The Portland City Council may direct millions in unspent housing funds to bail out financially distressed nonprofits, a move they say could fill some of the city’s nearly 1,900 low-income apartment vacancies.
Councilors convened Thursday for more than three hours to hash out how, exactly, they can use $106 million in unbudgeted housing funds identified by City Administrator Raymond Lee in a stunning report last month. The memo by the new city administrator represented a massive escalation of what started as a $21 million unspent balance within the Portland Housing Bureau last November.
The memo highlighted the Housing Investment Fund established by city ordinance in 2016. It has grown to include several “sub-funds” that relate to multifamily housing, with sources that include the general fund, fees on rentals, and a portion of the city’s fees on vacation homes. Many of the funds, however, have limitations or restrictions on their use, and the memo and city staff Thursday outlined the potential risks of shifting those uses.
That left a shallower pool of money for councilors to discuss — between $21 million and $56 million. From the dais, councilors grilled city staff, in particular Chief Financial Officer Jonas Biery, who briefly appeared to lose patience during the proceedings.
When Councilor Angelita Morillo asked about information accuracy coming from his office, Biery told her, “We’re busting our asses trying to get this information accurately to the public in an environment where misinformation is continuing to be shared in the media and otherwise.”
Councilor Loretta Smith raised the issue of whether the city’s auditor, financial firm Baker Tilly, had been made aware of the $106 million.
“It was hidden from the council and the mayor,” Smith said. “It was hidden from our auditors, who didn’t know about it.”
Lee has said the city plans to hire an outside firm to independently investigate the housing funds. In addition, the city administrator in his memo last month recommended a “systematic review of all funds in (the) city to confirm that budgeted fund balances reflect actual existing contingencies and reserves.”
When it came time to discuss potential uses for the funds, a proposal by Morillo and Councilor Mitch Green called for immediately disbursing the $20.7 million first discovered in November on rent assistance ($9 million), eviction legal aid ($1.9 million), miscellaneous landlord/tenant education and downpayment assistance ($1 million) and rent buydowns for low-income apartments ($8.8 million).
Discussing the rent buydown proposal Thursday, Green cited data revealed by The Oregonian/OregonLive last December that showed nearly 1,900 affordable housing apartments sitting empty across Portland. Green said it was difficult to read headlines that so many units were “lying fallow.”
The meeting offered a rare display of public comity among the oft-divided council, as most councilors said they’d support some version of assistance to the struggling nonprofits to pay down their debts and cover operating expenses, which would free the landlords to lower rents or upgrade their security.
Still, the idea met some skepticism.
Councilor Eric Zimmerman asked why Portland housing authority Home Forward, for instance, has kept units empty for months on end without lowering rents, as would happen when market-rate property managers need to draw tenants.
“The continual bailout is a concern for me,” Zimmerman said. “Before we commit to buying down their mortgages, can we get an understanding that the system actually isn’t rotten to its core?”
Councilors didn’t vote on any proposals during the work session. Discussion of the funds will continue before the Housing and Homelessness Committee at a date to be determined.
Portland eyes unspent housing funds to fill empty affordable housing units
