Underfunded inclusionary zoning fails, but fully funded programs can be a boost to below-market housing and a fiscal bargain.

Hey, here's some cash. While you're at the store, would you grab me some eggs?

That's the simple, efficient premise behind the housing policy just approved by Oregon's most populous city and county. Here's some cash. While you're building those apartments, set aside some of them to be rented at less than the market rate.

In a 3-2 vote Thursday, the Board of Multnomah County Commissioners followed up on a unanimous Jan. 31 vote by the Portland City Council to fully fund this concept in the form of Portland's inclusionary housing program for rental projects.

Together, the two votes will remove what has been a major obstacle to new apartment buildings in close-in Portland neighborhoods. In most of the city, what had been an underfunded mandate will no longer be underfunded.

"It just makes our entire city more equitable,"

Multnomah County Chair Jessica Vega Pederson, an East Portland resident who spearheaded the county action, said Wednesday.

"People at many different income levels have opportunities to live close to where their jobs are."

YOU GET WHAT YOU PAY FOR

It's easy to overthink "inclusionary zoning" programs like Portland's, but the concept is not complicated: New buildings should include homes priced for a mix of different incomes.

The problem is how to get a good quantity of mixed-income apartment buildings to exist. If you required 30 percent of homes in every new building to be priced at less than the cost of building them, you wouldn't get a mixed-income building; you'd get nothing at all. Thirty percent of zero would be zero.

With this round of changes that takes effect March 1, Portland has faced that problem head-on and come up with a relatively simple answer. Fully fund the gap between costs and prices.

Don't just ask for the eggs; pay for the eggs.

"We only get those homes if private-sector projects move forward, and they only move forward if the financials make sense,"

Portland Commissioner Carmen Rubio, who steered the reform through City Hall, said last month.

Portland's program in brief: For new apartment buildings of 20 or more homes, at least 10 percent must be set aside for people earning no more than 60 percent of the metro area's median income. (Currently, that 60 percent limit comes to $54,180 for a household of two, for example.) Those homes' rents, meanwhile, must be capped at levels those households can afford. (No more than $1,250 a month or so for a one-bedroom, for example.)

The government then makes up for that reduced revenue, mostly with a temporary property tax break, to keep the project in the black.

There are a few other options for new buildings to comply, such as putting below-market homes in a comparable location elsewhere. But with this being the only option that's fully funded in higher-rent parts of the city, it's expected to be by far the most common choice.

If you do the math to calculate the public's cost per home, the below-market housing created via fully funded inclusionary housing is less expensive than a comparable home created by a local housing bond. That's presumably because the affordable homes hitch a ride on a project that was already being financed.

"WE HAVE TO GO WHERE THE DATA TELLS US"

The city's inclusionary housing program had already been fully funded for years in Portland's "central city," the approximately one-mile radius around Pioneer Courthouse Square. But outside central Portland, the program's funding had been tightly limited by the city and county, which must both sign off on any tax abatement.

The result of this underfunding over the last seven years had been that many projects bent over backward to avoid the program. The share of new homes in 12--19-unit buildings, those just below the program's threshold, had approximately doubled. Hundreds and maybe thousands of other homes likely weren't built at all, in part because of cost...