Portland’s growing pile of unspent housing funds surged Friday to $106 million, the city’s top bureaucrat said in an extraordinary disclosure.
The announcement by City Administrator Raymond Lee caps a series of revelations about money sitting unused in various Portland Housing Bureau coffers, first reported by The Oregonian/OregonLive last November and initially believed to be about $21 million.
And it comes as Portland grapples with a prolonged homelessness and housing crisis while it faces a series of fiscal challenges.
As city officials began to review fund balances across the embattled bureau, they’ve continued to find millions more in previously unreported funds, Lee wrote in a memo to the Portland City Council, which sets the budget under the city’s new form of government.
“Some of this information has been released over the past several months; other information is newly available,” Lee wrote. “Taken together, it provides a clearer picture of the resources available within the Portland Housing Bureau.”
Prior to Portland’s voter-approved government overhaul, which went into effect last year, the mayor or individual city commissioners controlled bureaus that kept their own budgets and were not overseen by a central administrative branch.
Lee said the city would hire an outside firm to independently investigate the housing funds. He also recommended a “systematic review of all funds in (the) city to confirm that budgeted fund balances reflect actual existing contingencies and reserves.”
The city administrator further suggested instituting a series of rigorous checks and cross-checks against audited financials to confirm fund balances.
“I remain committed to sharing critical information with Council as it becomes known to us, whether that be at a natural next step in the legislative or budget conversations, or via separate communication,” Lee wrote.
In a statement Friday, Council President Jamie Dunphy credited the city’s new government structure for “unearthing these longstanding problems.”
“We are lucky to have lots of opportunity to do good and deliver help to the community, both in programmatic support and in greater transparency and efficacy of our government,” Dunphy said.
Mayor Keith Wilson sounded a similar note, expressing his appreciation to the city administrator for swiftly coordinating an independent audit and investigation of the housing funds.
“Gratitude is also owed to the Budget Office and the Portland Housing Bureau for their hard work and diligence,” Wilson said. “Our transformation into a single, unified local government structure has brought budgetary concerns into sharp focus, and I look forward to collaborating with my Council on how to best serve Portland with these funds.”
A main target of the memo is the Housing Investment Fund, which was established by city ordinance in 2016 and has grown to include several “sub-funds” that relate to multifamily housing. Its sources include the general fund, fees on rentals, and a portion of the city’s fees on vacation homes. Many of the funds have limitations or restrictions on their use, and the memo outlines the potential risks of shifting those uses.
Last fall, city staff alerted the City Council to $21 million in unspent funds generated by a fee that landlords pay to register new rentals – money that could have gone to emergency rent assistance, eviction defense or other housing aid. Instead, the funds remained unspent and accumulated over several years. Senior city staff had learned of the money months prior to notifying the council, leading policymakers to allege they were kept in the dark.
Then, last week, the council learned that the Housing Bureau had millions more in unspent money at its disposal, as The Oregonian/OregonLive first reported. The additional unbudgeted funds were initially believed to be at least $15 million, according to a memo from Dunphy. That would have brought the total to at least $36 million.
Lee’s Friday memo shows unreported funds in the Housing Bureau of roughly triple that figure.
A city spokesperson said in an email statement, “The majority of the balances were intentionally held for future or planned use but were not incorporated into the City’s formal budget process. Moving forward, the City will reflect these contingency and reserve funds during the annual budget process.”
The spokesperson, Cody Bowman, said no disciplinary action was being taken against city staff in the matter.
In his memo, Lee noted that although he does not have reason to believe other city funds are regularly underbudgeted, the city will move forward with its due diligence nonetheless.
“There are unique circumstances around Housing Bureau funds that suggest this is an isolated incident and is not indicative of a broader citywide practice of underbudgeting fund balances,” Lee wrote. “We will still move forward with a process to evaluate other city funds to ensure this issue doesn’t exist.”