June 18, 2018

Meyer sets lofty housing target: the “1 Million Months Challenge”

A conceptual rendering of a new Low Income Single Adult Housing (LISAH) complex, set in the historic Kenton neighborhood in North Portland. (Photo: Transition Projects and Holst Architecture)

Meyer will select a small number of projects to develop innovative approaches to housing affordability in Oregon, with initial grants of up to $125,000 available early in 2019 and potential follow-on grants in 2020 to further develop the pilots and broadly share results of the work.

Defining the problem

Meyer prioritizes stable, safe and affordable housing as one foundation of a more equitable Oregon. A shortage of housing generally has driven up rents and home prices across the state, and for those unable to earn enough to pay for even very basic housing without help, the consequences can be life-altering. A growing body of research shows that housing instability contributes directly to poor performance in school, difficulties getting and keeping a good job, and poor health outcomes.

Our tax code and social policies invest billions into housing in the form of property tax deductions (for mortgage interest and property taxes) that mostly benefit affluent households. For poor people, people with disabilities and chronic illnesses, and people of color, public investment (outside of prisons and jails) has been rather less lavish.

Even at that, publicly subsidized affordable housing has long been under intense scrutiny around cost. Hardly a week passes without a new article or news segment challenging the ostensibly high cost of new affordable housing. The urgency behind that concern is understandable, as the gap continues to grow between the demand for affordable housing and the public investment necessary to meet the need. There's no doubt we must look for ways to get more from every public dollar going into affordable housing.

Beginning in 2015, Meyer has sought to play a constructive role in this conversation, convening 16 experts as the "Cost Efficiency Work Group" and producing a report aiming to clearly articulate the factors that tend to drive up costs in affordable development and to focus on real opportunities to bring down costs.

Part of this work is a communications challenge. Subsidized affordable housing is different in significant ways from market-driven real estate development, and there are constraints that are beyond developers' control that make it easy to put affordable developments in an unflattering light for those unfamiliar with the special nature of this work. There's also an important conversation about tradeoffs between long-term lifecycle costs and upfront construction costs -- building smart for the long term is not necessarily "inexpensive."

Still, in the face of urgent unmet need and a widespread skepticism about government's ability to respond effectively, it's critical to achieve as much as possible with the limited amount of public subsidy available. Although it's unlikely there's a completely novel "silver bullet" approach to creating affordable housing no one has ever thought about or tried before, it does seem worthwhile to support exploring new ways of looking at these perennial issues.

Changing the frame: focusing on the big-picture outcome

In mid-July 2018, Meyer will release a Request for Proposals that builds on our recent efforts to support innovative work around how to provide more affordable housing by lowering costs. In 2015-16, we awarded funding to five projects looking at different approaches to bringing more housing online at a lower cost, and we continue to follow that work with keen interest.

For this RFP, 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. To that end, we are defining a "moonshot"-style challenge, focusing creativity and energy around a specific, lofty goal.

The 1 Million Months Challenge ("1MM"):

Bring us your best ideas for guaranteeing 1 million months of affordability, using as little public subsidy as possible.

This takes a bit of unpacking. There are many possible paths to 1 million months; here are some potential examples to illustrate the kinds of ideas this could include:

  • Piloting an approach to build, site and deliver new factory-built units meant to be affordable for 20 years that would aim for just under 4,200 units (240 months x 4,167 units = just over 1,000,000 months of affordability)
  • Creating affordable units for 60 years with lower rents through cross-subsidy from other income-producing uses in the same properties, aiming to scale up to about 1,400 total units (720 months x 1,389 units = over 1,000,000 months)
  • Maybe your best idea doesn't involve building any new housing? Exploring a sustainable approach to master-leasing new units in the private-market for five-year increments, staggered over time, to assist nearly 17,000 households five years at a time (60 x 16,667 = over 1,000,000)

The key point is that we are leaving it up to people who know the most about these challenges to define how to reach the goal. We're framing the goal this way to emphasize flexibility and focus on the outcomes:

  • Flexibility: This is less about developing "projects" than creating a viable model or path; we are explicitly open to purely financial strategies that deliver on the outcome of creating more access to affordable housing.
  • Outcomes: We are not necessarily focused on production of units (although more housing is important, and some strategies will rightly focus on that), but rather on the end-goal of housing large numbers of people for an extended period of time.

Finally, it's worth highlighting that we're pulling the focus away from the raw total development cost to focus on what really matters most: the amount of public subsidy required to achieve the goal.

Unlike a typical Meyer RFP, we're not looking for affordable housing projects per se, but a model or path that changes the game. You could say we're trying to "get out of the way" of solving these problems, by putting as few limitations as possible on what counts as a solution. We're calling the question for those who insist that the current system doesn't deliver bang-for-the-buck and there are better ways to do things. Ultimately, the point of this RFP is to give you an opportunity (and some resources) to take an idea or a notion or intuition that you've been thinking about and build it out to a full-fledged plan, test it, improve it and share it.

Sharing ideas, results and lessons learned will be a central part of participating in this experiment. Project teams funded under this RFP will be expected to participate in a learning cohort with each other, sharing and critiquing ideas, and helping each other refine and improve each model. Additionally, Meyer will create a variety of platforms and public events to highlight this work, to broaden the circle of folks around the state trying to think about these challenges in a different way and improve upon the ways we help people into housing they can afford, and ultimately to help public funders and other partners identify new models and approaches worth their support.

About the RFP 

The RFP will be available July 19, with Initial Inquiry applications due to Meyer (via our online GrantIS system) by August 14. Meyer staff will present an overview of the RFP and answer questions at the following information sessions:

  • Tuesday, July 24, 2018, 9:30-11:00 am
  • Monday, July 30, 2018, 3:30-5:00 pm

Both sessions are accessible via teleconference or in person at Meyer's offices at 425 NW 10th Ave. #400 in Portland). To register, click here.

The strongest proposals will be invited to submit more detailed proposals in the fall, with decisions and grant funding in early 2019. Grantees receiving funding under this RFP will be eligible to request follow-on implementation grants to be awarded in early 2020.

Finally, because it matters who is being helped and how much rent they are able to pay, and because there are distinct challenges in this larger context of cost and efficient use of subsidy, Meyer has defined three categories under the RFP and hopes to make awards in each:

  1. Hard-to-House or Extremely Low Income: Housing solutions affordable to people/households between 0-30% Area Median Income (AMI), and/or designed and specifically intended to assist populations with significant challenges around access to affordable housing:
    • Transition Age Youth exiting foster care
    • Immigrants and/or refugees
    • People of color
    • Indigenous communities and tribes
    • People with disabilities (including severe and persistent mental illness)
    • Domestic violence survivors
    • People released from incarceration or people with a criminal record
  2. Rural Workforce Housing: Housing solutions intended to serve residents of rural communities up to 100% of the local AMI. "Rural" in this context means any community not located within one of the federally defined "Metropolitan Statistical Areas": Portland-Vancouver-Hillsboro, Salem, Eugene-Springfield, Medford, Corvallis, and Bend.
  3. The Open Challenge: Housing solutions affordable to households at or below 60% AMI that do not fit in the other two categories.

Applicants will be asked to specify one of the above categories when they apply. Meyer's intent is to make at least one award in each category, depending on the quality of proposals received.

Feel free to direct questions, etc. to me at michael [at] mmt.org or (503) 228-5512.