HOU-1.06 - Affordable Housing Tax Increment Financing Set Aside Policy
Renamed from "Income Guidelines for Affordable Housing Tax Increment Financing Set Aside Policy" August 2, 2017.
Importance of TIF Set-Aside Policy
The Portland Housing Bureau has completed a thorough review of the city policy on Tax Increment Financing Set-Aside Policy for Affordable Housing and is presenting recommendations to City Council for improvements to the policy for the next five years.
Why This Is Important
The Tax Increment Financing (TIF) Set-Aside Policy was created in 2006 as a permanent resource to invest in meeting the City’s housing needs by creating and preserving homes for the City’s most vulnerable people and families.
In its first five years of implementation, the set-aside policy has generated more than $152 million in direct investment in housing affordable to low-income and workforce residents. Since 2006 affordable housing investment has accounted for one-third of TIF expenditures across nine urban renewal areas.
The set aside provided capital resources for key projects like the Bud Clark Commons, Block 49 veterans housing in South Waterfront, and preservation of existing low-income apartment units. Funds have also been used to help residents in neighborhoods access homeownership with down payment assistance, and allow others to remain in their homes by funding needed home repair work.
Benefits for the City
Updates to the set-aside policy will increase its overall efficiency and effectiveness in generating revenue for direct investment in housing in the City. The community will benefit by an increase in the number of homes and physical improvements in existing low-income housing. Highlights of the recommendations include:
- Maintain 30% across Urban Renewal Areas (URAs) as the minimum spending threshold over ten cumulative years (FY 2006-07 to 2015-16)
- Retention of the existing income guidelines within set aside. This means that set-aside dollars will continue to be prioritized toward projects that serve the most vulnerable
- Increased efficiencies in coordination between PHB and PDC on set-aside budgeting and reporting
How the Policy Review Was Conducted
In Spring 2011, PHB launched the review process for the set aside with an eye towards creating recommendations for improvement to the policy. PHB convened a subcommittee of our new Portland Housing Advisory Commission (PHAC), comprised of City and Portland Development Commission staff, as well as business, nonprofit and community leaders with experience using TIF for housing development. Recommendations from the subcommittee were presented to each Urban Renewal Advisory Committee and at a public hearing of the PHAC. Email and written testimony were also received and considered.
Education District Urban Renewal Area
The 30% set-aside policy helps ensure that a portion of the Tax Increment Financing (TIF) supports the preservation or creation of affordable homes within the Urban Renewal Area (URA). The Portland Housing Bureau administers the set-aside and makes decisions regarding set-aside investments.
How will PHB invest the set-aside in the Education Urban Renewal Area?
The bureau’s top investment priority is the preservation and creation of rental housing that remains affordable to low-income families and individuals. Prior investments in the downtown core have focused on the rehabilitation of existing rental homes, and the preservation of buildings with federal rent subsidies. PHB staff analyze opportunities in new districts, and with community input set guidelines for investing the set-aside to best address the unmet needs of our community.
How does the community help shape PHB investments?
PHB releases an annual funding solicitation (Notice of Funding Availability, NOFA) to seek development proposals for investments. Proposals are reviewed by a public review committee, and the evaluation results are published for public review. The Portland Housing Advisory Commission (PHAC), PHB’s citizen advisory group, holds a public meeting every month, and members of the public are encouraged to attend and provide testimony.
History of TIF Set-Aside Policy
On April 26, 2006, through Resolution No. 36404, the City Council expressed an interest in considering a policy “to dedicate a percentage of Tax Increment Financing (TIF) revenues from all Urban Renewal Districts citywide to an affordable housing set aside fund, or to create another mechanism to ensure predictable and adequate funding and prioritization of housing for individuals and families earning 80% Median Family Income (MFI) or less.”
Council also “request[ed] the Portland Development Commission work in partnership with the Bureau of Housing and Community Development, the Office of Management and Finance, the Housing and Community Development Commission, and Affordable Housing Now and other interested stakeholders to develop and present to Council by September 1, 2006 either an implementation plan to create such a set aside fund or other options.”
The PDC Commission directed staff to create and implement a broad and inclusive public participation effort, consistent with PDC’s Public Participation Policy, which reflects perspectives from individuals and groups, including Urban Renewal Advisory Committees, involved in all aspects of tax increment financing, and other stakeholders who would benefit or would be impacted by a specific set or automatic allocation of urban renewal resources for affordable housing.
Tax Increment Expenditure Data Report
A Technical Advisory Committee was established to review PDC’s historic information on affordable housing expenditures in the existing URA’s as well as developing projections regarding future expenditures. The committee consisted of members representing the following: Mayor, Commissioner Sten, Bureau of Housing and Community Development, Office of Management and Finance, the Housing Development Center, Community Development Network and PDC.
The Technical Advisory Committee was charged with assisting with the Data Report on Historical and Forecasted Urban Renewal Expenditures. Their work was completed during the month of July 2006. Both the PDC Board and the City Council were briefed on their work in August.
TIF Set Aside Implementation Plan
A Project Advisory Group was established to review the data report from the technical advisory committee and discuss implementation options. Membership will include: Mayor, Commissioner Sten, Bureau of Housing and Community Development, Office of Management and Finance, the Housing Development Center, Community Development Network, Affordable Housing Now, Housing and Community Development Commission, Housing Authority of Portland, Portland Business Alliance, League of Women Voters, PDC and urban renewal advisory committees.
The Project Advisory Group was charged with assisting with the development of TIF Set Aside Implementation Recommendations. The Group met three times in August and September and provide input to PDC staff in the development of the Implementation Plan.
A public forum cosponsored by PDC and HCDC was held August 28th to allow for broad community input into the development of the Implementation Plan.
In October both the PDC Board of Commissioners and the City Council adopted the TIF Set-Aside Implementation Plan which established a 30% set aside in the new districts (Interstate Corridor Urban Renewal Area, Gateway Regional Center Urban Renewal Area, Lents Town Center Urban Renewal Area and North Macadam Urban Renewal Area) and South Park Blocks Urban Renewal Area, and includes separate percentages for Downtown Waterfront Urban Renewal Area, Oregon Convention Center Urban Renewal Area and the Central Eastside Urban Renewal Area.
TIF Set-Aside Income Guidelines
The Implementation Plan included PDC’s intent to establish income guidelines that correspond to individual URA Housing Policies, current projects, per unit subsidies, and forecasted budget availability. PDC participated met with urban renewal advisory committees and stakeholder groups, as well as citywide stakeholder and advocacy group in January and February to get input on the in Preliminary Staff Recommendation for Income Guidelines.
PDC hosted a public forum on January 24, 2007, which was attended by over 60 community representatives ranging from URA representatives, neighborhood representatives, affordable housing developers and advocacy groups, homeownership advocates, community organizations and real estate professionals.
On February 28, 2007, the PDC Board of Commissioners formally adopted Income Guidelines for the TIF Set-Aside.
2011 Stakeholder Review
In early 2011, the PHB completed a thorough review of the policy. The review included a public hearing on the TIF Affordable Housing Set-Aside policy (held on August 2, andthe hearing provided an opportunity for public testimony and comments on the policy and the recommendations currently under development. On November 16, 2011, the Portland City Council unanimously approved and adopted a set of recommendations that Housing Commissioner Nick Fish brought forward in order to improve the TIF 30% Set-Aside Policy. View the City Council ordinance.