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OP-ED: A possible new method for addressing housing affordability

http://djcoregon.com/news/2019/03/12/op-ed-possible-new-method-addressing-housing-affordability/

The fact that Oregon is in the midst of a devastating housing crisis is not news. Since 2011, the rental vacancy rate in Oregon has hovered between 3.9 percent and 4.9 percent, while the national average has gone from 9.5 percent to 7.1 percent. In 2015, the Portland-Vancouver-Hillsboro metropolitan statistical area had either the highest or second-highest annualized rent growth in the country. Unsurprisingly, these market constrictions weigh most heavily on families with low or moderate incomes. Half of all renters in Oregon spend more than 30 percent of their income on rent and utilities; they’re “cost-burdened,” by experts’ definition. In 2016, Oregon had about 298,000 cost-burdened renter households – more than the total number of households in Portland.

Over the past few years, the Oregon Legislature has tried to tackle this affordability problem from a number of different angles – by expanding tenants’ rights, providing public dollars to subsidize the provision of low-income housing, and changes in land use laws. Responses on the land use side have largely focused on removing barriers in housing supply through baseline mandates such as requiring that accessory dwelling units be a permitted use in all single-family zones and expediting the residential permit process.

The 2019 legislative session has opened with a flurry of similar bills intended to further these goals – but there is one bill that is striking because it contains something different. Rather than ordering local governments to allow certain types of housing or limiting their ability to restrict the same, House Bill 2003 would require cities with populations of 10,000 or greater, and Metro, to calculate the extent of their local affordability gap and then try to solve it.

This approach is not unique. Achieving compliance with most of Oregon’s statewide land use planning goals is premised on an inventory, analysis, and a solution-based approach. For example, Goal 10, relating to housing, provides that buildable lands are to be inventoried, shortfalls identified and that, based on this data, the local government will “encourage” the provision of needed housing at price ranges and rent levels and include flexibility of housing location, type and density. Although this objective may sound good on paper, the Land Conservation and Development Commission (LCDC) has not elaborated on those expectations regarding the details of type and density, given the political sensitivities of that elaboration at the local level. Instead, the LCDC initially left that discretion up to local governments with most of its efforts aimed at providing suggestions and housing tool kits to assist local governments in meeting their housing responsibilities.

HB 2003 would aim to fill in those gaps by requiring local governments to plan for needed housing. First, it would require that the Oregon Department of Administrative Services (DAS) create a regional housing needs analysis so the state has accurate statewide data on housing need. The bill also would require each city and Metro to prepare an inventory of the existing housing stock and provide a housing shortage analysis as well.

The housing needs analysis will identify the total number of housing units necessary to accommodate anticipated populations in a region over the next 20 years and must classify housing by type (i.e., attached or detached single-family and multifamily housing) and affordability (i.e., “very low income” meaning households at or below 50 percent of the regional median income, up to “high income” meaning above 120 percent of the regional median income.) These needs and housing analyses must be completed every eight years.

Within 12 months of determining its estimated housing need, each regional or local government must adopt a housing strategy identifying what steps it will take to meet the housing need. Included in this calculus is whether the housing market is likely to develop to the zoned densities, taking into account the financial or density bonus incentives, for each affordability category. Where there is a land shortage, Metro or a city may decide whether to: 1, expand its urban growth boundary, 2, alter its regulations to increase the likelihood that housing will be developed at needed densities, or 3, use a combination of the two based on the priority scheme provided for in Oregon law.

Under the bill, the LCDC would be required annually to identify up to 10 cities that are having difficulty implementing their housing strategy. The Department of Land Conservation and Development (DLCD) may prioritize technical assistance resources for these cities or provide enhanced oversight and enforcement. Currently, the LCDC has authority to amend a local jurisdiction’s comprehensive plans or land use regulations to comply with the existing housing and urbanization statutes, and HB 2003 would allow the DLCD to petition the LCDC to take such action if a local jurisdiction is not implementing its housing strategy. These provisions restore much of the authority granted to the LCDC to accomplish periodic review, whereby the LCDC would review local government plans and regulations to ensure compliance with the goals on either a seven- or 10-year cycle, but where enforcement of these requirements has stalled indefinitely in recent years.

One of the reasons cited most often for abandoning periodic review was the cost to local governments in conducting these analyses and reporting back. HB 2003 would provide additional funding for the state agencies where these additional obligations are imposed, and authorize the DLCD to provide funding to local governments to implement their needed housing strategy for those 10 priority cities, but it would not reimburse local governments for the costs of determining the housing need or the housing strategy based on those findings, although the Legislature in 2018 provided $1.73 million to the DLCD (HB 4006) to provide local governments for the purpose of housing planning.

Notwithstanding the costs, which might be significant, the importance of this effort cannot be understated. Everyone agrees that we need more affordable housing and that housing prices are increasing, but we are completely in the dark with regard to a jurisdiction-based accounting of this shortfall based on the varying affordability levels necessary to make planning decisions that are calculated to respond. Without collecting this data, we are ill-prepared to determine if the existing efforts (and proposed ones) to reduce barriers to housing are working or whether more targeted, customized efforts would be more effective.

Edward Sullivan is a retired practitioner of land use and municipal law with more than 45 years of experience. Contact him at esulliva@gmail.com.

Carrie Richter is an attorney specializing in land use and municipal law at Bateman Seidel. Contact her at 503-972-9903 or crichter@batemanseidel.com.