Increased Income Limits from HUD Could Increase Feasibility of Portland Inclusionary Housing.

One beneficiary of increased HUD income limits could be the developers/owners of projects participating in the Portland inclusionary housing programs. 

Below is a table that shows the increase in the increase in max rent levels that would be permitted for units with income restriction at 80% of MFI for the Portland metro area. 

Max rents possible increase by $94-$134 depending on bedroom counts.  For this post I am focusing on a 2 BR unit. The table shows that for 2 BR units:

1. The maximum allowable rent (including utility allowance) would increase by $121 from $1,345 to $1,465. 
2. Assuming this is NOT higher than the street rent for the project this would mean that a developer could realize additional income of $1,452 per year for a 2BR unit reserved for a tenant with income below 80% MFI.  Note that this requires NO additional effort or investment from the developer/owner.  
3. Capitalized at 6% an increase of income of $1,452 per year would mean the value of the unit increased by $24,200.  So if 20 units were reserved at 80% MFI the value of those 20 units increased by $484,000 just because of the change in HUD income limits. 
4. In addition, the pool of eligible renters for the unit is expanded. For a 3 person family at 80% of MFI (the occupancy standard for a 2 BR unit) the eligible income increased by more than $4,800 (unrounded, from $53,784 to $58,608). 
5. NOTE: I expect HUD income limits for the Portland metro will continue to increase NEXT year, so the max rents and increase in values for 80% MFI units will NOT be limited to just this year. 

Created and originally posted on the Oregon Housing Blog.