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Affordable rents further out of reach

National report paints a dire picture, but nonprofit sees hope


by: PHOTO COURTESY: NATIVE AMERICAN YOUTH ASSOCIATION - Construction workers oversee the stacking of pre-fabricated modules into the Kah San Chako Haws apartment building in Southeast Portland. The nine-unit development is an experiment in quicker and cheaper construction of low-income housing.A study of housing trends by Washington, D.C.’s National Low Income Housing Coalition has found that a Portland-area breadwinner working a minimum wage job would need to work 78 hours a week to afford rent for an average two-bedroom market rate apartment.

The study, “Out of Reach 2014,” quantifies the trend in which more and more people are making minimum wage, but that there are fewer and fewer apartments that they can afford. The study considers rents “affordable” if they are no more than 30 percent of a tenant’s gross income. The trend has become especially dire in recent years in Portland, as renters here have grappled with an apartment vacancy rate that is among the lowest in the nation.

Portland-area housing advocates say that trend poses a serious problem for the local economy because it pushes working families out of the city.

The Portland area, which stretches into Clark County and Vancouver, Wash., has 267,680 renting households. The median income of those renters is $68,300. But a breakdown of the data shows that more than one in five qualify as “severely burdened” — those households forced spend more than half of their income on housing, including utilities. That leaves precious little for other necessities, such as food and health care, says Nick Sauvie, executive director of Rose Community Development, a Southeast Portland nonprofit that provides housing to low-income residents.

Sauvie points to a recent study by Portland housing expert Tom Cusack showing that 72 percent of Portland renters who earn less than $50,000 a year were paying more than the recommended ceiling of 30 percent of their income for housing.

“That’s really staggering,” Cusack says. “That’s almost three out of four renters, and fifty-thousand bucks isn’t a bad income. You’ve just got a huge affordability problem in Portland.”

According to the “Out of Reach” report, housing burdens are especially severe among those making 30 percent or less of the median family income. In Oregon’s 3rd Congressional District, which includes most Portland and Gresham households, among renters making 30 percent of the median income — about $20,500 — seven of 10 households spend more than 50 percent of their income on housing. There are more than 30,000 3rd District households making less than $20,500 annually.

Another 22,455 3rd District households make between 31 and 50 percent of median area income, and about one in three of those pay more than half their income for housing.

Local low-income housing advocates say that unaffordable rents, even for those with jobs, is pushing many Portlanders outside the city and some into homelessness. Sauvie says that Rose Community Development is seeing many low-income Portlanders doubling up with family and friends as a way to deal with the area’s high rents. Many of Rose’s clients are single-parent households, he says, for whom 78-hour workweeks are not feasible.

“If you consider kids and having to work those long hours to pay the rent, that’s really tough,” he says.

Portland not the worst

The “Out of Reach” report makes clear that there are worse places than Portland for renters. In San Francisco, the minimum wage is $10.74, $3 more than the federal minimum wage. But rents in San Francisco are so high that an average San Francisco two-bedroom apartment costs three and a half times what a worker can afford with a full-time minimum wage job.

The desperate need for more low-income housing has led to the formation of a new work group including two state legislators, the Oregon Home Builders Association and representatives of cities, counties and others with an interest in housing, according to Janet Byrd, executive director of Neighborhood Partnerships, a Portland nonprofit working on low-income housing issues.

Byrd is one of the driving forces behind the new group, which first met two weeks ago. She says the group hopes to look at ways to encourage construction of low-income housing. Among the issues they intend to tackle are possible code changes that might make it easier for developers with creative solutions to build. But she also says state money needs to be part of the package to incentivize potential builders of low-income housing.

“The state really needs to think of housing as an infrastructure investment and put some serious money into construction,” Byrd says.

Some local private developers are pushing the city for code variances and waivers of development fees that would allow them to build much lower cost low-income housing. A few projects that did not accept public money have been able to offer apartments built as inexpensively as $70,000 per unit.

Project saved time, money

Byrd says the Kah San Chako Haws, an apartment project in Southeast Portland’s Lents neighborhood, is an example of a creative solution to low-income housing. The modular three-floor, nine-unit Kah San Chako Haws was completed in 12 months, half what a typical project might take. It was developed by the Portland’s Native American Youth and Family Center, though its apartments, which rent from $500 for studios to $800 for two bedrooms, were not intended to exlusively house low-income Native Americans.

Aware that many Native Americans are among those suffering from the lack of low-income housing, NAYA officials decided it was worth the investment to build an apartment house that might push the discussion among area developers.

“We really wanted to test the technology and design,” says Rey Espana, director of community development for NAYA.

With its modular design, Kah San Chako Haws cost about $180,000 per apartment to build. Espana figures that’s about $40,000 less than most low-income developments that have to factor in the soft costs associated with taking public money. Espana says that on a larger scale, the cost could be brought down to about $135,000 per apartment. But the real advance, Espana says, was in saving time.

Kah San Chako Haws took only three days to build because it was pre-constructed for assembly. That means three days of construction noise and neighborhood traffic interruption. And the building is LEED-certified, so upkeep and energy costs should be low.

But referring to the lack of low-income rentals, even Espana says, “You can’t really build yourself out of this problem.”

Low-paying jobs, few rentals

Sauvie blames a “snowball effect” for much of the situation. He says thousands of people who dealt with home foreclosures during the recession became renters. Meanwhile, the supply of rentals for those making middle and low incomes has diminished. In addition, Sauvie says, many middle-income jobs have been replaced by service economy jobs that pay minimum wage or a little more.

Sauvie, whose nonprofit started in the 1970s buying and rehabbing old homes and small apartment buildings, says the federal low-income housing tax credit system intended to help nonprofits such as Rose Community Development is simply too complicated and burdensome. Developers often are asked to buy vacant property and hold on to it for years in the hope that federal funding will be approved.

“The tax credit system is basically a bribe to the private sector to get them to put money into affordable housing,” says Sauvie, who adds that it isn’t working. Currently, there are fewer than 300 new units of publicly funded, low-rent housing being planned in Portland, according to the Portland Housing Bureau.

But that doesn’t mean there aren’t a growing number of housing subsidies, says Althea Arnold, a research analyst with the National Low Income Housing Coalition. Arnold notes that the single-largest housing subsidy in the country is the mortgage interest tax deduction enjoyed by homeowners. The coalition has campaigned for a $500,000 cap on those deductions, and potentially re-directing some of the money that would be raised toward funding low-income housing.