How much money is too much money? Governments throw out big numbers at budget time, sometimes it’s hard to tell.

But Brendan O’Connell, CFO for the city of Portland, noted some truly giant figures around housing recently that really ought to put things in perspective.

The city budgeted $2.7 million for emergency shelter for the fiscal year that ends in June. The real outlay could be 10 times that amount, maybe as high as $30 million.

A lot of that money is going to pay for motel rooms that have been used since the start of the pandemic to house people in ways that prevents the spread of COVID. The hotel bills have been rising, partly because more people need shelter and partly because the city has run out of lower-cost rooms to rent.

The city has been spending more than $1 million a month since the summer, and the cost is steadily rising. In the month of December alone, Portland shelled out $2.5 million to house 900 people.

To be clear, this is not all coming from Portland taxpayers. The bill so far has been split by state and federal sources, although the federal program is set to expire this spring. But it does raise the question, how much housing could Portland build if it had the money that it’s now forced to spend on hotel rooms?

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According to Christian MilNeil, a journalist and housing activist, the answer is “a lot.”

MilNeil, who flagged these expenditures in a tweet last week, did some quick back-of-the-envelope math about what the city could do with that amount of money.

Since you pay for housing over time, it’s a question of financing. If the city had $15 million to spend, which is what is tentatively projected for emergency shelter next year, it could build about $60 million worth of housing right now.

MilNeil serves on the board of the Portland Housing Authority, which is wrapping up a new affordable-housing project on Cumberland Avenue, with 60 apartments and a day care that will cost about $20 million when it’s all paid off.

By that measure, the $15 million state and federal taxpayers are chipping in for hotel rooms next year could create 180 apartments and three day cares, something that would make a real difference in Portland’s housing and labor markets.

Portland has again seen a spike in new arrivals, asylum-seeking immigrants who have made it across the southern border. Late last month, the city was housing 1,150 people a night, more than twice as many as it did in the summer of 2019, when it turned the Portland Expo into a temporary shelter after an influx of asylum seekers arrived in town.

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Settled in permanent housing, these people could be the workers who the city’s employers say they can’t find. And housing them permanently would cost a lot less than putting them up in hotels even for a short time.

Of course, nothing is so simple.

Portland couldn’t spend that money on permanent housing because it comes from an emergency COVID program. And even if the city could redirect these funds, there are 900 people who need a place to sleep tonight.

But it shows that if we can come up with the money to respond to the COVID crisis, we ought to be able to come up with the money to respond to the ongoing affordable-housing crisis.

As MilNeil pointed out to me, it always costs more to deal with an emergency than it does to prevent one. Portland is in the process of building a 200-bed homeless service center, but if there are no permanent homes for poor people to move into, the new shelter will fill to overflowing. If the city, state or federal government had invested in housing three years ago, we would not be paying for all these hotel rooms now.

Portland voters tried to address the affordability problem in 2020 by passing the local Green New Deal referendum. It requires developers of buildings with more than 10 units to make 25 percent of the apartments affordable to median-income renters.

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The jury is still out on whether that’s a good policy (there’s some preliminary evidence that it discourages development and makes the housing shortage worse). But even if the pace of for-profit development doesn’t slow down,  it would take years to create as many affordable apartments using a market mechanism like the Green New Deal as the city could create right now with the amount of money it is spending on hotel rooms.

The pandemic has changed people’s thinking in a lot of ways. Maybe one of them should be how much is too much to spend on housing.

 

Correction: An earlier version of this article misstated the cost of the Portland Housing Authority project on Cumberland Avenue. It is $20 million. This has been corrected in the text above.


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