During last year's campaign season, nearly every candidate we interviewed for local offices declared that "affordable housing" is the most pressing issue for Bend, and for the region. With the population in Central Oregon surging, housing prices have been steadily climbing and pricing out more and more levels of income from purchasing homes here.
The implications of the debate have several prongs, like whether Bend will become a socio-economically exclusive city, pricing out working class individuals and edging more toward a tourism town like Aspen, which is both outdoor playground and a cultural smorgasbord, but isn't affordable for the service workers necessary to keep that lifestyle and tourism machinery in motion.
But beyond expressing concern for more affordable housing, few of the candidates and few elected officials seem to be presenting viable, robust and complete solutions. We recognize that it is a tricky issue, and one without easy solutions. Unfortunately, though, it seems as if both the City of Bend and Bend Park & Recreation are banking on reducing "System Development Charges" (SDCs) as the most viable means to create more affordable housing.
This simply does not make senses to us—at least not as a magic bullet.
In a nutshell, SDCs are fees collected by the City from both commercial and residential developers. In turn, that money helps fund the City's basic infrastructure—streets, sewers, water lines. Residential developers are also tagged for SDCs for parks.
For developers, SDCs can be frustrating because they add costs (for example, about $6,000 for a single-family home)—and, one theory says, forces housing prices higher so that developers can recoup these additional expenses. Certainly there is validity in that calculation. For example, one proposal floated last week to Park & Rec was waiving SDCs for multi-family housing dedicated to families at or below 60 percent of the median income. Yes, that idea is an attractive notion for encouraging developers to build more affordable housing in the region—and, could serve as one piece of the puzzle.
This is not the simple arithmetic of the construction costs needing to be less than sales price, but is a more complicated matrix of trade-offs and examinations about where thousands of dollars for each house will flow—whether to the developer, the City, Park & Rec, or the homeowner; and in whose pocket does the money best serve the good of the City.
Moreover, waiving SDCs means fewer funds for the City to deliver services, and effectively helps shift the balance of power from the public to private sectors. Already the police and fire departments are so woefully underfunded that the fire department was forced last year, cap in hand, to beg voters to approve a five-year property levy simply to raise funds to provide baseline equipment and services.
Bend is not the first city to struggle with preserving and creating affordable housing—and it would do well to consider lessons from other municipalities, like San Francisco, which underwent one of the quickest gentrifications in recent history as rent and housing prices tripled and quadrupled in the mid-90s, and have only steadily continued to climb since then.
To counterbalance those trends, and to help build affordable housing, the mayor's office there provides a tax incentive that does not reduce direct revenue to the City, but in fact increases it. By providing low interest rate loans to developers to subsidize specific categories of housing development, the City directly encouraged 10,000 new affordable homes within the city between 1990 and 2008.
We are not necessarily suggesting that this is the solution either, but we do urge both City Council and Park & Rec to consider more than simply waiving SDCs as the means toward affordable housing—and, more specifically, to consider solutions that maintain civic funds and continue to center decisions about housing development in the public, not private sector.
Eight years ago, we watched what happened when developers were given nearly free reign of housing development in the region, and hope that we have learned from our mistakes.