Less than 15 percent of the $357 million in outstanding Portland Housing Bureau loans is expected to be repaid, a new city audit reveals.
City Auditor LaVonne Griffin-Valade criticizes the bureau for not being transparent in reporting the loans it makes for affordable housing to City Council in a complete or timely fashion. The bureau and its director have discretion to make loans of up to $3 million without prior council approval.
"The safeguard to prevent abuse of this discretion should be the transparency provided by quarterly reports to Council," the audit says, "and clearly defined parameters around project costs, desired outcomes, and loan types offered. As discussed in the following sections, PHB has not yet defined these parameters."
Housing Bureau officials told the auditor's office they expect to recoup just $54 million of the $357 million of federal and city dollars the bureau currently has loaned out for affordable housing.
The bureau's expectation is that most of the loans it makes won't get paid back.
"Loan repayment is only one of the benefits that the public receives for its investment in affordable housing," bureau spokeswoman Jayme Cuti tells WW. "The primary benefit is a 60 year commitment that these properties make to affordability. While the loan repayment is long, the benefit received by the public is equally long."
The audit says the bureau has made $83 million in loans in the past three years—despite not having established goals for what the loans should do.
"HB has not defined outcome measures for the loan programs, or evaluated the most cost-effective way to achieve those outcomes," the audit says. "In addition, PHB is not consistent in how different loan products are used, and the majority of loans require little or no repayment."
In his response to the audit, City Commissioner Dan Saltzman—who oversees the Housing Bureau—says that the city has conflicting expectations to both end homelessness and recoup some loans.
"The audit found the Bureau has been successful in setting and meeting our policy goals in providing housing for the City’s vulnerable citizens," Saltzman writes. "Yet there is also a hope that the investments the City makes in housing for people with lower incomes can also generate enough revenue to fuel substantially more lending, in the manner of a bank."