The Bend City Council has renewed its goal of adding more affordable housing to Bend. Surely, it’s the right thing to do.
But the city has apparently flunked a test that checks if it is spending federal affordable housing grants in a timely way. If the city fails the test this year and next, “there is a real risk of losing funds at that point,” according to an email from federal officials.
Bend may never lose a dime. The apparent failed test, though, underscores two problems. Much of the federal grant money for affordable housing Bend receives goes unspent year after year, and the city doesn’t do enough to monitor it. Those issues demand action from the city’s affordable housing committee and the Bend City Council.
Bend raises money for affordable housing in two primary ways. It has a building permit fee — just made permanent by the council — that goes toward affordable housing. It seeks federal grants that the city, in turn, awards to groups to help create affordable housing. The city has been getting about $400,000 to $500,000 a year from the grants. In 2018, that jumped up to more than $1 million. Combined with other money, these community development block grants have helped create 366 housing units in town.
The federal government does a timeliness test May 2 on the CDBG grants. The city fails the test if 1.5 times the amount of the current year funding remains unspent. And it was announced at Wednesday’s affordable housing committee meeting that the city has likely failed. The city has awarded grant money and it just doesn’t get spent.
“It’s important to remember that you wouldn’t lose any CDBG funds if you are untimely this year, but you will be required to submit a work plan to increase spending by the next test date in May, 2020,” Doug Carlson of the Oregon office of the Department of Housing and Urban Development wrote the city in an email. “If the city is still above the 1.5 ratio, there is a real risk of losing funds at that point.”
In 2014, the city awarded just over $400,000 in CDBG grants and about $320,000 was spent. In 2015, the city awarded about $500,000 in grants, and $400,000 was spent. In 2016, the city awarded $500,000, and about $450,000 was spent. In 2017, the city awarded about $500,000, and less than $300,000 was spent. In 2018, the city awarded more than $1,000,000, and about $500,000 was spent.
Digging deeper into an individual year shows that in 2018, for instance, Housing Works received an award of about $325,000, and that money is all unspent. Bend Area Habitat for Humanity received a grant for $200,000, and that money is all unspent.
The story behind the numbers is complicated. One issue that makes things worse is that unspent money from the past continues to roll into newer projects and remains unspent. For instance, the affordable housing grant money from 2014 that was unspent was eventually yanked from three projects. It was then counted in the 2018 money awarded to Habitat for Humanity. It is still unspent. Habitat for Humanity reduced its request for a 2019 grant from $425,000 to $250,000, because it has had difficulty moving forward on creating housing.
Getting financing and permits for affordable housing projects can be like carefully walking up Pilot Butte while balancing several water bottles on your head. Financing, alone, is usually cobbled together from a variety of sources with differing paperwork, conditions and timing. They don’t neatly line up. CDBG grants are also not always the most useful tools. They can’t be spent directly on building buildings. They can’t be used by for profit entities. They can be spent on things, such as buying land and related infrastructure.
The $325,000 allocated to Housing Works in 2018 is close to being spent on buying land. It may result in 47 units of housing being built above medical offices off of 27th Street. It’s been delayed, in part, because the Bend City Council just authorized the spending in the last month and because of the need to complete an environmental review.
The city’s affordable housing committee and the council need to insist more work is done to identify why so much money remains unspent and determine if anything can be done to remove delays. More immediately, councilors need to ensure the city tracks grant awards it makes more closely. It’s been too informal. Grant contracts have not had sufficient benchmarks.
The city’s affordable housing committee voted Wednesday to recommended that the Bend City Council adopt a policy to recall grant awards after six months if 30 percent of the money has not been spent appropriately. Organizations in jeopardy of losing grants would get an opportunity to defend themselves. That’s a step in a good direction.
Work on affordable housing projects is swaddled in virtue — with many people firmly committed to doing the right thing. No matter how praiseworthy the goal, though, the lack of exacting focus on the money subverts affordable housing in Bend.