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OP-ED: Big changes will greatly impact the housing picture in Oregon

From the Daily Journal of Commerc 12/10/19.

The 2019 session of the Oregon Legislature saw changes to many existing laws, but none as significant as those relating to requirements for state, regional and local government actions to meet housing needs. Two pieces of legislation are particularly significant: HB 2001, which requires more housing types in single-family zones in large and medium-size cities and the Metro region, and HB 2003, which provides for a uniform database for a more frequent review of housing statistics and needs and a basis for further actions to deal with housing shortages. These bills trigger some major changes.

Let’s first look at HB 2001, which was better known during the legislative session for ending the exclusivity of the single-family housing type in single-family zones. By mid-2021, medium-size cities (i.e., populations between 10,000 and 25,000) must also allow duplexes on all lots and parcels in single-family zoned areas, while large cities (populations over 25,000) and most cities and urban counties in the Metro region must, by mid-2022, allow duplexes on the same basis as medium-size cities, and in addition allow triplexes, fourplexes, townhouses and cottage housing clusters in large portions of these single-family zones. There are a few off-ramps, such as inability to supply sufficient urban services (a result our planning system was supposed to avoid) and the ability of the Department of Land Conservation and Development (DLCD) to grant extensions to deal with infrastructure deficiencies; however, requests for extensions from local governments must be accompanied by a plan of action to correct these deficiencies.

Local governments may regulate the siting and design of these new housing types, but only if those regulations do not, by themselves or cumulatively, discourage those new types through “unreasonable” cost or delay. One can expect to see these words frequently in Land Use Board of Appeals (LUBA) and appellate court opinions over the next few years, unless administrative rules adopted by the Land Conservation and Development Commission (LCDC) provide additional direction regarding such regulations.

LCDC is also directed to adopt administrative rules and model codes. If a local government covered by the rules does not adopt local ordinance provisions to implement the new law, the model codes will displace conflicting existing codes for single-family zones. That said, it is important to keep in mind that nothing in these standards requires middle housing actually be built. The Legislature also appropriated $3.5 million to assist local governments in complying with the new law in terms of code revision and provision of supporting infrastructure.

HB 2001 also clarifies earlier legislative direction that accessory dwelling units be allowable in most single-family areas by prohibiting obstacles that some local governments had used to discourage them, such as owner occupancy and off-street parking requirements. The legislation prospectively prohibits use of covenants that would interfere with these new legislative requirements and directs the Building Codes Division to consider code requirements that would facilitate conversion of single-family dwellings into duplexes, triplexes or fourplexes.

HB 2003 is more oriented to the housing planning process and deals with three areas:

  1. Every city with a population greater than 10,000 must have a housing needs analysis (HNA) submitted to the DLCD on a schedule adopted by the end of this year. The HNA must be updated every six years in the Portland region and every eight years elsewhere.
  2. The state, with Housing and Community Services taking the lead, must devise a regional housing needs analysis, a methodology for calculating housing needs on a regional basis to analyze and quantify the housing shortages in the state over a 20-year horizon. That analysis must consider matters related to the equitable distribution of publicly supported housing within a region and a housing shortage analysis for each city and Metro and must be completed by Sept. 1, 2020 and be submitted to the Legislature by March 1, 2021.
  3. Finally, DLCD must develop a methodology and adopt rules for a Housing Production Strategy (HPS) for cities with populations greater than 10,000 – including a list of specific actions that the city must undertake to promote development within the city to address housing needs identified in its HNA. Controversy over the adequacy of the HPS is years away – DLCD does not expect to begin reviewing them until late 2023, but it has enforcement powers to assure that local governments respond to these housing needs.

While the Legislature has spoken, that is not the end of the story. Eugene tried to derail state ADU requirements and is rumored to be leading efforts to repeal some or all of this new legislation. Though this legislation will not take effect for many months, if not years, the storm clouds of controversy may already be forming.

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.

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From policy rubble, Portland begins to rebuild

From the Daily Journal of Commerce 12/3/19.

On Nov. 20, when the Portland City Council agreed to pay $350,000 in attorneys’ fees, it marked a final defeat for the city’s approach to regulating older brick buildings.

The order to pay legal fees came after the city lost a federal lawsuit brought by landlords who challenged a city ordinance requiring them to post warning signs on unreinforced masonry buildings, which are considered particularly vulnerable during a sizable earthquake.

The placard ordinance itself was a significant retreat from earlier recommendations. The notification policy was a compromise after the council faced a chorus of protests to requiring seismic retrofits – an expensive process that involves girding masonry buildings with a steel skeleton.

Commercial building owners, along with affordable-housing providers, churches and others, fought back. So the council settled on requiring masonry building owners to post a placard with a simple 19-word message: “This is an unreinforced masonry building. Unreinforced masonry buildings may be unsafe in the event of a major earthquake.”

On May 30, federal district Judge John Acosta struck down the council-approved ordinance, writing that it was unconstitutional because it compelled speech from building owners in violation of the First Amendment.

“The more they tried to make it better, the worse it got,” said John DiLorenzo, a Portland attorney who brought the lawsuit on behalf of the building owners. “It became a shadow of its former self. Even then, what was left couldn’t survive First Amendment scrutiny. It was just a total disaster for the city.”

Acosta wrote that the ordinance was “unduly burdensome” and based on a database riddled with inaccuracies. The database of unreinforced masonry (URM) buildings was compiled by city officials and Portland State University engineering students, typically based on a visual inspection of the building exterior and permit records.

In his ruling, Acosta painted a detailed picture of a failure in government regulation. The judge wrote that the city “lacked the political will or public support to achieve its desired goal: mandatory retrofits for URM buildings.”

Now, more than five years after the city began formulating a seismic retrofit policy, city officials are essentially restarting the process from scratch with yet another committee.

The city’s attempts to regulate URM buildings began in 2015, when a committee formed by the Bureau of Emergency Management recommended a mandatory program to strengthen all but the smallest buildings. Scientific advances and national publicity deepened the understanding of the risks posed by a large-scale Cascadia subduction zone quake and lent urgency to regulation. However, city commissioners were unable to agree on a seismic retrofit policy.

Instead, they settled on the placarding requirement – a measure meant to pressure private building owners to pay for the retrofits. The Masonry Building Owners of Oregon responded by launching a lawsuit with DiLorenzo, a Davis Wright Tremaine attorney and lobbyist who often takes on complex business cases.

DiLorenzo found sympathetic plaintiffs. One, John Beardsley, a longtime local real estate developer and investor, owned the Western Rooms building at Southwest Second Avenue and Ankeny Street. The 113-year-old building in 1979 was reinforced via a seismic retrofit. Nevertheless, it did not meet the city’s standards, and the building was placed on the city’s URM database.

Beardsley told the court that the city’s placarding language would make him “a liar.” Acosta’s ruling criticized the city for placing the burden of proving a building did not belong on the URM list on property owners.

Another building owner who testified was Walter McMonies, a retired real estate lawyer who owns several Portland buildings and became president of the Masonry Building Owners. McMonies testified that he spent $1.1 million to upgrade a 36-unit multifamily building in Northwest Portland, but that it still did not meet the city’s standards for seismic reinforcement.

“I’m pushing $2 million to finish it,” McMonies said in an interview. “That’s not a scare story. That’s what it costs.”

In 2017, Enrique Castaneda worked on the seismic stabilization of the Trinity Place Apartments in Northwest Portland. Despite a $1.1 million investment, the building still doesn’t meet city seismic reinforcement standards, owner Walter McMonies says. (Sam Tenney/DJC file)

In 2017, Enrique Castaneda worked on the seismic stabilization of the Trinity Place Apartments in Northwest Portland. Despite a $1.1 million investment, the building still doesn’t meet city seismic reinforcement standards, owner Walter McMonies says. (Sam Tenney/DJC file)

In its defense, the city pointed to Berkeley, California, where the number of URM buildings had been cut from 587 in 1991 to six by 2007. Unlike Portland, however, Berkeley made seismic retrofits mandatory and offered a “suite of options for financing retrofits,” Acosta wrote.

Portland’s seismic policies went through a series of committees that included building engineers, owners, city officials and others. Meanwhile, the city’s leadership changed. Steve Novick, who had originally pushed for mandatory seismic retrofits while overseeing the Bureau of Emergency Management, lost his bid for re-election. In ensuing years, the BEM would change hands to commissioners Dan Saltzman, Ted Wheeler and now Jo Ann Hardesty. Hardesty’s office referred questions to the BEM.

DiLorenzo criticized the role of the city’s staff in pushing the seismic retrofits.

“We have a few city employees who have driven this process,” he said. “It is obvious that the City Council was being manipulated by its staff. … I think this is a real failure of governance, and it was eye-opening to me.”

DiLorenzo said the city’s first committee was packed with engineers.

“It would have been a financial bonanza for those guys,” he said.

A report shows the 2015 eight-member Retrofit Standards Committee included five engineers.

BDS spokesman Alex Cousins said there was no undue influence by professional engineers or city staff on seismic retrofit policy. Cousins noted the final policy committee, which made recommendations to city staff, had 18 members – only one of whom was an engineer.

“It is a mischaracterization to say that the committees were stacked with engineers or that the process was predetermined,” Cousins stated in an email. “The fact remains that seismic retrofits make buildings safer in the event of an earthquake, and structural engineers are best able to understand how buildings perform during these events. They needed to be part of the URM policy-making process as did the rest of the stakeholders involved.”

The BEM is now forming a new committee that will look at possible financing for seismic retrofits, including options such as tax breaks and a revolving loan fund. The URM Work Group will meet for the first time on Dec. 17.

“The focus of this will not be a mandatory program,” BEM spokesman Dan Douthit said.

The city has been conscientious in its desire to regulate URM buildings, McMonies said.

“I don’t think anybody’s a bad actor,” he said. “It’s a difficult problem.”

McMonies was skeptical that the committee will come up with a new solution.

“The new committee is fine, although we feel we really looked under every rock,” he said. “There isn’t any spare money in the city’s budget, with the homeless and the housing crises.”

The work group is expected to examine financing options over a year before reporting back to the City Council.

“A lot of specifics aren’t known,” Douthit said.

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Most Oregon Measure 49 properties remain undeveloped

From Capital Press 11/25/19

SALEM — Most of the farm and forest properties made available for development in Oregon under a decade-old ballot initiative haven’t yet been subdivided, according to state land use regulators.

Meanwhile, county governments and affected landowners don’t appear eager to take advantage of a program that would steer home-building away from more valuable natural resource lands.

Of the properties that have been subdivided under Measure 49, a property right law passed in 2007, about 62% are in agricultural zones, 16% are in forest zones and 11% are in mixed farm and forest zones, according to the Department of Land Conservation and Development. The remainder are in rural residential zones.

“The farmland seems to be getting developed at a faster rate than the other categories,” said Sarah Marvin, a senior planner with DLCD, during a Nov. 20 hearing before the House Agriculture and Land Use Committee.

Oregon voters passed Measure 49 to amend another ballot initiative approved three years earlier, Measure 37, which allowed landowners to seek waivers of land use regulations imposed on their properties.

Landowners could also seek compensation for lost property values under Measure 37, but most counties could not afford to pay those claims and instead opted to waive restrictions on development — stoking fears of major new subdivisions that would interfere with agriculture and forestry.

Under Measure 49, those development rights were scaled back so that most landowners could only build three homes per property, or up to 10 homes if they could sufficiently prove that regulations reduced their property values.

Roughly 4,200 new parcels were approved by Oregon land use regulators under Measure 49, but only 1,700 parcels were actually created — leaving about 2,500 new parcels that could be created in the future, according to DLCD.

In areas such as Southern Oregon, the possibility of development occurring outside urban growth boundaries may raise the chances that newly built homes will be prone to wildfire hazards, said Marvin. “A lot of Measure 49 homes sites are going into extreme fire risk areas.”

To mitigate the risks from such home-building, DLCD enacted rules in 2014 under which landowners in farm and forest zones can transfer their development rights to rural residential zones or areas that have already been largely subdivided.

Since then, however, not one county government has implemented an ordinance that would allow landowners to transfer these development credits, Marvin said. That’s likely because county officials have limited time and resources to create such programs.

“They’d have to compete with other things on their agenda to get this in,” she said.

If landowners were excited about transferring their development rights, they’d probably demand that county officials make that option available — something that clearly hasn’t happened, said Jim Johnson, land use specialist with the Oregon Department of Agriculture.

“There’s not, in my opinion, a real demand for it,” Johnson said. “If nobody is asking for it, the county has other things to do.”

While the development credit transfer system should be a “win-win for everybody,” it’s likely that Oregon’s program is too restrictive to be enticing to landowners, said Dave Hunnicutt, president of the Oregon Property Owners Association.

Landowners are unlikely to want to jump through the program’s regulatory hurdles without an incentive, Hunnicutt said. “There’d better be something valuable at the end of that.”

Currently, development credits can only be transferred within the same county, which is a geographical limitation that probably discourages landowners, he said.

Those in remote rural counties would be more interested in the program if they could transfer the development credits to more urbanized areas, Hunnicutt said.

Allowing more flexibility makes sense, since geographical restrictions won’t prevent property development under Measure 49, he said. “Those are going to happen and there’s nothing anyone can do to stop them.”

Another possibility could be to allow additional dwellings to be built with the development credits if they’re transferred from farm and forest land into rural residential zones, said Rep. Brian Clem, D-Salem, who chairs the House Agriculture and Land Use Committee.

“I feel like we need to sweeten the pot somehow,” Clem said.

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OP-ED: Recognizing state authority in water quality certification

From the Daily Journal of Commerce Oregon 11/22/19.

Suppose you want to develop a parcel of land containing a wetland created by water running off an adjacent property. Your project would fill the wetland, so the Federal Water Pollution Control Act (Clean Water Act) requires that you obtain a federal permit prior to undertaking that activity. Specifically, you need a permit from the U.S. Army Corps of Engineers pursuant to Section 404 of the Clean Water Act. Before the Army Corps issues the permit, the state must provide a water quality certification as required by Section 401 of the Clean Water Act.

What is the scope of the state’s authority? Must the state focus on only your project? Or may it look further and consider impacts from other projects, such as prior development of the adjacent property that created the wetland to be filled?

The Clean Water Act prohibits discharges of pollutants into waters of the United States unless done in accordance with a valid federal permit. In the case of discharge of dredged or fill material into waters such as wetlands, Section 404 of the Clean Water Act allows the Army Corps to issue permits for such activity.

When applying for a Section 404 permit, the applicant must provide “a certification from the state in which the discharge originates or will originate … that any such discharge will comply with the applicable provisions of” various other sections of the Clean Water Act. This requirement comes from Section 401 of the Clean Water Act and is referred to as the “401 water quality certification.”

The Clean Water Act and associated case law are clear that the state has virtually unlimited power to impose conditions on its 401 water quality certification to ensure compliance with the Clean Water Act and “any other appropriate requirement of state law.” See PUD No. 1 of Jefferson County. v. Washington Department of Ecology (1994). Federal law also says the focus of the certification review needs to be on the activity being permitted, not the discharge, and on ensuring that the activity “will be conducted in a manner which will not violate applicable water quality standards.”

In Oregon, water pollution control is mandated through ORS Chapter 468B. ORS 468B.020 requires the Oregon Department of Environmental Quality (DEQ) to take actions necessary for the prevention of new pollution and abatement of existing pollution by “requiring the use of all available and reasonable methods necessary to achieve the purposes of ORS 468B.015 and to conform to the standards of water quality and purity established under ORS 468B.048.”

These water quality laws are implemented in OAR Chapter 340. OAR 340-048 sets forth procedures for filing and evaluating water quality certification applications. OAR 340-048-0015 requires certification when an applicant is applying for a federal license or permit “to conduct any activity that may result in any discharge to navigable waters.” In reviewing applications for certification, DEQ “must evaluate whether the activity for which certification is sought will comply with applicable provisions of” the Clean Water Act, “water quality standards set forth in OAR 340, division 041, and other appropriate requirements of state law.” The specific considerations that DEQ must take into account all focus on the effect on water quality of the activity being permitted.

DEQ’s guidance documents further narrow the state’s focus to runoff from the activity being permitted. For example, DEQ’s Section 401 Water Quality Certification Post-Construction Stormwater Management Plan Submission Guidelines advises DEQ to consider all methods necessary for “the project” to meet water quality standards and evaluate whether “stormwater runoff may cause or tend to cause pollution.” The post-construction stormwater management plan need only look at “stormwater runoff generated by the water quality storm event on the CIA.” That is the Contributing Impervious Area, which is defined as “all impervious surface areas within the project boundaries plus impervious surface areas owned or managed by the same entity from which stormwater runs overland or via discrete conveyance (e.g., piped) to an area within the project boundaries.” DEQ, therefore, may evaluate run-on only when that run-on is coming from an area owned or managed by the same entity that is seeking the 401 water quality certification.

Thus, although the state has the authority to impose “all available and reasonable methods necessary” to protect water quality, its 401 certification review should look at whether the permitted activity will result in a discharge that would lower water quality. It should not evaluate the water quality impact of run-on from a completely different parcel or activity not owned or managed by the applicant. To do so would contravene DEQ’s own guidelines, which allow consideration of run-on only when it is coming from an area also owned by the applicant. The applicant must keep DEQ focused on the activity for which the permit is being sought.

Pushing the regulator to maintain that focus likely is not a realistic strategy given the costs in terms of project delay while negotiations continue. Depending on how long a 401 water quality certification application has been pending, applicants could consider asking the Army Corps to issue the Section 404 permit without the Section 401 certification on the basis that the state has waived certification by failing to act within the regulatory timeline. It is unclear if the Army Corps would agree to do so, and in any event, this only kicks the can down the road, as the state will likely insist on the same conditions prior to issuing necessary permits and approvals as the project progresses. The best strategy may be to start early – prior to purchase, when there may be room to negotiate the handling of off-site drainage as part of the sale. And if not, at least the issue will have been identified early, such that everyone knows what to expect as the project proceeds.

Elizabeth Rosso is an attorney at Jordan Ramis PC. She focuses on environmental law. Contact her at 503-598-5537 or elizabeth.rosso@jordanramis.com. This column is intended to provide readers with general information and not legal advice. Consult professional counsel for help regarding specific situations.

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OP-ED: Public participation in Oregon’s land use system: a vexed issue

Oregon has citizen involvement as the first of its 19 statewide planning goals and has a statewide Citizen Involvement Advisory Committee to advise citizen involvement programs that each city, county and regional planning agency must have. However, public participation is more often ignored or despised by many participants in the planning process; they view it as a waste of time and obstructionist rather than constructive. Developers and local governments ascribe NIMBY (not in my backyard) motivations to organized local groups that participate in local land use hearings, and some urban sociologists claim that recognized neighborhood associations are too white, too insular and unrepresentative of their locality. These latter criticisms play a large part in the proposals to change recognized community participation in Portland’s planning scheme.

There’s a lot at stake here. Being “recognized” gives an organization a seat at the table before the decision-maker to allow the voices of affected members on various issues – parking districts, ordinance enforcement and, most important to many, zoning. While that participation does not give the neighborhood association (the term used for geographically-based entities that the city recognizes as representative of each area) “standing” (a legally recognized interest in the outcome), Commissioner Chloe Eudaly suggests a broader base is necessary so that other communities (business associations, underrepresented minorities, LGBTQ+ groups) may also participate. While the proposals keep changing, existing recognized neighborhood associations assert that longstanding modes of participation (including the opportunity to take an appeal of certain land use decisions at no cost to the City Council) may be lost.

Public participant testimony is often dismissed as insignificant or nonresponsive. While elected officials generally need not respond to all comments on policy matters, Oregon planning law does require a response to properly raised issues in a local government decision on a discretionary permit (a conditional use for a new sewage treatment plant, for example). Although that is a good thing because it demonstrates that citizen testimony was indeed heard, it can be time-consuming for applicants and local government staff. And sometimes an appeal may be needed to clarify how the local governing body construes a plan or zoning ordinance provision.

Local governments in Oregon are authorized to recover some or all of their costs for appeals to their governing bodies. Questions of whether the public at large should bear these costs or whether some or all of those costs should fall on the appealing party, who may be disproportionately impacted or benefited by the outcome, are some of the policy questions local government decision-makers must weigh. Certainly imposing the full cost of processing an appeal on an individual appellant may render the appeal impossible.

While this result may be avoided through a fee waiver for individual appellants or neighborhood associations, current law places the prospect of true citizen involvement at risk. Local governments seeking reimbursement of the cost of processing appeals (as well as developers) sometimes point to the abuse of the appeals system by “frequent filers,” who appeal and add time and expense to review of projects that are often affirmed.

The 2019 Legislature enacted a bill that authorized the imposition of attorney fees on failed challenges to certain public housing projects approved by local government. This was not the first, and certainly will not be the last, proposal directed at discouraging appeals of certain local government decisions. But while discouraging certain appeals, the Legislature has thus far declined to consider the most appropriate way to balance and allocate the costs of processing appeals, which may be an even greater concern.

Citizen participation may also have another dark side. In 2001, William Fischel proposed the “home voter” thesis, suggesting that, unlike state and federal governments, local governments reflect different voter concerns – i.e., those of homeowners. Property taxation (the principal means of financing local governments and schools), local laws regarding public conduct and particularly zoning, reflect a deep-seated desire to protect property values. Developments that would bring more children, accommodate people of a different race or ethnicity or those with unfamiliar social or religious practices, or otherwise upend the prevalent single-family land use patterns of the area may often be subject to a skeptical, if not hostile, view. While immigrants vote with their feet, the Fischel hypothesis says that city and suburban homeowners remain and vote their perceptions of property values and choose to locate and express their preferences by voting in accordance with their own economic interests being significant.

By Fischel’s own admission, the hypothesis is less effective in larger cities, which have a significant rental cohort. In Portland, for example, there is political support for increasing density and a diversity in housing types, for rent control, and for less parking for multifamily developments than would be the case in Sherwood or Happy Valley, where the perceptions of the value of one’s own home will spill over into planning and land use decisions that may, for example, conflict with state policy to increase densities within urban growth boundaries.

In the early years of the state’s planning program, public participation was lauded; however, it was clear that this participation could not be used legitimately to oppose state policy on such things, for example, as farmland protection or alternatives to the automobile. The current discussions must balance public participation against a land use system influenced by relatively quick (by national standards) processing times.

Oregon has not fully dealt with public participation in planning. Its rules are vague, its enforcement avoided and its present status is a desiccated symbol of ambivalence. Despite state law to the contrary, the level of that participation has effectively become optional for local governments to allow public participation at whichever level they desire. The reticence of most local legislative leaders to deal with the role of the public in land use policy making may well lead to frustration of those who feel left out and unheard. Those sentiments have resounded on the national scene, leading to the implacable dissonance in national politics. Oregon can do better than that.

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.