Incomes rise, but renters can stay

Tax-credit buildings don’t force their highest earners out

By peter korn

The Portland Tribune, Nov 5, 2009 (6 Reader comments)

L.E. BASKOW / TRIBUNE PHOTO

The Sitka Apartments building in the Pearl District, which was built with the benefit of tax credits, requires that tenants cannot make more than $28,000 a year when they move in, but once in , those residents don’t have to leave simply because their salaries increase.

By all accounts, the Sitka Apartments building in the Pearl District is a great place to live.

The waiting list for the building’s income-restricted two-bedroom apartments can run as long as two years, and the wait for a one-bedroom can last up to nine months. Studio waits are three to six months.

The Sitka has an attractive courtyard and underground parking. It sits right on the streetcar line near the Pearl’s three parks and even offers free Wi-Fi throughout the building.

There are bike racks in the Sitka’s courtyard, and not surprisingly, they often are full. Since its opening four years ago, the building has attracted a large number of young, college-educated residents or part-time students with higher-income days ahead of them.

One thing the Sitka doesn’t have is high rents. As an affordable housing building made possible through federal low-income tax credits, rents at the Sitka are set by agreement with state housing officials, who administer the tax credits.

An income-restricted apartment at the Sitka is a very good deal. Most two-bedrooms rent at about $800 a month, far below the market rate equivalent in the Pearl District. Smaller apartments, especially the studios, rent $100 to $200 below equivalent, market-rate apartments.

These apartments aren’t for everybody. You can’t make more than 60 percent of the median family income for the Portland area if you want to get one (or 50 percent of median income for some). That means a single person can’t make more than $29,400 for the year.

But once you get in the Sitka, or any of the other affordable housing, low-income tax credit buildings scattered around the city, you’re set. Meeting the income requirement gets people into tax credit housing apartments, but once in, they can increase their earnings without ever having to worry about leaving.

And according to a December 2008 landlord’s survey of the Sitka’s tenants, better than one in three now make more than the maximum income eligibility requirement they met when they began to rent in the building.

Most of the renters at the Sitka are young or middle-aged, white, single and childless, so the maximum eligibility income they had to meet was about $28,000 — depending on when they applied.

But 73 of those tenants make more than that, with 17 making more than $39,000, four exceeding $49,000 and 10 earning more than $59,000. And based on a scattering of interviews with Sitka dwellers during the past two weeks, most know how lucky they are.

A benefit to some

Tara Mooney counts herself among the fortunate at the Sitka. Four years ago, when the Sitka opened, she and a roommate were among the first to sign up for a two-bedroom apartment. Since then, Mooney has married, and she and her husband have a 5-month-old baby. They don’t know how much longer they will stay, but they are saving their money to eventually buy a home.

Saving that money is made possible because Mooney pays $805 a month for her apartment at the Sitka. She’s looked at other similar market-rate apartments in the Pearl, and most, she says, are close to twice what she is paying.

Mooney says that she and her husband make “way over” the eligibility requirement that allowed her to first rent the apartment. In fact, she says that when she and her husband married, she was worried their combined income would get them kicked out of the Sitka, until she learned that could not happen.

TRIBUNE PHOTO: L.E. BASKOW • Sitka Apartments tenant Charles Airey says it would be hard to leave his home of four years because it is a “special place to live.”

Mooney says she can see why some people might believe she should have to go, to make room for a lower-income tenant. On the other hand, she says, “I’m thankful that’s not the rule. It’s kind of helped get us on our feet.”

In addition, according to state officials, even if they wanted to, landlords of tax-credit buildings such as the Sitka could not raise their rents for tenants who have begun earning more money.

Ironically, while tenants in these work force housing buildings don’t have to leave and don’t have their rents increased as they earn more money, tenants in public housing, who tend to be poorer, do see their rents increase as they make more money. And sometimes they are told they must leave. Public housing projects receive deeper federal subsidies than do affordable housing tax-credit buildings, and they have to follow more stringent regulations.

Are there wealthy people inside Portland’s affordable housing buildings? Probably not, housing authorities say.

In fact, given the economic downturn of the last year, an increasing number of people in these tax-credit buildings probably make less than the eligibility requirement, not more. However, there are people who earn more than the average Portland resident who are nonetheless benefiting from rents below market rates. And this is made possible through tax subsidies.

Housing officials say that privately owned buildings such as the Sitka are probably the most prominent example of the once-in, never-out rule. Most tax-credit buildings in Portland are run by nonprofit organizations, who generally use additional funding sources and serve a greater percentage of residents with incomes lower than the required minimum.

Some people see the handful of tax-credit buildings in the Pearl District and downtown as a testament to the success of affordable housing in Portland. Not every city has tax-subsidized affordable housing in neighborhoods such as the Pearl District. And over time, they say, most tenants eventually move on to home ownership or larger apartments.

The Sitka is owned by private developer Turtle Island Development, and management there declined interview requests.

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