After more than two years of counties slowly ramping up homeless spending, Metro Council is developing a ballot measure to expand the uses of Supportive Housing Services dollars.
Metro staff, led by Chief Operating Officer Marissa Madrigal, recommended 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.
Who spends the money?
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.
“When we began this process, we had a slightly different concept in mind,” Madrigal told Metro Council at a July 9 meeting. Metro has “this amazing success with the 2018 housing bond” — which is projected to exceed housing production goals — “so we were originally thinking maybe we propose something that cleaves off some funding, or a percentage of funding, and goes into a separate pot that then Metro administers and we just kind of replicate what we have today.” But that plan changed in response to pushback from county officials.
“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 at a July 8 press briefing. “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.
Oversight
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.
In the current SHS system, “the accountability is very backward-looking, where the systems are set up to report out what happened, rather than a system that … has strong standards, definitions and expectations up front,” Madrigal told Metro Council on July 9. “In my opinion, our current system is weighted too heavily and almost exclusively on the end, once the money has been spent, and we need to do more upfront to ensure that we are using the tools that we know work, measuring our progress and actually meeting our goals.”
Rate and duration changes
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. If the tax is extended, Metro may also adjust the income thresholds to adjust for inflation, to ensure only high-income earners are paying the tax.
“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 councilor Mary Nolan said her constituents “did think that a 10-year plan was going to end the homelessness crisis when they voted for it.” Extending the tax “will require some dialogue with voters — and I mean dialogue, back and forth — and if we’re not going until May, we have time to do that,” Nolan said.
Council to decide on more specifics
Metro staff are proposing the ballot measure appear on the May 2025 ballot.
Metro councilors expressed broad support for the proposal at the council’s July 9 meeting, though many details still have to be ironed out.
The proposal also calls for more coordination with the cities in each county. It does not include any changes to the current proportional distribution between the three counties.
“While we should be attuned to smaller cities, we should not do that at the cost of the human beings who live in the city of Portland,” Nolan, who represents much of Portland, cautioned at the July 9 meeting.
By the time the measure is voted on in May, Portland will have an entirely new governance structure.
“Each of (Portland’s) four districts will be larger than the second largest city in the region. So finding some way to use those districts as a mechanism for representation at decision-making tables — and also allocation of funds — is something we should think about before we send something out,” Nolan noted.
The original SHS measure was developed in 2019 and appeared on the May 2020 ballot.
The proposed changes to the measure are “the work that I think that we originally wanted to do” before the 2020 measure, Metro Council President Lynn Peterson said. “But it was an emergency and people felt like it needed to go immediately, and so a lot of the details weren’t worked out and it was a rough start.”
Counties have improved their SHS programs over the past few years, but the process “has shown us all that we can do better, that there are holes and gaps of things that weren’t discussed prior to putting it on the ballot … that now need to be worked out,” Peterson said.
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