On Real Estate & More – April 2024

JUST ABOUT ANYONE will tell you that there is not enough housing in Oregon, which drives up the price of everything. Oregon’s Governor Tina Kotek has said addressing that problem is a big priority for her, and now, the Oregon Legislature is delivering.

In January 2023, Governor Kotek issued Executive Order 23-04, which established a goal of 36,000 new homes annually in Oregon—almost double what the state is providing right now, and established an advisory council which was tasked with providing recommendations to achieve the housing goal. Their report included recommendations on one-time urban growth boundary (UGB) amendments, funding for infrastructure and affordable housing, and adjustments to land use standards, which were incorporated into Senate Bill 1537. Their recommendations were based on findings that Oregon needs to develop more than 550,000 new housing units to accommodate 20 years of population growth, and to account for current underproduction. A certain percentage of these new housing units need to be provided for people of lower incomes and those experiencing homelessness.

Several measures were brought forward to help address these issues: Senate Bill 1537 and 1530. Those two measures, along with House Bill 4134, will commit a total of $376 million towards boosting housing production, create a new housing division to help navigate housing bureaucracies, help fund existing homeless shelters and give cities a one-time chance to bypass state land-use laws to build housing.

More specifically, SB 1537 was created at the Governor’s request to assist local governments with housing production, making interest-free loans to local governments for affordable housing production, supporting local governments’ efforts and granting qualifying cities the ability to undergo a one-time urban growth boundary amendment.

A major component of the bill was a series of programs to provide financial assistance to help local governments overcome various roadblocks, including lack of available land or difficulties building infrastructure like water and sewer service to support new housing. The overall intent was to increase flexibility to Oregon’s housing rules to make sure new housing is built. Bureaucracy-wise, it would also create a statewide office focused on ensuring that local land use codes comply with state law and coordinating between the various state agencies involved in housing production.

One of the initial sticking points of the housing package was the exemption to allow cities a one-time opportunity to sidestep state land-use laws and bring in more than 100 acres for cities with a population greater than 25,000 people and no more than 50 acres for those with fewer than 25,000 people. Cities must show that they have done comprehensive planning and permitting before expansion—and demonstrate the need for both housing and land.

Currently, cities must forecast population growth over 20 years before requesting to change an urban growth boundary for new homes, businesses, or industrial or public facilities. If they show the area inside their boundary won’t accommodate projected needs and identify outside land meeting a complex set of criteria, they can apply to expand their UGB.

The Governor has historically faced headwinds in the legislature in attempting to pass legislation similar to SB 1537, particularly when it comes to the urban growth boundary. Lawmakers in her own party led the way in shooting down a bill she championed during last year’s session.

But ultimately, the bills passed with bipartisan support.

In part of the package, SB 1530 makes significant investments toward immediate housing needs, appropriating $258 million for the implementation of various state programs. The investments will give $131 million toward housing and homelessness, $123.55 million for housing infrastructure and production, and $24.5 million for healthy and safe homes.

The package includes HB 4134, which would give infrastructure grants to specified cities to support housing development.

At the time of writing this article, the package was being sent to the Governor’s desk for signature.