We need to fund housing—but how?
A common and significant barrier to well-located, accessible, and affordable homes is a lack of funding for essential public infrastructure such as sewers, sidewalks, and transportation. These are often necessary prerequisites to building new homes.
Here are some examples of policies that work
Cities across Oregon have implemented several creative solutions to finance and expand the impact of each infrastructure dollar spent. Here are examples of policies that have worked. These mechanisms might not be a good fit for every community, but are worth considering.
- Public-private partnerships: Combines public and private investments to make each dollar go further. The Regional Rural Revitalization (R3) Consortium provides a powerful example, building over 600 homes across 10 Eastern Oregon counties.
- Revolving Loan Fund: Loans money to community projects, which then pay back the loan, allowing the fund to continue the cycle. See the state’s Moderate Income Revolving Loan Fund (MIRLF) or Tigard’s Middle Housing Revolving Loan Fund as examples.
- Community development corporations: Neighborhood-scale nonprofits that build affordable housing or other community development projects in the places they serve.
- Community land trusts: Residents own their home but not the land under it. The land trust model ensures that families with moderate to low incomes can build wealth through home ownership while maintaining permanent affordability for future generations.
Funding resources
The Housing Accountability and Production Office (HAPO) lists a variety of funding resources on their Housing Production Resource Hub, including:
- Moderate-Income Revolving Loan Fund: Established in 2024, this program was seeded with $75 million in General Fund resources for the Housing Project Revolving Loan Fund. It supports and expands very low-, low-, and moderate-income housing production in communities through a revolving loan fund structure.
- Housing Infrastructure Support Fund Program: The HISF establishes a state structure to support city planning and financing for water, sewers and sanitation, stormwater and transportation projects that produce housing at specified minimum densities.
Options for generating revenue
The following options for generating revenue to fund affordable housing or other housing affordability projects are listed in more detail in the Housing Production Strategies Toolkit.
- Construction excise tax: Established by the Oregon legislature in 2016, this allows local governments to levy a tax on new construction, which must be used to fund affordable housing or infrastructure development. ORS 320.192-.195. Many cities, including Newberg and Grants Pass, are successfully using this funding source.
- Demolition tax: A tax on building demolitions and condo conversions, with revenue typically deposited into a Housing Trust Fund to fund affordable housing or other activities.
- Land-value tax: Unlike a traditional property tax, which taxes the value of the land plus the value of improvements, a land-value tax is based on the value of the land only. This discourages land speculation and incentivizes development in cities and towns. Like traditional property taxes, the revenues from land-value taxes are often used to fund infrastructure, housing, or other public goods. This has been implemented in several cities in Pennsylvania and elsewhere, and has been considered but not adopted in Oregon (also referred to as a Georgist land tax in the HPS Toolkit).
- Luxury tax: Some cities in the US, including Los Angeles, have adopted a luxury tax on high-value property sales. In recent years the Oregon legislature has considered limiting the mortgage interest deduction (MID) for second homes, and using the resulting funds to support housing in various ways. We are likely to see MID reform legislation in the future.
- Transient lodging tax: A tax on short-term rentals, hotels, or other short-term lodging, such as the one implemented in Hood River.
- Vacant homes tax: A tax on short-term rentals, vacation homes, and other homes that remain vacant for a certain period of time. Vancouver, BC and several cities in California have adopted this tax, successfully reducing unused homes and funding more affordable housing. No city in Oregon has adopted it... yet.
Read the next of 1000 Friends’ six strategies for Oregon cities.
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