The measure to lift a ban on requiring developers to build affordable units is now headed to the House of Representatives.

PARIS ACHEN - Protesters demonstrate in front of Gov. Kate Brown's office at the Oregon Capitol Feb. 18, 2016, urging lawmakers to pass bills to increase affordable housing and tenant rights.The Oregon Senate passed legislation Friday to reverse a 17-year ban on requiring developers to include affordable housing units in their plans.

The bill to allow inclusionary zoning is part of a last minute deal between lawmakers and builders and real estate lobbyists to address the state’s affordable housing shortage.

PARIS ACHEN - Sen. Michael Dembrow, D-Portland“In a hot market like Portland, many people are moving into town who can afford the $2,000 a month for a small apartment,” said Sen. Michael Dembrow, D-Portland, who co-sponsored the bill.

“But it means the people who grew up in those neighborhoods are forced to move far away.”

The proposal, now headed to the House of Representatives, allows local governments to require developers to build up to 20 percent of units at below market rates in exchange for at least one incentive, such as tax exemptions, fee waivers or expedited services. Developers also may opt to pay a fee in lieu of the requirement.

The inclusionary zoning provision applies only to multifamily housing projects with 20 or more units. The units would be available to those who earn up to 80 percent of area median household income. In Portland, that is about $48,198 a year, according to the American Community Survey.

“It’s a little disturbing for some of our communities because they would like room to provide more housing for 60- to 80-percent population because that’s where they are seeing the most need,” said Erin Doyle of the League of Oregon Cities. “We have programs in place for below 60 percent.”

Doyle said restricting the requirement to only projects of 20 units or more also excludes certain communities from using inclusionary zoning.

“Still, it’s a step in the right direction, and we look forward to seeing if the tool works for our communities,” Doyle said.

The measure 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.

"I think it's a good experiment," said Jon Chandler of the Oregon Home Builders Association. "The way it's stated it has a chance of increasing the affordable housing stock in a way that won't put the burden on builders to the point that projects don't get build...which makes the housing crisis worse."

The bill passed the Senate 20-to-8 Friday, with bipartisan support. If approved in the House and signed by Gov. Kate Brown, Oregon would leave Texas as the only state that still bans inclusionary zoning.

Sen. Ted Ferrioli, R-John Day, and some other Republicans spoke out against the bill Friday. He said the measure places another obstacle to constructing housing. He said land use laws and an “iron band on communities that are developed” are the main barriers to solving the state’s affordable housing shortage.

Other components of the housing deal include increasing notice for raising rents in the first year of month-to-month tenancies, establishing a pilot program for expanding an urban growth boundary for the purpose of building affordable housing and allowing annexation with a petition by landowners instead of by election. All three measures are in the queue for a vote in the Senate in the next several days.

By Paris Achen
Portland Tribune Capital Bureau Reporter
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