Skip to Main Content View Text-Only

The City of Portland, Oregon

Portland Housing Bureau

Solving the unmet housing needs of the people of Portland.

Phone: 503-823-2375

fax: 503-823-2387

1900 SW 4th Avenue, Suite 7007, Portland, OR 97201

More Contact Info

Equity Gap Contributions

Please note: PHB funds are limited. PHB may not be able to provide loans to all eligible projects.


An Equity Gap Contribution (EGC) provides public funding to fund development costs for new or existing affordable rental or mixed-use project, or projects for economic development activities directly related to affordable housing   An EGC is intended to fund the difference between the projected project costs and available sources of construction and permanent financing, including Housing Development Subordinate Loans (HDSL) and Cash Flow Share Loans (CFS).


An EGC provides construction and/or bridge financing, that either partially or fully converts to permanent financing and is designed to work in conjunction with other public and private financing sources. Assuming regulatory compliance, an EGC accrues no interest, requires no payments, and converts to a grant after sixty years. An EGC is a “last resort” financing product used only when (i) other financing has been maximized, (ii) the housing project does not generate sufficient cash flow (after operating expenses including required replacement reserves and required senior debt service) to allow amortized or cash flow payments to PHB, and (iii) the project provides an exceptional and tangible public benefit beyond the typical affordable housing project. The definition of an exceptional public benefit will reflect then-current City and Bureau priorities and may be described in PHB’s Notices of Funding Availability. PHB will determine if the exceptional public benefit test is met. 

If a project uses Low Income Housing Tax Credits (LIHTC), an EGC cannot be used, as legal requirements dictate that project financing have a term and an interest rate. An EGC does not have an interest rate or term and becomes a grant after 60 years provided all terms of the agreement have been met. 

The following summary outlines the general product characteristics available to Project Sponsors.  For the EGC, the same general financing terms apply to the construction, bridge and permanent phases of financing. A more detailed description of terms specific to the EGC is outlined in the Product Specific Guidelines section below. 


Funding for this loan may be through tax increment financing (TIF), other city or federal funds.  Borrower shall comply with any and all requirements related to the funding source.  For example, TIF funds must be used for infrastructure and physical improvements (including tenant improvements) of real estate projects within an Urban Renewal Area.  Federal and other city funds come with their own fund-specific restrictions and obligations.


Maximum Amount:  For new funding: PHB Director may approve up to $500,000; Commissioner in Charge approval is required up to $1 million; City Council must approve amounts in excess of $1 million.

Interest Rate:  0%


  1. Construction/Bridge Period: up to 24 months. 
  2. Permanent Financing Period:
  • Years 1 – 60: Outstanding until repaid, due on unapproved sale, transfer, change of use or refinance. 
  • Year 60:  EGC becomes a grant.                                                      

Debt Coverage Ratio (DCR):  Not applicable


Project Sponsors who meet all of the following criteria may be eligible to receive an EGC:

  1. The Project Sponsor may be either for profit or nonprofit.
  2. The Project Sponsor must own the subject property or have site control.
  3. Other financing sources for the project, including primary debt an HDSL or/and a CFS, must be maximized. 
  4. Designated Affordable Units must be affordable for 60 years (as required by Title 30 of the City Code).


Eligible Project Sponsors: A For Profit or Eligible Non-Profit with ownership or site control of land or a rental property may apply for an EGC. 

Eligible Projects: A project providing rental housing or community facility directly related to housing that exceptionally furthers the goals and objectives in Portland’s Comprehensive Housing Plan, Consolidated Plan, Urban Renewal Area plans or other applicable policy directives may be eligible for an EGC upon approval by PHB.

Interest Rate: There is no interest charged on an EGC. 

Participating Financing: Project Sponsors must seek maximum participating financing on the best terms available.  Interest rates for superior loans should be at the current market rate or better for the financing type.  Generally, the combined debt coverage ratio for all participating financing (other than PHB financing) should be no greater than 1.25 to 1.00 in Year 1 for superior loans.  The combined loan to value ratio (LTV) for all senior financing will be evaluated by PHB in order to determine that leverage has been maximized for the project.  PHB reserves the right to condition its funding upon the terms of the external debt to prevent overleveraging. PHB evaluates bond-financed projects against current bond underwriting requirements.  In addition, projects must utilize the maximum HDSL supportable by the project prior to qualifying for an EGC.

EGC Recapture Provisions: The provisions for recapture in the Equity Gap Contribution Agreement include the following method of repayment: Sale, Transfer, Refinance, Exchange or Change of Use

Security/Collateral: The PHB ensures security through a recorded instrument, an Equity Gap Contribution Agreement.  The Agreement describes the amount, the conditions and the provisions of the EGC. Also, the Agreement describes the conditions under which the EGC may be recaptured in full by the PHB. The Equity Gap Contribution Agreement is recorded to evidence the project sponsor’s obligation, although no Trust Deed is recorded and therefore it is not a lien against the property.  If a Project Sponsor receives an EGC only from the PHB, the PHB reserves the right to record liens against the property upon default.