City councilors and staff discussed some policy options at a 'retreat' Saturday afternoon.

STAFF PHOTO: MARK MILLER - Bryan Pohl (center), Forest Grove's community development director, responds to input from City Councilor Val Valfre (left) at a work session Saturday. Also pictured: Paul Downey, Forest Grove's administrative services director.They didn't make any official decisions on what to do to encourage affordable housing in Forest Grove, but members of the Forest Grove City Council and city staff spent about an hour of a lengthy work session Saturday, March 3, discussing ways to build a "toolkit" for the issue.

Bryan Pohl, Forest Grove's community development director, presented the council with several policy ideas it could pursue as a means of bringing about more local housing for people who make considerably less than the area median income. But before that discussion, he put up a map showing city-owned properties in Forest Grove. The availability of land to build on, he pointed out, is "a huge piece" for developers.

"It's not a great outlook right now," Pohl said. "Most of those parcels are parks and things like that."

Pohl said city staff plan to conduct an analysis of city-owned land, determine what could be made available for housing development and report back to the City Council.

That idea made sense to Mayor Pete Truax, who compared the issue to a political campaign.

"It's like running for public office: You need luck, you need organization, you need money. If you don't have money, don't worry about the luck and the organization," Truax quipped. "For public housing, we need land, we need architects and we need lumber, and if we don't have the land, the lumber and the architects don't mean squat."

Council members offered several ideas for ways that the city can expand its land inventory study, such as including nonprofit-owned land. City Manager Jesse VanderZanden said his staff can first focus on what land the city owns and then expand from there as the council desires.

In terms of policies, the council agreed it wants to learn more about its options for offering property tax exemptions.

The idea behind exemptions is that they create an incentive for developers to build and maintain housing for individuals and families that have low or no income.

In most cases, the owners of a property — whether it's a single-family home, a downtown restaurant or a multifamily complex — have to pay annual property taxes to the city at a prescribed rate. But if they are granted exemptions for maintaining a certain number of housing units for residents making 60 percent of less of the area median income, the amount they owe in taxes can shrink dramatically. That can offset the lower revenues that landlords make from below-market-rate rents, in some cases making affordable housing a lucrative proposition for developers.

By exempting certain properties from paying property taxes, though, a city gives up some of the tax revenue it expects to receive on an annual basis.

"You're giving up revenue that's not being replaced," Pohl said. "And I think that's kind of the hallmark of a lot of our sort of conversations right now, is that these are real costs."

"You know, everything costs," remarked City Councilor Adolph "Val" Valfre Jr., who until late last year served as executive director of the Washington County Department of Housing Services. The question that policy-makers like the City Council need to consider, he added, is: "Is it prudent use of (public) dollars to address the needs of our citizens?"

City Councilor Elena Uhing said that in addition to property tax exemptions, she would like to see the council presented with more information on a possible construction excise tax. Portland began charging an excise tax on certain building projects in 2016 as a means of funding affordable housing projects.

The council agreed it is not interested in following Portland's lead in waiving system development charges for accessory dwelling units. System development charges, usually known by their abbreviation as "SDCs," are one-time fees that builders must pay to compensate the city for the strain their developments are expected to place on public utilities. In Forest Grove, the city requires SDCs to be paid for the municipal parks and water systems.

"I think we need to act quickly with affordable housing. I think we need to have a clear plan. And I don't know if this is the answer," Councilor Malynda Wenzl said of the idea of waiving SDCs for dwellings like "granny flats" and mother-in-law apartments. "I don't think we're going to get what we want."

Council members appeared less resolved on just how adventurous they want Forest Grove to get in setting affordable housing policies. Pohl said he wants to develop an "action plan" on affordable housing that the city can follow, but it's up to the council to decide what policies to include.

"I think it's a regional issue, therefore I would try to stay within what the county and other cities have done," said Councilor Ronald Thompson.

Truax disagreed.

"Maybe they ought to listen to us," Truax said.

Valfre, who was appointed to the City Council last year in part because of his housing experience with Washington County, said the city can gather valuable information from observing what has happened in other communities and at the county level.

"I think we need to look at lessons learned from some other places," Valfre said. "Let the other folks work this out and give us some kind of historical (example), how they worked it, how they worked through the problem."

The City Council did not take any formal action at the Saturday work session. Although the council typically meets Monday evenings, it holds periodic "retreats" like Saturday's event to have more in-depth discussion about council goals and other areas of focus.

The retreat was held at the Forest Grove Light & Power building, 1818 B St.FILE PHOTO - An affordable housing complex, which was paid for in part with support from the city and state, rises in Portland in 2016. Governments can create incentive programs for affordable housing developers. Without incentives, low-income housing is generally less profitable for developers than market-rate or luxury housing.

By Mark Miller
Editor, Forest Grove News-Times
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