Portland councilors make renewed pitch to spend $56 million of unbudgeted housing funds

In December, Portland city councilors pitched a plan to quickly spend $20.5 million of unallocated city money on renter protections. Three months later, that spending plan has now nearly tripled in scope after councilors learned of other unspent housing funds.

A new proposal led by four city councilors would expand that package to include spending on several novel proposals to address the city’s affordable housing crisis, like a “rent buydown” plan to help erase debt accrued by affordable housing providers and a “social housing” strategy to purchase property for publicly-owned affordable homes. The nearly $56 million proposal would also pay for the already identified renter support and eviction defense programs.

Councilor Mitch Green, one of the politicians behind the plan, called the spending plan the response to a “generational opportunity” to impact the city’s affordable housing crisis.

“I think we’re in one of those crises where we have opportunities to seize on investments right now that are probably going to be lower cost than a few years down the road,” Green said at a council meeting last week, where he previewed a part of this plan.

The proposal also chips away at Portland’s larger budget shortfall, putting $4 million to cover a gap in the city’s general fund. Councilors are expected to advance the funding package next month.

City officials first disclosed that the Portland Housing Bureau was sitting on 21 million of unbudgeted dollars in November.

That money was generated by a fee that landlords must pay to register new rentals, and it is meant to be spent on programs that support renters. The housing bureau said this money had accumulated during the COVID-19 pandemic. At the time, city housing staff were focused on quickly distributing the heap of unanticipated federal stimulus funding to help renters, and distributing the other money took a back seat.

In December, the three councilors who represent East Portland’s District 1 pitched a plan to spend that money on rent assistance, legal defense for people faced with an eviction, and other tenant support programs.

But that plan was stalled early this year after a closer look at the housing bureau’s budget found $85 million in additional dollars that were off of city councilors’ radar.

Unlike the $21 million, this money wasn’t sitting unbudgeted and unidentified in the housing bureau. Instead, this money came from a patchwork of revenue streams that had accumulated over the years. These funds were each intended to grow over the years until that money was expected to pay for large projects, like a new housing development or maintenance project.

While housing officials were aware of these dollars, they were absent from the city’s annual budget documents, since they were years-long investments not set aside for annual spending. That means they were largely unknown by the elected officials who, under the newly reconfigured government structure, no longer oversee city bureaus.

The varied funding streams come with their own legal restrictions on how they can be spent. That means councilors can only tap into about $35 million of the full $85 million for other projects.

The latest council proposal pairs that number with the $21 million in unspent rental registration fund dollars to build the $56 million spending package. Councilors Green and Angelita Morillo join two councilors behind the original spending plan, Council President Jamie Dunphy and Councilor Candace Avalos, in sponsoring the plan.

In a Wednesday evening email to councilors, Dunphy said the new spending plan is set to be first heard at the city’s housing committee on April 7. That will be the first meeting of this newly restructured committee. Under Dunphy’s citywide committee restructuring, approved by the council last month, Avalos is chair of the Housing and Permitting Committee, while Green is Vice Chair.

The discussion may be divisive. Councilors have sparred on the best way to spend these funds in recent months, some taking offense to how slowly it’s taken to get the money to those who need it most.

At Wednesday morning’s council meeting, Councilor Loretta Smith called it “highly inappropriate” for Dunphy to further delay the conversation on how to spend these dollars — a plan that Smith originally had introduced with her District 1 colleagues. Last month, a majority of councilors voted to delay the spending decision, choosing to first wait to learn more about how the unallocated dollars could legally be spent. Smith did not vote for that plan.

“There is so much need for housing in this community. We are in a housing crisis,” Smith said Wednesday. “Vulnerable and underserved communities always get put to the back burner.”

Dunphy told her a new proposal would be introduced soon.

Here’s a breakdown of the spending plan:

$12.6 million to be spent on future affordable housing developments proposed by the housing bureau

$10 million to buy one or more properties for the city’s first foray into “social housing,” a term for publicly-owned, permanently affordable housing

$9 million on rental assistance for tenants facing eviction or experiencing homelessness

$8.8 million to help lower the cost of rent at affordable housing developments to increase tenancy and ensure housing providers can pay off debts — also called “rent buydowns”

$5.6 million to speed up development of affordable housing as part of the city’s Broadway Corridor project

$3 million toward three affordable housing developments in North and Northeast Portland

$2 million to pay for legal services for renters facing eviction

$200,000 to improve renter and landlord education on tenant rights

$800,000 to help prospective homeowners cover downpayment costs

Notably, the package suggests sending 4 million in unspent housing dollars to the city’s general fund, which pays for parks, police and other city services. The city has a $18 million shortfall in its current-year general fund, which has yet to be resolved.

Mayor Keith Wilson previously asked councilors to consider using some of the newly discovered housing dollars to patch larger city budget gaps.