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OHCS to relaunch permanent loan program: agency will issue bonds and lend directly to projects
Summary
OHCS staff told the Housing Stability Council they will relaunch a permanent loan program (formerly "direct lending") next week with two starter products (E&D and HUD risk-share), a new credit committee, and estimated interest-rate savings of 0.25to1.2 percentage points versus market alternatives. Staff emphasized underwriting and oversight and said bonds, not general funds, will finance loans.
Oregon Housing and Community Services staff outlined plans to relaunch the agencypermanent loan program, a funding line that will let OHCS issue tax-exempt bonds and lend proceeds directly to affordable rental projects. Kelso Bresounis, OHCS's financial strategy lead, said the program is being renamed from "direct lending" to the "permanent loan program" to make the tool clearer to partners and described two initial loan products: an Elderly & Disabled (E&D) product and a HUD risk-share product.
"This permanent loan program is fixed-rate, first-lien permanent loans," Bresounis said, explaining the loans are designed to provide lower interest rates and longer amortization to reduce long-term project costs. He told the council the agency will sell bonds and lend the proceeds to projects rather than rely on legislative appropriations.
Bresounis reminded the council of OHCS's lending history: past E&D bond issuances totaled about $589,000,000 and supported roughly 355 developments and more than 7,000 units. He said a newly formed credit committee and increased underwriting capacity will manage credit risk and compliance. Staff estimated the permanent loan interest rates could be roughly 0.25 to 1.2 percentage points lower than comparable alternatives and offered two loan structures (a 40-year amortization with no balloon or a 17-year balloon option).
Council members asked how projects already in the ORCA pipeline would transition to OHCS lending and what collateral backs the bonds. Staff said E&D bonds have a historical voter-approved structure and are backed by the state's authorization; HUD risk-share loans are revenue bonds backed by project cash flow with HUD sharing default risk. Staff said OHCS would work with pipeline projects to assess whether switching to OHCS lending is beneficial for their financing stack.
No formal vote was taken; staff said the program is set to launch the following week and encouraged council members to request technical briefings on implementation.
