Housing plans from Oregon Gov. Kotek, lawmakers take shape

Making it easier to annex land and increasing options for middle-income Oregonians are top priorities

By: - January 17, 2024 4:00 pm

Houses, apartment buildings and townhouses are going up across Portland in July, 2023. (Lynne Terry/Oregon Capital Chronicle)

Top Oregon leaders have been clear for months that the 2024 short legislative session will focus on housing and behavioral health. With the start of session just weeks away, housing proposals have begun to take shape.

Gov. Tina Kotek announced Wednesday she plans to introduce just one bill, a $500 million package of incentives and policy changes intended to spur a dramatic increase in homebuilding. Economists estimate Oregon is 140,000 homes short of current demand and needs to build more than 440,000 new homes within the next 20 years to keep pace with expected future demand. 

Kotek’s 69-page bill includes a host of changes, including a revised attempt to make it easier for cities to annex more land for housing. She was unable to convince enough of her fellow Democrats to support a similar proposal on the final day of the 2023 session, leading to a rare defeat on the Senate floor. 

Meanwhile, state lawmakers last week previewed some of their own proposals to address housing and homelessness during committee presentations. Lawmakers will continue vetting the different plans during the 35-day session that begins Feb. 5.

Kotek’s plan

Kotek’s proposal is the only bill she’ll introduce this year, signaling the governor’s continued focus on housing and homelessness. The crisis was a keystone of her campaign and her years as speaker of the Oregon House, where she championed a law praised by the White House and urban developers that effectively ended single-family zoning in the state.

“Decades of underbuilding have left Oregon with a severe housing shortage that is driving up rents, home prices and worsening our homelessness crisis,” she said in a statement. “People that are ready to transition out of homelessness struggle to find housing. Meanwhile, employers – both public and private – in Oregon struggle to hire due to a lack of workforce housing for rent or purchase, harming local economies across the state.”

Key to her latest plan is a one-time loosening of state land use laws to make it easier for cities to add housing. Oregon’s unique decades-old land use laws protect fertile farmland and the state’s stunning mountains, forests and high desert from the type of urban sprawl common in other Western states, but critics say the state’s laws make it too difficult to build homes and contribute to a lack of affordable housing. 

Under current state law, cities must apply to the state to expand their urban growth boundaries, the invisible  lines around a city that dictates where and how it can grow. It’s an expensive, time-consuming process.

Kotek’s proposal would allow cities with more than 25,000 residents to add up to 150 acres to their urban growth boundaries and cities with fewer residents to add up to 75 acres outside of the normal expansion process, as long as they meet certain criteria. Cities that choose to add land would need to demonstrate that they needed affordable housing and that currently available land isn’t enough to build the needed homes. 

Additionally, at least 30% of the homes built in expansion areas would need to be legally restricted for affordable housing. Any site larger than 15 acres would also need a plan that includes a mix of housing, including “middle housing” like duplexes, triplexes and small apartments, as well as options for transit and walking and space for recreation and small-scale goods and services, such as neighborhood grocery markets. 

Kotek’s plan also calls for creating the Housing Accountability and Production Office within the Department of Land Conservation and Development to collaborate with local governments on building housing and complying with state laws.

Her $500 million request includes $5 million to establish the new office. The rest of the money includes: 

  • $200 million for grants or loans to cities or tribal councils to help pay for infrastructure to build housing for low- or moderate-income families. 
  • $200 million for loans for developers of housing for Oregonians who earn too much to qualify for affordable housing subsidies but too little to afford market-rate homes.
  • $40 million in grants or loans for cities or tribal councils to purchase land for affordable or middle-income housing. 
  • $20 million for grants to developers for homes that will use only electricity for cooking and heating instead of natural gas, which causes harmful emissions. 
  • $15 million to help local governments plan for housing and infrastructure. 

New support for middle-income housing

Lawmakers including Sen. Dick Anderson, R-Lincoln City and a member of Kotek’s Housing Production Advisory Council, are fine-tuning plans to build more homes for middle-income Oregonians. 

The House and Senate committees focused on housing heard presentations last week about a proposed statewide revolving loan fund to spur construction of homes affordable to people earning about 80% to 120% of the median income in their area. Currently, the cost of building a home is too high relative to the rent or sales prices for housing that’s affordable for the median household in many parts of the state, ECONorthwest President and CEO Lorelei Juntunen told lawmakers. That means that developers either build homes that cost too much for the average Oregonian or opt not to build at all. 

“In Oregon, underproduction is a big enough issue that even middle-income households really struggle to find affordable housing,” she said. “The solution for middle-income households is to build more housing.”

The median income varies throughout the state. In most rural counties, workforce housing would be targeted at individuals earning between about $32,000 and $64,000 annually or a family of four earning between about $45,000 and $90,000 annually. In Portland, an individual homebuyer would make between about $48,000 and $96,000 annually and a family of four would earn about $68,000 to $136,000. 

The proposal for the revolving loan fund would allow cities to select projects and apply for a loan from the state that includes a subsidy of about $15,000 to $35,000, lowering the cost of the home. Local governments would repay the loan by giving up their tax revenue on the new property for 10 years.

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Julia Shumway
Julia Shumway

Julia Shumway is the Capital Chronicle's deputy editor and lead political reporter. Before joining the Capital Chronicle in 2021, she was a legislative reporter for the Arizona Capitol Times in Phoenix and reported on local and state government and politics in Iowa, Nebraska and Bend. An award-winning journalist, Julia also serves as president of the Oregon Legislative Correspondents Association, or Capitol press corps.

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