Portland's Innovative Loan Forgiveness Program for Housing Conversion

Christian Bryant
Oct 20
3 min read

Updated: 1 day ago

Understanding the Need for Change

Portland’s downtown core has faced record-high office vacancy rates since the pandemic began. At the same time, the city grapples with a severe housing shortage. To tackle these pressing issues, Prosper Portland and the City of Portland have introduced a loan forgiveness program. This initiative encourages developers to transform underutilized office spaces into residential units. The goal is to revitalize downtown, increase the housing supply, and support sustainable development. Learn more about the program’s background.

Loan Forgiveness Program Highlights

The loan forgiveness program offers several enticing features:

Forgivable Loan Amounts:

- Up to $60,000 per unit for embodied carbon savings.

- Up to $25,000 per unit for energy efficiency improvements.

Loan Terms:

- A 2% interest rate, structured as a 10-year forgivable loan.

- The loan balance is forgiven annually in equal parts over 10 years, provided compliance is maintained.

Affordability Requirement:

- Rents must remain within 60%–120% of Area Median Income (AMI).

Sustainability Focus:

- Projects must incorporate energy efficiency and carbon reduction measures. Full details here.

Who Qualifies for the Program?

To be eligible for this program, projects must meet the following criteria:

Location: Primarily within Portland’s Central City, including downtown and Old Town.
Building Type: Existing office buildings that are vacant or significantly underutilized.
Project Scope: Full or partial conversion to residential units.
Compliance:

- Inclusionary housing requirements for projects with 20+ units.

- Seismic upgrades as required by city code.

- Maintain residential use for at least 10 years. City permitting guidance.

Additional Incentives to Consider

In addition to the loan forgiveness, there are further incentives available:

System Development Charge (SDC) Waivers:

- Up to $3 million in SDC exemptions for projects that include seismic upgrades.

Streamlined Permitting:

- Self-certification and third-party plan review options to expedite approvals. Read about SDC exemptions.

How to Apply for the Program

If you're interested in applying, follow these steps:

Initial Contact:
Email PPDCustomerSuccess@portlandoregon.gov with:
Building address.
Applicant or architect contact info.
Project description (floors converted, number of units).

Pre-Application Review:
A dedicated point of contact will guide you through early planning.
Submit Application:
Include financial projections, design plans, and compliance strategy.
Approval & Loan Agreement:
Prosper Portland reviews and issues loan terms.
Construction & Compliance:
Meet performance standards and affordability requirements throughout the 10-year term. Start the process here.

Maintaining Loan Forgiveness Over Time

To keep the loan forgiven, you must adhere to the following:

Annual Compliance Check:

- Submit rent rolls and affordability certifications.

Sustainability Reporting:

- Document energy efficiency and carbon reduction measures.

No Unauthorized Use Changes:

- The property must remain residential for the full term.

Failure to meet these conditions could result in repayment obligations.

Why Act Now?

This is a pilot program with limited funding. Portland has been ranked among the top U.S. cities for office-to-residential conversion feasibility. This makes it a prime opportunity for developers to take advantage of financial incentives and help shape the city’s future.

Key Resources for Further Information

This program is a significant step toward addressing Portland's housing crisis while revitalizing the downtown area. If you're a developer or property manager, now is the time to explore these opportunities.