After more than two years of counties slowly ramping up homeless spending, Metro Council will consider a proposal to expand the uses of Supportive Housing Services dollars.
Metro staff, led by Chief Operating Officer Marissa Madrigal, are recommending that the Metro Council ask voters to approve a ballot measure that would expand the uses of the tax revenue to include building or purchasing low-income housing; extend the lifetime of the tax; reduce the tax rate; and strengthen oversight and accountability.
The Metro Supportive Housing Services tax is paid by businesses and high-income earners in the urban areas of Multnomah, Clackamas and Washington counties.
The tax was approved by voters in 2020 as a 1% marginal personal income tax on residents earning more than $125,000 and a 1% business income tax on businesses earning more than $5 million. The tax is currently set to expire in 2030.
The tax revenue is distributed to the counties to fund homeless services like shelters, outreach, and permanent supportive housing. Revenue started accumulating more than two years ago but despite the housing crisis, the three counties have been slow to use the funding.
There is currently more than $400 million in unspent SHS funds, according to Metro. The tax has brought in far more revenue than initial forecasts projected.
Washington and Clackamas counties did not have robust county homeless services programs in place prior to the SHS tax, so the counties have had to do more work to build up new programs. Multnomah County, through the Joint Office of Homeless Services, has been handling homeless services for years, yet still failed to spend much of its SHS funding in the first years.
Metro’s proposal would expand the uses of the SHS funds to “allow acquisition, construction and preservation of affordable rental housing and permanent supportive housing, with sufficient flexibility to complement county SHS investments.”
Metro currently has an affordable housing bond, but those funds will all be allocated in the next year. Metro could have sought a ballot measure that would have redirected some SHS dollars for affordable housing projects led by Metro, but is instead leaving the spending up to the counties. The proposal seeks to “dedicate a minimum percentage of funds to capital investments in affordable housing and permanent supportive housing,” which would be distributed to counties like the other SHS funds, but earmarked for capital investments.
This spring, Metro began meeting with stakeholders in local government, affordable housing development and social services to discuss changes to the SHS program.
The proposal for a ballot measure came out of those discussions, though many county leaders have expressed skepticism — if not outright opposition — to any changes to the program. Much of the pushback came when it seemed like Metro may take some of the money out of the counties’ distributions, but that isn’t part of the recommended measure.
“As a regional government, we both recognize the need for regional standards and definitions and that governance at a high level, and at the same time, we recognize that no county is the same, no city is the same, no town is the same, and they may have a different mix of needs, from one to the other,” Madrigal said. “Our approach would be strong regional governance, strong regional goals, but still allow the counties to create their own unique mix of services. Some might be a little bit more intense on the shelter side. Some might be a little more intense on outreach or affordable housing. We want to create a system that allows for that flexibility and difference, while still driving toward those regional goals that the program is intended to meet.”
Multnomah County is on notice for failing to follow its past SHS budgets. The county was already off course, significantly underspending SHS funds, for months before Metro demanded a Corrective Action Plan in spring 2023. In recent months, however, the county has made progress toward most goals outlined in the Corrective Action Plan.
The proposed ballot measure would increase oversight for all three counties through a new Investment Board and by increasing Metro’s supervision of the counties. Metro would create performance metrics and more closely monitor the counties’ progress. Metro currently retains 5% of the SHS revenue for administration. Madrigal said Metro hasn’t spent all that money and would redirect their current surplus toward affordable housing projects. Since that 5% cut is more than enough for now, Metro can increase its oversight work without exceeding the 5% in the future, Madrigal said.
Metro staff are also recommending the ballot measure include a reduction to the tax rate, though a specific percentage hasn’t been determined, and an extension of the tax's duration.
“I don't think any of us think that homelessness will end in 2030, so extending the tax for a length of time to stabilize the program and support the development of affordable housing is a recommendation,” Madrigal told reporters at a briefing on July 8.
Metro staff aren’t recommending a specific new sunset date, but an extension long enough to “leverage rent assistance for affordable housing development and ensure long-term stability of services for people experiencing chronic homelessness,” according to a summary Metro Council will review Tuesday, July 9.
The extension would likely be at least 20 years, Madrigal said.
Metro staff are proposing the ballot measure appear on the May 2025 ballot. The council will hear the recommendation at its July 9 meeting but will have months to decide how — and if — to move forward before the ballot filing deadline in winter 2025.
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