Portland approves plan to spend $56 million of unbudgeted housing funds

Five months after Portland officials first discovered millions in unspent money in its housing bureau, city councilors have agreed on how to use those funds.

The vote puts roughly $56 million toward eviction defense, rent assistance, affordable housing projects, and several novel programs – like a plan to help erase debt accrued by affordable housing providers and a strategy to purchase property for publicly-owned affordable homes. The spending plan also puts nearly $9 million toward the city’s general fund, which pays for parks, police and other city services, and is facing a deficit.

The package, introduced by Councilors Candace Avalos, Jamie Dunphy, Mitch Green, and Angelita Morillo, passed Wednesday with an 8-4 vote.

As always, the council decision didn’t come easily.

While councilors all agreed the money should go toward programs that help low-income tenants, they were split on where to spend it. The key issue was whether councilors should be hand-selecting which housing nonprofits receive city funding, or whether councilors should trust the housing bureau to decide how to distribute funds.

“In general, as a council, I feel like we should be setting the rules of the game, not deciding who wins,” said Councilor Tiffany Koyama Lane during the meeting. “I worry that by listing certain winners, we risk turning policymaking into pick-making.”

She and others asked that councilors trust bureau experts with making decisions about housing projects. But others said this situation was an example of how those officials can’t always be trusted. As Councilor Eric Zimmerman noted, the only reason councilors were grappling with this unexpected money was because city leadership didn’t identify it – and address it – earlier.

“When your bureaus do not perform, we will use the blunt instrument,” said Zimmerman, directing his comments to the city administrator’s office. “When you find out that millions of dollars are not being told to the council, this is the reaction.”

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, which is intended to be spent on programs that support renters. The bureau said this money had accumulated during the COVID-19 pandemic, during which city staff were more focused on quickly distributing unanticipated federal stimulus dollars to help renters.

In February, a plan to spend that money on some renter supports stalled after the city administrator’s office found $85 million in additional dollars that were not on the city councilors’ radar.

Unlike the $21 million, this money wasn’t a surprise to the housing bureau. These dollars came from a patchwork of revenue streams that had accumulated over the years. Those funds were meant to grow over the years until that money would pay for large projects, like a new housing development or maintenance project.

The varied funding streams come with their own legal restrictions on how they can be spent. The package passed Wednesday uses $56 million of the total unanticipated funds.

Councilors spent more than three hours Wednesday tweaking the funding package. In the end, councilors struck a balance between giving funds to specific programs and nonprofits and funnelling money back to the housing bureau with explicit direction.

Here’s what the council approved:

• $17.5 million to buy properties for the city’s first foray into “social housing,” a term for publicly-owned, permanently affordable housing. This money also will go toward other future affordable housing developments proposed by the housing bureau
• $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”
• $8.6 million toward the city’s general fund. $4.3 million of that money would go to this current fiscal year, which ends June 30, and the other half would go to the next fiscal year
• $5.6 million to speed up development of affordable housing as part of the city’s Broadway Corridor project
• $3.5 million to cover remaining construction costs for an apartment complex in North Portland managed by Hacienda CDC for low-income tenants – those making at least 60% of the area median income, or $75,000 for a family of four
• $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

The conversation comes just weeks ahead of what’s expected to be another bruising fight over the city’s budget for the fiscal year, which begins July 1. According to the city budget office, the city is facing a roughly $170 million budget shortfall. Mayor Keith Wilson is expected to release his draft budget plan April 20.