Implementing Oregon’s Housing Production Strategy

Implementing Oregon’s Housing Production Strategy

Oregon has provided regulations and recommendations for local jurisdictions to prepare housing production strategies.

Goal 10 of Oregon’s land use planning program, adopted in 1973, requires cities to develop a housing needs analysis to determine whether each jurisdiction has an adequate supply of land to accommodate current and projected housing demand. Although Oregon cities have complied with state law requiring housing capacity analyses in their comprehensive plans, local housing supply has not kept up with demand. In 2019, amid a growing affordability crisis, the state legislature adopted House Bill 2003 (HB 2003) to ensure that jurisdictions more effectively meet the state’s housing needs. The bill requires cities with populations exceeding 10,000 to not only prepare a housing capacity analysis but also prepare and implement a housing production strategy (HPS).

The state’s Land Conservation and Development Commission (LCDC) has updated its rules and regulations to provide cities with more specific directions for implementing HB 2003. Cities must prepare an HPS report that includes a housing needs analysis and production strategy. A city’s production strategy must identify actions and measures that support the production of housing needed to accommodate residents of all income levels over the next 20 years and set a schedule for implementing those policies. In addition to describing how the city engaged with residents and housing providers, an HPS report must estimate the impact of its strategies: identifying the number of housing units to be produced, type of tenure, and income and demographic groups being served.

The Department of Land Conservation and Development (DLCD) prepared a guidance document to help local governments draft their production strategies. The guidance contains more than 100 production strategies, including zoning and other regulatory changes and financial incentives. Many strategies in the guidance document can help cities increase their housing supply, including zoning reforms to allow more multifamily residences and authorize accessory dwelling units. Cities can also revise street frontage, driveway, and parking requirements as well as other standards that restrict lot subdivisions. Streamlined permitting processes can encourage new construction. Other strategies revise provisions for development fees (such as charges for water and sewer connections) and taxes (such as demolition taxes) when a redevelopment provides more housing units than the original structure did.

The guidance document also includes strategies to encourage the production of affordable and workforce housing. These include density, floor-area ratio, and height bonuses for residential developments that offer income-restricted units. Property tax abatements and other financial incentives can improve the economic feasibility of affordable housing. In addition, local governments can prioritize the use of surplus land for income-restricted housing, and tax-increment financing districts can contribute funds for affordable housing developments.

LCDC’s revised rules and regulations also call for city policies and actions to achieve equitable housing outcomes. A city’s HPS must ensure that all residents, including low-income households, people of color, people with disabilities, and classes protected under state and federal fair housing laws have access to quality housing in high-opportunity areas. Housing options and services should be available to people experiencing homelessness, homeownership opportunities should support wealth creation, and housing stability should be protected from gentrification and displacement. To promote equitable outcomes, the guidance document’s strategies include regulatory, procedural, and financial incentives for developments to include units that meet accessible design standards. Other strategies address policies to affirmatively further fair housing and to reduce the influence of not-in-my-backyard advocacy. DLCD has prepared an antidisplacement and gentrification toolkit, which has been incorporated into the guidance document. The toolkit is intended to help local governments predict pressures and adopt mitigation measures for gentrification and displacement arising from production strategies. The toolkit includes a typology of neighborhoods based on their gentrification stage and identifies whether a strategy would mitigate or exacerbate inequity for each neighborhood type. For example, removing code requirements that impede the conversion of commercial buildings to rental and moderate-income housing is a strategy that would be particularly effective in early gentrification and active gentrification neighborhoods. Eviction prevention measures would be an effective antidisplacement measure in affordable and vulnerable as well as late gentrification neighborhoods.

HB 2003 also addresses another weakness of previous legislation, which required individual jurisdictions to prepare their own housing needs analyses without coordinating with nearby jurisdictions. HB 2003 directs the Oregon Housing and Community Services Department and DLCD to develop a methodology for preparing a regional housing needs analysis, conducting a regional analysis, and estimating the housing needs for each city and Portland Metro. In addition, HB 2003 directs the two departments to report the findings of the regional analysis and the effectiveness of the departments’ methodology to the legislature. In the resulting report, DLCD and the department of housing and community services recommend that the legislature adopt a statewide housing needs assessment program based on the two departments’ methodology, with an emphasis on housing production. The report calls for the statewide program to include housing production targets and equity indicators and address impediments to housing production. In March 2023, the legislature adopted House Bill 2001, which requires the state’s Department of Administrative Services to implement a statewide housing needs analysis program based on the report’s recommendations.

Click on the following links to access the plan and ordinances and information about how they address regulatory barriers:

• House Bill 2003 of 2019
• House Bill 2001 of 2023

Find more plans, regulations, and research that state and local governments can use to reduce impediments to affordable housing at HUD USER’s Regulatory Barriers Clearinghouse.

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