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State MURAL loan fund explained to Bend committee; staff flags city liability and program choices
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Summary
OHCS presented the MURAL moderate‑income revolving loan fund (established in SB 1537) as gap financing that Bend can adopt; discussion focused on eligible projects, repayment mechanics, administrative fees, and city liability if projects default on the program fee payments.
Megan Ellardson, program manager with Oregon Housing and Community Services, described the Moderate‑Income Revolving Loan (MURAL) program created by the 2024 legislative package (Senate Bill 1537). She said the program provides a pool of state funds ($75 million total) that are issued as 0% loans to sponsoring jurisdictions; jurisdictions then issue grants to eligible developers to close project financing gaps. Megan said $50 million is available in the program’s first two years with a $10 million set‑aside and that the standard loan term is 10 years with annual repayment tied to a program fee that takes the place of property taxes on improvements.
OHCS staff explained key mechanics: participating jurisdictions adopt a local MURAL program through ordinance and enter a master agreement with OHCS; once a project is approved locally and passes a completeness check at the state level, OHCS issues the 0% loan to the sponsoring jurisdiction and the jurisdiction issues grant funding to the developer. Repayment occurs via a program fee collected through the county tax assessor in lieu of property‑tax payments on improvements; staff described a dollar‑for‑dollar payback model over the loan term and noted a 3% inflation factor is applied to the repayment schedule to reflect tax growth.
Eligible costs include land acquisition, predevelopment, infrastructure and system development charges; eligible project types include both rental and for‑sale homeownership so long as units are deed‑restricted at or below the sponsoring jurisdiction’s chosen AMI cap (OHCS noted the program’s statutory cap is 120% AMI but jurisdictions may elect a lower cap such as 80%). Megan said the sponsoring city or county ‘‘is in the driver’s seat’’ to define program rules and eligibility.
Committee members probed risks and administrative costs: staff identified a 5% administrative allocation to sponsoring jurisdictions and a 1% allocation to the county assessor, and cautioned there is an unconditional promise by the sponsoring jurisdiction to repay the state if a project fails and the program fee does not materialize. Staff said some jurisdictions (Tillamook, Coos Bay) are early adopters; technical fixes from a later bill (Senate Bill 48) were noted as clarifying repayment options and opening small additional repayment flexibility.
The committee endorsed adding MURAL program design work to the set of near‑term items staff will take to City Council for direction, while flagging the need for more analysis of underwriting, security interests, and how the city would manage default risk and administrative capacity.
