On September 11th, Prosper Portland presented a report to Portland City Council on six proposed Tax Increment Financing (TIF) districts. After the presentation, Commissioner Rene Gonzalez questioned the merits of the city code requiring 45 percent of TIF funds set-aside for affordable housing in those districts. Based on comments during the session, the pending changes to the city’s form of government and a shift from past developer-friendly policies by the bureau prompted his objection. It is a sentiment supported by a business development advocacy group whose CEO recently penned an opinion piece published in the Oregonian.
Portland City Council adopted a TIF set-aside Policy for affordable housing in 2006, and that percentage of funding dedication increased from 30 percent to 45 percent in 2015. A 2024 ECOnorthwest TIF district investment impact report highlighted the policy’s effects across nearly two decades of development post that City Council change to TIF. The report found that 47 percent of all affordable housing in the city now resides within former TIF districts, and those areas experienced subsequent market-rate housing production growth four times greater than in other comparable segments of the city. Portland’s modern application of TIF differs from its historic Urban Renewal past, which removed housing for freeways and large civic projects. Current district proposals and recently approved TIF districts take a more holistic approach to economic development that aims to prevent displacement. Those new priorities strengthen communities before investing in large transformative projects like new parks, MAX light rail, or street grid enhancements similar to the Broadway Corridor Redevelopment plans.
Commissioner Gonzalez’s post-report comments did not question the need for housing or directly challenge the efficiency of past affordable housing production funded by TIF districts. However, they contested Prosper Portland’s ability to develop significant projects within TIF districts due to the current level of affordable housing required. “All of these choices have trade-offs. It’s great to talk about the plusses but also understanding the opportunity costs. And one of the biggest critiques that we discussed about Prosper over the last 15 years is the ability to deliver big projects, and we’re taking away tools from Prosper again to solve specifically one of the many problems we have in our community,” said Gonzalez.
Members of Prosper Portland and the Portland Housing Bureau addressed the Commissioner’s questions, supporting the current integration of affordable housing in TIF spending while reframing the assertion that Prosper Portland’s current approach has pulled back from all other areas in favor of affordable housing. “My top line assumption is that affordable housing and the resources that have gone to affordable housing if you compare the year 2000 to the year 2024, there’s a much higher level of investment in affordable housing. If you were to compare the kinds of investments that we’re making in public, private partnerships that support commercial development or major Community priorities, it’s probably about the same. What I think has declined precipitously since 2000 is the amount of funding that’s going into infrastructure,” explained Kimberly Branam, the outgoing Executive Director of Prosper Portland.
Although infrastructure support from TIF funds has declined in recent decades compared to past urban renewal spending, they have not disappeared. Infrastructure investment and projects that hasten gentrification are now shifted later in the TIF lifecycle. Modern TIF planning focuses on community stabilization ahead of significant project investment, strengthening existing residents and businesses against displacement before rents rise. This approach attempts to improve neighborhoods for the people already there, using the tax dollars collected in that district for its benefit. These programs now encourage private development and transportation funding but share economic growth with existing communities instead of predominantly benefiting private investment. “Historically, when you look at many TIF districts that were neighborhood TIF districts, a lot of them were anchored by a potential for new light rail lines. The challenge with having the first [TIF] investments out of the gate focused on the local match for federal [transit] investments is that then, you don’t have resources for the first five to ten years for other priorities. So the desire that we’ve heard is let’s learn from the lessons [of past TIF districts] and make sure that we’re stabilizing communities early on as those major infrastructure investments take place,” said Branam. “So along 82nd, as you’re planning for major investments, I think there’s a desire to make sure that early investments go towards the kinds of things that help small businesses purchase their property and homeowners stay in their homes,”
Portland Housing Bureau Director Helmi Hisserich reinforced the need to stabilize housing ahead of infrastructure investment as a tactic to fight gentrification and make more efficient use of public funding. “There is a direct corollary between major investments in the public sector, such as transportation and open space –which are very desirable– and the increase in property value, housing prices, and displacement,” said Hisserich. When public works projects increase area property value, the inflated costs for land will eat into the government’s budget for affordable housing developments. “Our current approach to affordable housing is to invest at the tail end, taking all of that value increase into our cost of that housing. So I think we need to be talking about a strategy where we’re investing early,” remarked Hisserich.
Commissioner Gonzalez expressed a perspective that the city is more vulnerable than when City Council first enacted this affordable housing funding policy. “Set-aside and the theory behind it goes back to 2006 [when] the city was booming. We were doing quite well at creating big projects and doing quite well at building. We were concerned that we were leaving people behind and so that it was not shared economic prosperity. I want to make space for this Council not to just hand off policies to the next Council that are based on very different assumptions. I think we are in a very different place in 2024 than we were in 2004. We’re not generating big projects, market [rate] housing has collapsed. I mean, we’re looking at a downtown armageddon if we don’t significantly change this trajectory,” said Gonzalez. He also noted that middle-income housing production is still relatively weak, and many Portlanders earn too much to qualify for the affordable housing TIF funds create. However, the greatest need for housing remains in the regulated affordable segment.
Lisa Abuaf, the Director of Development and Investment for Prosper Portland, addressed the agency’s efforts to support middle-income housing and the headwinds to working as a catalyst for middle-income housing creation. “We actually set aside a portion of our citywide funds to support middle-income housing. I want to acknowledge middle-income housing is not regulated affordable and you don’t have the federal programs to tap into. So it’s really challenging because we’re very dependent on what’s happening in the private debt and equity market. I think that’s actually what we’re seeing right now, and the volume of resources we have today in TIF can’t take the place of what has been private investment to date.” said Abuaf. Helmi Hisserich also cited an increased need for regulated affordable housing above all others. “While middle[-income] housing is a great area when we talk about affordability, 53 percent of the housing need is in households earning below $81,000 a year.” In 2024, a household of three people earning 80 percent of the Median Family Income would make $84,960 and could qualify for many TIF-funded affordable housing.
In Monique Claiborne’s opinion piece published in the September 15th Oregonian, she echoed the Commissioner’s desire to reexamine the affordable housing requirements. Claiborne is CEO of the regional economic development group Greater Portland Inc., a private agency that bolsters business development in Portland and surrounding areas. The article reiterates Commissioner Gonzalez’s perspective regarding TIF’s required affordable housing percentages and argues for returning Prosper Portland’s independence from the City Council before the new year’s changes to City Council. Since 2007, city leaders have gained increased control over Prosper Portland’s activities and budgets. Changes to Prosper Portland control and TIF allocations are not yet under consideration at City Hall. However, these comments could represent a test to see if there is support for rolling back changes made to TIF district project allocation and Prosper Portland’s operational stance.
With many officials and research pointing to housing costs as a leading factor for Portland’s social problems, initiatives removing funding sources for affordable housing would likely fail to receive widespread support. However, Commissioner Gonzalez’s suggestive inquiries and Monique Claiborne’s opinion piece show signs of a growing cohort seeking change in TIF district set-aside percentages. People should expect more discussion of affordable housing set-aside in the coming months before a new 12-person City Council takes control. Prosper Portland staff committed to bringing additional information to the October 23rd City Council public hearing on TIF District Exploration.
Disclosure: The author of this article served on the 82nd Avenue TIF Working group and voted in favor of forming the district that includes a 45% affordable housing set-aside.
Commissioner Rene Gonzalez is running for Portland Mayor. Montavilla News does not endorse candidates or ballot measures.
Promotion: Help keep independent news accessible to the community. Montavilla News has a Patreon account or you can pay for a full year directly online. We invite those who can contribute to this local news source to consider becoming paid subscriber or sponsor. We will always remain free to read regardless of subscription.