State Housing Agency Regularly Exceeds Benchmark for Construction Costs
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Oregon has the nation’s second-highest rate of homelessness, yet the state keeps funding affordable housing that costs far more than the national average.
By Nigel Jaquiss
*October 08, 2026 2:50PM PDT
Gov. Tina Kotek's housing agency has struggled to control the costs of state-subsidized developments. (Will Yurman/Lookout Eugene-Springfield)
(Will Yurman/Will Yurman / Lookout Eugene-Springfield / Pool)
This story was produced by the Oregon Journalism Project, a nonprofit newsroom covering the state.
Oregon’s housing agency has a simple yardstick for measuring how efficiently it funds construction of affordable apartments—they shouldn’t cost more to build than the national average.
For the past three years, however, it has failed to meet that standard—by a wide margin. Last year, hard construction costs for housing projects it funded averaged $318 a square foot, 31% more than the agency’s benchmark.
Every dollar over that target is a dollar the state agency, Oregon Housing and Community Services (OHCS), cannot spend to build more units.
OHCS’s consistent failure to fund projects that meet its cost target surfaced at a recent meeting of the agency’s governing body, the Oregon Housing Stability Council, made up of volunteers appointed by Gov. Tina Kotek.
It’s a big job. OHCS, with a biennial budget of $3.7 billion and more than 450 employees, expects to produce or renovate nearly 8,000 units of affordable housing across the state in the current two-year budget period.
Yet the council, unlike other state oversight boards, meets remotely and, based on its performance at recent council meetings, rarely challenges the cost of projects that agency staff wants to fund.
That changed last month, however, when a proposal met resistance from a new member.
At the council’s virtual monthly meeting September 11, a retired Portland developer of affordable housing named Ed McNamara broke with the council’s habit of simply rubber-stamping projects.
Instead, McNamara, who joined the council in July, said he couldn’t support a package of four proposed developments.
“I don’t understand why they cost so much,” he said of two of the projects. Every other council member voted yes. McNamara abstained.
McNamara declined OJP’s request to elaborate on his comments. But the concerns he expressed at the public meeting focused directly on the cost of two projects that far exceeded the agency’s benchmark for cost per square foot.
And more broadly, McNamara’s dissent cut to the heart of Oregon’s housing crisis.
When she entered the governor’s office in 2023, Tina Kotek made increasing the state’s housing supply a top priority. She promised to build 36,000 new units a year, a figure Oregon has come nowhere close to reaching.
Although the governor has supported easing land use restrictions and zoning requirements to increase housing, the biggest and sharpest arrow in her quiver is OHCS, by far Oregon’s largest funder of affordable housing.
Every year, OHCS publishes key performance measures to help lawmakers and the public gauge its effectiveness. Since 2017, one of those measures has been construction costs of the affordable rental housing that it funds.
Specifically, the agency uses a national index of construction costs for affordable housing compiled by a company called RS Means. The agency’s benchmark is RS Means' national average cost per square foot.