A federal block grant program meant to support low-income residents gives Bend less money per capita than other large cities in Oregon. As a result, Bend officials say, the city has to be more creative in tackling affordable housing issues.

The federal Department of Housing and Urban Development’s Community Development Block Grant program distributes annual awards to three Portland-area counties and 14 Oregon cities, including Bend and Redmond. The state of Oregon receives a much larger sum — nearly $12 million in fiscal year 2017 — to distribute to other communities.

Bend received about $446,000 from the program, or $5.12 per person. Redmond, which is about a third the size of Bend, receives half the funding Bend does. Corvallis, with a population 70 percent of Bend’s, gets more than one and a half times the federal funding Bend gets. And Portland, about seven and a half times the size of Bend, receives more than 28 times the funding.

“We have no choice but to be more innovative,” Bend Affordable Housing Manager Jim Long said. “We’re not getting federal money.”

Cities can’t use the grant money to build homes, but they can use it to rehabilitate existing buildings, buy property, assist nonprofit organizations that help low-income people and improve utilities, streets, sidewalks and parks. Portions of Bend’s 2017 award will be used by the Bethlehem Inn homeless shelter to expand its family program, Central Oregon Veterans Outreach to buy a house for a homeless family and Habitat for Humanity to help low-income families with house down payments.

HUD uses two 40-year-old formulas, one of which prioritizes population and one of which heavily weights the age of housing stock, to determine how much grant money cities receive. The department runs both formulas and awards the higher grant amount to each city.

For the most part, the formulas work out to give money to cities that need it. High-poverty cities including Detroit, Pittsburgh, and East St. Louis, Illinois, receive between $42 and $53 per person, while wealthy bedroom communities including Yorba Linda, California, and Bowie, Maryland, have annual awards of less than $3 per capita.

But wealthy communities in New England, the mid-Atlantic seaboard and the Midwest can benefit from the second formula because they have older homes, even though those old homes are kept in good repair by well-off owners. The bedroom community of Newton, Massachusetts, for instance, gets $19.54 per person in grant funding despite having a median income of nearly $105,000 — more than twice the U.S. median.

When the program was created in the 1970s, the age of homes was an effective proxy for how much need a community had, HUD spokesman Brian Sullivan said.

“Back in 1978, maybe the age of the housing stock might have been an accurate measure, but now, maybe not so much,” Sullivan said.

Fast-growing cities in the Sunbelt, which stretches across the southern U.S. from California to Florida, have similar complaints about the formula, said HUD northwest regional spokesman Leland Jones. Jones, who works from Seattle, is the department’s public affairs officer for Alaska, Idaho, Oregon and Washington, and he said the four states have more in common with the Sunbelt than other northern states.

However, these newer cities don’t have the same issues aging cities do, he said.

“When new cities come in, they don’t quite have the issues some of the older cities have,” Jones said.

Older cities have to replace or upgrade aging infrastructure, including separating combined sanitary and stormwater sewers that haven’t been allowed since the early 1900s. And many aging cities in the Rust Belt have lost 20 percent or more of their population since 1950, leaving a smaller tax base to pay for ever-more-expensive work.

As a whole, the grant program also has less money to distribute to more cities. Since 2001, the number of block grant recipients has increased by more than 200, while the amount allocated by Congress has fallen $1.4 billion. The program gave away the equivalent of nearly $6 billion in today’s dollars in 2001, and about $3 billion this year.

“CDBG has fewer dollars to hand out to many more people,” Jones said. “It’s like going from a Thanksgiving with a 24-inch apple pie to a 12-inch or 8-inch apple pie and increasing the number of people at the table, too.”

President Donald Trump’s proposed budget would entirely eliminate funding for the CDBG program and the HOME Investment Partnerships Program, a block grant that allows cities to buy and build homes for low-income families. Bend doesn’t qualify for the HOME program, but Corvallis, Eugene, Portland and Salem do.

Congress rarely approves presidential budgets as introduced, and Trump’s proposal to cut the block grant program led to a massive outcry when voters learned the grants help fund popular programs like Meals on Wheels and Head Start preschools for low-income children.

Eliminating the block grant would force the organizations that use it to seek money elsewhere or cut back on services, Affordable Housing Advisory Committee chairman Andy High said.

“It’s going to hurt those that need it,” High said.

Bend’s small share of the federal money already creates tough choices for the committee he chairs, which recommends which applicants should receive portions of the city’s grant.

“It just makes it tough to choose,” High said. “If you have $1.5 million requested and $500,000 to give out, two-thirds of the projects will go unfunded or requesters will get less than they asked for.”

Grant recipients, including Bethlehem Inn, look for other sources of money, Bethlehem Inn executive director Gwenn Wysling said. The shelter received $21,000 from the program for a $5.3 million expansion that will add space for five more families.

“We know the money is lacking so we go after it when the need is really there,” Wysling said. “We look to programs like CDBG to be there when we need them.”

Bend has found other ways to provide affordable housing, including adding a small fee to every building permit and using the proceeds from that fee to develop housing for low-income families. The city’s Affordable Housing Advisory Committee recommends which projects receive those funds as well.

The city also provides incentives including property tax exemptions and development fee waivers for developers who build new affordable units. And the committee in coming months will look at changes including allowing tax credits for vertical housing, loosening parking requirements and allowing fourplexes in single-family neighborhoods to create more housing for families who make slightly more than the most frequent targets of affordable housing.

Despite receiving a smaller share of federal money, Bend has built more affordable housing units in the past decade than every Oregon city but Portland, Long said.

“We have to work harder, and we have to be more creative than the others,” Long said.

—  Reporter: 541-633-2160, jshumway@bendbulletin.com