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The Oregon Legislature has been extremely active on housing issues in recent years.

In the 2016 short session, lawmakers passed bills allowing construction excise taxes and inclusionary zoning and limiting voter-approved annexations.

In the 2017 full session the Legislature added a major piece of legislation, Senate Bill 1051, which addresses affordability criteria, density, accessory dwelling units (ADUs), the review period for development applications and the standards municipalities use when considering housing development.

This spring trumped them all. The legislative session that ended early this month included passage of House Bill 2001, which essentially eliminates single-family housing zones. The new rules, which local governments have a couple of years to put into place, will allow “middle housing” — duplexes, triplexes, fourplexes, townhouses and cottage clusters — on parcels in areas that previously excluded such housing types.

The legislative mandate also builds on previous ADU legislation by removing the owner-occupancy requirement and dropping the off-street parking mandate when an ADU is added.

The goal is to increase the state’s housing supply and hopefully make shelter more affordable.

Public officials are scrambling to figure out how to implement the new regulations. Developers are waiting to see what the new code looks like. And nonprofits who work on affordability are cheering lustily.

“People around the state will debate whether HB 2001 is ‘good’ or ‘bad’ based on their own perspective,” said Paul Bilotta, community development director for the city of Corvallis. “I won’t wade into that. What I can say is that it does mean is that everyone now has to ‘own’ the housing crisis. HB 2001 removes the ability to create enclaves within cities that don’t have to worry about housing impacts. Communities are going to either have to figure out where they want to say ‘yes’ to housing development or roll the dice and see what happens within their established neighborhoods.

“Oregon is the first state to try this, so none of us knows exactly what is going to happen.”

Count Albany Mayor Sharon Konopa among the public officials who think HB 2001 is a bad idea.

“This is irresponsible legislation in my view,” said Konopa, who has been “adamantly opposed” since the bill was introduced. On three occasions (Feb. 8, March 18 and June 11) Konopa submitted written testimony in opposition to the bill to the Legislature.

“This bill takes away cities’ authority over the character of their neighborhoods and basically punishes single-family neighborhoods.”

Konopa said she feared that single-family homeowners will suffer a loss in property values, while she and Bilotta expressed concerns that cities might have to build more infrastructure (water, sewer, storm drainage or transportation services) because of the additional population that added density might bring.

Those who work in affordable housing feel differently.

“This is a great win and we are very appreciative that our elected officials understand that the housing crisis is real and this session they passed strong legislation to back that up," said Karen Rockwell, executive director of Benton Habitat for Humanity. “HB 2001 is one of many tools that have been given to communities to help manage their issues locally. As our community continues to struggle with housing shortages, homelessness and mental health issues, middle class crunches, senior housing demands, student housing limits, etc. ... we will need every possible tool to be considered.

“Specifically for our organization, the benefits of HB 2001 are far-reaching. It will allow us to have additional development possibilities that meet a huge need in our area.”

Here’s a look at the issues that HB 2001 brings to the fore:

Middle housing

Cities with populations of more than 25,000 such as Albany and Corvallis, have until July 1, 2022 to adjust their plans and development codes to allow for additional housing types in single-family zones.

Cities between 10,000 and 25,000 such as Lebanon, which only must allow for duplexes in single-family zones, have until July 1, 2021, to make the necessary adjustments.

Such adjustments will be a time-consuming process, said Jeff Blaine, the community development director for the city of Albany.

“Implementing the bill will be very challenging,” he said. “Staff will need to evaluate our comprehensive plan and development code to determine what amendments are required to comply with the bill. Implementation has the potential to substantially impact the character of existing and future neighborhoods.”

Konopa says the bill violates a contract of sort with homeowners.

“When a homeowner invests in their housing choice they did not do so in thinking their local government will come along later and transform their single-family neighborhood to multifamily and impact their on-street parking and traffic,” she said. “This will not happen overnight, but it will be one house and one neighborhood at a time. It eventually erodes away single-family neighborhoods. Why should this housing choice be punished?”

However the change is characterized there is a huge swath of Corvallis that is eligible. Planning Division Manager Jason Yaich said the city’s Land Development Information Report notes that there are 2,250 acres of land in the city limits designated RS-3.5, the single-family zone. Much of it in is a large chunk north of Corvallis High School.

“Generally speaking,” Yaich said, “if we look at the area between 17th Street on the west, Highland Drive on the east, Buchanan Avenue on the south and Circle Boulevard on the north … that is almost exclusively RS-3.5.”

Another chunk of RS-3.5 exists west of Kings Boulevard and in the Timberhill area, while South Corvallis and southwest Corvallis also contain sections with large, formerly rural lots.

Large lots is a key to the equation. While the sections of land noted above are virtually built-out, any parcel that is redeveloped would be subject to the new rules.

Thus, a developer could buy a property, tear down the existing structure and build duplexes, townhouses or other middle housing types. And the larger the lot, the more options developers would have.

“Given there are a lot of smaller homes on larger lots and its proximity to Oregon State University,” Corvallis Community Development Director Bilotta said of the area north of CHS, “it would probably attract a lot of teardown or intensification interest from the market. There has been a lot of intensification immediately adjacent to those areas.”

Indeed. Outside the Corvallis RS-3.5 zones are areas of higher-density such as RS-9, RS-12 and RS-20 and those neighborhoods around Oregon State University have seen intense redevelopment and infill building. A three-bedroom bungalow is torn down and two five-bedroom townhouses go up in its spot.

It’s not clear how much more demand exists for student housing. OSU enrollment has flattened out in recent years after years of growth of 4% or better, and more than 1,500 bedrooms will come on line in the next two years when the Domain, in northwest Corvallis, and Washington Yards, just south of campus, are finished.

ADUs

Accessory dwelling units, also known as in-law units, have consumed vast amounts of meeting time and staff time in both Albany and Corvallis. Konopa twice has vetoed ADU legislation that was driven by the 2017 legislative changes and Albany remains out of compliance with current state law (see  accompanying story, which begins on A1).

And that was before HB 2001 altered the playing field by dumping the owner-occupancy and parking mandates. The new ADU regulations also hit sooner, taking effect Jan. 1.

“We kept our existing rules we had over ADUs to minimize the amount of ADUs that would impact neighborhoods.” Konopa said. “HB 2001 takes away cities’ local rules.”

Bilotta put it more bluntly: “HB 2001 settles the issue.”

Despite the angst and intense public process, the arguments are addressing a housing type that remains little-used in Albany and Corvallis.

“We have not seen any significant ADU activity," Blaine said.

Albany issued one ADU permit in 2017, five in 2018 and two so far in 2019, Blaine reported. The numbers in Corvallis are similar, Bilotta said: six in 2016, five in 2017, four in 2018 and four so far in 2019.

“I would expect the elimination of the owner-occupancy requirement to increase the number of ADUs constructed in the city,” Bilotta said. “particularly in the first years where there may be pent-up demand. As to how many I would have no way to guess, although we are starting from a very low number. So even something like a 500% increase isn’t that many units citywide.”

Bilotta said that based on what he is hearing from the development community, ADUs could become a more regular piece of housing development, noting that anyone putting up a five-bedroom house, either to sell or rent, might better their return on investment by including an ADU in the project.

Infrastructure

Cities plan for the water, sewer, storm drainage and transportation pieces of development based on how many people are expected to live in a neighborhood. HB 2001 turns that on its head, Konopa said, citing the Springhill Drive area from the railroad tracks to the urban growth boundary.

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“This area is served by septic tanks so there is no sewer service,” Konopa said. "To serve this area with sewers would cost millions, and we would need to form a local improvement district. Also, the transportation system cannot support the added density. This bill puts an unfunded mandate on cities in increasing the infrastructure needs to serve middle housing when an area was not planned for that density.”

Bilotta posed similar questions.

“If the state guidance (scheduled for December) says that the intent is to quadruple the density in residential zones, there could be significant need for substantial infrastructure upgrades across the state to accommodate an intensity jump of that magnitude. Hopefully, there will be some balancing of public interests on that front because it could get very expensive.”

Cities also might be required to move a bit quicker than normal, Bilotta said.

“What the bill is saying is if the pipe isn’t large enough or the road isn’t wide enough, cities need to start projects to fix those problems and not hold back the development,” he said.

“This will force cities to become more proactive when it comes to widening roads and upgrading buried infrastructure, which is going to likely necessitate cities across the state taking some actions that are usually not popular, such as increasing infrastructure financing options, eminent domain and construction disruption.”

Development issues

Longtime Corvallis area builder Chris Saltveit said that HB 2001 will be devilish to implement and that developers might have to wait awhile before they fully know its impacts.

“As an example, duplex construction is not addressed in the RS-3.5 zone,” Saltveit said. “How does a person even begin to draw up a project? Setbacks, building height, parking, green space (and) private outdoor space are just a few of the items that the land development code requires an applicant to address and comply (with). What will the city do if I turned in a duplex plan tomorrow in an RS-3.5-zoned area? The entire code will have to be rewritten.”

Albany’s Blaine says sorting things out will take time.

”Public outreach will be a critical component to any future change in the comp plan and development code,” he said. “We expect the Planning Commission and City Council to have many discussions about implementation over the next few years.”

Konopa predicted that many developers will move elsewhere amid the confusion and new challenges.

“Developers and buyers will build new single-family neighborhoods in the small communities that are not subject to the rules of this bill, like Millersburg, Tangent and Adair Village,” she said.

Adair Village already is engaged, Saltveit said.

“You should look at how many new, affordable homes are being built in Adair Village,” he said, noting that the new residents have access to Corvallis schools. “These homes are nice and considerably cheaper than if built under city of Corvallis oversight.”

Saltveit also questioned whether the bill will be challenged legally.

“My first take is the cities will push back against the law,” he said, “similar to what they did on the voter-required annexations.”

The annexation limits came out of the 2016 session. Corvallis, Philomath and the League of Oregon Cities have challenged the law, with the matter remaining before the courts.

“There have been no discussions one way or another regarding legal action to my knowledge,” Bilotta said. “A lot of the provisions don’t take effect for years, and there are some questions about how they will be interpreted by state agencies, so the dust has to settle a bit before everyone understands exactly where things stand.”

Konopa said “the (City Council) has not taken a formal position on the bill,” although she added that “if I hear of any cities that plan on challenging the bill, then I’ll bring the question to the council.”

Possible grounds for legal action, she said, would be the unfunded mandates and taking away cities’ local authority.

It seems clear to Bilotta that more process lies ahead.

“It is a little cliché, but the image that keeps coming up in my mind is the toothpaste tube,” he said. “Market forces squeeze the tube harder and harder and cities traditionally have had some freedom to point the nozzle where they wanted or in some cases, build a stronger cap for the tube. What HB 2001 does is poke a hundred tiny holes into the side of tube, so if cities still want to try and keep that cap closed, toothpaste is going to spill out of all those holes in very unpredictable ways.”

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Contact reporter James Day at jim.day@gazettetimes.com or 541-758-9542. Follow at Twitter.com/jameshday or gazettetimes.com/blogs/jim-day.

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