For years, tourists visiting Portland have gazed at the familiar sights of downtown: Powell's City of Books, Voodoo Doughnut, and people sleeping on the sidewalk.

Soon, when those visitors check into their hotel rooms, they will help pay to put roofs over the heads of the most vulnerable Portlanders.

That's thanks to an innovative new tax deal championed by Multnomah County Chairwoman Deborah Kafoury.

For the past 17 years, a 2.5 percent tax on rental cars and hotel rooms in the county has been used to fund an expansion of the Oregon Convention Center, to finance a Convention Center hotel, and to provide marketing dollars to Travel Portland, the nonprofit whose job it is to attract tourists.

The annual revenues from those taxes have increased rapidly: The total now stands at $21 million a year. That matches a hotel construction boom across the city as tourists flock to Portland ("Locals' Guide to Luxury Hotels," WW, Aug. 29, 2018).

Last week, WW learned that three local governments—City Hall, Multnomah County and Metro—were nearing a deal to expand the use of those funds.

The agreement would also set aside future tax revenue for new acoustics at Arlene Schnitzer Concert Hall (which would be matched with private dollars), as well as authorize $40 million in bonds for Veterans Memorial Coliseum and $40 million in bonds for the five Portland Centers for the Arts downtown, including the Schnitz.

But the most significant piece of the deal is the plan to take $5.25 million a year from that tax revenue and give it to the Joint Office of Homeless Services. The agreement is the result of more than a year of negotiations between local officials and Travel Portland.

WW has learned the agreement remains uncertain, even as Mayor Ted Wheeler—who has been pushing for the deal—takes it to a Dec. 12 vote of the Portland City Council. That's because of a difference of opinion that pits Kafoury against hotel owners as well as her counterparts at City Hall and Metro. Negotiations were ongoing at press time.

While most of the spending in the agreement is viewed as traditional uses of the lodging tax, Kafoury has been particularly interested in the unconventional use of the funds to increase spending on homelessness, arguing that it should be a concern for people in the tourism industry.

That's something most hoteliers would agree with.

For much of the year, Portland hotel managers have complained to City Hall and Multnomah County about people sleeping on the sidewalks outside their concierge desks.

"Like many other general managers in Portland, I have not seen any improvement in the homelessness problem in the center city," wrote Jean-Marc Jalbert, general manager of the Nines Hotel, in a letter to elected officials Sept. 6. "Quite the contrary, we have noticed a worsening of the situation. The increased homelessness situation is now spiraling out of control in Portland City Center."
Jeff Miller, executive director of Travel Portland, says that frustration is widely felt among hoteliers.

"The tourism community feels the effects of—we don't call it 'homelessness'—people with bad street behavior," says Miller. "We've been at the table with this negotiation and have agreed to what is a really large number out of [the lodging tax]."

While Travel Portland is willing to share taxes with homeless efforts, the negotiations stalled over concerns about what will happen when the tourism boom ends.

Kafoury wanted the $5.25 million protected from any industry pressure to cut it if lodging tax revenue declines.

"The public recently stepped up and said getting people off the streets and into housing was a top priority when they passed a $652.8 million housing bond," says Kafoury. "All I'm asking is for the city and Metro to do the same."

One reason the governments want the funding for homelessness to be locked into the deal? They need the money to fulfill a promise they made to voters last fall.

When voters passed the housing bond in November, they did so in part because Metro committed to making 1,600 units affordable to people in the lowest income bracket—a family of four making less than $24,420 a year or an individual making less than $17,100.

But the bond didn't actually provide all the funding needed to do that in Multnomah County. And the new deal with hoteliers could fill the gap.
City and Metro officials say they're ready to reach a deal.

"The money for the visitors fund can help us deliver on long-envisioned improvements to Veterans Memorial Coliseum and our other arts facilities," says Wheeler chief of staff Michael Cox. "That's what the fund was created for. We can also secure perhaps more than $50 million in new funding for supportive housing. That will pave the way for further partnership to meet the need."

Regardless, the sum of money being negotiated this week is a pittance compared with official estimates of how much public investment is needed to address housing and homelessness in Portland. To serve the projected population of chronically homeless people, the city and county have estimated they will need at least $640 million over the next 10 years to pay for housing and services like mental health and addiction treatment.

Discussions of how to find that money are just getting started. The county will lead an effort to identify sources of funding and build support.

And advocates for more funding of supportive housing—that is, housing that comes with social services—are expected to ask voters directly for more money, with a ballot measure as soon as 2020, a county source says.

That in turn could set off another political fight. Metro passed its housing bond last November. It's planning to take a transportation package to voters in 2020—which would make for a ballot glutted with tax measures.

But for now, the county is fighting over who will have a say in what happens if tourism dollars grow scarce.

"To me this just being opportunistic in the best sense of the word," says City Commissioner Nick Fish. "It's new money, it helps us fill a gap, and it serves the most vulnerable people in our community. I would be extremely disappointed if we couldn't close this out and reach an agreement."