Portland, Ore.— A few years ago, Portland, Ore., did a radical U-turn with its Community Development Block Grant (CDBG) program.

Meetings with local residents and reviews of demographic data uncovered evidence that a complaint often made by community groups in the wake of redevelopment efforts was based on reality here. The poorest residents—those whom redevelopment is often meant to serve—were being crowded out.

“We were very successful at accomplishing revitalization goals,” said Will White, director of Portland’s bureau of housing and community development. Yet, he added, “In many cases the people who benefited were not the people who lived there. If they didn’t own the real estate facility, business, or home, in many cases they ended up getting displaced, because the revitalization brought gentrification.”

Not only that, a city-commissioned study of rental housing availability found that Portland had plenty of apartments available for residents earning above the area median income (AMI), and even for those somewhat below the median. But for those below the 30 percent level, which in 2006 was $20,350 for a family of four, the city was facing a shortage of more than 13,000 housing units.

So Portland shifted from “a place-based strategy to a people-based strategy,” said White. In other words, instead of using CDBG funds to revitalize neighborhoods, it now targets low-income people themselves, with the focus on those earning less than 50 percent of AMI and the emphasis on those at 30 percent and below.

For its housing efforts, which typically use far more than half the city’s CDBG dollars ($8.2 million out of a $14.1 million total in fiscal 2007), that has meant slashing new-apartment production to allow deeper income-targeting. “It’s easier to build housing at 50 or 60 percent of AMI,” said Beth Kaye, the Portland Housing Bureau’s policy, planning, and communications director. “But that’s not where the need is. We have deliberately cut production in order to produce more of the specific type of housing that we need.”

In addition, officials discovered that many existing properties were already serving tenants at or below the 30 percent AMI level, but that many of those residents were heavily rent-burdened. So over the past two years, the city has restructured and refinanced the debt on those properties so rents can be lowered to levels residents can afford.

In addition, Portland officials in 2004 introduced a set of CDBG-funded programs called the Economic Opportunity Initiative, which offers loans and business expertise to “microentrepreneurs” with very low incomes who want to start their own businesses, as well as workforce training and career support for others in that income bracket. The workforce programs make a three-year commitment to each individual and work only with employers who agree to hire people going through the program, said Kaye. “The idea here is not just to place somebody in a $7-an-hour job, but to move them so they are poised to get that $14-, $17-, $22-an-hour job.”

The goal is to help participants increase their incomes or assets by 25 percent or more over three years—the kind of gains that can eventually reduce or eliminate their need for government assistance. Said Kaye: “Our indicators show that most people in the program have already met this goal and are on pace to exceed that goal.”