Despite a host of compromises over what to prioritize, Portland City Council has yet to decide how to allocate $21 million in funding generated by the city’s Rental Services Office.

After a handful of amendments, a resolution initially intended to allocate funds toward rent stabilization and homelessness prevention morphed into a proposal that could instead see millions funneled to Prosper Portland—the city’s economic development agency.

The City Council is working to quickly allocate the funding after a recent audit of the Portland Housing Bureau (PHB) Rental Services Office uncovered $21 million in unspent funds it had received between 2021 and 2024. 

First proposed in early December, the “Slow the Inflow” resolution was intended to address immediate needs of people who are at risk of homelessness. That's because in Multnomah County, nearly 1,600 people became homeless in November—the latest data available—with nearly 1,200 of those engaging with homeless services for the first time. At the same time, 1,300 people exited homelessness that month—with 420 moving into permanent housing.

All three East Portland city councilors—Candace Avalos, Loretta Smith and Council President Jamie Dunphy—cosponsored the bill.

Coming out of the Housing and Homelessness Committee, the resolution was predominantly focused on sending direct aid to people facing homelessness, including rent assistance, housing vouchers, and rapid rehousing programs. With the new amendment Council passed January 28, over a quarter of the total $21 million dollars could instead funnel into the city’s economic development corporation Prosper Portland—a contentious facet of the legislation.

While city councilors couldn’t reach a final vote before the meeting adjourned Wednesday, the discussion gave further insight into increasingly frequent clashes between councilors whose legislative priorities appear favorable to low-income Portlanders, and those poised to guide that funding toward corporate developers. The evenly split Council has led to stalemates on major issues so far this year, most notably during its vote to elect a new council president in its first meeting in January.

On Wednesday, Avalos offered a conciliatory tone when introducing the amended version of the resolution she spearheaded.

“This amended proposal before you today is a good faith effort to respond to what we heard,” Avalos said. “It seeks to balance the urgent need for immediate renter supports with housing priorities raised by other Council members. It does not include everything that I personally would choose, but it is a package that I believe we can stand behind together.”

The funds are generated thanks to an ordinance passed in 2018, which requires landlords to register rental units and pay a small fee for doing business. The collected money goes into a fund that offers support to renters and landlords through rent assistance programs, eviction protection, and assistance to landlords for unanticipated costs at permanent supportive housing projects.

A piece of a competing ordinance to allocate the same $21 million that Councilor Eric Zimmerman brought through the Finance Committee was copied into an amendment to the resolution discussed Wednesday. Zimmerman sought to redirect $5.6 million in funding to Prosper’s Broadway Corridor project.

The full project includes two 230-unit affordable housing projects currently in development. One is developed by the city’s housing authority, Home Forward, and the nonprofit Urban League of Portland, and is fully funded by a combination of local and Metro funds. It will serve people with incomes up to 60 percent of the area median income (AMI), with 50 units reserved for those making 30 percent AMI or below.

Portland’s current AMI is $86,870 per year for an individual.

Across the street is another development, called Parcel 6—a mixed affordable- and middle-income housing project for those making 60 to 120 percent AMI, according to Prosper spokesperson Yume Delgado. That project will be developed by Related NW, an affiliate of California’s largest middle-income developer Related Companies of California. 

The Parcel 6 development faces a $22 million funding gap, and amendments to the resolution could send $5.6 million to Prosper to help fill part of the hole. The rest would come from matching state funding and loans later this year. But if Prosper is unable to get that funding, the initial $5.6 million would go back to funding rent assistance, pending passage of an amendment requiring it.

The city has already opened its coffers for Parcel 6, and some councilors are hesitant to send more money without a better understanding of why the gap exists in the first place, or how the development will help Portlanders needing assistance now.

“I know that with the economics of affordable housing in the city of Portland right now, I struggle,” Green said. “I struggle to think about how we can lease up a set of units that range from 60 percent AMI to 120 percent AMI, when you can't even lease up units at the 60 percent AMI because they're so close to market [rate]. And in fact, at the range that we're thinking about in the Parcel 6 of Broadway Corridor, I don't know how it's any different than market.”

The City Council authorized a $36 million Portland Clean Energy Fund (PCEF) investment in Parcel 6 on December 18, 2024. The impact statement of the ordinance boasted that the investment would “catalyze significant additional funding in projects to redevelop the former US Postal Service site.” 

Now, City Council is again considering whether to subsidize the project, send it straight to those on the verge of housing, or both. 

After the meeting, Councilor Green sent his colleagues two variations of an amendment for city councilors to consider next week.

One would strip the $5.6 million funding from Prosper and $2.5 million for two other development projects and instead allocate $8.1 million to rent buydowns through PHB. The buydown would mean paying down some of the mortgages for affordable housing projects in the city’s portfolio, which in turn would permanently reduce rents for those units.

A second option would strip the $5.6 million from Prosper but keep funding for the other two projects in place. In either case, the allocation to buydowns could effectively reduce rents on a portion of the city’s 1,800 vacant, existing affordable housing units, potentially setting rates affordable to those making 45 percent of AMI, according to Green.

“If we expanded what the Portland Housing Bureau is already doing, you can cut rents for the renters in those units by 18 percent,” Green said. “One time expenditure, 18 percent over the life of the regulatory agreement.”

The Council is expected to take up the final resolution in its February 4 meeting, and will vote on the underlying ordinance to release the funds later in the month.

Correction: A previous version of this story misstated Portland's Area Median Income (AMI) for an individual. It also failed to distinguish that the Urban League's building will serve those with incomes up to 60 percent AMI, with 50 units reserved for those at 30 percent or below.