Milwaukie City Council Study Session on MURAL Program – May 13, 2026
Milwaukie City Council Study Session on MURAL Program
The council held a study session on May 13, 2026, to discuss the Oregon Moderate Income Rental (MURAL) loan program. Staff presented findings from extensive research, including conversations with other jurisdictions and state agencies. After detailed deliberation on risks, administrative capacity, and feasibility, the council decided not to move forward with implementing the MURAL program at this time. Instead, they directed staff to send a letter to Clackamas County requesting the county administer MURAL on behalf of cities and to compile a list of legislative fixes for the 2027 session.
Discussion Items
- MURAL Program Overview and Staff Research: Assistant City Manager Josie Daniel and Development Project Manager Nanny Bird reviewed their work since the March 17 session. They reported being among the most knowledgeable on MURAL in the state, having spoken with numerous jurisdictions. Key findings from other cities included:
- Tillamook County: The only jurisdiction initially cited as a leader, but has paused its program. They passed a resolution first, then realized they needed an originating ordinance to define project criteria. They also face unresolved questions from the county assessor about liability for delinquencies. Tillamook staff provided a memo detailing reasons for the pause.
- Coos Bay: Adopted an originating ordinance but is still figuring out program criteria and implementation. They are working with a consortium of experts (including an SBDC and a finance professional) to contract out administrative tasks due to limited capacity and risk concerns.
- Hood River Model: Hood River limited MURAL to nonprofit developers only, who self-comply with affordability covenants, and they release funds in tranches (e.g., 85% after final inspection) rather than a lump sum. Staff noted this reduces risk but still leaves cities with some administrative burden.
- Risk of Default and Credit Impact: A major concern was the city's liability if a homeowner defaults on the loan. The MURAL program requires the sponsoring jurisdiction to repay the state if the loan goes into default, and the state's annual payment is based on the property tax increment. Council pressed staff on whether default would affect the city's credit rating; staff reported that OHCS gave vague, non-committal answers (e.g., “we’ll work with you”) but never stated the city would not owe the money. Council President Anderson noted that any default, regardless of amount, could harm the city’s credit rating.
- Financial Exposure Quantified: One council member estimated that for a 44-unit project, at a 5% historical default rate (based on Federal Reserve data since 1979), about two units per year could go into default. Each unit’s annual property tax increment is roughly $950, so the city’s liability would be about $3,000 per year. However, the larger risk is during construction, where the city could be on the hook for the full loan amount (85% of the total) if the project fails before completion.
- Administrative Capacity: Staff emphasized that the city lacks the expertise and staffing to administer MURAL. Setup alone would take at least six months, requiring IGAs with the county, originating ordinances, marketing, application review, financial auditing, and long-term compliance monitoring. The 5% administrative fee per project is insufficient to cover these costs, and outsourcing compliance to a nonprofit or the county would still leave significant internal work.
- Prevailing Wage Requirements: Staff noted that most MURAL projects likely require prevailing wage (a concern for many cities). The developer associated with the local church project had obtained a “determination letter” stating the project would not be subject to prevailing wage, but several council members questioned the validity of that letter and noted that nonprofit developers typically already work with prevailing wage.
- Preference for Nonprofit-Only Model: Some council members expressed interest in the Hood River model of limiting MURAL to nonprofit developers, as nonprofits already have compliance systems. Others argued that even with nonprofits, the risk and administrative load remain significant, and the city would lose control over the affordability covenants.
- County Role and Consortium Idea: The council discussed the possibility of Clackamas County serving as the sponsoring jurisdiction for the whole county, but staff confirmed that state rules allow county MURAL funds only in unincorporated areas. However, if the county adopts its own MURAL, it could contract with cities for administration. The council decided to pursue this avenue via a letter.
- Legislative Fixes: Council members brainstormed changes to the MURAL program that would make it more viable, including: having the state administer the program directly (rather than through cities), resolving compliance and default liability issues, allowing counties as default SJs for entire counties, establishing a state contingency fund, and providing legal consultation for cities.
- Other Business – Solid Waste Letter: Council reviewed a letter from the Regional Waste Advisory Committee (RWAC) supporting certain waste policies. The council agreed to send a similar letter, with technical edits to align with metro’s upcoming fee increase and compost program. Mayor noted the letter should be sent before the June 2nd RWAC meeting.
- Council Reports:
- Community Advisory Board (CAB): Reported new members, including a 16-year-old youth from Rex Putnam High School. CAB plans to restructure meetings to be more inclusive, moving away from executive committee-driven agendas. They will host listening sessions for the strategic plan.
- NCPRD Levy Update: The Clackamas County Parks and Recreation District is polling on an 18-cent levy (per $1,000 assessed value) to fund operations; if polled well, it could go to voters in November. Discussions at the chamber suggested that Meals on Wheels may be moved from NCPRD to a nonprofit, as it was seen as outside parks’ core mission.
- LOC Meeting Highlights: Mayor reported that LOC discussed the statewide shelter program; the governor’s funding request faces legislative headwinds, and there is talk of shifting shelter responsibility to cities. LOC also continued discussion on MURAL; a city manager emphasized that infrastructure funding is critical for housing production.
- Downtown Update: Council member shared positive news: two new shops (vintage-themed) are opening in the Rexall building, farmers market Sundays are thriving, and a wine walk drew crowds. First Friday events are being reorganized with “hubs” including a night market at Main and Jackson. ADX Portland is exploring a Milwaukee itinerary for their regional creativity festival in October. Passports for local businesses were very popular at the City Information Booth.
- Upcoming Events: Hillside opening ceremony on May 14 at 10:45 am; council members were reminded of the next council meeting (May 20) with a metro 2050 vision presentation and proclamations; a quorum is needed.
Key Outcomes
- Directed staff to NOT place MURAL on the June 2nd agenda for action. The council concluded the program is not feasible for Milwaukee given current staff capacity, unclear financial risks, and unresolved liability issues.
- Approved sending a letter to Clackamas County (with edits) asking the county to establish a system to administer MURAL for cities, potentially through a contract with H3S (the county’s housing authority). The letter will be circulated to other cities for co-signature before the June 2nd county commission discussion.
- Directed staff to compile a list of five to ten legislative fixes for the MURAL program to share with Representative Gamba ahead of the 2027 session. Fixes include state administration, default liability resolution, and compliance support.
- Approved drafting a supportive letter to Metro (based on the RWAC letter) regarding solid waste policies, with a focus on future fee increases and food scrap technical assistance.
- Council reports noted progress on CAB restructuring, NCPRD levy exploration, and downtown revitalization events.
Meeting Transcript
So um thanks very polling to or our uh study session for May 12th. It's my brother's work that's on the six uh briefly on the and uh we only have one thing on the agenda. Well we have to work this too. Um the only uh item staff presenting on our agenda tonight is Oregon moderate intel remote loan program. Yeah, thanks very much your did you want to do okay? Yeah, man. Josie Daniel, assistant city manager. I'm here with our development project manager Nanny Bird. Uh as you know, we've been talking about mural for several months now. This will be council's third uh discussion at the body stuff discussing it together. And if you recall back in the March 17th meeting, uh this is essentially a continuation of that session that you all started. Um I was directed to receive a number of questions from our council members, and then provide responses to the questions as best we could uh through talking to the state as well as our neighboring jurisdictions and those that you knew were pursuing the mural program have pursued the mural program are thinking about it. So uh I can say pretty strongly and with a lot of confidence that um we both nanny and myself together are probably one of the two most informed people about what's going on in the state with the world. We've talked if you see the list in the staff report of the number of jurisdictions we talked to. We have not been taking any of this lately, or just saying our opinions based on nothing. Um we've we have followed up with our our thoughts and concerns and tried to give you answers to your questions. So with that, I know we have a presentation that looks like it's up there, uh, but really this is about going over the questions. So um if you would like, we can go I don't know if it's necessary. This could be just go right back in discussion. We can go through the questions one by one uh with you all if or we can just play by here if you have questions about some questions and answers. Are you saying the presentation is pitched as questions one by one? Or I would ask um Nikki to pull up the sound report we can go through the matrix. Yeah, if you want to do that way, we can so I don't know what people think. Do we need to go through the answers one by one? Or people feel pretty comfortable with them? Yeah, I don't need to go one by one, but I do have some general some of the questions was only answered by staff. The reason why OECS didn't answer those questions. Yeah, you have questions about specific uh answers where those came from, how this came to be we can go into those, but uh none of them are just like staff's opinion, those are typically uh built from talking to ACS within this last round. The questions that you need us or in previous discussion in contact with them for a month. Um and also some of the responses are reflective of our conversations with other SJs sponsoring frustrations that can be done the program. Um had their own experience with OECS or given us some their experience with working through the program as they have as far as they have to. So um yeah, hopefully that helps answer your question. based on the the questions that you gave us or in previous discussions because we've been in contact with them for a month um and also some of the responses are reflective of our conversations with other SJs sponsoring jurisdictions that can either done the program um have their own experience with OHCS or given us some their experience with working through the program um as they have as far as they have to want to so um yeah hopefully that helps answer your question council I think one of the most the things that jumped out at me most and maybe you can shed a little more light is the fact that Tillamook which is the only jurisdiction through uh that was supposedly leaving the charge is on hold yeah talk a little bit about that yeah absolutely um good question so thanks to Manny we got uh finally to connect with the TillMo County uh last Friday so very recent and we similar to you probably you also heard that uh C4 unless there's next OECS where this Tolomo County was that one that was for the South there the one that stop develops when it comes to Rome. Our discussion with their community development director uh who's also building official and that's oversees their housing vision basically they they created a resolution so they don't have they can create a resolution and it gets more complicated when I talk about it but essentially if you enact a resolution you can accept projects but you kind of need an ordinance to also figure out what the project criteria is that you'd want to judge those projects on. So they got into this they're currently in this cycle of they have a resolution they've already accepted a project now they're kind of backpedaling to go oh we need to do an originating ordinance to basically clarify what we want the program to really be the criteria to be and also they have a number they have a number of questions that have not been answered both from a county assessor as well as from their community development director about some liability issues when it comes to delinquencies and it's okay for me to say Joseph they actually provided the staff report that their staff um sent to their council um explaining the reason for the pause and we have printouts of that that we can provide to you as well public record um so I think we should have those out yeah literally this is all just happened recently so it's all random we have really thought in that conversation that we're gonna hear a lot more like oh yeah you know here's the check we've done this check and then this IgA we've got this question figured out um but it was the complete opposite it's interesting because you mentioned C4 and that uh president and I were both at C4 anybody else I don't know you were there yeah that's my thought um they did mention Tillamov who didn't believe when they were asked about who is doing it Tillamuk was kind of the only answer they gave whereas when Mark Gambl spoke to us in January he had met with them and he had said that he told us them five or six or seven we were one of seven or eight jurisdictions that were looking into so that being I would not them being the state them being OHCS yeah them being OHCS had told rep Gamba that there were seven or eight jurisdictions looking at it um but they included us and we knew we were in a very preliminary state um so I mean that doesn't speak uh well for the uptake of the program that could gone for January's really all they still we're you're where you're in so and that would be some whole who's big has been a speech part who's bay is pastor that's kind of scene they're still working through you pass merged originating ordinance you negotiate your ITs at the county assessment and you establish your project criteria and your application process work with that my understanding is Kuzbay is kind of still in that we're setting up a new program phase. Exactly Kuze has they have adopted a origin ordinance essentially the sampling um now they're trying to figure out what their criteria is going to be really who's going to implement so I think when I mentioned I don't know if it was just to you mayor or to castle at large but the whoever is working trying to build a consortium um based on their CDD business development it's like a it's kind of like an SBDC sorts uh there they do a lot of loan products a lot of underwriting so they're working with them as well as a gentleman by the name Stevie Brooks who's I based in Portland who I've worked with in the past who's done some uh finance review and some you know a finance increment just finance person in general who's also part of that consortium so they're trying to create this group of professionals technical technical experts that cities can potentially contract with to implement our homework it's if you have anything else to add yeah I mean just to tie on that um the Coos Bay conversations that we had have the same theme as the Tillomook conversation that's in this memo so the reason Coo Space is trying to um work with this consortium is because of the capacity and risk them. So the reason Coo Space is trying to um work with this consortium is because of the capacity and risk themselves. I would just I think this the long staff requirement at that second page where it's gonna sound a lot like reference you might have heard from your own staff, county staff do not have the resources available, technically there's comprehensive review. Um, and that makes us any project specification should not be considered until OHCS does address the county's questions and concerns related. And so I think there's a fun idea. And on the last page, numbers one through five that are listed there. That's then they're letting I mean the sign that's where it was a big red flag for some of the company not able to sign, saying that they are they don't have um the expertise or staff to do those five of those five things to be able to assign that, and they thought that was gonna be what OHCS would do once OHCS receives the application, but that wasn't the case. Can you you mention in some of the responses the hood river model that's not we're kind of talking about compliance for profit developers, talk about what so is the river doing moral, or what is the hood river model and how does that look different from output? Yeah, that's a great question. So um if you look on your answers to questions, your questions, the attachment uh question number 12. It's gonna be a good place to look, but um I talked to everybody how we found out they were doing that originally more. So they adopted an arrangement. Um and they did some things that we thought were like if we were going to move forward, but it made some sense to us. They have similar capacity issues, like the legal concerns. Um, and so they vote in their originating coordinates, they basically in their compliance plan that they would only receive projects that were um from nonprofit developers, so that like wires to send built in.
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