Portland now says roughly $106M in housing funds went unspent

Portland has now discovered roughly $106 million of previously unidentified funding within the Portland Housing Bureau, city administrators said Friday.

That’s more than five times the initial amount identified by city staff in November, which sparked alarm among both the public and elected officials at the time.

In a memo released Friday, Portland’s top administrator Raymond Lee, who was just hired in December, characterized the newfound money as a relic of the city’s former government system.

Much of the funding was the result of housing bureau leaders allowing certain program funds to accumulate over time, with the plan to spend those excess dollars on future projects once enough money had amassed.

Lee said this was “typical practice” for government bureaus. But, he said, the fact that bureaus never shared information with city leaders who craft the city budget, is a facet of Portland’s old form of government that must change.

“This moment reflects the City’s ongoing shift from bureaus and offices developing budgets independently to the City of Portland managing its finances holistically under our new form of government,” Lee wrote in a Friday memo to city councilors. “I am prepared to support the Council, as the City’s legislative body, in making fully informed decisions.”

Portland’s new government, where bureaus are overseen by a unified administrative branch rather than elected councilors, has only been operational since January 2025.

The $106 million comes from a variety of sources, including the nearly $21 million in unspent rental services dollars made public last fall. Each source of funding has an explicit source and purpose — meaning the money can’t go straight into the city’s general fund to patch the anticipated $67 million budget shortfall.

Here’s a breakdown of where these dollars were found and what they can be used for:

• $20.7 million in the Rental Services Office. This money was generated by a fee that landlords must pay to register new rentals, and is legally required to be spent on programs that help renters stay housed.
• $11 million in the Short-Term Rental fund. That pot of money comes from a tax on vacation rentals in Portland, like VRBO and Airbnb. These are expected to be used on affordable housing and homelessness programs.
• $8 million in Transient Lodging tax fund, a charge paid by people who stay at hotels, motels, short-term rentals or other vacation rentals. Theses funds are meant to be spent on affordable housing programs,
• $4 million from seven smaller funds within the Housing Investment Fund. That includes some straightforward revenues, like those collected through federal housing funds and an excise tax on large construction projects. But it also accounts for some more niche pots of funding, like through a specific fund created in 2016 to cover maintenance costs for three city-owned residential properties.
• $62 million in a combination of four other housing bureau funds coming from affordable housing and tax increment financing funds, which are all restricted for specific uses, ranging from property maintenance to voter-approved housing bond projects.

The dramatically revised figure comes as the city is already planning for the next budget year. Housing and homelessness have been top issues in Portland politics and civic discussion for more than a decade.

Since learning of the initial $21 million in surprise housing dollars last year, councilors have been debating the best way to put them to use. This debate will surely grow with this much larger pot of funding.

In a statement, City Council President Jamie Dunphy said this is “a good problem to have.”

“But it’s still a problem,” he said. “I’m very glad that the new form of government is leading to unearthing these longstanding problems. We are lucky to have lots of opportunities to do good and deliver help to the community, both in programmatic support and in greater transparency and efficacy of our government.”

Mayor Keith Wilson, who previously proposed using the untapped housing dollars to backfill the city’s operating budget gaps, also shared optimism about the discovery.

“Our transformation into a single, unified local government structure has brought budgetary concerns into sharp focus, and I look forward to collaborating with my Council on how to best serve Portland with these funds,” Wilson said.

City Administrator Lee said it’s unlikely that heaps of unspent funds like these are hiding in every city bureau.

“There are unique circumstances around Housing Bureau funds that suggest this is an isolated incident and is not indicative of a broader Citywide practice of underbudgeting fund balances,” he said.

But Lee said he will be closely analyzing funds across bureaus going forward.