Oregon Cities

Audit identifies flaws in Metro’s ability to oversee supportive housing tax

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FILE: The front of the Hattie Redmond permanent supportive housing complex in North Portland on Aug. 22, 2023. The complex is supported, in part, by funding from the Metro Supportive Housing Services tax.

FILE: The front of the Hattie Redmond permanent supportive housing complex in North Portland on Aug. 22, 2023. The complex is supported, in part, by funding from the Metro Supportive Housing Services tax.

Caden Perry / OPB

Four years ago, voters in the Portland metro region passed a first-of-its-kind tax meant to fund programs that help people experiencing homelessness get into stable housing. Since the tax began in early 2021, the county agencies responsible for spending the funds have faced scrutiny for how they’ve used — or not used — the revenue.

But a new audit shows that some of the tax’s troubles stem from the government body tasked with overseeing the entire program: Metro.

Metro is a regional government that encompasses much of Multnomah, Clackamas and Washington counties. It is responsible for supervising 2020′s Supportive Housing Services tax, which comes from a 1% income tax on individuals earning more than $125,000 yearly and a 1% tax on net income for businesses making more than $5 million in revenue annually. Metro distributes that revenue between the three counties.

Metro is responsible for ensuring the 10-year tax is meeting voters’ expectations by conducting financial reviews, managing several oversight bodies and intervening if counties are falling short on spending goals.

Yet a report published this week by the Metro Auditor finds cracks in this governance model. The audit finds gaps in Metro’s data collection, unclear responsibilities for each county and inconsistent goals to measure the program’s success.

“Reliable data is needed to assess progress,” writes Metro Auditor Brian Evans in a letter to Metro leadership accompanying the report. “Decision-makers and the public need to be able to understand what the data means.”

The report comes as Metro anticipates collecting nearly $1 billion more in expected revenue from the tax over the next six years. The regional government initially estimated the tax would raise $250 million annually. But Metro economists estimate that for the fiscal year 2023, which ends in June 2024, the tax will bring in at least $357 million. By 2029, that figure will be more than $400 million, economists believe.

Auditors see an opportunity for Metro’s top administrators to improve the program’s oversight system to address this influx of money.

The Metro tax is specifically designed to fund programs that help people experiencing homelessness retain housing. That can look like job training classes, on-site substance use disorder treatment programs or legal clinics where people can clear their criminal records. The tax does not pay to construct new apartments or shelters.

The tax dollars are required to be spent on programs that help two similar-sounding populations: people with a disability who have been homeless for a long period of time and people who have experienced homelessness or are at risk of experiencing homelessness. Three-quarters of the tax dollars are meant to be spent on the first group, with the remaining quarter spent on the latter.

As the audit points out, Metro hasn’t clearly distinguished between these two populations. This may be why none of the participating counties have reported to Metro how much money they are spending on each population, as required.

Metro also has failed to clearly explain what success looks like for this tax, the report finds. The audit points to discrepancies between statements Metro has published on various websites and documents on how many people the tax is expected to help, wrongly conflating “households” and “people” as a form of measurement.

“Inconsistent definitions create a barrier to understanding program goals and appear to shift from year to year without explanation,” the audit states. “The inconsistencies are not minor word variations, they have a direct effect on what is expected and what data points are appropriate to evaluate progress.”

The audit found that inconsistent data collection across counties — in terms of money spent on programs, or the amount of people served annually — makes it difficult for Metro to compare each jurisdiction’s work.

The report is also critical of the volunteer board that reviews counties’ adherence to the tax measure. Auditors write that the board is made up of many people who are employed by local organizations that receive money from the supportive housing tax, creating a conflict of interest.

And the auditors raised a concern about what happens once the tax expires in 2030. According to the report, as many as 5,000 people receiving assistance through the program could suddenly lose their housing or services if the tax isn’t renewed.

In all, the audit makes 18 recommendations. That includes establishing clear metrics for measuring success, conducting more in-depth analysis of county data and frequent reports to Metro Council, which has only received one annual report.

Metro leadership called the audit an “honest and earnest review” of the tax program. In a response to the audit, Metro Chief Operating Officer Marissa Madrigal places some blame on the “sprawling and complex governance structure” laid out in the tax’s founding documents. She agrees that it’s left Metro with ambiguous expectations.

“This multi-layered complexity is at odds with the region’s need to address the homelessness crisis with urgency, transparency, and clarity,” Madrigal writes.

While she pledged Metro’s commitment to fixing the shortcomings identified in the report, Madrigal also said that Metro is given little power to influence how each county uses its funding but is still expected to hold them to account.

“This ambiguity is itself a threat to the program as it undermines public trust and wastes time and resources on arguments about where responsibility and authority lie,” she writes.

Madrigal pledges to address the audit’s recommendations within the next two years.

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