A new housing finance proposal designed to accelerate residential development in Oregon is moving closer to becoming law after lawmakers approved legislation establishing a construction loan program for mixed-income housing projects.
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The measure, Senate Bill 1567, now heads to the desk of Tina Kotek, governor of Oregon, for final approval. If signed into law, the bill would create a $20 million revolving loan fund aimed at helping developers finance both market-rate and affordable housing construction across the state.
Supporters say the initiative could help overcome one of the biggest barriers to building new homes: access to affordable construction financing.
Under Senate Bill 1567, the Oregon Housing and Community Services agency would establish and administer the revolving loan program.
The fund would provide subsidized construction loans to developers building mixed-income housing projects. In exchange for receiving the financing, developers would commit to including affordable housing units within their developments.
Unlike some housing initiatives that rely on federal grants or subsidies, the revolving loan structure allows funds to be reused as loans are repaid, creating a long-term financing source for future housing developments.
The initial $20 million for the program would be transferred from the Housing Project Revolving Loan Fund, according to the bill text.
Housing advocates say the model could help stimulate development by lowering borrowing costs and improving access to capital for builders.
The legislation was introduced by Khanh Pham, a state senator representing Portland, and received bipartisan backing in both chambers of the Oregon Legislature.
Lawmakers have been exploring new strategies to address Oregon’s housing shortage, which has pushed home prices and rents higher across many communities.
“I’m thrilled that the Legislature is moving forward with the establishment of a cost-effective and proven model to stretch public dollars to build more market-rate and affordable housing across the state," said Pham, chair of the Senate Housing and Development Committee, in a statement. “This $20 million investment in a revolving loan fund model will spur desperately needed housing production immediately and for decades to come.”
Supporters say the legislation reflects growing recognition that both public and private sectors must collaborate to expand housing supply.
Housing developers frequently cite construction financing as one of the biggest obstacles to building new projects, particularly when developments include affordable housing components that generate lower returns.
By offering subsidized loans, the program aims to reduce that financial pressure and encourage builders to move forward with projects that include both market-rate and income-restricted units.
Officials say the revolving loan model could also allow the program to continue supporting projects over many years, as funds are recycled through repayments and reinvested into new developments.
The proposed loan program is one of several recent initiatives aimed at encouraging housing construction in the state’s largest city, Portland, Oregon.
In August, the Portland City Council approved a temporary ordinance waiving system development charges for the construction of 5,000 housing units over three years, an effort intended to reduce development costs and accelerate building activity.
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City leaders are also advancing planning updates through the Central City Code Amendments Project, which proposes zoning and planning changes aligned with the Central City 2035 Plan.
The proposed amendments would increase maximum building heights in certain districts, allow greater floor area ratios and target key areas for rezoning. Officials say these changes are intended to provide developers with greater flexibility while encouraging more residential construction in central urban areas.
The future of Senate Bill 1567 now depends on whether Gov. Tina Kotek signs the legislation into law.
If approved, the revolving loan program could begin providing financing to developers in the coming years, potentially helping expand housing supply across Oregon.
Supporters believe the program could become an important tool in addressing the state’s housing shortage while promoting mixed-income communities that combine affordable and market-rate housing options.
With housing demand continuing to rise across Oregon, lawmakers and housing advocates say initiatives like the proposed loan fund will play a critical role in supporting long-term housing production.
Originally reported by : Sara Edwards (Portland Business Journal) in KGW8.
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