Portland Housing Affordability – Market Tools and Incentives

Traci Manning, DirectorPortland Housing Bureau, www.portlandoregon.gov/phb/

traci.manning@portlandoregon.gov, 503-823-2380

1.Pearl District Affordable Housing Development Agreement

2.Indirect Affordable Housing Development Tools

3.Floor Area Ratio Bonus

Pearl District Affordable Housing• Development agreement between

Portland Development Commission and Hoyt Street Properties

• Agreement to match City infrastructure investments with HSP development

• Affordable Housing Requirement: 35% of residential rental units affordable below 80% MFI– 15% at 50% MFI; 20% at 80% MFI

• HSP to provide land /City to provide development subsidy

1. Pearl District

2. Indirect Tools

3. FAR Bonus

• Outcome: 30% of total units affordable– 601 affordable units built; 126 new units planned

• Affordable units are in stand-alone buildings, not integrated in market-rate buildings

• All affordable units received city subsidy• No affordability term was established in the

agreement– Some units were counted but only regulated for 10

years• Affordable housing buildings reflect design

character of the district and blend in

1. Pearl District

2. Indirect Tools

3. FAR Bonus

Multiple-Unit Limited Tax Exemption • 10-year exemption on improvements• $1,000,000 annual cap in foregone revenue• 10+ unit projects within designated high transit areas• At least 20% of units must be affordable to

households earning 60% MFI or below• Affordable unit mix must reflect total unit mix of

bedroom sizes• Projects must demonstrate a financial need (capped

rate of return)• Green Building requirements

1. Pearl District

2. Indirect Tools

3. FAR Bonus

Homeowner Limited Tax Exemption • 10-year exemption on improvements• 100 unit annual cap for private developers

(no cap for non-profits)• Single-family, townhome and condominium• 3+ bedrooms unless in high transit area• Price cap of 120% area median sales price

($291,000)• Buyer must be 100% MFI or below• Owner occupied

1. Pearl District

2. Indirect Tools

3. FAR Bonus

Limited Tax Exemption OutcomesJuly 2013

• 14,187 units currently receiving an exemption– 87% Rental– 13% Homeowner

• 88% of rental units occupied by < 60% MFI• 61% of homeowner units occupied by < 80%

MFI• More units are coming back on the tax rolls

than new units being added• Total annual foregone revenue of $16 million

1. Pearl District

2. Indirect Tools

3. FAR Bonus

SDC Project Eligibility

• Eligible areas within the City of Portland• New construction or rehabilitation

adding new residential units• Homeownership and rental

development• For-profit and non-profit developers

1. Pearl District

2. Indirect Tools

3. FAR Bonus

SDC Program RequirementsRental Projects • Developments must serve households

earning at or below 60% of the Median Family Income (MFI), adjusted for household size, with a maximum housing expense of 30% of household income limit, for a 60 year period.

• If only a portion of a project will be affordable, exemption amounts are prorated

1. Pearl District

2. Indirect Tools

3. FAR Bonus

SDC Program RequirementsHomeownership Projects • Units must sell to homebuyers who will

occupy the homes as the initial occupants• Developers may not rent out properties• Initial homebuyer income at or below 100%

MFI for a family of four (adjusted upward for 5+), currently $69,400

• Units must sell for less than the price cap for the HOLTE Program, currently $291,000

1. Pearl District

2. Indirect Tools

3. FAR Bonus

SDC Program OutcomesFY 12-13

• 400 units approved for exemption– 60% rental– 40% homeowner

• $5 million in foregone SDC revenue– $10k per rental unit– $16k per homeownership unit– Majority of revenue foregone by Parks and

Sewers• Program evenly used by for-profit and

non-profit

1. Pearl District

2. Indirect Tools

3. FAR Bonus

Focusing FAR Bonuses on Housing

• Portland currently offers 18 FAR bonus options• E.g. Eco-roof, open space, public art, affordable hsg

• Portland rental development has increased post recession• 6,800 units built in last 18 months; 6,500 under

construction• Comm. Saltzman leading effort to focus FAR

bonuses on creation of affordable housing in new private developments

• City staff currently researching cost/benefit for developers to determine whether FAR for affordable housing would be desired

1. Pearl District

2. Indirect Tools

3. FAR Bonus