The Oregon Legislature is poised to vote on a $376 million housing package that would give cities more flexibility to build homes outside city limits.
The proposal, split into four bills and endorsed by the budget-writing Joint Ways and Means Committee on Wednesday, now heads to the full House and Senate for votes. It represents a continuation of years of large housing packages as lawmakers and Gov. Tina Kotek try to pull Oregon out of a housing deficit linked to unaffordable home costs and rising homelessness, though it’s only about two-thirds as much as Kotek sought for housing and homelessness.
The package includes infrastructure funding, a new revolving loan for middle-income housing, more money for homeless shelters and a boost to state rent assistance. It’s a step up from the $350 million lawmakers initially proposed, though far less than the $600 million Kotek sought or her $550 million counteroffer, which included more money for building homes. A Kotek spokeswoman didn’t respond to an email about the cuts Wednesday afternoon.
Lawmakers and Kotek also significantly narrowed the most controversial part of the proposal, a one-time exception to the state’s strict land use laws to allow cities to bring in up to 50 or 100 acres of land outside their urban growth boundaries. Normally, cities must submit expensive and time-consuming applications to expand their urban growth boundaries, or the invisible line that dictates where and how cities can build.
Kotek’s initial plan called for cities to be allowed to add up to 75 or 150 acres and for the Portland metro to add up to 600 acres, which has since been cut to 300 acres. Lawmakers also added new criteria for cities to qualify for the expansions, including having a higher percentage of cost-burdened households than the rest of the state.
Rep. Mark Gamba, D-Milwaukie and a co-chair of the Legislature’s environmental caucus, said during a hearing this week that he’ll support the proposal but still has concerns about expanding urban growth boundaries.
“The farm and forest land that we try to project with our UGBs are just as critical to living in the state as our housing capacity,” Gamba said.
Upgrading infrastructure
About $94 million, or nearly one-quarter of the funding is for cities and tribes to use for infrastructure improvements needed to support housing.
“Across Oregon, water and sewer projects are aging out, they’re at capacity and in some cases they’re falling apart,” Rep. David Gomberg, D-Otis, said during a Tuesday hearing. “As we strive to build more housing across Oregon, in many communities we don’t have the ability to service the housing we’ve got, let alone look at more housing.”
Ariel Nelson, a lobbyist for the League of Oregon Cities, wrote to lawmakers that infrastructure costs are the biggest barrier to housing development and affordability.
“Infrastructure costs are an incredible challenge for cities of all sizes across the state, whether urban, rural, suburban or frontier,” Nelson wrote. “Furthermore, local capacity and financing constraints mean existing state and federal infrastructure programs are out of reach for too many small and rural cities. The most powerful tool the state can deploy is to make focused infrastructure investments to support needed housing development.”
Many of the projects funded by the bills are in smaller cities, including a $3 million payment to the city of Stayton to improve sewer infrastructure and $3 million for Siletz to upgrade its wastewater treatment plant. The Warm Springs Housing Authority would also get $4 million to rehabilitate rental houses on the Warm Springs Reservation.
Separately, the spending package includes $29 million for Portland-based organizations to purchase land for affordable housing. The bulk of that funding, $25 million, is for the Albina Vision Trust to buy the 10.5-acre Portland Public Schools headquarters and redevelop it as affordable housing, parks and commercial space along the Willamette River.
Lawmakers including Sen. Kayse Jama, D-Portland and the chair of the Senate Housing and Development Committee, said the funding was a way the state could help restore damage done to the historically Black northeast Portland neighborhood.
“This critical funding will give the state the opportunity to heal the harms of historically racist land-use decisions by investing in the historically Black Albina neighborhood, which has been fractured by redlining and the construction of Interstate 5,” Jama said.
Building homes
Another $75 million is for a new revolving loan fund for local governments to tap to help pay for affordable and moderate-income housing. Kotek had sought $200 million for the fund, a new tool for developers to build homes for people earning about 80% to 120% of the median income in their area.
Those Oregonians make too much to qualify for income-limited affordable housing but don’t earn enough to buy homes in most of the state. In rural areas, they’re individuals making between about $32,000 and $64,000 annually or a family of four earning between about $45,000 and $90,000 annually. In Portland, it’s an individual earning between about $48,000 and $96,000 annually or a family of four earning about $68,000 to $136,000.
The revolving loan fund would allow cities to select projects for funding and use state-issued loans for a small subsidy, driving down home costs. Cities would pay back the state-issued loans by giving up tax revenue on the property for a decade.
Sen. Dick Anderson, a Lincoln City Republican who serves as vice chair of the Senate Housing and Development Committee, championed the revolving loan proposal.
“To solve this housing crisis, legislators must get creative in how we get there,” Anderson said in a statement. “These investments, in tandem with the creative financing options outlined in SB 1537, are a good first step. As a tireless advocate for local control, I’m glad to see these targeted investments going directly to communities throughout Oregon, not just Portland.”
The package also would create a new state office, the Housing Accountability and Production Office, with $10.6 million in funding to help local governments meet their housing goals. A law passed last year requires cities to plan for how they’ll meet housing needs and fulfill Kotek’s statewide goal of building 36,000 homes per year. The package also includes $65 million to keep operating homeless shelters throughout the state that are at risk of closing. Kotek visited one of those shelters, a low-barrier site in Cottage Grove, during the final stop of her 36-county tour in December. The shelter, which houses several dozen people in small units, launched with federal COVID relief funds and risks closing in a few months without additional money.
Another $34 million would be set aside for rent assistance and other efforts to keep people from losing their homes. And $18 million would go toward 27 recovery housing projects, or safe spaces for people in recovery from drugs or alcohol.
“Finally, the Legislature has come together to address not just homelessness, but housing on every level,” said Rep. Vikki Breese-Iverson, R-Prineville and vice chair of the House Committee on Housing and Homelessness. “I am proud to work side by side on this bicameral, bipartisan effort to invest in needed housing and infrastructure in all corners of our state.”
by Julia Shumway, Oregon Capital Chronicle
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