Metro Council is poised to ask voters to approve the greatest increase in the regional government’s authority in decades, signaling support for referring a $652.8 million affordable housing bond to the November ballot. Is this a sustainable solution? Read more…
Affordable Housing Could be New Metro Focus
Six of seven elected Metro Council members view ballot measure scheduled for Thursday vote favorably.
by Jim Redden
Portland Tribune
Tuesday, June 05, 2018
Excerpt:
The Metro Council is poised to ask voters to approve the greatest increase in the regional government’s authority in decades.
Six of the seven elected council members have signaled support for referring a $652.8 million affordable housing bond to the November 2018 ballot this Thursday, June 7. The proposed measure says passage will create a new affordable housing function for Metro. The funds would be distributed to cities and county housing authorities.
During a May 29 council work session on the measure, Metro Chief Operating Officer Martha Bennett said… Metro-commissioned polls and conversations with others in the Portland area convinced her that the affordable housing crisis is a regional issue demanding Metro’s leadership. “Housing price increases have been exceptional historically, and the situation is even worse if you’re a person of color,” Bennett said.
Praising the framework were Metro President Tom Hughes and councilors Sam Chase, Shirley Craddick, Bob Stacey, Craig Dirksen and Betty Dominguez.
Complicating matters is an existing restriction in the Oregon Constitution that prohibits governments from partnering with private businesses on projects funded by such bonds. It prevents the traditional method of building affordable housing, where governments only fund a portion of the projects. The 2018 Oregon Legislature recognized the problem and placed a proposed constitutional amendment on the November 2018 ballot to repeal the restriction for affordable housing projects. Voters won’t know whether it will apply to the potential Metro measure before the election, however, because they will both be on the same ballot.
If the amendment passes, Metro estimates the bond will preserve or create 3,900 affordable housing units. If it fails, the number drops to 2,400. Both are just a fraction of the 48,000 affordable units Metro says the region needs, however. Passage of the constitutional amendment also would allow Portland to increase the number of units to be preserved or built by its affordable housing bond.
Affordable housing and social justice advocates are expected to support the measure at Thursday’s hearing. It will be opposed by John Charles, president and CEO of the Cascade Policy Institute, a free market think tank. He calls it an example of “mission creep,” and an expensive and inefficient way to build affordable housing. Other elected officials in the region are split over the measure.
Those who support the measure agree with Bennett that the affordable housing crisis is so unprecedented and severe, Metro must help address it. Those opposed to it have several objections, including increasing property taxes to pay for affordable housing. Metro says the average homeowner will pay $60 a year for the life of the bond, more if the property is valued above a $240,000.
And those who are undecided also have concerns, including how the bond’s passage might affect future funding measures. Metro has already said it will ask voters to approve a regional transportation funding measure to help finance the new MAX line proposed for the Southwest Corridor between Portland and Tualatin through Tigard in November 2020.
“Local governments have their own funding issues. Tualatin voters just passed a local transportation bond. Tigard just voted on a local operating levy, the schools and Tualatin Valley Fire & Rescue continue to fund local option levies. There is a tipping point beyond which voters are unable and/or unwilling to pay,” Tualatin Mayor Lou Ogden said.
Comment:
Yes, the Portland region’s affordable housing crisis is unprecedented and severe, and there is a tipping point beyond which voters are unable and/or unwilling to pay… and pay and keep paying. The housing crisis is not going to fade away – as long as incomes lag far behind rising housing prices. Compound this notion with HUD Secretary Ben Carson’s proposal to cut federal housing assistance to “help propel people out of poverty”. It seems we continue to attack the problem by using taxpayers’ money to build more affordable housing units, even when we recognize we cannot keep up with the growing demand. Furthermore, we abate taxes on new multi-family projects to incentivize the creation of market-rental units that developers would not otherwise build because of high land costs. As Professor Patrick Condon of the University of British Columbia said, “But that strategy is both inefficient and fails to ensure affordable housing in perpetuity.”
What we need more than public subsidies and financial incentives is a systemic approach to the problem. First, recognize the source of the problem of rising housing prices. Those 10 to 15 percent annual “appreciation” rates we experience in some neighborhoods are not rising building values, they are skyrocketing land values – the speculative component of property value. The more sustainable strategy is to dampen those steeply rising land values through the property tax system. Our state legislature could address property tax reform in the next session by allowing jurisdictions to adopt a local option land value tax. Step 1: exempt metro jurisdictions from Measure 5 and 50 limitations and revert to true market assessments. Step 2: Authorize differential tax rates – a high rate on land assessments and a low rate on building assessments. This would dampen land price inflation over time and incentivize capital investment in housing construction. All at no additional cost to taxpayers!
