The decline and fall of affordable housing

The downtown that Portland builds should open doors for people of all income levels
Sunday, March 04, 2007 By MARTHA GIES
The Oregonian

Jerome Henwood still smolders over a rent hike that sent him packing. "It's not just the homeless who are hurting," he insists. "It's the low-income elderly and disabled, and we're being pushed out of downtown." Henwood, 62, moved into an 11-story market-rate apartment building on Southwest Park Avenue in 2002. The rent was $670, but he made do with just Social Security. "It had a rooftop garden," he says, and he loved the location, just south of Portland State University. Then a California equity group bought the building, and just 15 days before his lease was to expire, he learned his rent would jump to $1,055, just $2 shy of his monthly income. And he's not the only one who's been forced out of downtown.

During the last decade, downtown Portland has become a privileged place to live, as condominiums sprouted from the Pearl District to South Waterfront and rental buildings in between have been flipped into condos. Longtime residents -- minimum wage-earners or retirees on fixed incomes such as Henwood -- watched their rents soar and affordable units disappear.
Unless we're willing to write off downtown as an enclave for the well-to-do -- or for the few addicts lucky enough to get treatment and housing -- we must muster the political will to build more truly affordable rentals. The city manages deals all the time. Just look at the $57 million aerial tram, the $45 million upgrade of Civic Stadium and the $42 million snazzy little streetcar.

Portland's vaunted livability attracts people with money. But let's not end up like San Francisco, where dot-com money took over the city, driving the middle class to the suburbs and the poor to the streets. Four pertinent new reports give us a snapshot of where Portland stands now. It's a mixed picture. The Portland Development Commission just finalized its recommendations for spending the new tax increment set-aside from urban renewal districts that the City Council earmarked for affordable housing: $162.6 million over the next six years. This time around, PDC increased its commitment to build as many as 1,450 units specifically for people who pay no more than 30 percent of their income for rent. That's citywide, too, not just downtown. The U. S. Department of Housing and Urban Development will release new median income figures any day now. This could trigger rent increases in income-restricted buildings, since landlords are allowed to raise rents whenever the medium income rises.

Northwest Pilot Project's Downtown Portland Affordable Housing Inventory -- expected to be about 3,400 units -- will be published after new rents are announced. Here, the affordable ceiling is set just $35 higher than what a single person working full time at Oregon's minimum wage can pay -- $425 per month.
Figures for the first two years of the city's Ten-Year Plan to End Homelessness indicate it's working, with fewer people living on the street. But it has created even more competition for the dwindling low-income rental stock because, thus far, no new units have been added.

Wrong direction

Portland turned onto the path of high prices and tight supply when, in a move to clean up things, the city tore down a lot of low-income housing in the '70s. As late as 1974, an estimated 6,000 units still existed downtown; but a 1978 report showed 738 units lost since 1970 in the Lownsdale and Yamhill districts alone. It looked as if subsidized housing could make up for the lower-end rental housing lost when landlords signed the first 20-year HUD contracts in 1977. In subsidized buildings in which tenants pay 30 percent of their income for rent, and the government makes up the difference. Subsidies help keep buildings rented at market rate and also help the renter -- just as government-guaranteed loans and income tax deductions help those of us paying mortgages.

But with the Reagan budget cuts to HUD programs in the '80s, homelessness exploded nationally. In Portland, it took until 1988 to get a grip on the loss, and the City Council passed a resolution: the 5,183 low-income downtown housing units that existed in April 1978 would be maintained. We've never pulled that off.

Ten years ago, HUD contracts signed in the '70s began to expire. At the Roosevelt Plaza on Southwest Park, 58 people received eviction notices in 1997. Northwest Pilot Project, which had helped seniors displaced from downtown hotels for decades, and director Susan Emmons negotiated a postponement. For the first time, owners helped pay some relocation costs. As the person Northwest Pilot Project sent to help tenants find new homes, I was the unwitting agent of the destruction of a community, a family really. Many of these people were long-term tenants -- among them people in wheelchairs, or suffering schizophrenia, or speaking only Korean -- and they loved their home, right on the Park Blocks and convenient to Safeway. After those people moved, the building went condo.

If the Roosevelt evictions were my personal introduction to the brutal side of gentrification, they also were a turning point in public awareness of the problem. The Oregonian ran four major articles on the loss, including a front-page photo of tiny Olive Lacsamana, 93, sitting alone in her tidy room before eviction.

So in 1998, when the Oak's contract expired, the city bought the building to maintain 90 apartments as subsidized housing, and they remain so today. The city passed a preservation ordinance the same year. It requires any owner opting out of a HUD contract to first offer to sell the building to the city, so low rents can be preserved. Unfortunately, the ordinance has not been enforced, and when the Western Rooms quietly converted to market-rate rentals in 2001, we lost 39 units of subsidized housing. Which is not to say that all landlords are ready to bolt. The largest HUD contract downtown, Clay Tower with 235 subsidized one-bedroom units, expires this December, and the Schnitzer family, which owns the building, is trying to negotiate a meaningful extension from a cash-stripped HUD.
These HUD buildings are a critical part of the housing picture, and the new inventory will show 1,040 HUD units downtown.
Less successful have been the income-restricted buildings, first built here in the '90s in exchange for tax credits. The income restrictions are too high. A one-bedroom "60 percent" apartment rents for $709 a month, while the elderly that Northwest Pilot Project serve typically average $750 in monthly incomes. The new inventory of affordable housing downtown will also show the trend away from open-market housing for the general low-income public, toward housing targeting special needs: corrections clients, the chronically homeless and people in recovery.

One reason for this shift is the Ten-Year Plan to End Homelessness. It addresses only the chronically homeless, defined as single, disabled people who have been homeless for a year or more, or homeless multiple times. Defenders of this plan argue that the chronically homeless cost millions by burdening courts, jails, hospitals and sanitation systems.
The Ten-Year Plan report claims 480 new housing units. Yet, except for the 60 units at 8 N.W. 8th Ave., on the drawing board as early as 1999, nothing has been built downtown. All the others are existing low-income housing and were simply co-opted by the plan from the existing pool of low-income affordable housing stock. Let's not set up a system under which someone has to be chronically homeless before being able to get a place to live.
So now what are our options?

At the federal level, we are just going to hope to outlive the current administration's cuts to vital HUD housing programs.
At the state level, we need to reverse the proscription against a real-estate transfer tax so that we can enact one here and use money to finance new low-income housing. More immediately, Senate Bill 38 could generate approximately $60 million per biennium for housing by increasing the document recording fee from $21 to $36, with the additional revenue going to Oregon Housing and Community Services. The fee is charged for paperwork processing when a property changes hands.
And locally, we have the new tax-increment financing revenues, though they are not going to bring us to our goal downtown. Also, as we do create units, some of which will be in the South Park Blocks and Downtown Waterfront Urban Renewal Areas, lets not earmark all of them for the chronically homeless, leaving the elderly and the working poor out of the mix.
This is a real estate problem, and we need to solve it at a real estate level. For myself, I'm still haunted by Olive Lacsamana at the Roosevelt and all the other low-income elderly that we continue to shuffle around this city.
In the meantime -- though you can't see it from the top of the tram -- downtown Portland is 1,800 affordable housing units short of our 5,183-unit downtown goal.

Martha Gies is the author of "Up All Night" and many short stories and essays published over the last 30 years. A longtime low-income housing activist, she has helped relocate tenants from the Roosevelt Plaza, Clifford Hotel, Western Rooms, St. Francis Hotel and the Ace Apartments. Since 1996, she has done the housing counts for the Downtown Portland Affordable Housing Inventory.

Link to article