City Council to the rescue.

Portland City Council is taking this housing emergency seriously.

Last week, as we reported, Housing Commissioner Dan Saltzman was able to win Mayor Charlie Hales' vote on a proposal to increase the amount of urban renewal dollars spent on affordable housing from 30 percent to 45 percent. Commissioner Nick Fish was also on board with the plan, but Commissioners Amanda Fritz and Steve Novick had expressed reservations.

The council was set to hear testimony on Wednesday, but didn't plan on voting until next week. After hours of testimony from a plethora of advocates—from developer Dike Dame, who sits on the Portland Housing Advisory Commission; to Habitat for Humanity President and CEO Steve Messinetti; to Proud Ground Executive Director Diane Linn—the commissioners decided not to delay the vote when it became clear all five council members would approve the increase. Getting unanimous approval also allowed the commissioners to declare emergency status on the ordinance. While the emergency status doesn't change the dates the increase will go into effect, Commissioner Nick Fish today said it gets things going in the right direction.

Council is also looking into other ways to generate new sources for dedicated affordable housing funds, and this time they're going after developers' money instead of setting aside property tax revenue.


The commissioners also unanimously approved a resolution allowing the Portland Housing Bureau (PHB) to begin a nexus study into the economic feasibility of assessing a "linkage fee" on new commercial developments.

What's a linkage fee, you ask? It's a cost leveled on developers of commercial projects under the assumption that a portion of jobs created by the new developments—hotel, restaurant, retail, office, etc.—are relatively low-paying, meaning that the employees won't be able to afford market-rate housing. The linkage fee is there to offset some of the housing impacts created by these new developments.

"It's a bit of insider baseball, if you will, with regard to housing policy," PHB Director Kurt Creager testified at Wednesday's hearing. "Affordable housing linkage fees capture revenue from new developments in a manner that doesn't render the development economically unfeasible and provides municple governments resources to produce and manage the affordable housing demanded as a result of the new jobs created."

Creager offered an example of a hypothetical new office building in the Central City that includes a ground floor deli. Assuming wages in that deli are $9.25 per hour (Oregon's minimum wage), the annual wages for a full-time employee would be less than $20,000. On the other hand, the average rent for an apartment in the Central City could cost around $1,400 per month based on current rates. This would mean that to live near their jobs, those deli employees would be spending about 87 percent of their annual wages on housing. By charging developers a linkage fee, the city would be able to use the revenue to create housing within the Central City that those deli workers could afford.

Other cities already have linkage fee policies in place. For example, San Diego charges developers up to $2.12 per square foot on new construction. New developments in San Francisco are tagged with linkage fees of up to $24 per square foot, Creager says. In Seattle, which is also experiencing a housing crisis, City Council is considering implementing a linkage fee of up to $28 per square foot.

Seattle's proposed linkage fee got developers all riled up. They challenged the plan's constitutionality and eventually got Council Member Mike O'Brien to shelve the idea. Creager says the city attorneys don't believe implementing a linkage fee in Portland would run into the same road block.

The results of the study are expected in April 2016.

Fish says though any new money dedicated toward affordable housing—whether it's generated by assessing linkage fees or revamping the city's density bonus program for developers to prioritize affordable housing creation—he worries that by the time those options are on the menu for Portland, the housing boom will be over.

With the addition of the $67 million officially added to the coffers on Wednesday, Portland now has $269 million socked away to address the housing crisis over the course of the next decade.