Portland, OR. — A Central Oregon policy analyst is raising concerns about the cost of subsidized housing projects funded by the Portland-area regional government, arguing taxpayers are paying far more than private-market rates to build “affordable” units.
Randal O’Toole, an adjunct scholar at Cascade Policy Institute, analyzed more than 40 projects financed through Metro’s 2018 Affordable Housing Bond. He found the average cost across 41 projects was approximately $681 per square foot. In the city of Portland, the average rose to $787 per square foot, while suburban projects tended to cost somewhat less.
O’Toole said those figures are two to three times higher than typical private-sector housing construction in the region, which he estimates at under $300 per square foot.
One project he initially reviewed, located in Gresham, totaled $66 million for 224 units and 72,500 livable square feet, equating to roughly $942 per square foot. Another project, Glisan Landing, cost $77.8 million for the same square footage, or about $1,073 per square foot. He noted at least one additional development could exceed $1,100 per square foot, depending on final unit size calculations.
According to the report, several factors contribute to higher costs. He argues that many projects are mid-rise apartment buildings, which he says become more expensive with each added story. He also contends that Metro awarded housing grants exclusively to nonprofit developers, who typically collect developer fees averaging about 12 percent of project costs. Those nonprofits often contract with private construction firms, layering additional administrative and profit costs into the final price, he said.
Most projects rely on multiple funding streams, including federal low-income housing tax credits and additional local and state subsidies. Developers typically contribute 10 to 20 percent of total costs from their own funds, according to O’Toole’s analysis. Some Portland-based projects also receive support funded by a one percent tax on new home construction, which he argues raises overall housing costs.
In total, the projects he examined represent more than $2 billion in spending.
The report contends that if regional leaders were focused primarily on affordability, they would prioritize lower-cost construction methods and avoid taxing new housing to fund subsidies. He argues that Metro’s broader land-use and density goals are contributing to higher per-unit construction costs.
Metro has previously stated that its affordable housing investments are intended to increase housing supply for low-income households and address regional homelessness and displacement pressures. Supporters of the bond program argue that subsidized projects often include additional requirements — such as prevailing wages, environmental standards, and long-term affordability restrictions — that can increase upfront costs.
O’Toole, who writes from Central Oregon and is the author of several books on land-use and transportation policy, said his findings reinforce his long-standing opposition to government-directed planning and density mandates.
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