Property Purchase

The City of Hood River purchased the property in January 2020 for $1.2M. The Oregon Business Development Department granted $410,000 for the purchase and the remainder was financed by the City. Construction Excise Tax is a repayment source, and other funding sources include local, state and other community partners.

Goals

At the time of purchase the City committed to development of at least 50 housing units for households earning at or below 120% of area median income. Since that the time the city council refined its primary goal and identified additional goals.

Hood River’s Housing Needs

Following adoption of a Housing Needs Analysis in 2015, the City developed a housing strategy and established goals of creating opportunities for a more inclusive and diverse housing inventory.  Elements of the Housing Needs Analysis were updated in 2019, and updated housing income and affordability data is included in a 2022 Affordable Housing Strategy.  Key points about housing affordability include:

• Median home prices and median rents have seen steady increases.  Both exceed Oregon statewide levels.
• Hood River will have an ongoing need for housing affordable to lower- and moderate-income households including those making $92,160 or less annually (with four members in the household).

• Homeownership rates in Hood River declined from 51% to 46% between 2015 and 2019; in 2019 about 54% of Hood River households were renters.
• In 2019, about 48% of renters were cost burdened, meaning they paid more than 30% of their gross income for housing and may have difficulty affording necessities such as food, clothing, transportation and medical care.
• In 2019, 77% of people who work in Hood River lived elsewhere and commuted.

The aerial photograph below depicts Hood River’s city limits (dashed blue line) and Urban Growth Boundary (dashed red line). The 780 Rand Road site is highlighted in yellow.  It is in close proximity to many businesses along Cascade Avenue (US Route 30, the Historic Columbia River Highway), as well as the site of a future school.

Preparation of preliminary development alternatives included evaluation of zoning, utilities, topography and natural features on the site and in the surrounding area, as well as the City’s capital facilities plans for public infrastructure. The Village at Rand Hill neighborhood is located immediately east of the site, and the Maley Subdivision is located to the southwest. There are undeveloped properties to the west and south, and partially developed properties to the north. Public utilities including water, sanitary sewer and stormwater facilities are available to serve the site, but new roads and other infrastructure will need to be constructed. Wetlands and steep slopes will affect where housing and other improvements can be constructed on the site.

In the spring of 2022, the property was rezoned to Urban High Density Residential (R-3) in its entirety.  And, PBS Engineering completed a wetland delineation report. The report shows that the extent of the wetlands identified by PBS are reasonably consistent with the wetlands identified in previous analyses for the site, and CDP/CCHC do not expect the extent of wetlands to significantly change the site plans shared with City to date.  The wetland delineation will be reviewed by the Department of State Lands (DSL) and the US Army Corps for their concurrence.

The images below describe a variety of housing types. The City anticipates development on the site will feature multi-family housing (apartments) and townhouses for rental. Shared-equity home ownership (rowhouse/townhouse in a Community Land Trust) remains desirable but does not appear to be economically feasible on this site.

The preliminary development alternatives incorporate other improvements and amenities including public trails, park space and open space.

The developer selection process began in July of 2021 with a Request for Qualifications to affordable housing developers. Seven well-qualified firms responded and the City short-listed BRIDGE Housing Corporation and Community Development Partners (CDP) to respond to a more detailed Request for Proposal (RFP) in September. The RFP outlined City Council’s project goals which included not only development of affordable housing but also environmental sustainability, energy resiliency, community engagement, and park and open space. Both BRIDGE and CDP proposed developing over 120 units of housing for households earning between 30% and 60% of Area Median Income on the City’s parcel.

On November 22, 2021, City Council selected CDP as the preferred developer for the City’s 780 Rand Road affordable housing project. CDP is partnering with the Columbia Cascade Housing Corporation, the development arm of the Mid-Columbia Housing Authority.

The overall process for development of the site is expected to occur like this:

In the spring of 2022, Community Development Partners (CDP) and Columbia Cascade Housing Corporation (CCHC) took several significant steps in the fundraising process for development of 129 affordable housing units, including:

• An application was submitted to Oregon Housing and Community Services (OCHS) for LIFT Rental funds.  This request was not successful.  If awarded, the project would have be considered fully funded and CDP/CCHC would proceed with full design and permitting processes. However, significantly more LIFT funding was requested by affordable housing developers in 2022 than was available.  CDP/CCHC anticipate applying for OHCS LIFT funding again in 2023, and they will discuss alternative funding strategies and timelines with the City.
• The project’s income mix was updated to consist of 39 units (rather than 20) for households earning up to 30% of Area Median Income (AMI), and 90 units for households earning up to 60% AMI.  This results in a greater diversity of incomes, better serves the area’s most housing instable residents, and increases chances of success of receiving LIFT funding.  Further, the 30% AMI units will be supported by Project Based Vouchers that strengthen both the social impact and financial outlook of the project.
• CDP/CCHC met with the Energy Trust of Oregon (ETO) to discuss their funding programs. The project will qualify for incentive funds for both Multi-Family and Attached Residences.  CDP/CCHC also plans to use ETO’s technical assistance and incentives for “Path to Net Zero” and solar programs.
• CCHC submitted a request of $3 million for the project to Senator Merkley’s office via the community initiated spending process. The odds of securing this award, and precise timing, are unknown.

While CDP/CCHC remain optimistic about the outlook of this project, affordable housing developers in Oregon are experiencing a variety of challenges. Four of the primary challenges are summarized below, and CDP/CCHC will continue to track these closely to understand how heavily they will impact this project:

1. Construction Cost Escalation – Many factors over the past several years have resulted in dramatic cost increases in construction materials and labor. Recently, projects on the west coast have seen 12% cost increases year over year.
2. Rising Interest Rates – the interest rate environment also rose rapidly. The Federal Reserve increased the prime rate by 50 bps (0.5%) in early May of 2022, 75 bps (0.75%) in July of 2022, and has signaled as much as a 2% increase by the end of 2022.
3. New Limits on Private Activity Bonds (PABs) – 4% Low Income Housing Tax Credits (LIHTCs), which are central to the funding of this project, are required by federal tax law to be paired with PABs. The law requires that at least 50% of project costs must be financed with PABs. PABs are issued on a State level and until very recently Oregon always had excess PABs for 4% LIHTC projects. However, the recent increases in local and regional funding for affordable housing throughout the State has caused the demand for PABs to increase substantially, and last year OHCS determined they have more demand for PABs than available supply. This shortage is causing a slowdown in the amount of affordable housing projects that can move forward across the state. Affordable housing advocates are encouraging the US Congress to lower the “50% test” to a 25% test to enable more affordable housing projects to move forward.
4. Very High Level of Competition for LIFT Funds. The Oregon Housing and Community Services LIFT program was substantially oversubscribed this year. In 2022 there was $30,350,000 in LIFT funding in the category available to the 780 Rand Rd. project (LIFT Rural paired with 4% LIHTC), and approximately $110 million was requested by developers of seven projects throughout Oregon. It was the most competitive application process for LIFT in the program’s three-year history.

To receive updates about community outreach events and other project information for 780 Rand Road, please email HRaffordablehousing@communitydevpartners.com with your name and preferred contact information (phone, email, etc.).

There is no “sign-up list” for the proposed affordable housing development at 780 Rand Road but you are welcome to contact the Mid-Columbia Housing Authority (MCHA) to confirm if subsidized rental housing is available elsewhere in the region (https://www.mid-columbiahousingauthority.org/property-rentals/).  And, MCHA provides other resources including down payment assistance, foreclosure prevention, home repair loans and home-buyer classes (https://www.mid-columbiahousingauthority.org/homeowner-resources/).

To learn more about Hood River’s housing market economics, download this document to review two broad housing market economic topics affecting Hood River.

Factors affecting housing demand:

• What factors influence Hood River’s growth and housing market? Will they change over time?
• What might Hood River look like in the future if current development patterns continue?

Effects of housing production:

• How can Hood River increase housing supply to positively impact housing affordability?
• What impact does allowing increased development capacity have on the housing market?
• What’s the relationship between SDC’s and housing prices?