Eugene two-year HIP report: city says housing production and preservation lag targets; staff point to funding and market constraints

City of Eugene staff on May 28 presented the two-year Housing Implementation Pipeline (HIP) report to the City Council, saying the program has increased shelter capacity and completed some subsidized housing projects but that overall production of income-qualified housing is lagging and will likely fall short of HIP goals unless new investments or policy changes are made.

"The needs of housing across the housing continuum exceed the resources and capacity of the city's programs and staffing," Amber Friedman, the city's HIP analyst, told the council. She said that, at the current pace, the city estimates roughly 400 income-qualified units will be completed by the end of the HIP period, short of the HIP's five-year target of 835 new income-qualified units.

Why it matters: staff and councilors emphasized that a persistent shortage of affordable housing is a root cause of homelessness in Eugene. The HIP frames city action across the housing continuum and was designed as a five-year, cross-departmental road map to coordinate the city's role in housing production, shelter and preservation.

What the report found: The HIP two-year report (for fiscal years 2023 and 2024) credits several concrete accomplishments. City-supported shelter spaces increased by 64% during the period with 675 city-supported shelter spaces in operation at the end of FY 2024; city staff said the total shelter capacity in Eugene is approximately 1,000 spaces, while an estimated 3,400 people experience homelessness nightly in the community. The city also exceeded its two-year target for permanent supportive housing (PSH) with 102 new PSH units and exceeded a homeownership target with 70 cooperative units at Peace Village; the city invested more than $1.2 million in that project through affordable-housing trust funds and fee assistance.

Shortfalls and constraints: Friedman said overall income-qualified housing development and preservation is behind the HIP targets. Staff reported 196 new affordable units completed toward a HIP target of 310 (two-year subgoal) and 56 preserved toward a target of 95. Friedman cited a confluence of constraints: declining federal HUD resources, fluctuating local construction-excise-tax revenue, one-time pandemic funds that are not ongoing, rising construction and insurance costs, and higher interest rates. She also noted the time required to develop affordable housing (commonly four to 10 years), and the complexity of state funding processes for subsidized projects.

Staff emphasized vacancy and market data: Friedman said Eugene's rental vacancy rate is about 3%, the 2023 median home sale price was $479,000 and the average two-bedroom rent was about $1,800 per month. She said 25% of Eugene households earn under $30,000 per year and that, under those conditions, many households need rental options under roughly $750 a month. "Until Eugene has an adequate supply of diverse housing, the community will need creative and alternative shelter solutions and options," Friedman said.

Policy tools discussed: council and staff discussed the difference between direct subsidies and tax-exemption tools. Community Development Director Will Doughty explained that direct funding (for example, contributions from an affordable-housing trust fund) provides capital up front to make projects financially feasible, while tax-exemption programs such as the city's multi-unit property tax exemptions (MUPTI) reduce costs by forgoing future tax revenue and thus lower a project's operating costs over a multi-year period. Doughty said Eugene has seen limited private development move forward in the downtown core using MUPTI alone; projects commonly still need additional subsidy.

Council response and next steps: council members urged deeper regional and long-term planning and said the city should consider broader strategies, including new revenue options, to meet housing needs. Staff noted recent actions the council and other agencies have taken in the months before the report, including awards of HOME and HARP funds, urban renewal support for affordable housing, extensions for safe-parking and safe-tent sites, downtown deed-restriction work and disposition processes for city-owned lots intended for housing development. Friedman said the HIP will be updated as state requirements and funding conditions evolve, and staff will continue six-month updates to council with the next biannual reporting cycle.

The work session included questions and discussion but no formal votes on HIP policies during this meeting.