Metro appears poised to ask voters to extend homeless services tax, allow some proceeds to go to affordable housing

The Metro regional government is mulling major changes to its voter-approved supportive housing services tax, which funds homelessness abatement efforts in Oregon’s three largest counties.

Metro Chief Operating Officer Marissa Madrigal recommended to the Metro Council Tuesday that it back changes that would raise the income level at which the tax would kick in to account for inflation, extend the life of the tax beyond its current 2030 expiration date and allow a portion of the funds to be used for building affordable housing, among other adjustments.

Councilors expressed support for the recommendations Tuesday.

They are expected to vote at a later date on whether to ask voters next May to approve some of the proposed changes, including extending the tax’s sunset date and expanding allowable uses of the tax revenue. Before such a vote, councilors could adopt the increased income threshold for the tax and renegotiate the regional government’s contracts with counties to increase oversight.

“I find it hard to see something that I disagree with in your proposal,” said councilor Juan Carlos González, whose district includes a large swath of Washington County.

The tax, passed in 2020, funnels dollars to Multnomah, Clackamas and Washington counties to fund supportive housing services including rent assistance, behavioral health treatment and shelter space.

The tax has generated far more money than anticipated – it’s expected to bring in nearly $1 billion in surplus revenue over the next five years – and counties have struggled to spend their allotted portions of the proceeds. Multnomah County reported spending 53% of its $170 million program budget in the first three quarters of this fiscal year. It has not yet released its spending for the final quarter.

Metro President Lynn Peterson expressed strong support Tuesday for the proposed changes, which she said could correct a lot of its current shortcomings.

“This is the work that I think that we originally wanted to do prior to putting this on the ballot in 2019, but it was an emergency,” she said. “People felt like it needed to go immediately so a lot of the details weren’t worked out and it was a rough start.”

Madrigal asked councilors to consider raising the income threshold for when the tax kicks in based on inflation to ensure only high income earners are paying the tax. If councilors approve the proposal, that change would apply to the upcoming tax year.

Currently, Metro collects a 1% tax from individuals on income earned over $125,000 or from couples on income earned over $200,000. Personal income taxes fund about 55% of the housing services tax, officials said, while the remaining 45% is covered by a 1% income tax on businesses bringing in more than $5 million annually.

As part of the recommendations, Madrigal said Metro councilors should renegotiate the regional government’s agreements with each of the three counties by December to improve transparency and accountability.

Madrigal also proposed that Metro ask voters to expand the use of the tax dollars to cover the “acquisition, construction and preservation” of low-cost rental housing. The proposed change comes as $652 million in proceeds from the Affordable Housing Bond passed in 2018 are about to dry up.

Officials said they don’t believe voters would support a new bond, but they are hopeful voters would approve modifications to the existing supportive housing services tax. As it stands now, Metro’s housing services tax cannot be used to pay for construction or purchase of affordable housing buildings.

The chairs of all three counties benefitting from the tax shot down a similar proposal by Metro in March to use surplus homeless services tax funds to build more affordable housing. They warned that diverting those dollars would negatively impact the counties’ work to reduce homelessness on the streets.

Madrigal is proposing that Metro ask voters to extend the life of the tax, which is set to expire in 2030, in an effort to stabilize rent assistance and continue supporting the region’s homeless population.

She recommended that councilors tack on clauses to the measure they put in front of voters that would establish clear oversight through an “investment board” appointed by Metro councilors. The board would help guide spending of the tax revenue by requiring counties to submit spending plans and goals and seeking input from cities on how housing services dollars should be used.

Councilor Duncan Hwang, who represents Southeast and parts of Southwest Portland, said he supported the recommendations, but cautioned Madrigal and his fellow councilors to consider a reality where voters don’t approve the proposed ballot measure.

“I think we’re approaching this like we’re confident that voters would pass a measure, and I don’t want us to approach it with that mindset because there’s an election and they could go either way,” he said.

— Austin De Dios covers Multnomah County politics, programs and more. Reach him at 503-319-9744, adedios@oregonian.com or @AustinDeDios.

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