Street Roots • April 20-26, 2018
KEMPER, from page 11
build the homes but chose instead to sell
the lots to Housing Works for $5,000, and
Housing Works built the seven homes,
ground-leasing them to the new
homeowners, so that the homes were able
to sell for $180,000.
Kemper admitted that in the days when
he was in private development, he probably
would not have developed those homes.
It would depend,” he said. “If you were
getting big prices on the other homes and
that absorbed your loss, that would make
sense.”
Central Oregon’s housing stock is
predominantly single-family homes, and
developers still want to build that kind of
housing.
“You can make money doing that,”
Kemper said. “It’s an easy business.”
It gets to the biggest problem in
affordable housing - how to pay for it.
“You can only build what you can finance,”
Kemper said. “That’s the problem.”
Housing affordable to low-income earners
is the most difficult to build, despite the fact
that it is needed the most.
Costs of construction and development
often are paid for by loans and debt service
financed by a bank, on the guarantee that
the money will be paid back via the sale of a
home or the market rents of an apartment
unit.
In a white hot housing market like
Portland or Bend, financiers know they’ll get
a return on the investment - the home will
sell quickly, for a price likely above market
value, given the competition. The same is
Rural Housing
true of new apartment buildings, given how
much landlords can charge for rent.
But that scenario does not apply to
affordable housing. Because rents are
subsidized, sometimes deeply, the money
generated from renters or low-income
homeowners is not enough to pay for the
development. Financing for affordable
housing thus is not entirely paid for by bank
loans or financing.
The amount of money generated from
rent is generally around half the cost to
develop the building. That leaves at least
half the development costs unaccounted for,
which is often referred to as “gap financing.”
“My world is trying to find gap financing,”
Kemper said. “That’s the trick.”
The spectrum of funding sources that
Kemper, like any other affordable-housing
developer, needs to apply for includes Low
Income Housing Tax Credits, available
through Oregon Housing and Community
Services, which provide 4 percent and 9
percent tax credits for affordable-housing
projects.
“Nine percent tax credits are the golden
ticket,” Kemper said. “A 9 percent tax credit
will give you 70 percent of the financing.
Four percent tax credits help. A 4 percent
(credit) is 30 to 40 percent of your
financing.”
Then there are at least a half-dozen other
funding sources to go after, including bank
loans or bonds; funds administered by the
state’s General Housing Account Program,
which is funded by the state’s document
recording fee when real estate transactions
are filed; and exemptions from paying
system development charges, which are
between $20,000 and $30,000 for each
building built to pay for city utilities, such as
sewer, water, roads and parks infrastructure.
The two housing developments in Sisters
and LaPine are financed together, and
Kemper can rattle off the funding streams
for the projects as if he were reciting the
day’s grocery list or the lines of a favorite
song.
It’s a $17 million deal. Housing Works
issued bonds, took out $6 million in debt
and got $5 million in tax credit equity. The
city of Sisters contributed $300,000 to the
development there. LaPine gave Housing
Works the land the townhomes are being
built on. Housing Works is contributing $1
million toward the development. Another
bank loan paid $3.4 million. And nearly
$400,000 came from the General Housing
Account Program.
“That’s eight stacks of financing to get
that deal done,” Kemper said. “It’s crazy.
It’s hard.”
The Oregon Legislature tripled the
amount of money generated by the
document recording fee, from $20 to $60,
during its February 2018 session. The
increase will generate an estimated $30
million each year for affordable-housing
projects, which Kemper thinks is a boon to
affordable-housing development.
“That’s huge!” Kemper said. “That’s gap
money to make deals go. That’ll be the
difference between whether a deal goes
through or not.”
Half a million dollars may not sound like a
lot in a deal worth $17 million, but it is the
hardest to find.
“It’s those last dollars,” Kemper said. “It’s
Page 13
all the difference in the world.
“And if I have a $10 million deal, I can get
4 percent tax credits and I can get a loan
and I can get the city to kick in an SDC
(system development charge) exemption;
I’m at $9 million,” Kemper said. “I’ll carry
my developer fee. I’ll even put in some
money, but that last million bucks is what’s
going to make that deal go.”
Kemper, although he is retired, is still
working. Financing of the Forbes Road
development is yet to be finished. He now
lives full time in Southwest Portland (he had
lived in Central Oregon during the week and
in Portland on weekends). He plans to travel
with his wife and spend time with his family,
but he’s also interested in turning his
developer’s eye to a problem closer to
home: Portland’s homelessness.
“It’s affecting the very character of
Portland as a city,” he said. “You can’t have
people camping in downtown Portland. You
need to create a place for them to be.”
He said he’s been communicating with
Homer Williams, one of the founders of the
nonprofit Harbor of Hope. Williams
announced this month that the organization
intends to build a “navigation center” in the
Pearl District for people experiencing
homelessness, following a $1.5 million
contribution from Columbia Sportswear
owner Tim Boyle.
Kemper is interested in micro-housing -
including single room occupancy, or SRO,
housing - for the same reason he pursued
the housing he developed at Housing Works:
There are plenty of people who want to live
in it, and it’s what they can afford.
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CLACKAMASCOMMUNITYCOLLEGE
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A p ril 4 ............................. 9-11 a.m.
A p ril 18............................. 9-11 a.m.
DEPARTMENT OF HUMAN SERVICES
MT HOOD COMMUNITY COLLEGE
PORTLAND STATE UNIVERSITY
50 SW 2nd Ave, Portland
A p ril 3 ..............................9-11
A p ril 1 0 ............................9-11
A p ril 17.......................... . 9-11
A p ril 2 4 ................... .*...... 9-11
Student Union - 2 6 0 0 0 SE Stark St
Gresham
A p ril 3 .......... ................. 12-2 p.m.
A p ril 17...........................12-2 p.m.
PSU TriO - 4th Floor Rm 425,
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A p ril 2 5 ..................... 12-2 p.m.
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A p ril 2 5 .......................... 9-11 a.m.
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A p ril 2 3 .......... 10:30 a.m.-6 p.m.
19421 SE Stark St, Portland
A p ril 5 ........................... ...2-4 p.m.
3 NW 3rd, Portland
A p ril 2 4 ........................... 2 -4 p.m.
HUMBOLDT GARDENS HEALTH FAIR
PORTLAND RESCUE MISSION
5033 N Vancouver Ave, Portland
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111 W Burnside, Portland
A p ril 1 2 .......................... 8-10 a.m.
A p ril 2 6 ......................... 8-10 a.m.
a.m.
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EAST COUNTY CHURCH OF CHRIST
COLUMBIA COUNTY^
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SACAGAWEA HEALTH CENTER
1060 Eisenschmidt Ln, St Helens
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MULTNOMAH COUNTY
CLACKAMAS SERVICE CENTER
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