HB 2912: A new land acquisition fund to support the development of affordable housing

This post is the last in a series explaining key housing bills that passed during the 2017 legislative session.

Oregon is in desperate need of more of the opportunities created by decent, stable homes that are affordable to families with low incomes. There are many existing tools used to finance affordable homes, including tax credits, bonds, local property tax exemptions and incentives, and other public support that makes affordable housing possible. Oregon’s severe shortfall of affordable housing means that we need to find additional tools to support the development of homes affordable to people with low incomes. This session, the Oregon Legislature added a promising new tool that will support the creation of affordable homes for both rental and homeownership.

HB 2912 establishes the Affordable Housing Land Acquisition Program (LAP) to provide financial assistance to affordable housing developers by enabling them to acquire land for future development. The LAP in HB 2912 was modeled after Washington State Housing Finance Commission’s (WSHFC) highly successful Land Acquisition Program, which provides loans at no more than a 1 percent interest rate, with payments on the principal and interest deferred for the life of the loan. In concert with the Association of Oregon Housing Authorities, the Oregon Housing Alliance’s development and land use workgroup members recognized the great potential with this tool.

The LAP will help developers purchase and hold land when it comes up for sale, giving them time to assemble the necessary financing after acquisition. In Oregon’s heated real estate market, the ability to move quickly and acquire land is critical to increasing our supply of affordable homes in the coming years. The fund could be particularly useful in rural areas, which can face barriers accessing financing. The LAP will also help meet the spectrum of Oregon’s housing needs, with 40 percent of the loans directed for use in homeownership programs and 60 percent of the loans directed for multifamily affordable rental housing. The program will be funded with $3 million from an undersubscribed predevelopment program in Oregon Housing and Community Services, making it an efficient use of existing resources.

This bill was sponsored by a bipartisan group of legislators and passed unanimously out of both chambers. Special thanks to the Oregon Housing Authorities for their leadership on this bill, as well as our Housing Alliance members and the Columbia Cascade Housing Corporation. Thank you to the chief sponsors of the bill, Representatives Gomberg, Huffman, Johnson, and Keny-Guyer, for making this innovative idea a reality.