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Legislature pulls off housing deal as session winds down

Lawmakers push through affordable housing package

EO MEDIA GROUPSALEM — Lawmakers pushed through the last two bills in a four-pronged housing package Thursday intended to address the state’s affordable housing shortage.

The bills, among the last to pass the 35-day short session, authorize cities to require developers to include affordable housing units in their projects, also known as inclusionary zoning, and to annex property without holding an election, if all the landowners agree.

“If we don’t make sure we have enough affordable housing, we will not be the state we want to be,” said House Speaker Tina Kotek, D-Portland.

The legislation resulted from a deal struck between House Democrats and affordable housing advocates, the real estate industry and builders. As part of the bargain, Kotek agreed that if one bill failed, she would hold back the others.

The deal allows inclusionary zoning, authorizes cities to annex without an election, increases rights for tenants in month-to-month tenancies and establishes a pilot program for smaller cities to build affordable housing outside its urban growth boundary.

Inclusionary zoning

The House of Representatives passed the inclusionary zoning bill 39 to 21 Thursday. Senate Bill 1533 lifts a 17-year ban on inclusionary zoning and authorizes cities to pass ordinances to require up to 20 percent of new units to be offered at below market rates. The requirement applies only to developments with 20 or more units, and the developer must receive at least one incentive from the city in exchange for the affordable units, such as tax exemptions or density variances. The units must be offered at rates affordable to people earning 80 percent or less of median income.

The bill also lifts a moratorium on construction excise taxes. Under the measure, local governments may pass an ordinance to levy an up to 1 percent tax on new construction. The proceeds must be used for housing programs, first-time homebuyer down payment assistance and developer incentives for building affordable units.

Oregon and Texas are the only states in the nation that ban inclusionary zoning.

Rep. Alissa Keny-Guyer, D-Portland, said she was disappointed with some of the compromises lawmakers had to make on the legislation, but she said it’s still a good first step. Specifically, the 20-unit threshold precludes many smaller communities in need of more affordable housing, she said. The state also needs more housing that is affordable to residents who earn less than 80 percent of median income, she said.

“I predict we will be back on inclusionary zoning for smaller communities,” Kotek said Thursday. “We made compromises on the bill for a reason. It gives bigger communities a tool right now, but we have more to do.”

PARIS ACHEN - Demonstrators at the Oregon Capitol urge lawmakers to pass legislation Feb. 18, 2016, to increase housing stability in Oregon.

Annexation without election

What seemed like a narrow change in law in Senate Bill 1573 to allow annexation without an election, when landowners agree, stirred fears that voters could lose control of the character and future of their communities.

The measure narrowly passed the House Thursday 31-to-29 after no floor debate. The bill requires cities to annex land into its urban growth boundary when all landowners sign a petition.

Rep. Ken Helm, D-Washington County, said the bill would not change the way cities plan their urban growth boundary or impact system development charges.

“No one is going to be forced to be annexed,” said Helm, who presented the bill on the floor Thursday.

The proposal drew opposition from officials from several cities, including Corvallis and Rogue River, and voters rights organizations such as the League of Women Voters of Oregon. Builders, real estate companies and Metro spoke in support of the measure.

Richard Reid, co-chairman of the Oregon Communities for a Voice in Annexation, said the bill removes citizens’ right to vote on annexation and have a say in the fate of a community’s natural resources, green space, heritage land and recreational areas. The bill also gives no consideration to whether a community has the infrastructure to take in more land, Reid said.

“It is my belief that large developers that push to remove this right do so because they are only interested in the bottom line and could care less about the impact to the community,” Pam VanArsdale, mayor of Rogue River, wrote in a statement to lawmakers. “As a Realtor, I have worked with some very good developers, and I have also seen the disastrous results of poorly planned growth and annexations that leave the local citizens coping with failing infrastructure, water and waste water treatment, and traffic congestion that becomes a tax burden to mitigate.”

Tenant protections

The Senate passed House Bill 4143 late Wednesday, 16-to-9, to enhance protections for tenants in month-to-month lease agreements by prohibiting rent increases for one year and requiring a 90-day notice for any increase after that point. Current law requires only 30 days’ notice, but the city of Portland requires a 90-day notice.

The measure also increases fees landlords can charge tenants for violating a smoking ban from $50 to $250 after a warning. Another tenant protection to increase the notice period for no-cause evictions after a year of tenancy from 60 days to 90 days was stripped from the legislation.

Affordable housing pilot program

Both chambers also passed a bill this week to establish an affordable housing pilot program in the state’s smaller communities. The program will allow an expansion of urban growth boundaries to include an affordable housing project, which must be used for affordable housing for 50 years. The program will pilot two projects, one from a community of 25,000 or less and another community greater than 25,000. The state’s most populous counties are excluded, including Clackamas, Marion, Multnomah, Polk and Washington. The program takes effect in July 2017.

Other affordable housing measures included:

• Senate Bill 1582 sets out implementation guidelines for the $40 million bonding investment the state made last year to build new affordable housing

• House Bill 4042 restarts the General Assistance Program to support homeless individuals who cannot work and qualify for federal disability assistance

• $8 million to increase emergency housing assistance to community agencies around the state

• $2 million to increase support for homeless shelters

• $2.5 million in lottery bonds for the preservation of existing affordable housing

• $2.7 million for foreclosure counseling and $200,000 in additional support for Legal Aid Services of Oregon to help low-income Oregonians with housing problems

By Paris Achen
Portland Tribune Capital Bureau Reporter
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