Eighteen years ago Portland developer John Beardsley signed an agreement with the federal department of Housing and Urban Development to provide low-income housing in Portland for 20 years.
Beardsley is holding up his end of the bargain, and HUD, at least in Beardsley's case, is doing the same. Now, however, as the contract nears expiration, the city of Portland is trying to prevent Beardsley and others from realizing the agreement's net benefit: the ability to convert units to market-rate rents when contracts expire.
In August, at the urging of then-housing commissioner Gretchen Kafoury, the Portland City Council passed an ordinance that forces owners to do one of three things: keep the buildings affordable in perpetuity: sell them to the city; or pay a "replacement fee" of no less than $31,000 for each low income apartment unit they convert to market rate.
The upshot for developers like Beardsley is that, instead of a payoff at the end of their affordable housing projects, they're getting the shaft.
They say the city changed the rules of the game while the game was well underway, effectively killing the payoff they were told awaited them at the end of their contracts.
Many of Portland's for-profit owners of low-income housing describe the ordinance as morally and legally indefensible. They say they're planning to sue. Others say they'll sell their buildings to the city and wash their hands of the mess.
Owners say that HUD's housing program, generally called the project-based Section 8 program, was never the …