In a recent audit conducted by the city auditor, it has been found that Portland’s Inclusionary Housing program, designed to address the city’s housing affordability crisis, is not meeting its intended goal of creating affordable apartments for those in need. The findings of the audit shed light on the challenges faced by the city in expanding its supply of affordable housing, even after nearly a decade of declaring a housing emergency.
Launched in 2017, the Inclusionary Housing program mandates that developers constructing new apartment complexes with 20 or more units allocate 20% of those units to individuals or families earning 80% or less of the region’s median income. This translates to approximately $90,000 per year for a family of four. Developers also have the option to designate 10% of the units for those making 60% of the median income, which is around $60,000 per year for a family of four.
In return for participating in the program, developers are offered incentives such as waived development fees and property tax exemptions for the affordable units. Alternatively, developers can choose to opt-out of the program by paying the city a fee of approximately $25 per square foot of residential space in their new building.
The program aimed to provide a diverse range of housing options in “high opportunity neighborhoods” with quality schools, good access to public transportation, and other amenities. Additionally, it was intended to increase housing opportunities for families and individuals facing the greatest economic disparities.
However, the audit highlights that these goals were too vague and not realistic, and the program has fallen short of meeting them. As of April 2023, the program has resulted in the creation of 566 new affordable apartments since its inception in 2017. However, the majority of these units are targeted towards individuals or families earning 60% or less of the median income.
The audit emphasizes that this falls short of serving the Portlanders who face the greatest economic disparities. Data reveals that a significant number of low-income renters, particularly people of color, do not qualify for the affordable apartments due to the income thresholds set by the program.
Furthermore, the report suggests that if Portland’s median incomes continue to rise, more individuals and families will be excluded from qualifying for the program. Surprisingly, market-rate apartments in the city are already affordable for those earning between 60% and 80% of the median income, and some are even cheaper than comparable units provided under the Inclusionary Housing program.
The audit also points out that the program lacks options for low-income families, with only 23% of the affordable units having two or more bedrooms, and a mere two units offering four bedrooms.
Another concerning finding of the audit is that the funds collected through the Inclusionary Housing program, totaling over $5 million from developers who opted out of the program, have not been utilized as intended. Instead of funding more affordable housing programs through the Portland Housing Bureau, the collected fees have been allocated towards the bureau’s general operating costs.
The program, reportedly, has succeeded in building new units in neighborhoods with easy access to schools, transportation, and services. However, the overall impact was stated to have fallen short of the program’s objectives.
