Is there a better way to create more affordable housing in Oregon? We intend to find out over the next few years, as four dynamic teams test, improve and iterate on very different innovative ideas.
Last year, Meyer laid down an unusual and ambitious invitation, which we called the “1 Million Months Challenge,” to encourage innovation around affordable housing design, finance and construction. The basic intent was to empower people who think mainstream affordable development isn’t concerned enough with cost, and those who claim there are less costly ways to help people attain housing that’s affordable, but also meets some basic threshold of quality, dignity and comfort (while still attending to long-term costs of operating and maintaining housing).
A Caveat - This is Harder than it Looks!
Full disclosure: After nearly five years of engaging with experts on these issues, we are not entirely certain there’s a path that can deliver dramatic cost reductions. Too often, people who criticize the (admittedly eye-wateringly high) cost of delivering new housing do so without much experience with the thicket of constraints and cross-cutting pressures that define a typical government-subsidized multifamily development. And too often, critics suggest cutting corners without thinking through the tradeoffs of throwing out (for instance) prevailing wage requirements or building to a high standard for energy-efficiency.
As we outlined in our 2015 report, the basic math involved in building high-quality buildings makes it essentially impossible to aim for rents affordable to people earning a modest wage (or far less), and that necessarily means that public funding will be an important part of most affordable development. Factor in a white-hot construction market, expensive land, the string of expectations that follow public dollars, and the risk mitigation requirements of a dozen or more funding partners, and affordable housing seems far from affordable.
Still, that’s not an excuse for complacency, and as the 2015-16 round of grantees pursuing innovative cost efficient strategies demonstrated, there are some important ways to trim costs at the margin in design and construction, as well as some finance and design strategies that haven’t been fully tested that deserve to be further developed.
The 1 Million Months Challenge
As we reflected on what we learned from the 2015-16 RFP focused on innovation, we wanted to open the doors even wider to innovative ideas and approaches and to focus more clearly on the end goal: creating as much access as possible to affordable housing for as little public subsidy as possible. This led us to last year’s 1 Million Months Challenge, a moonshot-style competition, focusing creativity and energy around a specific, lofty goal: Bring us your best ideas for guaranteeing 1 million months of affordability, using as little public subsidy as possible.
We framed the challenge this way to emphasize flexibility and focus on the big-picture outcome: This is less about developing "projects" than creating a viable new model or path that could potentially help our partners house large numbers of people for an extended period of time.
Proposals were invited under three broad categories: Rural Workforce, Extremely Low-Income/Hard to House (i.e. those with additional challenges to housing stability like mental illness, etc.), and an Open category serving any low-income population.
Meyer received 18 proposals from across Oregon, and after an extensive vetting process, awarded grants to four projects:
BRIDGE Housing Corporation: Creating Equitable Opportunity through Opportunity Zone Investments (Statewide/Open)
BRIDGE will explore utilizing the new Opportunity Zones to promote the creation of affordable housing in Oregon without relying on scarce and competitive federal Low Income Housing Tax Credits. The recent federal tax cut package created tax incentives for investing in economically distressed communities (“Opportunity Zones”) defined by the state. BRIDGE will partner with Novogradac & Associates (a national tax and real estate development consultant) to develop a model for creating housing with the help of new investors expected to be drawn to the Opportunity Zones. Many in the affordable housing world are wondering whether Opportunity Zones could be an effective tool for developing affordable housing, and BRIDGE is well-positioned to be an “early-mover” here and to share what they learn with the field.
Housing Development Center: Zero Energy Modular for Rural Workforce Homeownership (Statewide/Rural Workforce)
Housing Development Center (HDC) will partner with Vermont Energy Investment Corp. to bring VEIC’s interesting zero-energy modular housing model to scale in Oregon, combined with a land trust model to assure long-term affordability. HDC is a leading nonprofit consulting firm focused on affordable housing finance and development across the state and a partner with Meyer on several recent important projects. This proposal takes on several key unresolved issues in affordable housing in Oregon: how to scale up modular design and construction beyond its very small current market share, how to jump-start affordable housing production in rural Oregon, and how to leverage highly energy-efficient new construction for long-term affordability.
SquareOne Villages: Affordable Together: scaling a community-based approach to housing (Lane County/Open)
SquareOne Villages was a grantee in the first round of Cost Efficiency grants in 2015-16, developing and documenting best practices around creating new tiny home villages for extremely low-income people (typically those leaving homelessness) in Lane County. In its next phase of work, it will explore combining limited equity cooperative ownership with a community land trust structure to create a new affordable homeownership model. Since it began experimenting with very low-cost housing options, SquareOne has progressively stepped up its ability to improve the quality and design of tiny homes, and if this hybrid ownership structure is successful, it could benefit a range of similar efforts across the state.
In addition to those three projects, a fourth organization was awarded a grant under Meyer’s 2018 RFP to improve access to private market housing and was invited to join the 1 Million Months cohort because its work aligns well with the goals and intent of the 1MM RFP:
Hacienda CDC: Community-based affordable ADU rentals to increase the supply of private market units and stabilize low-income homeowners at risk of displacement. (Portland/Open)
Hacienda has been a leading partner in the Living Cully collaborative (along with Verde, NAYA and Habitat for Humanity Portland/Metro East), which has been engaged in robust neighborhood-focused work on affordable housing and community development since 2010.
This project will fund the design, planning and implementation of affordable accessory dwelling units to be rented to low-income tenants and people of color in Cully, Lents and Inner North/Northeast Portland. The project will not only create new affordable units, but also help insulate low-income homeowners from displacement pressures by supplying them with supplemental income from the rentals.
What Comes Next
The four grantees are just beginning their work now and are committed to sharing what they discover over the next two years. Meyer plans to provide a series of opportunities for stakeholders and other interested parties to engage with the cohort and learn from their work to build out replicable and scalable new approaches. Stay tuned for more!
— Michael