Oregon Lawmakers Kick-Start Moderate-Income Housing Program with $75 Million

Oregon needs to build 29,500 new homes annually to meet demand and, having approved less than half that number last year, lawmakers have granted $75 million to kick-start a ‘moderate income revolving loan program.’

Tackling the Home Affordability Crisis

The program will assist developers finance the construction of middle-income housing as Oregon, like most other states, tackles the home affordability crisis.

It is hoped that the revolving loan program will override the homebuilding slump, particularly hard-hit by high interest rates.

The $75 million will produce between 2,000 and 3,000 new homes, according to the director of Oregon Housing and Community Services (OHCS), Andrea Bell. Housing units are expected to cost $30,000 each.

$700 Million Will Be Invested in Rental Properties

The OHCS estimates that $700 million will be invested this year to provide 7,000 rental properties with a $100,000 public subsidy per apartment.

How the Moderate-Income Revolving Loan Program Will Work

Cities and counties will receive money from the revolving loan fund as zero-interest loans. The local governments will then pass the money on to developers as grants and in return, developers will rent or sell the properties to households whose earnings do not exceed 120% of the area’s median income.

Instead of paying property taxes, the developers (or “grantees”) will repay the money as a fee to local governments. These payments will be returned to the state.

The theory is that if everyone pays what they owe, the fund will replenish itself, allowing the state to offer more loans in future years.

The Harvard University researchers from the Joint Center for Housing Studies calculated the cost of a moderate-income housing program in Georgia at $23,000 a unit, with a similar scheme in Kansas costing $27,000 a unit.

These figures are a far cry from the $100,000 per unit price tag on a middle-income home in wealthy Massachusetts.

The program will expand existing housing stock levels. However, the university researchers say it could face a backlash from advocates who fear the subsidies will channel resources away from low-income households with the greatest need.