Sunday, July 20, 2014

Portland City Council Video/Audio on Old Town Action Plan, I Calculate $117 Per Month Local Subsidy for Apts Up to 100%MFI.

Video is HERE; I have also created and posted to my OneDrive cloud HERE a MP3 audio file of the 2 hour and 45 minute long discussion.

The 5 Year Action Plan document is HERE. A table from the plan pasted below shows affordable rents (without utility allowances) and eligible incomes at different MFI levels: 

60%-100% MFI City Subsidy for SDC 's is $117 Per Month, No Rent Burden Controls.
SDC waivers are intended to apply to new construction only. If you do the math you will see that $7 million in SDC waivers for 500 units would cost $117 per month, $1,400 per year, for 10 year compliance period. (If the compliance period increases then the cost per month decreases).

Another Program Might Provide Additional Subsidy if Some Units are Below 80% MFI Units?
Under the Multiple Unit limited tax exemption program it appears to me that it might also be possible to apply for tax exemption for all the units if rents for 20% of the units have rents affordable to HH's with incomes below 80% MFI ; every $1,000 in annual tax exemption would add $83 to the monthly subsidy cost. 

Using a base assumption of $1,000 per unit tax exemption value, for a 10 year term for the full 500 units there would be an additional $5 million in lost revenue or a total of $12 million. 

Using those assumptions local subsidy per unit would total $2,400 annually @ $200 per unit per month for 500 units, with 100 of those units affordable below 80% MFI.  

(Note: The plan also calls for funding of seismic studies and upgrades to existing buildings; if an existing building is adapted to provide housing, these subsidies might assist the development of those units (SDC waivers may not be available for these units since they only apply to new construction but it is not clear that there will be any income restrictions on seismic funding). 

Below 30% MFI HUD Subsidy, $517 Per Month; With 30% of Income Rent Burden Controls.
The latest HOME Forward Dashboard report HERE indicates average project based voucher HUD subsidy per month as $517 or $6,204 per year ; 82% of all Home Forward tenant based voucher holders had reported incomes below 30% MFI.  

This data suggests that roughly speaking it costs $400 more per month in rent subsidies to help a household below 30% MFI vs a household where rents are set as affordable at 100% of MFI in Portland. One additional benefit of HUD assisted rental subsidies is that renter paid portion of rent is generally limited to 30% of tenant income, substantially reducing the likelihood of tenant rent burdens. (Note: Differences are likely overstated, as significant percentage of HF voucher units are 2 bedrooms or more, whereas all examples for OldTown plan are shown as zero or 1 BR units).

SDC Assisted Unit Old Town Rent Burdens Will Not Be Limited to 30% of Income
Tenant paid rent levels in the Old Town projects will NOT adjusted by income as are HUD subsidized rents.  So long as the market supports, the maximum rent permissible at 100% MFI could be paid by a tenant with any income below 100% MFI. This means cost burdens for some renters likely will higher than 30% of their income, since few renters incomes will be exactly at 100% MFI. (As this would be by renters election, one could argue that this is a voluntary cost burden choice).

There is scheduled to be a City Council vote on the Action Plan on the 23rd. It is possible that there may be tweaks to the final plan, including limiting the rate of future rent increases past 10 years.

Originally created and posted on the Oregon Housing Blog

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