Saturday, February 13, 2016

Inclusionary Housing Bill Changes: New 80% "Affordable Housing" Income Limit is Bad Rental Housing Policy.

Changes in the bill that would lift the preemption of local inclusionary ordinances reported HERE would now define affordable housing as up to 80% of median family income, instead of the prior 60% of median household income definition of affordable housing. This may make sense for multifamily home ownership purposes but it's bad rental housing policy.

This is a MAJOR weakening of the bill (SB 1233) and a diversion of resources to a segment of the market that has a far lesser need than the 60% of MFI and below rental housing market.

In the Portland metro area a developer would be able request local incentives and property tax exemptions for a 2 BR unit with a rent as high as $1,323 instead of a maximum rent of $993 (at 60% MFI). That's would allow a developer seeking incentives to charge $330 or 33% more than would be permitted with a 2 BR income limit at 60% MFI.

This new 80% of MFI "affordable" rent limit is also $115 higher than the Portland $1,208 2 BR FMR used for housing vouchers, meaning that Portland area developers may get incentives for units with rents not available to housing voucher holders, at odds with the the voucher source of income legislation passed last year. 

[Note that 2016 income limits have yet to be published by HUD but they seem likely to increase which would allow even higher rent levels].

The National Low Income Housing Coalition reports in Oregon that there were 94 affordable and available units for every 100 households between 50%-80% of median family income, but only 42 units affordable and available for every 100 households below 50% of median family income.

The graph below shows how Oregon renter cost burdens DECLINE significantly as income increases; use of a 80% of MFI "affordable housing" income standard focuses attention on a segment of the market that has a far lesser need than renters at lower income levels. 

Justifications that incentives for higher income housing will allow filtering down of units to lower income families amount to a "trickle down" rationale for a bad policy. 

Originally created and posted on the Oregon Housing Blog.

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