Review of housing set aside reveals positive results

By John Miller, Contributing Writer

As a long time advocate for affordable homes here in Portland I was very happy to discover that the city has exceeded its ‘TIF Set Aside” spending on affordable housing in urban renewal districts over the past five years. I am involved in a review panel that’s looking at the past five years’ performance and then making recommendations for the next five years.  It’s heartening to see that the city has made good, at least in large part, on this critical commitment.

Without getting too “wonky,” here’s some background. TIF stands for Tax Increment Financing, the primary source of funding for development in urban renewal areas.  In 2006 the City of Portland adopted the “TIF Set Aside” that mandated that 30% of all TIF funds in urban renewal districts be spent on affordable housing. Further, the City defined a set of income guidelines to make sure that the money was spent to meet our city’s greatest housing needs. Lastly, the city mandated that the 30% goal applied to each district, and not as a city wide goal (an important distinction  — more on that below).

The projections in 2006 estimated the TIF Set Aside would raise $121 million dollars for affordable housing in the city’s nine eligible urban renewal districts. Five years later, it now looks as though actual spending on affordable housing projects in URAs has been $153 million dollars — about 33% of TIF expenditures overall. That’s very good news and illustrates the city’s commitment to help solve our affordable housing challenges here in Portland.

There are two very important features of the Set Aside policy that I’d like to emphasize here. First, the policy states that the goal is “by district” rather than as a city-wide goal. This is important because it ensures that affordable homes are evenly distributed throughout the city, and not concentrated in a few areas. One of the drawbacks of urban renewal in other cities around the country has been that after the improvements are made, property values rise, and low and moderate-income families can’t afford to live there anymore. This unintended consequence of urban renewal is kept in check here by mandating that, in addition to a host of community improvements, affordable homes are built within each district so that people of all incomes have a chance to live in newly revitalized areas.

The second important feature of the set aside policy is the income guidelines that detail what the money will be spent on (and more importantly, who will receive the benefits of the public investment).  In most districts the guidelines mandate that between a third and a half of the set aside funds be spent on the development of homes that are affordable to families making 30% or less of the median family income (MFI) — seniors, people with disabilities and working families. The rest of the funds are targeted toward homes for a variety of income levels, up to 100% MFI, and it varies by district.

Dedicating up to half the funds in a district to homes for very low income people is critical, because it is very difficult to develop housing to serve 0–30% MFI residents. Without this dedicated funding source, it’s likely that many of these projects would not be developed, making our affordable housing shortage even greater. Overall, the review of the TIF Set Aside shows that we fell short in meeting the goal of developing homes for families making 0 to 30% MFI, and so more work is needed here in the future.

At this point in time the City and other partners are conducting a review of the Set Aside policy, and they’ll make recommendations for changes to the policy, if any, going forward. I’m optimistic that these recommendations will allow the continued success of the Set Aside as we strive to meet the varied housing needs of our city.

I applaud the Portland Development Commission and the Portland Housing Bureau for their good work on this policy, and Commissioner Nick Fish for his steadfast stance in support of the “by district” aspects of this critical financing tool.

The TIF Set Aside helps to ensure that decent, quality affordable homes are built throughout the city and helps to ensure that Portlanders are not unintentionally forced out of their neighborhoods as a result of urban renewal.

John Miller is the Executive Director of Oregon Opportunity Network, a trade association that supports and strengthens  community development and affordable housing organizations through advocacy, communications, peer learning, and best practices.

 

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