Bond funding swap
In conjunction with our partners at Metro, the Portland Housing Bureau is re-allocating funds between two affordable housing projects in our development pipeline, one supported by Portland’s Housing Bond and the other by the Metro Affordable Housing Bond. This funding “swap” will more efficiently and expediently bring new affordable homes to Portland’s housing market.
The 149-unit Barbur Apartments, initially funded through Portland’s Housing Bond, will now instead receive funding from the Metro Affordable Housing Bond. The hollywoodHUB project, originally funded by the Metro Bond, will now receive funding from Portland’s Housing Bond—149 of hollywoodHUB’s 222 units will now be counted as Portland Housing Bond units; the remaining 73 units will continue to receive Metro Bond funding and will be counted toward the goals of the Metro Bond. This funding swap between the two projects will not alter any of the current unit counts for either Bond—the number of total units, family-sized units, and deeply affordable (<30% AMI) units for each Bond will remain the same.
Why we decided to swap the funding
Funding for affordable housing is always complicated and has only grown more challenging in the volatile market conditions that followed the COVID-19 pandemic. Affordable housing developers must assemble a capital stack of funding sources for each project, which usually includes a conventional mortgage loan, tax credits, and other sources of funds from public or private sources—each with their own particular set of rules and regulations.
Both the Barbur Apartments and hollywoodHUB were awarded PHB funding through competitive solicitations in 2021, with the Barbur project applying for Portland Bond funds, and hollywoodHUB applying for Metro Bond funds. When the Barbur Apartments project was awarded Portland Bond funding, the development team was in the process of assembling their capital stack and planned to apply for Local Innovation and Fast Track (LIFT) funds from Oregon Housing and Community Services (OHCS).
This year, however, OHCS designated its LIFT and Housing Trust Fund (HTF) resources to support Metro Bond projects only, leaving the Barbur project with a $4 million funding gap. There would not be another opportunity to apply for the additional funds until 2024, which would have delayed construction until mid-to-late 2025.
While hollywoodHUB was awarded Metro Bond and LIFT funds, they would have had to change their funding plan to accommodate LIFT rules, leaving that project with a new funding gap as well.
PHB was able to work with Metro to find a solution that would allow Barbur Apartments to move forward much more quickly: swap funding sources between the two projects. Substituting the Portland Bond funds with Metro Bond funds in the Barbur Apartments allowed us to allocate the additional LIFT and HTF funds to the development, while an equivalent number and type of units in hollywoodHUB would shift to the Portland Bond.
With the swap, hollywoodHUB will be fully funded and reach financial close by mid-2024, and Barbur Apartments will reach financial close by late 2024/early 2025.
An additional change in our Metro Bond project pipeline has occurred. Portland Community Reinvestment Initiative (PCRI) has made the decision to withdraw their project, the Alcena, due to changes in the financial landscape since they accepted Metro Bond funding in March 2022. Due to increasing interest rates and construction costs, and with an inability to leverage additional external funding, the project is no longer financially feasible for PCRI. Therefore, the Alcena project will not move forward, and the Metro Bond funding for the project will be re-allocated by PHB at a later date.