Habitat for Humanity Portland Region: Creating Affordable Homeownership Opportunities

BY ARA HIRST + PRESTON KORST, HBA Staff

From land use regulations to permitting timelines, the development of the region’s housing stock is heavily impacted by the regulatory environment under which builders work. For HBA, partnerships with local governments are essential to our advocacy efforts. They help ensure these regulations do not pass an undue financial burden to the end user: homeowners. For one HBA member serving households earning 35%85% of the Area Median Income, these regulations and partnerships are particularly impactful.

Habitat for Humanity Portland Region provides homeownership opportunities to those who would otherwise likely be limited to the rental market—in fact, between 2018 and 2022, roughly 29% of Habitat homeowners previously lived in subsidized rental housing before applying to Habitat. Within their traditional model, Habitat acts as the general contractor of a development, while helping a buyer acquire a down payment and mortgage set at no more than 30% of total household income. Funding and labor are donation and volunteer driven, with an in-house construction team overseeing the projects.

Applicants for the homeownership program must meet income, employment and credit requirements, and applications are only accepted when properties are available. The homeownership program even requires sweat equity hours – a concept all homeowners or business owners can resonate with.

“Our staff are out building houses with volunteers and homebuyers,” said Steve Messinetti, President & CEO of Habitat for Humanity Portland Region. “There are very few affordable homeownership providers who are the builder, help the buyers acquire mortgages and down payments, and teach homeownership education classes.”

In Habitat’s case, the support of local jurisdictions is critical to bringing affordable homeownership opportunities to the community. For instance, Portland offers a 10-year tax abatement of property taxes for buyers in affordable housing developments. More recently, the City of Lake Oswego has taken strides to support a Habitat project, demonstrating a shift in a city not always known for its affordability.

Navigating the development landscape

With a donation and volunteer-based model, the number of people Habitat is able to serve is impacted by the cost to build. While materials and labor can be accounted for through donations, regulatory costs and processes create an additional burden.

“SDCs (permits and fees) can often exceed the cost of land and are a big hurdle for affordable housing,” said Steve. However, there are seemingly simple actions cities can take to help mitigate these development costs. “Some jurisdictions, including Portland and Lake Oswego, waive all or part of SDCs for affordable housing development. We’d love to see other jurisdictions take this step to enable affordable housing development.”

For Habitat, navigating permitting processes includes an added layer beyond the headache of delays and added expenses that any market rate builder experiences. If they are utilizing government funding for a project, there can be deadlines or strict timelines for spending those funds. Any permitting delays complicate this process, but again, Habitat offers practical solutions for jurisdictions to help mitigate these challenges – solutions that could also be applied to process market-rate housing more efficiently.

“We’re encouraged by the momentum around streamlining the permitting process in Portland,” said Steve. “One promising idea is to designate a single point of contact who is charged with shepherding the permitting process for affordable developments.”

Another barrier to producing for-sale affordable products is the lack of consistent funding programs from government. “We have state and local governments with consistent affordable rental funding that developers can count on every year, dozens of nonprofits and even for-profit developers who specialize in building affordable rental housing, and banks that specialize in financing that rental housing,” Steve explained. “None of that exists on the for-sale side. Our hope is to create that infrastructure.”

Finding support in high opportunity areas

Partnering with jurisdictions is essential to addressing challenges faced in the affordable housing development process. But beyond regulations and development processes, leadership from local elected officials is essential to bringing affordable housing goals to fruition, Steve explained.

Two projects currently in the Habitat pipeline illustrate this important connection. Land for Century Commons, which will contain 18 affordable homeownership units in an amenityrich residential neighborhood, was donated to Habitat by the City of Hillsboro. “Mayor Steve Callaway’s leadership was instrumental,” shared Steve.

“This development reflects our City’s commitment to equity, to creating opportunities and accessibility for housing – for everyone who wants to live in Hillsboro,” shared Hillsboro Mayor Steve Callaway. “Being part of this neighborhood and the greater Hillsboro community will enhance these residents’ health, education, and quality of life. ”

Habitat is moving forward on their first-ever project in Lake Oswego this year, West Lake Grove. While the funding for purchasing the land came from an American Rescue Plan Act (ARPA) grant supported by state legislators, the City of Lake Oswego has as also committed an additional $800,000 of ARPA funding for infrastructure at the site. “We learned about the property from Lake Oswego Mayor Buck who was very interested in seeing an affordable homeownership developer take on this project that a local developer had envisioned,” explained Steve.

“Lake Oswego is in dire need of housing with secured affordability to ensure the many people who support our community daily are also able to call our city home. It’s how we’ll remain a thriving municipality,” shared Lake Oswego Mayor Joe Buck.

Habitat hopes that Clackamas County will follow their example and match the additional funds Lake Oswego is providing. “Mayor Buck and the full City Council have been great champions of this project,” Steve said. “The city has also implemented an SDC waiver policy for affordable housing developments, which has a significant impact.”

“Homeownership builds wealth, and Lake Oswego provides an unparalleled education and quality of life. The Habitat project assimilates both to ensure these opportunities are available to families for whom housing ownership in Lake Oswego would otherwise be too far out of reach,” added Mayor Buck. “It’s a win for all and hopefully just the beginning.”

Both Century Commons in Hillsboro and West Lake Grove in Lake Oswego also represent Habitat’s focus on development in high opportunity areas, or established residential areas with access to amenities and economic opportunities. Constructing affordable housing in these areas can often be met with resistance from neighbors driven by misguided fears of impacts to their property values. It can also face challenges with local design requirements that could drive up development costs or property taxes that are out of reach for low- or moderate-income families.

However, Habitat outlines several benefits to building in these areas and creating mixed-income communities. “Housing density near jobs, transit, schools, services, and community spaces reduces carbon emissions, makes transportation cheaper and more accessible, and adds to the diversity and vibrancy of our neighborhoods,” said Steve.

“Mixed-income communities also mean expanded social networks, which can lead to more job opportunities and connections. Businesses also benefit from having affordable housing in their community because it means employees can actually afford to live near their places of work.”

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