifamily Northwest recent survey, right?
So it—.
Elana Pirtle-Guiney
Yes, Yes.
Unidentified speaker
Affordable housing is a special snowflake and there are market trends that are impacting everybody.
I think, you know, referral system labor shortages impact the whole market.
So referral systems from service providers, people who are providing care in permanent supportive housing, addiction support, mental health support, they're all facing labor shortages.
Property management system is in a real world of hurt right now, and that has a really heavy impact.
And you can't just, oh, let's just change property managers because it upsets— I mean, sometimes you have to, but there's a real impact to tenants certainly and to the whole system with what's going on with property management right now.
Deferred maintenance is another sort of downstream impact.
They're taking units offline.
Units turn over very slowly when you have a labor shortage and you don't have funding.
And then I think I really wanna highlight particularly what Erica was sharing about the system as a whole is interconnected.
And my— over the first half of my career was at Central City Concern.
And I think, you know, we all know that partnership with addiction services, mental health services, healthcare, all of that for me personally shows up at home and it does for folks living in affordable housing too.
Candace Avalos
So thank you.
And Madison, lastly on this question.
Unidentified speaker
Yeah, thank you.
I really appreciated what, Ian, what you mentioned about affordability.
And the challenges of occupancy within sort of particular geographies, I think it's really important to talk about the population that we serve.
So from REACH's perspective, the majority of our communities are for folks who are at or below 60% area median income.
In Portland, that's just under $60,000 a year in income for a couple, or under about $75,000 for a family of 4.
So a household has to make below that threshold in income annually, but they still have to be able to make enough to pay their rent.
So that's a pretty narrow band of Portlanders.
And to the question of, you know, why can't we just reduce the rent to get folks into these units?
Well, the rents have to be high enough that the building can service its debt and then pay for the resident services that keeps folks stable, the maintenance, Unit turns, etc.
Um, so it's a— it's sort of a, a high-wire balancing act.
Um, and in Portland's economy today, I think the share of households that, um, qualify for that band and then can keep paying their rent once their income qualified for that unit, um, is shrinking.
Um, so it makes it harder to get folks into the units in the first place, and then it makes it hard to help those folks continue paying their rent and, and stay stable.
I also think we at REACH see a geographic input to vacancies, especially out in East Portland where we see lower response times from Portland Police, for example.
There's been some engagement with the mayor's office about addressing some of those public safety concerns.
But Erica, to your point, like, word gets out that uh, one property may have— residents could experience a crime in their neighborhood that gets out, and then we have one building in East Portland that has a boatload of vacancies that are all 60% studios and one-bedrooms.
I also think that there's an administrative burden that I haven't heard talked about nearly as much, but for a LIHTC building, low-income housing tax tax credit building, um, to get a voucher, to get into a more deeply subsidized affordable unit, there's a lot of paperwork.
And when we see those 60%, uh, rents sitting really at par with a market unit, sometimes a resident could be looking at 2 properties across the street from each other.
One's $10 more, but it has 100 fewer pages of paperwork for that household to do.
And for, you know, a working mom or just somebody who has not a lot of free time and doesn't love doing paperwork, like, that's an easier choice for them.
So I think that that contributes to the challenges of getting folks into these vacant units.
And of course, residents' higher acuity makes it challenging to get them what they need so they can maintain stable housing in partnership with the housing provider.
So, um, a couple of— and then also the, the cycle of needing capital repairs for a specific property to ensure that these units are habitable and rentable.
Uh, we as a nonprofit can't afford to make those capital repairs because of low rent collections because the vacant units need repairs.
You see how this goes.
Thank you.
Candace Avalos
Thank you.
So the next section, uh, I want to hear from Michael and Tracy.
So for HDC, what is the And why do you believe we are currently seeing a much higher rate?
And then for Michael, what occupancy trends is PHB seeing across the city's regulated affordable housing portfolio?
Tracy, go ahead.
Unidentified speaker
Yeah, thank you.
So forever, 5 to 7% physical vacancy has been what we've used, and for the most part, it's worked.
In terms of why it isn't working now, I want to kind of hearken back to some other folks' comments.
They've said a lot about these costs were outside of the pro forma or, you know, they're just past the margins.
And really by design, the affordable housing system since the beginning normally has a small margin of error for really good reasons, right?
We want to get the most bang for the public buck.
We want to serve as many people as we can.
I mean, for years, you know, we were looking at up to Seattle and their levy and how did they do it?
How did they keep getting bigger levies?
And a bunch of us would go up there and they'd talk to us about what they did.
And what they kept saying to us over and over is you got to under-promise and over-deliver.
And so we finally got our bond and we did.
Like, we under-promised, we delivered more units.
Thank you.
Than we said we were going to, to the voters.
And there's really good reasons that we did all that.
But unit volume meant smaller units, they're cheaper.
So some of those studios and ones, and it also meant units that needed to collect a higher rent.
And so, you know, you kind of zooming out and looking at the system, we've built a system on small margins for good reasons.
And over time, we've been really good at yes.
Scrimping and dealing with one or two issues that came up at a time.
Forever, you know, sort of said every organization that has been doing affordable housing for a long time has one or two stinkers in their portfolio, projects that are underwater, but the rest of the portfolio was fine.
And so organizations would make it work, but it was how the system was sort of designed and it balanced because everything else was doing okay.
But we are also getting away with not investing, and this is the geekiest thing I will say today probably, in asset management, right?
So that's the practice of long-term care of assets.
You know, if you think of housing as infrastructure, somebody's gotta be keeping an eye on it.
And organizations, you know, when a building was not hitting pro forma, there's just things you do without.
And again, that margin of error has continued to work until, as sort of Brian referenced and a few other people referenced in their pro forma, it stopped working pretty abruptly around COVID.
That's when the labor market really changed, which impacted property managers and resident service providers and supportive service providers, but also impact— really impacted tenants.
Candace Avalos
Right?
Unidentified speaker
Like, gig economy is bullshit when you're trying to rent a rent-regulated unit.
Excuse me.
And the prices for everything went up all at once.
Utilities, insurance, you know, everything.
Carpet, new carpets.
And so the margin of error, you've heard from several folks here, is just gone.
I don't know if it's permanent, but for a project that has this pro forma that's sort of stuck in cement and wasn't built with a margin of error, it's probably something not close to permanent.
Owners just lose their flexibility and also the resources they need to fulfill their mission.
Repairs slip.
Reserves get raided, and we do start with reserves.
Positions stay vacant, and then eventually low-income renters are left living in buildings that are affordable and yet less safe, less decent, and less stable.
I think I stole that from ShelterForce 'cause they really did a really good job of explaining it.
So I don't know that the system is changed dramatically so much As it was, those margins were always by design, in my opinion, too thin because we couldn't, you know, we were trying to do our best with the public dollar and we did for a really long time.
Candace Avalos
Thank you.
Michael.
Unidentified speaker
That is a great act to follow 'cause I wanna pick up on some of the themes that Tracy raised.
Thank you.
You heard Tracy use a phrase, Physical vacancy, right?
Yeah.
And that is a big emphasis of a lot of the public conversation that's happening right now around the issue of vacancy.
And another really significant issue that I think there's some reluctance among providers to talk about is the idea of economic vacancy, which means there are folks who are living in apartments and are unable to pay their rent, right?
And so this idea of we've got a lot of homeless folks and we've got a lot of vacancies, and those 2 things, there should be a solution with that math.
But we have to talk about the fact that folks who are in apartments are struggling to be able to pay their rent.
And when we talk about thank you.
We talk about all of the economic pressures that providers are facing.
It doesn't help them to fill their apartments if the folks who are living in them don't have the means to make their rent.
And the choices that are associated with solving for that are really difficult, right?
There's eviction for nonpayment of rent, and no one wants to do that, particularly mission-driven organizations.
There's support with rent assistance that we all understand is and so, you know, the slate of options for dealing with all of that become even more complicated.
And I think it's just really important to name that dynamic.
And something else that Tracy talked about that I wanna pick up on is just this idea of what we have, Thank you.
—Of promise to the community and how we need to think about changing that conversation as we move forward and as we ask them to invest in some next version of what funding for affordable housing looks like, whether it's social housing, whether it's another bond that does affordable housing.
As Tracy said, and I think it bears repeating, we valued getting as many apartments as possible for the bond dollars last yes.
And that meant building lots of studios and one-bedrooms.
In the solicitation that the Portland Housing Bureau has out on the street right now, we have said for multifamily development that unless there's a very specific reason, we're not going to fund the building of studio apartments in this particular development.
And where we have set a maximum subsidy of $150,000 In the past, we're saying we're not going to set a max subsidy.
We want you to explain to us how the costs that you are building into your pro forma are gonna help you have a healthy operating budget moving forward.
And that, you know, those kinds of steps, this is a very small, I mean, this is one solicitation, right?
This is a very small step, but it's going to involve us talking to the community about the lowest price per door is not the highest value that we can deliver when we're perpetuating these sorts of systemic issues.
And we have to think about how we as funders and policymakers are approaching those investments differently.
So there's lots more to potentially say, but I'll leave it with that for now.
Candace Avalos
Thank you.
Yeah.
So for the sake of time, I'm going to go into the community safety questions.
I'm going to call on a couple of you, and then I want to open it up to committee so that we have time for the committee members to ask you questions.
So the community safety questions, I'm going to read all 3 of them, and then I'm going to ask for Angela and Elsa to respond.
Sound good?
So we've heard and seen reports raising concerns about safety in affordable housing.
Can you talk about how safety needs have shifted over time, how that's showing up in your work, What role do onsite services, resident engagement, and property management play in improving safety outcomes, and anything that the city can do in supporting affordable housing providers that are to address safety challenges?
So very broad, but let's just hear from Angela and Elsa, and then we'll open up to committee members.
Thank you.
Unidentified speaker
Well, this has been well touched on because the safety issues that so many of the affordable housing providers are dealing with are a direct result of the increased acuity of the population that we're housing and the lack of services and funding to address that acuity.
You said it so well.
Um, at Hacienda, uh, Las Alitas was one of our proudest, uh, new properties.
Oh.
I loved it.
It used to be the Sugar Shack, if y'all live in that neighborhood.
What a moment to know that we were going to rise up, uh, housing for families.
It became such a difficult property for us to lease up, in part because of the word got out that, uh, we had some troubled tenants.
I was an advocate for including PSH.
Uh, I might have been one of the few advocates at the board because of the work that I do, but the mismatch of the families that were placed in our PSH units without the level of support necessary created a very unsafe environment for families and children.
So I understand, uh, what— why they made those decisions.
So if we're going to get to safety, we really have to reach out to our partners and talk about behavioral health and the necessary supports.
To make sure that the neighbors, the individuals dealing with untreated mental health are getting the care that they, that they need.
You know, some of the other community safety features I think really can also be tied to resident services.
As you have a robust resident services presence on a property, those are trusted relationships where you get to start seeing what households need a little bit extra help?
Where is perhaps domestic violence happening?
That happens through that trusted relationship of resident services and property management that is stable, consistent.
If you have that there, you are able to catch things before they really bubble up.
I want to make one comment because it hasn't been mentioned on the vacancy rates and something that we're seeing.
We've talked a lot about the, the, the vacancies, you know, the economic, the physical, but the compounding, uh, impact of slower lease-up is another thing that we're seeing at, uh, some of our properties.
And one of the drivers of that is the qualifications of renters seeking, um, apartments right now.
The the eviction rates, the rent arrears that piled up during COVID left a crop of people just a lot less creditworthy than they were before.
And we haven't had a conversation as a community or folks that oversee these qualification programs of how to address that.
So thank you.
Just wanted to offer that up.
Candace Avalos
Thank you.
Go ahead, Elsa.
Unidentified speaker
Thank you.
Similarly to Angela's comments, I believe that resident services is, is very important and is a catalyst to providing security at our properties.
Our properties are unfortunately struggling financially, and as previously mentioned, when a property is not cash flowing, when it is struggling financially, The first thing to that that goes is the resident services.
Resident services is absolutely crucial because they work so closely with the residents, and they are able to provide additional information that we at the high level as owners wouldn't be able to otherwise understand and, and provide support that they need.
Similarly, um, to Angela's comment, we are also struggling with lease-up, um, and sometimes that has to do with security.
We are, um, housing residents with higher acuity needs.
We, um, are seeing that sometimes those residents can create issues throughout the property, uh, which then creates issues with lease-up our Aurora property, which is an amazing, beautiful property, newly built, took almost 2 years to lease up because it was just so hard to, one, vet tenants.
It was harder to be able to get tenants housed.
And then also we just had a significant amount of higher acuity than we expected, uh, less support, mental health support and services support in general, to be able to deal with a property that wasn't designed in that way.
And then I think the last point that I want to make here is there is a significant and very important relationship between resident services and property management, and they really do assist with being the onsite security and providing those— the feeling— providing that feeling of security for residents in a property that does not have the ability to provide security services.
So when a property management company has the mission in place and has the mission in mind to provide residents security and secure and stable housing that really fits in with the resident services and that just provides an overall sense of security for the residents.
And the last point that I want to make is that properties that are struggling financially really do need an immediate demand— they have an immediate demand for funding and cannot cannot, um, provide the security enhancements that they need.
For example, if a property does not have the ability to provide capital to repair a fence or to provide lighting systems or other systems that would help residents feel safe and secure and provide that safe and safety and security for residents, that is a big issue for and so being able to reinvest in our property to provide those security measures would, uh, is incredibly helpful, would be incredibly helpful.
Thank you.
Candace Avalos
Thank you so much to this panel.
Uh, we've got eager councilors to ask you some questions.
We have about 37 minutes, so about 8 minutes-ish each councilor.
So just please, uh, be mindful of answering your questions as promptly as you can so that councilors can keep asking more.
We'll kick it off with Councilor Koyama Lane.
Tiffany Koyama Lane
Thank you, Chair.
Thank you so much, everyone.
I really appreciate the breadth and depth of the expertise that we have here.
I just have 2 questions.
The first one, we were starting to touch on it, is more concrete and specific, and then the second one's a little more aspirational.
So the concrete one is about the property management resident services and thinking about some of the issues that are more chronic.
And just what, are there things that folks have been thinking of doing and trying to, trying out in this area?
What I hear is that there, it's hard to probably find quality property management and that's also very expensive.
And doing it in-house is maybe a lot more challenging, is challenging.
But then if you're not able to pay the folks, The staff have low wages and you have high turnover.
So I'm just wondering if there are any tools or things that are being considered for dealing with some of those challenges.
Candace Avalos
And then, yeah, whoever wants to answer, jump in.
Unidentified speaker
Thank you.
I appreciate the focus on solutions and how we can move forward from here.
REACH had historically done its own property management in-house, and this year we had to make the decision to take that out of house and go with an external property management team.
This has been a really significant transition for REACH as an organization, but it was becoming increasingly clear that just fiscally, like, it was not the— It's not the right fit.
Councilor Avalos, as I believe you posted, you know, the math was not mathing.
And so we needed to transition to an external firm to hasten lease-up and unit turnover when a tenant leaves, getting a new tenant into that home.
And so that was frankly like, that's been an uncomfortable transition, but it's been necessary.
So I think that—.
Thank you.
Change, change is afoot, uh, and, and we're going to see more changes across the Portland housing kind of ecosystem in, um, in that same vein.
And REACH is also doing a pay equity study this year to ensure that our staff, from resident services to corporate staff to, um, to maintenance staff, are competitively compensated so that we can hopefully reduce turnover among our employees as well.
And I think that, you know, the income part of it is a big thing.
These are not, you know, we're nonprofits.
These are not like cash cow jobs, right?
I wanted to share, one of my member executive directors shared with me recently a study addressing the importance of the I think Erica mentioned the term funding them above— as an above-the-line investment, meaning not just assuming you're going to fund these resident services staff through the pro forma model, but we need public resources to fund these important roles.
It was a study by the Stewards of Affordable Housing for the Future that found that service-enriched properties specifically, it found that providing resident services was associated with a 26% increase in net operating income for the average property, translating to about nearly $1,200 in additional net operating income per unit per year.
So just trying to illustrate that.
Thank you.
Can I add on super quickly?
I think it's super important to talk about what resident services actually is.
What does that mean?
One great example I'd love to share from REACH is our economic empowerment programs.
We have one called Job Jumpstart that was funded by a private grant that allowed our resident services staff to work with our tenants to help To them get jobs.
Provide sort of mini grants to residents to get them what they needed for— to continue in their job or advance in it.
And so we covered things like certifications, license fees, upskilling training, some transportation, new wardrobes, anything that a resident needed to be more secure in their job or, or advance in their career.
Of the residents who participated 78% improved their on-time payment of rent, which is pretty staggering.
So I think that is one example of how the resident services can create that positive cycle.
And there are all types of programs that nonprofits across Portland do.
That's just one example that I think characterizes why it's so valuable.
Tiffany Koyama Lane
How much time do I have left?
Okay, um, for my aspirational question, I'm wondering if you had a, a magic policy wand idea that what you think would significantly improve affordable housing in our community other than more funding, what would it be?
That's to anyone.
Unidentified speaker
I, I'll chime in for Madison and I, who both whispered but more funding.
Because I think it bears saying, just because there are a lot of policy and regulatory choices that can be made that can mitigate some of these issues.
But I feel like there's also a longstanding— there are longstanding narratives like we can't build our way out of this.
Or, you know, we— there's not enough money, so we have to be smarter.
And there are lots of good answers to that question, but also money.
So I just wanted to say that one.
My non-financial— my magic wand would blow up all of the layers of compliance and reporting and that we've built up over 40 years and start over.
Again, lots of really good reasons, trying to be good stewards of public money, trying to see that people who need the housing get the housing.
And we've created such difficult jobs for our property managers and for our tenants.
And so my magic wand would get rid of all of those and start fresh.
And there are some, Some efforts underway to do that around margins.
Thank you.
Something that hasn't been mentioned, um, that affects our property and, uh, is not additional funding, although I agree additional funding is the best way to go, um, is, um, review of income restrictions.
Some of our properties were— are extremely old.
They were funded, uh, they're at— they're outside of the tax credit period.
They've been— they were funded 20 years ago, and the income restrictions are so low that it does not allow us to recapitalize those properties.
It does not allow us to be able to debt service those properties, and therefore we're not able to reinvest into those properties.
So to the extent— and some of these properties are extremely, extremely low.
I'm talking about most of the units are 30% AMI.
Okay.
So it just does not allow us to be able to provide the capital that we need to these properties.
The other thing that has worked really well for us is debt reduction programs and the expanded Oregon Affordable Housing Tax Credit, the OTAC.
Really, it has been very helpful specifically for the Aurora project because it allowed us to be able to not only obtain an extremely low debt rate, but also allowed us to pass on those rent savings to our residents.
We have just one quick point.
We have a little bit of an opposite problem in that our vacancy throughout our property is very much standard.
It's about 6 to 7%, but our economic vacancy, folks that cannot pay the rent, is about 28%.
So being able to pass down those rent savings or rental subsidies to our residents If I could share one, one example of what Tracy was speaking about, to redo the whole system around compliance.
I hear from a lot of our members about waitlist regulations are really problematic, the coordinated entry system.
So existing coordinated entry procedures as part of a lease-up process, getting folks into their units, can often extend turnovers by weeks or even months.
Thank you.
Even months.
And complex tenant selection plans based on referrals can break down when community partners are having— or property managers are having staffing turnover.
And then ambitious and laudable occupancy requirements such as asking for 2 heartbeats per bedroom can cause delays in search of the perfect family composition instead of serving the resident that might be right in front of you that needs housing now.
And lastly, for some of our members, the North-Northeast preference policies that have been mentioned before or earlier in the hearing today complicate projects financed by low-income housing tax credits.
LIHTC projects have a small window of time to complete the lease-up process, requiring the developer to fill units quickly after construction is finished in order to meet financial obligations.
And some of these Councilor, I'll just wrap by saying my phone is blowing up from our asset management director asking me to talk about the mismatch between eligibility and AMI levels.
But I am instead going to say, and this is maybe a free one, is I think we at Home Forward could do a better job of thank you.
I think that's a really important part of hearing our tenants and of empowering our tenants.
So much of the narrative and the ways that we have heard from our tenants has been frustrated of late.
And I think Councilor Pirtle-Guiney and I sat down with some residents at Dawson Park and some follow-up meetings with those folks.
I just saw the community that exists there, the power that I think exists through that community, and frankly, a lot of positive stories about the work that everyone at this table does.
There's a power imbalance there that I would just love to focus on shifting a bit.
Tiffany Koyama Lane
You can email me more of your magic wand ideas if you'd like.
Candace Avalos
Thank you.
Councilor Novick.
Steve Novick
Thank you, Madam Chair.
Um, I'm actually going to rip through these things because I have to leave early, so I've got about 7 minutes.
So I'll ask each of you, whoever speaks first, answer, and then I follow what Councilor, um, Koyama Lane said, email me the other, other answers.
Um, one thing I just wanted to one of the things I wanted to say is that hearing what Tracy said and others of you followed up on, it seems like having a session maybe of this committee, maybe this committee with folks from other jurisdictions who've added to the problems, having this discussion of what all the rules and regulations and compliance reporting are and talk through them and see if they can be taken apart, that sounds like, you know, a big necessary task.
One question I had was folks have talked about higher acuity and need for more services.
I'm wondering if anybody can sort of put that in concrete terms, like what are characteristics of tenants now that are common that were not common 10 years ago that are sort of higher acuity characteristics?
Unidentified speaker
I'll go ahead and try my best to answer that.
The high level of street drug addiction and the mental health byproducts of that.
It's such a struggle for people.
A lot of the people that come to our buildings are newly clean and sober.
Some are long-term clean and sober, but none of our buildings are alcohol and drug-free housing, and it's sometimes So hard for people to stay clean and sober, um, in the environment of the building because of all the things that have already been talked about, of, um, safety concerns, um, the systems in the building even.
Um, sometimes, like, I was in a meeting today and, um, it was brought up that there was a blind spot in the cameras on one of the stairwells, and then We're all thinking, well, how are we going to afford to get another camera to fix that blind spot?
Because we don't want that.
And definitely just the way that our behavioral health system has become so stretched to the limit, beyond its limit really, to where It really is a challenge to respond.
And like the people that are in the building, the property managers, the resident services are doing the very, very best that they can.
But like we are not mental health professionals.
And especially with people that are really having psychotic realities, hearing things in their head, just all the different behaviors that can happen.
And like, it's important for everybody to have housing.
I believe housing is a basic human right, but it does— if the services aren't there, it's just really hard for the whole community.
I'd love to pick up on that too and tack it on to something I was saying earlier, which is that when we as a community created our housing bonds We had goals related to the creation of permanent supportive housing.
So similarly to, you know, we've got this goal of how many number of apartments we have to produce, we had this goal of how many permanent supportive housing apartments needed to be created.
And that often meant 10 of the 60 units in a given building that were being developed were designated as permanent supportive housing.
In some cases, buildings were designed and staffed with that— the needs of that particular population in mind, and that's what that building did.
And I think some of where we've heard providers struggle is, you know, this well-intentioned model of we're going to get some of and buildings are not necessarily programmed and provided with the services and even sort of designed and interiors built with the needs of particular populations in mind.
So there's, I think, both the acuity of the population and how, again, as we think about what we do in our next iteration of how we're funding housing, what are the lessons we've learned about what works well and not?
Mitch Green
Thank you.
Unidentified speaker
In terms of population and design of properties.
Steve Novick
And I do apologize, I literally have to run in like 3 minutes and I've got other councilors, so I just, um, um, a similar question about security.
What kind of things do you see now that you didn't see 10 years ago that increase the need for security?
Unidentified speaker
Um, the, uh, um, the federal overreach coming from the ICE facility in South Waterfront does not make residents at Grays Landing, a 200-unit affordable development there 100 feet away, feel more safe.
That's one example.
I also think that a lot of nonprofit organizations are trying to respond to resident requests to feel more safe.
One of those, you know, so it— I think it can be hard to put a nail on it.
I know there's been stories and reporting about specific kind of, um, instances of criminal activity, um, that can make folks feel unsafe.
But I think— I know for, for our organization, um, folks feel— may feel unsafe because of— for whatever personal reason they have or, or external reason, they ask, you know, the, the person in front of them that's their resident services manager or property manager, um, for help feeling safe at home, which I think everybody wants.
Steve Novick
Okay, and actually I would love to get emails to the rest of you about that question, but I'll move on.
In terms of vacancies, some people say that, well, they've got these vacancies, why can't they just keep on reducing the rent until they're filled?
Why isn't it just that simple?
And maybe I'd be charging different rents for different individual units to do that, but just somebody tell me, why isn't it that simple?
If you can't rent it at X a month, you drop it to $50, and you drop it $50 the next month.
Unidentified speaker
I, I can get us started.
We have done that.
Um, we have dropped our rents significantly in many of our buildings to, uh, increase the marketability of our units.
At some of our, uh, properties, they are regulated at 60% AMI.
But we're charging rents as low as 30% AMI.
So we've dropped rents as low as $200 per month.
I think it's the— for in our portfolio, it's the marketability of these older buildings.
So preserving these older buildings is incredibly important, and being able to recapitalize and provide funds to be able to reinvest in these buildings is So that's my short answer.
Loretta Smith
Okay.
Steve Novick
Last quick question.
This might be sort of a— I mean, you talk about people, about economic vacancies, in some cases them being large.
Is there— and I know this is something people would want to say— but are there rules and regulations that have made it— make it too hard for you to evict people who aren't paying rent?
Unidentified speaker
Everybody, I think, on this panel— I can only speak for myself— but we're housers, right?
People who want to house people, not evict people.
And so I know, um, from REACH's perspective, it's always a, a last resort.
It's not something we want to pursue.
Or like advance, right?
However, as a nonprofit, we're not resourced to absorb someone's nonpayment of rent forever.
And so I think it's a conversation that our community as a whole needs to have, 'cause the status quo's not gonna be sustainable.
But again, no one gets into affordable housing 'cause they want to, you know, make evictions easier.
Thank you.
And I'll just add that within Homeport subsidized portfolio, of the folks who haven't paid rent, it breaks down on average to, I think, about 12 months at an average amount of about $190 a month, right?
So when you think about that societally, is that a cost worth paying to keep that many thousands of folks housed?
The answer is yes.
However, you know, there are realities that thank you, Chair Avalos.
Mitch Green
And I've got my eye on the time.
Thanks for the presentation and the discussion today.
This is a really important thing for us to sort of do as a collective body of people doing the work.
Thank you.
It's— there's been a lot of bad press out there around our affordable housing system, which I think misses some of the core foundational issues that we've started to touch on today.
And as I see it, I'm identifying basically maybe 3, but 2 categories of challenges.
And I want to make sure I've got that clearly from you.
The first challenge is that we have shifted our focus It seems like we have shifted the broad burden of our woefully underfunded behavioral health apparatus onto the affordable housing system itself.
Is that a fair statement?
Mm-hmm.
And maybe that was the best of intentions.
Maybe it was because there was nothing else there, but that seems to be the effect.
And if that's the case, picking up on this above-the-line, below-the-line kind of conversation, I think when I was talking to some of you about amendments for this kind of Keep Portland Housing approach based upon the debt buydowns or rent buydowns, the response I got was, well, every provider has a different balance sheet in some sense.
And so I wonder if we had a— if we had a way to articulate what some above-the-line items are that might contribute to of these differences in balance sheets and what maybe what like some very common core capitalization problems are, it might help us develop a clear policy agenda to maybe work with OHCS, City of Portland, our county partners to then think about what is the next phase and frankly the region because I think for me I'm always working backwards from how do I figure out to get voters to say yes to the next bond or measure.
I don't think they're there right now.
And so I don't think they're there right now because of— they, they haven't seen that we've correctly identified, um, the diagnosis of the problem.
And so I think, you know, what I see is both a threat and an opportunity.
The threat is we might let our, our, our, our stock go into abeyance because we can't afford to keep it going.
Like, it's like literally at risk of becoming— I see a lot of head noddings, like A thing that you have to dispose of off of your balance sheets or else you're, you're no longer a going concern.
That to me is like unacceptable because where does it go?
Well, it goes back into the market and then we've got different problems, or it just gets torn down and it doesn't get replaced.
And so I think if we can say, look, there are capitalization or recapitalization opportunities to preserve in time, very similar to the way that we think about land banking.
Right.
Like preserving time, a stock of housing that is— was much lower to build at a period in history of the city of Portland.
And then we resource it correctly with all the appropriate below-the-line investments to make it high-quality housing.
And then as a community, um, whether it's the county or the city, or I'm not going to say IGA because, I mean, that's— we're all a little raw around that, but but as a community, thinking about how we can invest in common to fund these above-the-line behavioral health resources, these wraparound services, this sort of kind of whole-person type of approach, so that way it doesn't fall on each individual provider to try to find the income, the net operating income to support that, seems to be like a huge opportunity for us.
And so I'm curious if any of that's resonating with this panel at all.
Unidentified speaker
Yes.
Yes.
All right.
I don't know if I a million percent understood the question, but would love to geek out in some future date about recapitalization of the portfolios, 'cause that's a lot of what we're doing right now is reviewing whole portfolios to try to figure out how to stabilize them.
And so above the line, resident services, asset management, So above the line just means that it's funded out of the rents.
Below the line means you fund it if you have any money left over.
Okay.
In our geeky housing world, I would not want to see behavioral health funded in housing.
It's where people live.
It's not where behavioral health— I mean, it's where behavioral health happens as much as it happens in your house, but it's not what the public should be funding inside housing.
But if we're going to put permanent supportive housing or any kind of mandate in housing, we need to fund it because as you said, what we're doing right now is kind of breaking the system.
And just one final point, I think, like I said, I've been doing this for decades.
I used to work at Central City Concern.
And so trying to match housing and services is kind of what I've been thinking about for a long time.
And—.
Thank you.
Behavioral health and healthcare, period, follows a person.
And we all build buildings.
And that fundamental mismatch has not been solved.
And I don't know that trying to solve that is working.
It just feels like, let's focus on people's homes.
Thank you.
And their healthcare maybe separately, but not at— so I'll stop talking and rambling.
Let me offer one small idea of the list of things that you mentioned.
You think about eviction prevention.
We often think about it as that's just paying for the rent.
When we're talking about the behavioral health and safety issues, eviction prevention needs to go beyond how much rent is due and cover the case management to address the for-cause issues that are triggering that particular eviction.
So really, you need to be thinking about the solutions for 2 separate sets of populations and what changes need to be made to your funding model to address the needs of a very high acuity population.
With eviction prevention, make sure case management dollars are attached to it so we solve their eviction problem.
Mitch Green
Thank you.
I appreciate that.
And, you know, these are not easy things to solve.
I think my third— I guess there was a second category, which is just simply the cost of running the buildings.
You guys have all cited the extraordinary inflation that we've experienced.
There was also the sort of kind of ratchet effect of during the COVID period, there was just a lot of nonpayment of rent.
And then, so then how do you turn that back on?
It's very difficult to turn that back on.
And so I imagine many of you took on obligations that you're still paying off from that period of time.
That to me was a social thing that we took on.
And so having that fall on any given provider's balance sheet feels like setting our system up for failure.
And so, you know, I think that's why we advocated for rental assistance dollars.
That's why we've advocated I think I'm very curious to know whether there's opportunities— Michael, we've talked about this— but common pool resources to share risk.
And I guess you all have the same risk profile, so maybe that doesn't work here.
But I mean, if your premiums are a function of— your insurance premiums are going to be a function of the risk that you're taking.
Loretta Smith
Yeah.
Mitch Green
But you can always buy that down a little bit with some help from other places.
And so I wonder if the city might think about developing an approach to housing policy that lowers costs from the standpoint of saying we're stepping in also as an anchor tenant, so to speak, in the insurance counterparty problem.
That could be an interesting area for us to look at to see if it has the effect of lowering costs for everyone at a bargain for us.
I don't know.
Thank you.
I don't know.
I'm just speaking.
We're committee discussion spitballing here.
And then finally, the regulatory piece.
I'm very sensitive to that.
My intuition is that part of the reason why this is so expensive is because there's just a huge long lead of regulatory challenges that are all costly.
And who are the regulators?
I mean, the federal government's involved.
There's HUD.
I imagine the City of Portland.
I'm just curious if there's Is it a list that's smaller than 5?
No.
No?
There's more than 5 regulars involved in any given?
Unidentified speaker
I mean, an inspection list would probably be a tax credit investor, a lender, HUD, OHCS, and PHB.
So that's just inspecting units.
Okay.
HUD Home Forward.
I mean, I was kind of combining them, so—.
How dare you.
That's my bad.
I'm sorry.
Um, so yeah, over, over 5, right?
It's sort of the everything bagel model of—.
Mitch Green
So I think, you know, when we're trying to look at the social housing approach through this study going forward, I think one of the things we're trying to grapple with is, are we going to reproduce those same sort of and I just kind of put that out there.
And I'm done talking because I want to leave time for my good colleague over here.
Thanks.
Unidentified speaker
I did want to acknowledge you talked about pooling, like an insurance pool.
That does exist right now.
And my memory is failing me what the acronym is.
But maybe you might want to have— there is a local person here in the Portland metro area who could probably come and speak.
A number of our member groups do participate in this kind of regional, or maybe it's just a statewide insurance pool.
I don't— you keep looking at me.
I have no idea.
I thought you would save me and remember what the name of it is, but I made a note to check in.
The last state legislature, you could, you could see what that study was that they were— that they're— the state legislature is doing a tiny little study on insurance.
Candace Avalos
That's good.
Councilor Pirtle-Guiney.
Elana Pirtle-Guiney
Thank you, Chair.
I'd like to just toss out a few musings that I had listening to you all, and if you have thoughts on it, I'd love to sit down and follow up another time and then ask one question to be answered today.
I think it is worth exploring.
I heard nobody specifically came out and said folks who need support can't all get it in our units.
But I kind of started to hear that in the conversation around behavioral health at the end, and I'd like to at some point explore that continuum from the more basic PSH needs to more significant behavioral health needs and how different populations are served in different types of housing.
I would like to at some point explore the property management issue.
I hear about this a lot from a few constituents in a couple of particular properties in my district, and I, I wonder if there is anything that the city can do to help support whatever work you all need to do there.
I would like to at some point explore Um, the— we've heard a lot today about, um, folks who are not paying rent and the, the economic vacancies.
And we heard about the lack of interest in some of those smaller-sized units.
And it just strikes me that we have in a different piece of the work that this committee does, very small units with intended economic vacancies, right?
Our safe rest villages, our shelters.
And on the continuum, the difference between that and an SRO where somebody is not able to pay the rent is functionally not that different, even if we think about them as very different things.
And I'd like to understand whether we are actually using our resources most effectively when we build shelters that are very small spaces for people to live rent-free instead of putting funds to supporting people who are living in our SROs and not able to pay the rent, and whether we are in fact being as efficient as we should be in our system.
And I know that might touch nerves and sound third rail-y, um, Thank you.
But I'm trying to think creatively about how we're using our resources.
What I would like to ask for today is we heard a lot about what is not leasing well and the concentration of vacancies in certain units.
And we know that there are funds for some NOFAs coming up within PHB, and I'd like to hear anybody's thoughts on what does lease well.
What should we be specifically focusing on?
Should we be focusing on specific parts of town?
Should we be focusing on those family-size units?
Should we be focusing on mixed-income neighborhoods?
Should we be focusing on more residential neighborhoods or more transit access when those 2 things are sometimes the same but not always If you were putting together the profile of an ideal unit to be able to rent to get people in quickly, what should we be thinking about?
Unidentified speaker
Well, I would answer very simply.
Family-sized units with diverse rent levels, including subsidies.
But, you know, Councilor— Vice Chair Green has talked about, you know, not just a sort of 60% of area median income cliff, but also a 30% but, but having various rent levels throughout the building, and whether or not it's subsidized, it just gives so much more access to tenants and so much more resiliency to the providers sitting here in terms of our ability to operate those for the long term.
That has to be met on the other side with the right debt levels and the right capital stacks and all that.
And then family-sized units are evergreen in terms of the need, right?
Especially given how the affordable housing industry, but more importantly, the full market industry has and continues to develop in this community.
We need to, you know, acknowledge that kids are going to grow up and families are going to grow and need a place to live.
Thank you.
I agree with that.
We strive to create at least half of our units to be family-sized, 2, 3, 4-bedroom units.
Those lease up incredibly well, and subsidies certainly help.
The units that we struggle with, as you've heard, are the smaller studios and 1-bedrooms, particularly at the 60% AMI level.
So when I perform a new development, I strive to have those family units.
They're more expensive to build, as we all know, but they do lease up I just want to emphasize, uh, we need system-wide cooperation between the City of Portland, Multnomah County, metro government, and kind of mapping out what the needs are.
So I think it's through that kind of collaborative dialogue we're going to get the best results.
I know the Portland Housing Bureau is working with us on that as well.
We're working on this unified housing strategy, and I encourage you as council not to give up on seeing that through.
And any opportunities as possible to collaborate with Metro and Multnomah County on kind of coming up with a collective vision about how we answer your question, Councilor Pirtle-Guiney.
Thank you.
I would say too, like, buildings that are in vibrant neighborhoods are a lot more desirable, and buildings that have— that are beautiful.
Elana Pirtle-Guiney
Beautiful.
I know that Metro is doing some work there as well, and we certainly need to make sure we're coordinating.
I also have had a number of conversations with, um, folks in our I'm always open to having more conversations there.
Candace Avalos
Thank you so much to our panelists.
Steve Novick
Thank you, Councilor Smith.
Loretta Smith
Thank you, Councilor Smith, and thank you to all of our presenters for sharing your perspectives.
Candace Avalos
What we heard clearly is that these are not isolated challenges.
This is a system under real strain across multiple fronts, from operations to financing and just lots of complex tenant needs.
We've also heard that things like vacancy rates and safety and service delivery are very connected to these broader system constraints.
This conversation is important because it helps ground us in the reality of what's happening across our housing system.
And that should inform how we think about our role as the city, whether that's through policy or funding, which I heard sometimes too, or coordination.
And this will not be the end of the conversation, but it's an important step in making sure that we're aligned on the challenges and the opportunities ahead.
So thank you for being here today.
Committee members, our next meeting will be on Tuesday, June 2nd.
We don't have another May meeting due to the budget process, but to Brian's point, at the June 2nd meeting, we will be talking about the Unified Housing Strategy.
Thank you.
The social housing study, and we're going to have a recap code package.
So more to come.
Thank you all.
Meeting is adjourned.