City of Bend receives $5M federal grant to continue affordable housing efforts

In late June, it was announced that the city of Bend was awarded one of 21 grants given out by the U.S. Department of Housing and Urban Development through the Pathways to Removing Obstacles to Housing, also known as PRO Housing initiative. The 21 communities received grants between $1 million and $6.7 million from a pool of $85 million. Bend is the only city in Oregon to receive this grant, which had applicants from over 175 different communities across the country. The PRO Housing grant awardees will use the money to fund programs which identify and remove barriers to affordable housing. Bend received $5 million, half the amount of funding initially asked for, and is in the process of altering the scope of their plan. Mellissa Kamanya, the affordable housing coordinator for the city of Bend, joins us to share more about the grant and next steps.

Note: This transcript was computer generated and edited by a volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Late last month, the federal government announced that Bend was going to get $5 million to spur the creation of more affordable housing. The money is from the U.S. Department of Housing and Urban Development. Bend is one of 21 communities around the country that received one of these grants and the only one in Oregon. Mellissa Kamanya is Bend’s affordable housing coordinator. She joins us now. It’s good to have you on Think Out Loud.

Mellissa Kamanya:  Thank you so much for having me.

Miller: At the event celebrating the announcement of this federal grant the mayor of Bend, Mayor Kebler, said that Bend’s housing market can be summarized as expensive and exclusive. What does she mean?

Kamanya: That is correct. In the last few years, we have seen housing prices, on a regular basis, break records. The current average median price for a home is over $700,000. But our homeowners and average residents in the community can’t afford that. They’d have to earn 250 times the median average salary to be able to afford that. So exclusive, yes, because it is essentially for our wealthiest of residents. It is also difficult because we do not have enough housing to meet the needs in the community. So absolutely, definitely exclusive and expensive.

Miller: What have you already been doing to address the lack of affordable housing, before we get to what you hope to do going forward with this new money?

Kamanya: Yes, I’m glad you asked that. That was actually one of the reasons Solomon Greene from HUD, who came to the event – he’s the principal deputy assistant secretary for policy development and research with HUD – mentioned that we were selected partially because all the awardees had already done significant work to boost housing supply and not starting from scratch. So things that we have done that we’re really proud of. Then it was the first large city in Oregon to adopt House Bill 2001. And that is focused at helping with the missing middle housing or easing construction of different types of housing, getting away from a single house on a lot, and moving to duplexes, triplexes, etc.

We also have our own funding source called the affordable housing fee, and that is a fee off of permits that comes in and is cycled back out in the community in competitive applications to help fund housing development. So we’ve done another type of set of incentives. We have different funding opportunities for developers to have extra opportunities to bring down that cost for development, because it is really expensive.

Miller: Have those had an impact? Let’s take them one by one. House Bill 2001, for example. The issue we’ve heard for years – before Governor Tina Kotek successfully pushed for this, and after – is that this is not a mandate. It’s not that you can’t build single-family homes in any given neighborhood. It’s that you don’t have to. Now you can build multi-unit homes of different kinds, all over, in every city in the state. Has that happened in Bend?

Kamanya: Absolutely. We have a dashboard that shows the number of permits that have come in each year for each type of housing. And since we’ve implemented this, we have seen a large uptick in duplexes, triplexes and quadplexes. Essentially, where we’re at in Bend, available land is very limited. And before we can push that urban growth boundary, we have to infill. So each lot that’s available, we really want to make it count. So those duplexes and triplexes, quadplexes, being really creative. We’ve already seen a huge uptick in that.

Miller: And what about the other incentives that you have instituted in recent years to try to get more development? Has that worked?

Kamanya: Yes. Our affordable housing fee is one that I can speak to, because I’m very closely connected to that in my work. Each year, the city of Bend, through HUD’s CDBG, or Community Development Block Grant Program … we are an entitlement. We receive funding each year from HUD to push back out in the community. Regularly, we have much, much more in funding requests for things like down payment assistance, land acquisition, etc. Way more in request than we have available. Knowing that that can be a limit to our partners in funding their projects, that affordable housing fee regularly brings in upward of a million dollars every year to offer in tandem to our CDBG funds, greatly expanding local available funding for our local partners to build affordable housing.

Miller: So this is the background of both the median incomes, the median home prices, the work you’ve already been doing. What did you emphasize in your grant application with the federal government?

Kamanya: We did spend a lot of time in the application talking about all the great work that we have done, a lot of which we’ve just talked about. But we also identified some critical work that still needs to be done. First and foremost, the vision and the application we proposed is threefold.

The first one is really important. It’s to identify and remove barriers that are within the city’s control to change. That could be things like challenges within our permitting processes, difficulties with the community in interpreting code, things like that. The first step is to identify those barriers. Then we also proposed in the application that we would increase housing production through streamline processes and incentives. That is still to be determined what that will look like. But we really hope to be able to make it easier to develop, with the ultimate outcome of building more units.

And lastly, one we’re really excited about in the application, is the creation of a new fund, somewhere around $4 million, that will fund construction of new units. That will be another opportunity for developers to think about, how can we use CDBG funds, our affordable housing fund, and now this additional fund, to create a much bigger funding pool to help our developers fund their projects?

Miller: My understanding is that when HUD, when the federal government responded to your application, looked at the data you provided, and what you said you wanted to do, they decided that the problem in Bend is that housing production – over the last some number of years – has not kept up with incredible population growth.

They did not say the problem, or part of the problem is that Bendites are cost burdened. That it’s just too expensive, and that’s the affordability issue. But it does seem to go against what you were saying earlier, and what the mayor has said in the past. How do you explain that? What’s the disconnect?

Kamanya: I’m so glad you asked that. Just for clarity, there were three bars that allowed or invited us to apply, and they had identified that off pace housing, or not having enough to meet population growth. Cost burden was another bar, and then housing problems is a general bucket. And in the application process, we were only flagged for off pace production. We were not identified in HUD’s internal metrics for having that cost burden challenge.

Recently, we have looked at years and years of data to understand why is that the case with the cost burden? Why aren’t we being identified with that? And what we’re seeing, along with what the mayor is saying, is that our lowest income earners who have had the higher cost burden – meaning, they’re spending more than 30% of their income on housing – or severe cost burden – [they] are spending more than 50% of their income on housing – they’re just not here anymore. They have been pushed out by consistently high housing costs. So if they’re not here, that metric goes down. That is our opinion, that the reason we’re not being flagged for housing burden is because the most burdened people have already left.

Miller:You applied for $10 million through this grant application. You only got half of that. What were you hoping to do with the full amount that may be more challenging now?

Kamanya: We are thrilled to get the $5 million. We were completely overwhelmed and very grateful to be an awardee in this first round. And part of the application, we had to scope, a preliminary scope, of what would you do if you got half? And so I already have a little bit of a framework. Essentially, we have time from HUD to rescale and re-scope the grant. But the fund we had proposed [that] would bring $8 million to the community for housing development over six years, already, we know that’s going to drop down to about $4 million. It’s not a huge loss, because our proposal is that that will be a revolving loan fund and not a grant. So that money will roll back in, essentially, in perpetuity, to other developers over time.

The other things that we look at having to scope back are different administrative processes, looking at those internal barriers and how much time is spent on identifying ways to streamline the processes. And all of that is still to come. We still are looking at how to scope that back.

Miller: For most people, $5 million would be a life changing sum of money to get if the federal government came with one of those huge checks. But is that the case for a city of Bend’s size, when you spread it out over six years, and when you think about the scale of the problem?

Kamanya: It’s a great start. That’s the short answer. Because our intention is to offer the funding in tandem with other funds, it creates greater opportunities for our developers. As an example, land here is very expensive, and for a developer to look at, “How can I buy a larger parcel of land to build a larger number of units,” having access to this additional fund can be the tipping point for them to be able to make a bigger project pencil. So we’re really excited to have this opportunity and this funding to be able to support our developers.

Miller: If the federal government says that your big problem is that housing construction has not kept up with population growth, as opposed to saying that cost burden is a big issue for you locally, would they be satisfied if you use this new money to increase the number of market-rate units? Do they have to be considered affordable?

Kamanya: That’s a great question. These funds do follow the CDBG framework. And we’re looking at clarification. Present guidelines are that it’s for housing for up to 80% of the area median income and below. And this grant may be able to take us to 100% of the area median income and below. In short, that’s definitely not market rate. That is our working class and some of our lower income residents. So it’s not an infusion of market rate housing.

Miller: You mentioned a couple times that one of the things you’re hoping to look into is if there are barriers – internal barriers, local barriers – to housing creation in Bend. Do you already have an answer to that in any way? Have you already identified zoning questions or development charges or things that are still in the books that you think are hampering development, specifically in Bend?

Kamanya: There are commonalities across cities across the United States of barriers to development, things like, as I mentioned, permitting processes, or interpretation of code, or lack of clarity or knowledge on the housing process. We have made some headway, but our intention with this funding is to hire a consultant that will help identify those for us. Someone that’s neutral and from the outside of the organization, that can come in and do a thorough assessment to identify where we need to continue working or maybe an area that we haven’t considered yet.

Miller: In general, what do you see as the places where you can get the biggest bang for your buck, if the ultimate goal is more affordable housing? What’s the most efficient way to use what is always going to be a limited pot of money?

Kamanya:  I think it’s a tandem reach, it’s going to be making the processes easier and faster for our developers to work through and also having extra funding available. Those two married together in some type of blending, I think is the magic mix to help get more units on the ground.

Miller: How much of what we’re talking about here is really a question that can be addressed at the city level, as opposed to county rules, statewide laws or just the federal, nationwide economy?

Kamanya: That is a great question. Those all play together, they’re all different shades of how we make housing happen. The scope of the grant really limits us to what we can do as a city. There’s other funding streams, funding schedules and funding criteria that we are aware of. But we can really best focus on just within our boundaries, maybe working in parallel to what they’re also doing.

Miller: Mellissa Kamanya, thanks very much.

Kamanya: Thank you. Thanks for having me.

Miller: Mellissa Kamanya is the city of Bend’s affordable housing coordinator. She joined us to talk about the fact that, as we learned a few weeks ago, the city is going to receive a $5 million affordable housing grant from the federal government.

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