What's in Store for Oregon Housing in 2024?

Two years ago, I wrote about how the pace of homebuilding in Oregon was not keeping up with demand. As explained in the post, according to the Oregon Home Builders Association, at that time Oregon was experiencing a demand backlog of 110,000 homes and would need 30,000 homes to be built annually just to keep up with projected demand. It appears the situation has gotten worse since then, but hope may be on the horizon.

On January 10, 2023, the day after Oregon Governor Tina Kotek took office, she issued an Executive Order stating in part that "Oregon is experiencing a severe housing shortage, which increases housing costs and reduces housing affordability" and that the Oregon Housing Needs Analysis estimated that as of the date of the Order there was a "current shortage of almost 140,000 homes across the state" and that to meet demand "approximately 36,000 homes" would need to be built "each year for the next ten years."

The Executive Order established an annual housing production target of 36,000 homes and the "Governor's Housing Production Advisory Council" (HPAC) to recommend an action plan to meet Oregon's annual housing production target of 36,000 homes per year for the next ten years.[1] The HPAC was to provide a "final recommended action plan" by December 31, 2023.[2]

Affordable Housing Crisis: Bend, Oregon, Is a Case Study

Since then, it has been documented that Oregon's housing production is among the worst in the nation, and according to a recent report issued by Up for Growth, a Washington, D.C., think tank, Oregon is doing worse than all but four states in addressing the housing shortage. That report features Bend, Oregon, as one of the case studies. The report notes that while "Bend may be the Milken Institute's number five in economic performance among small cities,…it is ranked 179th out of 203 in the number of households with affordable housing costs."[3]

The letter testimony of Bend's mayor, Melanie Kebler, which she submitted to the Oregon Land Conversation and Development Commission (LCDC), was noted in HPAC's updated Recommendation relating to CFEC (or Climate Friendly and Equitable Communities) rules, which is part of HPAC's Agenda for their December 8, 2023, meeting. In response to HPAC's effort to assess the housing production issue and potential actions it may take, it quoted Mayor Kebler, wherein she highlighted the tension between CFEC rules and housing production goals:

City of Bend. Melanie Kebler, Mayor: A 7/28/2023 letter/testimony to the Land Conservation and Development Commission addressed concerns about CFEC with these words, 'To put it bluntly, we believe parts of these rules set cities up for failure. If this is how we plan to meet climate goals, we will fail to meet our housing needs...The proposed CFEC rules will lead to a land use system that is internally inconsistent and which pits unachievable climate policy directly against essential housing needs.' She asked that the state clearly model how it would be possible for Bend to achieve a 20 percent reduction in VMT [or vehicle miles traveled] while also meeting housing production goals. If it is not possible, the rules will need to be amended, she noted….

State Recommendations

HPAC's Recommendation relating to CFEC rules, as set forth in its December 8, 2023 Meeting Agenda, is as follows:

Request that the Governor's Office engage an objective third-party facilitator to work with DLCD [or Department of Land Conservation and Development], impacted jurisdictions and housing developers to (1) examine the impacts of CFEC rules on housing policy; and (2) identify which CFEC rules could potentially conflict with objectives of OHNA [or Oregon Housing Needs Analysis], and stay those rules pending the completion of the OHNA rulemaking and subsequent agency action.

Areas in the rules to examine include, but should not be limited to:

• Whether there should be greater flexibility and/or clarity in land use regulations required of cities, so as not to interfere with affordable housing production goals and homeownership opportunities.
• Whether there are ways to simplify the rules so that they can be implemented without taking time away from essential housing production planning and approvals.
• Whether the rules related to transportation planning, performance standards for VMT reduction, and major TSP [or Transportation System Plan] updates may create barriers to needed housing development and community growth.
• Whether the land use rules increase risk of gentrification and displacement, and stronger requirements for mitigation.[4]

While HPAC is making its recommendations, Governor Kotek announced on November 28, 2023, that she will ask Oregon lawmakers to approve $500 million to jump-start her push for more housing when the 2024 session begins on February 5, 2024. While she did not offer details about the funding, she said the money would go into a variety of programs, among them technical assistance for local governments, public works infrastructure, and development.[5] She stated during a previous, September 28, 2023, press conference, that she is pursuing a revised version of a bill that would allow cities to relax specific restrictions to encourage housing, including a potential expansion of urban growth boundaries as an incentive.[6] A similar bill was approved by the Oregon House of Representatives but rejected by the Senate on the final weekend of the 2023 session, which ended June 25.[7]

So, it appears the table is set for a potential expansion of urban growth boundaries and revisions to CFEC rules, as well as a push for $500 million in funding to spark housing development, in 2024. We will also see what HPAC's final recommendations, which are due at the end of the year, will be.

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