Portland Oregon city officials say they plan to consider a proposal to spend millions of dollars to bail out landlords and pay off mortgages held by landlords of low-income housing, according to reports. The plan is to bail out landlords so rents can be lowered in income-restricted apartments.
Oregon Housing and Community Services, the state housing-finance agency, has since last year been administering a similar $38 million program but it does not require landlords to lower rents.
The city wants to tap $8.8 million of unbudgeted Housing Bureau funds to buy down rents and to restructure the property owners’ debts. Owners are in financial distress because, they say, many tenants are failing to pay rising rents, operating costs are increasing and more units are sitting empty. Paying off part of their debts, the argument goes, would allow them to pass on savings to tenants.
Home Forward, the city’s housing authority, has told the city about its high vacancy rates, tenants’ nonpayment of rent and cash flow problems.
Home Forward, which provides over 12,000 federal housing vouchers and 7,000 units of affordable housing across the city, is in dire straits, according to reporting from Willamette Week. Its buildings are inching closer to financial distress, due in part to high rates of nonpayment of rent, vacancies and rising operational costs.
Market rents have dropped and affordable rents have risen so that the two were basically equal, meaning that tenants Home Forward could have attracted for its affordable units—most often the units rented to those making 60% or less of the area median income—are now opting to rent in the private market.
Home Forward tenants became increasingly unable to pay rent on time, or pay it at all. Home Forward spokesman Rylee Ahnen has previously said that just over half of its total tenants are over 30 days late on rent.
Ian Davie, the agency’s chief operating officer, told the board that this number was in part due to local regulations—chiefly the city of Portland’s FAIR ordinance—that requires a landlord with an 80% area median income unit to rent to a tenant so long as their income is 2.5 times the monthly rent. That means if the monthly rent is $400, the landlord must rent to a prospective tenant whose income is $1,000 or more. “The reality is folks get into units that they can’t afford.”
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