Revenue from short-term housing permits will fund housing bond.
When the city of Portland legalized short-term rentals in 2014, the resulting tax revenue was directed toward an affordable housing investment fund. Now that the account has a $1 million balance — and Portland is desperately seeking solutions to its housing crisis — the city council wants to cash in.
At its March 15 council meeting, an ordinance was introduced to do just that. At its March 22 meeting, the council approved the ordinance with no discussion.
“This is one example where short-term accommodations within the city are actually helping to pay some of the freight toward providing affordability,” Mayor Ted Wheeler said at the ordinance's first hearing.
Wheeler was referring to a 2016 Portland Housing Bureau study, which found that short-term rentals did indeed exacerbate the housing crisis.
“There is a negative impact because the short-term rentals took units off the market and arguably made the housing market worse,” Commissioner Nick Fish said.
Fish and Commissioner Dan Saltzman have pushed for this financing since the study was completed, he said. “It’s the most flexible dollar we have."
The ordinance allows the city to issue bonds up to $9 million to fund future affordable housing projects.
Commissioner Chloe Eudaly, who was elected on an affordable housing platform, said she’s excited about the additional funding. However, she emphasized the money won't completely mitigate the impact of short-term rentals. Eudaly said there are multiple short-term rental platforms that are not collecting the lodging tax.
“We should have a lot more than the $9 million capacity,” she said.
She’s probably right. Since Airbnb opened up shop in Portland, the city has been widely criticized for its lack of enforcement. Only one in five short-term rentals are operating legally. To rectify this problem, officials have recently implemented stricter permitting requirements along with immediate fines for violators. Those rules go into effect March 31.
What would the bond fund?
Specific numbers are not yet available as to how many units $9 million could fund, but a review of the city's recent affordable housing aquisitions provides some indication. The city recently purchased 263 units in Northeast Portland for $51 million. If the average unit costs $200,000, this $9 million investment will secure a mere 45 units for low-income families.
Wheeler did cite as a positive step forward the Housing Bureau's $1.2 million purchase of the Mt. Tabor Annex from Portland Parks and Recreation department. The annex will eventually be renovated and converted into affordable housing.
*This story has been updated to reflect the council's approval of the bond ordinance.