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Agenda Packet - 2011-05-09Jon Gustafson, Chair  Lynne Paretchan, Vice Chair Puja Bhutani  Julia Glisson  Jim Johnson  Russell Jones  Todd Prager  Jeff Gudman, Council Liaison + AGENDA PLANNING COMMISSION MEETING Monday, May 9, 2011 6:30 p.m. City Hall - Council Chamber CITY OF LAKE OSWEGO 380 A Avenue PO Box 369 Lake Oswego, OR 97034 503-635-0290 www.ci.oswego.or.us/plan Contact: Iris McCaleb Also published on the internet at: Email: imccaleb@ci.oswego.or.us www.ci.oswego.or.us/plan/planning_commission Phone: 503-697-6591 The meeting location is accessible to persons with disabilities. To request accommodations, please contact Iris McCaleb at 503-697-6591, 48 hours before the meeting. 1. CALL TO ORDER 2. ROLL CALL 3. CITIZEN COMMENT – Regarding Issues Not On the Agenda (3 minute limit per individual) This is an opportunity to raise issues regarding Planning or Citizen Involvement. 4. COUNCIL UPDATE 5. WORK SESSION Comprehensive Plan Update (PP 10-0007) Draft Housing Needs Analysis and Economic Opportunities Analysis – Review housing and employment needs and implementation strategies. Staff coordinator is Sarah Selden, Associate Planner. 6. PUBLIC HEARINGS 6.1 LU 08-0052 (Ordinance 2525) – Community Development Code - General Housekeeping and Minor Policy Amendments. Amendments (Chapter 50) for the purpose of clarifying, correcting, formatting, updating sections, and discussing minor policy changes. Final review of previously discussed items, Package B (continuing from page 393-412). This hearing is continued from April 25, 2011. Staff coordinator is Debra Andreades, Senior Planner. FOR MORE INFORMATION VISIT - http://www.ci.oswego.or.us/plan/casef.htm (Select LU 08-0052) (Continued on Other Side) Page 2 6.2 Ordinance 2526, LU 08-0054 – Community Development Code - Policy Related Housekeeping Amendments. Amendments (Chapter 50) for the purpose of clarifying and updating various code provisions. These provisions have been identified as having policy implications. This hearing is continued from April 11, 2011. Staff will request that this hearing be continued to a date certain. Staff coordinator is Debra Andreades, Senior Planner. FOR MORE INFORMATION VISIT - http://www.ci.oswego.or.us/plan/casef.htm (Select LU 08-0054) 7. OTHER BUSINESS – PLANNING COMMISSION 8. OTHER BUSINESS – COMMISSION FOR CITIZEN INVOLVEMENT 9. SCHEDULE REVIEW 10. ADJOURNMENT Jon Gustafson, Chair  Lynne Paretchan, Vice Chair Puja Bhutani  Julia Glisson  Jim Johnson  Russell Jones  Todd Prager  Jeff Gudman, Council Liaison + AGENDA PLANNING COMMISSION MEETING Monday, May 9, 2011 6:30 p.m. City Hall - Council Chamber CITY OF LAKE OSWEGO 380 A Avenue PO Box 369 Lake Oswego, OR 97034 503-635-0290 www.ci.oswego.or.us/plan Contact: Iris McCaleb Also published on the internet at: Email: imccaleb@ci.oswego.or.us www.ci.oswego.or.us/plan/planning_commission Phone: 503-697-6591 The meeting location is accessible to persons with disabilities. To request accommodations, please contact Iris McCaleb at 503-697-6591, 48 hours before the meeting. 1. CALL TO ORDER 2. ROLL CALL 3. CITIZEN COMMENT – Regarding Issues Not On the Agenda (3 minute limit per individual) This is an opportunity to raise issues regarding Planning or Citizen Involvement. 4. COUNCIL UPDATE 5. WORK SESSION Comprehensive Plan Update (PP 10-0007) Draft Housing Needs Analysis and Economic Opportunities Analysis – Review housing and employment needs and implementation strategies. Staff coordinator is Sarah Selden, Associate Planner. 6. PUBLIC HEARINGS 6.1 LU 08-0052 (Ordinance 2525) – Community Development Code - General Housekeeping and Minor Policy Amendments. Amendments (Chapter 50) for the purpose of clarifying, correcting, formatting, updating sections, and discussing minor policy changes. Final review of previously discussed items, Package B (continuing from page 393-412). This hearing is continued from April 25, 2011. Staff coordinator is Debra Andreades, Senior Planner. FOR MORE INFORMATION VISIT - http://www.ci.oswego.or.us/plan/casef.htm (Select LU 08-0052) (Continued on Other Side) Page 2 6.2 Ordinance 2526, LU 08-0054 – Community Development Code - Policy Related Housekeeping Amendments. Amendments (Chapter 50) for the purpose of clarifying and updating various code provisions. These provisions have been identified as having policy implications. This hearing is continued from April 11, 2011. Staff will request that this hearing be continued to a date certain. Staff coordinator is Debra Andreades, Senior Planner. FOR MORE INFORMATION VISIT - http://www.ci.oswego.or.us/plan/casef.htm (Select LU 08-0054) 7. OTHER BUSINESS – PLANNING COMMISSION 8. OTHER BUSINESS – COMMISSION FOR CITIZEN INVOLVEMENT 9. SCHEDULE REVIEW 10. ADJOURNMENT CITY OF LAKE OSWEGO 380 A Avenue PO Box 369 Lake Oswego, OR 97034 503-635-0270 www.ci.oswego.or.us TO: Lake Oswego Planning Commission FROM: Sarah Selden, Associate Planner SUBJECT: Draft Housing Needs Analysis & Employment Opportunities Analysis Reports DATE: May 5, 2011 ACTION Review and provide feedback on the draft Housing Needs Analysis (HNA) and Employment Opportunities Analysis (EOA) reports. Specifically, at the April 25 Planning Commission work session the Commission expressed interest in receiving an update on the City’s options for complying with the State’s Metropolitan Housing Rule, and in further discussion of the potential housing and employment implementation strategies. The Commission’s feedback will help to refine the reports prior to DLCD submittal at the end of May, for compliance with the City’s DLCD technical assistance grant. DISCUSSION The draft EOA and HNA summarize the technical information to date and will provide the factual basis as the City begins to discuss goals and policies related to housing and economic development. The Commission has reviewed many of the technical details in pieces and most recently a rough draft of the employment and housing land need analysis. The full reports bring together the demographic and trend information, with the land supply and need, policy implications and draft implementation strategies. Following are some key questions and information for the Commission’s review and discussion. Review of Both Documents Staff would like the Commission’s feedback on the following general items, relevant to both reports: • Do the potential implementation strategies make sense for Lake Oswego to meet identified deficiencies? Should any strategies be added? • Do the reports provide the necessary background information to begin policy and implementation discussions as we begin to review the economic development and housing chapters of the Comprehensive Plan? Review of EOA • Table 17 (p. 28) summarizes type of building floor area demand for the four employment forecasts. Note that all but the high growth forecast have flat or negative industrial demand. This is also reflected in the growth rate summary Table 12 (p. 25). o Given the draft vision statement and community economic development objectives, is this an appropriate range and distribution of floor area by type as we move into policy and implementation MEMORANDUM Page 2 Planning Commission Meeting May 9, 2011 Page | 2 discussion? Do we need to do more to save land for industrial purposes or is it more appropriate plan for broader office employment uses? • If the community wants to achieve higher levels of employment there are things the City must do to help make redevelopment happen. If the community wants lower levels of employment and redevelopment, the City would not develop new policies or programs, and rather let the private sector determine the future. o If the City should help to facilitate redevelopment and employment growth, what strategies should be considered for example to revitalize the IP zone, the Kruse Way area, Foothills, downtown and Lake Grove? • Goal 9 only requires us to look at vacant land supply. In doing that we have the results shown on Table 20. However, if we were to also consider redevelopable lands as shown in Table 11, it appears there is adequate employment lands to accommodate the range of potential demand. Review of HNA Metropolitan Housing Rule • When staff last updated the Commission, it was noted that different approaches were being explored for how the City could comply with the State’s requirement for an average density of 10 dwelling units/net buildable acre for new construction (the Metropolitan Housing Rule). More specifically, staff was exploring with DLCD the options for computing buildable land for the purpose of this density calculation. The hope was that we could count only the “needed housing” lands, based on population forecasts (up to 3,560 for the medium growth forecast). DLCD has clarified that the computation is based on all land in the City’s buildable land inventory (including vacant, part-vacant, and redevelopable land), not just projected need. • DLCD staff also clarified, however, that the City could choose to pursue an alternative computation provided under OAR 660-0045: Metropolitan Housing Rule, Computation of Buildable Lands, whereby the City could take the average density acknowledged by DLCD at our last Periodic Review (10.4 du/nba), and demonstrate the impact of any zone changes since that time. The work done on the city’s current inventory of buildable lands was still needed to ensure we had the capacity in appropriate zones to meet projected need. However, using the latter approach to the Housing Rule would allow the City’s policy discussion and implementation work to focus on providing for the community’s needed housing rather than focusing on strategies such as those listed in Table 23 to arrive at an 8,000 unit capacity. We are not required to demonstrate compliance with the Metropolitan Housing Rule as part of the draft HNA, but will need to update document to reflect the new information. Need Analysis • New Tables 19-20 (p. 22-23) have been added to the housing needs analysis potion of the report that demonstrate housing attainability based on area income levels, and corresponding rent or home sale prices, and type of dwelling. Information on housing stock available in these different price categories still needs to be folded into the report. o Do the assumptions for dwelling type and tenure (owner/renter) make sense for these income categories and Lake Oswego’s projected and desired demographics? • Table 22 (p. 25) demonstrates that Lake Oswego has capacity through vacant, part-vacant and redevelopable land under existing zoning to meet the projected housing allocations. Additional strategies listed in Table 23 and the draft implementation strategies, such as Foothills redevelopment, increasing secondary dwelling units (SDUs), and facilitating cottage cluster housing may provide additional options to meet housing need in particular for the medium and low attainability categories. o Should any additional strategies be considered in the implementation section of the report? Page 3 Planning Commission Meeting May 9, 2011 Page | 3 Next Steps The Goal 9 & 10 Work Group and CAC will be reviewing/receiving updates on these reports over the next two weeks. At the same time, staff will be incorporating feedback from all of the advisory groups into the document. The City Council will also receive a copy of the draft documents in their weekly digest by the end of the month. A draft will be submitted to DLCD by May 30 and a copy made available to the Commission. Starting this summer and into early next year, we will be review goals and policies of the Comprehensive Plan. These documents will be used to facilitate those discussions. ATTACHMENTS 1. Draft Employment Opportunities Analysis 2. Draft Housing Needs Analysis 3. Draft Community Vision Updated Review Draft May 5, 2011 1 City of Lake Oswego Economic Opportunities Analysis Disclaimer: continued review for consistency, formatting and typographical errors is in process. Updated Review Draft May 5, 2011 2 Acknowledgements The City appreciates grant funds received from the State of Oregon Department of Land Conservation and Development (DLCD) for technical consultant assistance to complete this document. We thank the following citizens for their dedicated work on this topic. [Placeholder for City to insert for CAC, Work Group, Planning Commission] Staff [Placeholder for City to insert] Consultants [Placeholder for City to insert] This document updates and builds upon the work the Draft Economic Opportunities Analysis created by ECONorthwest in 2009-2010. Introduction The City of Lake Oswego is conducting an Economic Opportunities Analysis (EOA) as required by its Periodic Review work program to update Goal 9 (Economic Development) of its Comprehensive Plan. The City received grant funds from the Department of Land Conservation and Development (DLCD) for technical consultant assistance to complete this task. The City elected to take advantage of this required plan update to create a long-range vision for the City. Part of this vision addresses economic development over the next 20 years. The focus of Goal 9 is “to provide adequate opportunities throughout the state for a variety of economic activities vital to the health, welfare and prosperity of Oregon’s citizens.” Goal 9 describes an EOA report as “an analysis of the community's economic patterns, potentialities, strengths, and deficiencies as they relate to state and national trends” and states that a principal determinant in planning for employment should be the competitive advantage of the region within which the developments would be located. The assessment of economic development potential in Lake Oswego is therefore presented in this analysis along with preliminary policies and strategies that would help the City provide economic development opportunities consistent with state requirements and its community aspirations. The implementation section identifies policies and strategies for meeting the economic development needs of existing and future Lake Oswego residents. These will merit further discussion and analysis in the implementation phase 2011-2012. Requirements This EOA describes how the City has and will comply with state and local requirements related to economic development. Specifically, as part of its Comprehensive Plan update, the City must address the requirements of Goal 9 (OAR 660-009) and the Metro Functional Plan Title 4 (Industrial and Other Employment Areas). Planning in the State of Oregon is governed by 19 Goals that express the State’s aspirations on land use planning and related topics, including economic development. Each goal includes Updated Review Draft May 5, 2011 3 guidelines for local jurisdictions’ comprehensive plans. The substantive content of an EOA is governed by Oregon Administrative Rule, 660-009-0015 which implements Goal 9: Economic Development. This rule requires inclusion of the following three interrelated elements inventory (supply), need, and policies as shown in Figure 1, below. Figure 1. Lake Oswego Economic Opportunities Analysis Methodology Metro’s Urban Growth Management Functional Plan Title 4 of Metro’s Urban Growth Management Functional Plan is intended to provide and protect a supply of sites for industrial uses and to cluster those industries so they may operate more productively. Title 4 also seeks to provide for the efficient movement of goods and services and Updated Review Draft May 5, 2011 4 to encourage the location of other types of employment in Centers, Employment Areas, Corridors, Main Streets and Station Communities. Title 4 requires that jurisdictions adopt land use regulations that:  Derive specific plan designations and zoning district boundaries of industrial areas in an Employment and Industrial Areas Map.  Limit the size of new buildings for retail commercial uses and retail and professional services to ensure that they serve primarily the needs of workers in the area. Title 6 of the Functional Plan addresses Centers, Corridors, Station Communities and Main Streets in the regional 2040 Growth Concept. It recognizes these areas as “the principal centers of urban life in the region”. It defines the elements (boundary, assessment, policies and action strategies) needed for regional growth including federal investments. Methodology The technical and political approach used for the EOA and related steps are consistent with the DLCD Goal 9 administrative rule, and the supporting OAR 660 guidance, as well as other supporting guidance provided per the DLCD Industrial & Other Employment Lands Analysis Guidebook (2005), and the Updated Draft Economic Development and Employment Land Planning Guidebook (July 2010). Vision and Goals (Local Aspirations) While this report complies with state rules and regulations, more importantly, it provides a vision for how the City of Lake Oswego, within a land use context, will plan for and provide economic opportunities for its citizens from 2010 to 2035. The strategies in this report are designed to help City leaders improve economic vitality for Lake Oswego, as described in the draft Lake Oswego Community Vision for 2035: We are a community where people can live, work, play and meet their daily needs for goods and services. We build upon the intellectual capital of the community to attract new ventures, retain local businesses and connect to the global economy. We are business‐friendly and a regional model for employment and mixed‐use centers that attract quality jobs. To this end, the City of Lake Oswego developed a set of Community Economic Development Objectives (CEDOs) that are intended to help guide the development of the EOA and move the community towards implementation of its vision for Economic Vitality. Some community objectives may, in the Implementation Phase rise to the level of a goal or policy and be formally incorporated into the updated Comprehensive Plan. Others may be more appropriately refined to become strategies for implementation. The objectives were developed based on the City’s existing Comprehensive Plan, the Economic Development Strategy, other local market analyses and were reviewed and updated by the Goal 9 & 10 Work Group, the Citizen Advisory Committee and the Planning Commission. Draft Community Economic Development Objectives:  Maintain and grow a strong local employment base to provide jobs for Lake Oswego residents and support a high quality of life.  Support and grow existing and locally-owned businesses. Updated Review Draft May 5, 2011 5  Support business incubation and employment growth within the city by providing a diversity of space/site opportunities.  Provide flexibility in employment zones that supports economic resilience and sustainability while minimizing negative impacts.  Focus redevelopment and intensification of jobs (e.g., jobs per acre) in employment corridors and centers.  Provide opportunities for a range of industrial and employment uses. Actively pursue environmentally responsible businesses.  Pursue a range of employment opportunities, such as an emphasis on creative class opportunities and clusters that build on Lake Oswego’s intellectual capital, proximity to universities and colleges and connection to the I-5 corridor. These could include but would not necessarily be limited to science, engineering, education, computer programming, research, arts, media and design.  Explore long term redevelopment opportunities in the southwest industrial area, along Bangy Road, along the Kruse Way corridor, and in Foothills.  Create the opportunity for employment well served by transportation options.  Maintain Lake Oswego’s exceptional quality of life by investing in infrastructure and services that support residents and businesses. Economic Conditions, Trends and Forecasts Lake Oswego exists as part of the larger economy of the Portland metropolitan area and is strongly influenced by regional economic conditions. For many factors, such as workforce, Lake Oswego does not differ significantly from the broader region. For other factors, such as income, it does. Thus, Lake Oswego benefits from being a part of the larger regional economy and plays a specific role in the regional economy. Demographic Trends Lake Oswego is located in the very desirable “inner-urban area” within the greater Portland region. This location is considered advantageous for accessing downtown Portland and its surrounding communities within a manageable commute. Downtown Lake Oswego’s ongoing renaissance and excellent parks, schools and community facilities continue to serve as attributes that make it a desirable place to live, work and visit. As Figure 2 indicates, the U.S. Census Bureau’s 2010 census count estimated there to be approximately 36,619 people in the City of Lake Oswego, which is an increase of 1,341 people since the 2000 U.S. Census. 1 For comparison purposes, Figure 3 shows population estimates prepared by Portland State University that indicate a population of 36,845 within the Lake Oswego city limits as of July 1, 2010. 1 Limited Census 2010 information was available at the conclusion of the grant period. Where information was available, it was included. Updated Review Draft May 5, 2011 6 Figure 2. Lake Oswego Historic Population Trends, 1920-2010 Source: U.S. Census; compiled by FCS Group. Figure 3. Lake Oswego Recent Population Trends, 1990-2010 Source: Portland State University, Population Research Center; compiled by FCS Group. Lake Oswego experienced a net gain of approximately 898 households since year 2000, with an increase of 472 family households and 426 nonfamily households. As indicated in Table 1, Updated Review Draft May 5, 2011 7 according to the U.S. Census, the average household size and average family size increased over the 2000 to 2008 time period. The average household size was 2.48 and the average family size was 3.10 people per household according to the U.S. Census, 2006-2008 American Community Survey. More recent 2010 estimates by City of Lake Oswego Long Range Planning staff for the Lake Oswego Urban Service Boundary (USB) indicate a relatively lower ratio of population to total dwelling units. Using GIS data, City staff estimates that there were 41,598 people and 19,031 dwelling units in the Lake Oswego USB in 2010; with a ratio of people per dwelling unit of 2.18. The fact that this ratio is lower than the average household size estimate reported by the U.S. Census is to be expected, since the U.S. Census tallies only occupied dwelling units and only population that resides in households (not group quarters) population. Table 1. Lake Oswego Demographic and Socio-economic Trends Prepared by FCS GROUP. According to U.S. Census estimates, the median age of Lake Oswego residents also increased slightly, from 41.2 years in 2000 to 42.1 years of age in 2006/2008. This is more than five years older than the median age of residents within the Portland Vancouver Metropolitan Statistical Area (MSA) region (36.7). In fact, Lake Oswego has more residents over age 65 than all other cities in the greater Portland region, with the exception of King City. A closer look at population age cohort patterns for Lake Oswego reflects the aging Baby Boom population (born between 1946 and 1965). As indicated in Figure 4 and Table 2, population cohorts that experienced the most significant increase include Baby Boomers within the 55-64 and 65-74 age ranges. These Baby Boomers (age 55 to 74) recorded a combined gain of 3,889 people since 2000. Updated Review Draft May 5, 2011 8 Figure 4. Population Age Cohort Trends, Lake Oswego, 2000 and circa 2007 Prepared by FCS GROUP. Table 2. Lake Oswego Area Population Age Cohort Trends Prepared by FCS GROUP. Updated Review Draft May 5, 2011 9 Another rapidly growing cohort includes the Generation Y sector which includes people in their late teens to early thirties. Population within the age 15-24 cohort group has increased by 1,294 people since 2000 (Table 2). According to the U.S. Census, the following age cohorts experienced a decline in Lake Oswego since 2000:  Age 1-14 (lost 465 people)  Age 25-44 (lost 326 people)  Age 45-54 (lost 614 people)  Age 75+ (lost 221 people) As older Baby Boomers tend to desire to remain in their current residence or community as long as possible, the population over age 75 is expected to increase measurably over the coming decades. However, the younger population cohorts (age 5-14) are likely to remain flat or experience negative growth. As shown in Table 3, recent trends in Lake Oswego over the past decade reflect population gains in the under age 5 cohort, but significant population losses in the ages 5-19 and 45-54 cohorts, as well as a slight decline in population over the age of 75, according to the U.S. Census. Table 3. Lake Oswego Area Annual Historic Population Growth Rates Prepared by FCS GROUP. Updated Review Draft May 5, 2011 10 Income Lake Oswego continues to retain and attract upper-income households. The portion of all households with annual income levels of more than $100,000 increased from 35% to nearly 41%. The most significant gains occurred in households earning more than $200,000 per year, which increased by 808 households since year 2000, as indicated in Table 4. Table 4. Households by Income Level, Lake Oswego, 2000 and 2006-2008 Prepared by FCS GROUP. According to the U.S. Census 2006-2008 American Community Survey, Lake Oswego’s average per capita income was $48,313, median household income was $83,486, and median family income was $105,593 (in 2008 dollar amounts). While average income levels in Lake Oswego have increased in nominal dollars, inflation adjusted income levels have fallen since 2000. This trend towards lower real income levels has been well documented in the Portland region and nationally, and is primarily attributed to the shrinking income levels in middle-income households and higher costs of living for items such as transportation, housing, food, energy and health care. Poverty levels in Lake Oswego are relatively low compared to the region and the state, with an estimated 2,602 people in poverty, according to the U.S. Census 2006-2008 American Community Survey. Table 5 shows that the number of people living below the federal poverty level in the Lake Oswego area increased from 1,181 people in 2000 to 2,602 people by 2006- 20082. 2 Federal Poverty Level is defined by the U.S. Department of Housing and Urban Development (HUD) as 70% of median income in a given year. Updated Review Draft May 5, 2011 11 Table 5. Federal Poverty Thresholds by Family Size, Urban Clackamas County, Current Year Dollar Amounts (Not Inflation Adjusted) Prepared by FCS GROUP. Availability of Workforce The availability of trained workers in Lake Oswego will impact development of Lake Oswego’s economy over the planning period. Key trends that will affect the workforce in Lake Oswego through 2035 include growing population, demographic factors (e.g., aging of the population; income), availability of educated and skilled workers, and regional commuting patterns. Lake Oswego has access to workers in the Portland metropolitan region workforce and is likely to continue to be able to draw workers from the regional workforce in the future. Educational attainment The availability of trained, educated workers affects the quality of the workforce in a community. Educational attainment is an important workforce factor because firms need to be able to find educated workers. In addition, educational attainment is correlated with income. The fastest growing occupations in the U.S. require an academic degree and, on average, have higher incomes than occupations that do not require an academic degree.3 Figure 5 shows educational attainment in Oregon, Clackamas County, and Lake Oswego in 2007. In 2007, Lake Oswego had a higher share of residents above the age of 25 with a bachelor’s degree or higher (64%) than residents of Clackamas County (32%) or Oregon (28%). 3 Arlene Dohm and Lyn Shniper, “Occupational Employment Projections to 2016,” Monthly Labor Review, November 2007, pp. 86- 125. Updated Review Draft May 5, 2011 12 Figure 5. Educational attainment for the population 25 years and over, Oregon, Clackamas County and Lake Oswego, 2007 0% 10% 20% 30% 40% 50% Less than 9th grade 9th to 12th grade, no diploma High school graduate (includes equivalency) Some college, no degree Associate degree Bachelor's degree Graduate or professional degree Educational AttainmentPercent of Population Age 25+ Oregon Clackamas County Lake Oswego Source: 2007 American Community Survey; prepared by ECONorthwest. Access to Lake Oswego’s workforce may be attractive to businesses that need highly educated and skilled workers, such as Corporate Headquarters or Professional and Scientific Services. Commuting Patterns Commuting plays an important role in Lake Oswego’s economy. Lake Oswego residents have a slightly shorter commute than most residents of Clackamas County or the Portland metropolitan region. About 70% of Lake Oswego’s residents commute 29 minutes or less, compared to 60% of Clackamas County residents and 65% of residents in the Portland metropolitan region. About 2% of Lake Oswego’s residents had a commute of 60 minutes or more, compared to 6% of residents of Clackamas County and the Portland metropolitan region.4 Lake Oswego’s residents commuted across the Portland metropolitan region in 2006,5 with about 90% of workers working in Multnomah County, Clackamas County, and Washington County. About 37% of Lake Oswego’s residents worked in the City of Portland, 14% in Lake Oswego, and 5% or more in Beaverton, Tigard, and Tualatin.6 4 2007 American Community Survey. 5 The most current data on commuting patterns is for 2006. This data is available from U.S. Census Bureau: LED on the Map. 6 U.S. Census Bureau: Longitudinal Employer-Housing Dynamics mapping tool. Updated Review Draft May 5, 2011 13 Lake Oswego’s workforce commuted from across the Portland metropolitan region in 2006, with about 85% of workers coming from Multnomah County, Clackamas County, and Washington County. About 22% of Lake Oswego’s workforce lived in the City of Portland, 14% in Lake Oswego, and 5% or more from Beaverton or Tigard.7 This means that Lake Oswego’s companies have access to workers from across the Portland metropolitan area but especially from the City north to Portland and from Beaverton east to I- 205. These commuting patterns create demand for automotive and other forms of transportation, both within Lake Oswego and on roads throughout the Portland metropolitan area. Changes in Employment The global economy is evolving. Nationally, this is reflected in changes observed during the 1980’s to the current period. These changes affected the composition of Oregon’s economy, including the Portland metropolitan area and Lake Oswego. The most important shift during this period at the national-level was the shift in employment from a focus on manufacturing to services. The most important shift in Oregon has been the shift from a timber-based economy to a more diverse economy, with the greatest employment in services. The most important trends and changes in employment for Lake Oswego over the next 20-years are: growth in financial firms, growing importance of health care, and growth in other services that require high quality office space (e.g., professional and technical services). Lake Oswego had 21,044 jobs at 2,272 establishments in 20068, with an average firm size of 9.3 employees.9 The average wage per employee was about $49,400. The sectors with the most employment and above average wages were Finance and Insurance ($65,335 average wage) and Professional, Scientific and Technical Services ($73,100). Other sectors with at least 5% of the City’s employment and above average wages were: Wholesale Trade ($86,400), Construction ($58,000), and Manufacturing ($54,700). The sectors with the greatest number of employees were: Finance and Insurance (17%), Professional, Scientific and Technical Services (12%), Government (11%), Accommodation and Food Services (9%), Health Care and Social Assistance (8%), and Retail (7%). These sectors accounted for 13,245 or 63% of Lake Oswego’s jobs. The sectors with the most employment and below average wages were Accommodation and Food Services ($16,300), Retail ($24,100), Government ($34,100), and Health Care and Social Assistance ($36,000). Other sectors with at least 5% of the City’s employment and below average wages were: Other Services ($27,200),10 and Administrative Support and Waste Management ($30,500). A substantial amount of Lake Oswego’s employment is located on land that is not designated for employment. 7 U.S. Census Bureau: Longitudinal Employer-Housing Dynamics mapping tool. 8 This study uses 2006 QCEW data to be consistent with the base employment data used by Metro in the recent work on the Urban Growth Report 2009-2030. 9 The number of employees per firm is calculated based on the covered data from the Quarterly Census of Employment and Workforce (QCEW). Other data sources give different firm size. For example, Table A-11 presents employment data from Lake Oswego’s business license database, which shows an overall firm size of 6.1 employees per firm and 9.1 employees per firm, excluding home occupations. The best available data about firm size is from the QCEW data because businesses with employees covered by unemployment insurance are required by the Federal Government to report all employment on a monthly basis. 10 Other Services includes services such as repair and maintenance, dry cleaning services, personal care services (e.g., barber shops or nail salons), and organizations. Updated Review Draft May 5, 2011 14  Home occupations. Table 6 shows home occupations, which account for about 9% of employment in the City’s License Database. Home occupations tend to have a lower average firm size, 1.5 employees per firm, compared to 9.1 employees per firm for non- home occupations operating in Lake Oswego.11 The most common types of home occupations are general construction, interior design, design, consultants, and mortgage brokers. Table 6. Licensed businesses in Lake Oswego, 2009 Number Percent of total Number Percent of total Avg. Emp/Firm Businesses operating within Lake Oswego 1,373 61% 12,532 91% 9.1 Home Occupations 887 39% 1,294 9% 1.5 Total 2,260 100% 13,826 100% 6.1 EmployeesFirms Source: City of Lake Oswego Business License Database; prepared by ECONorthwest.  Employment located on non-employment plan designations. The Quarterly Census of Employment and Wages (QCEW) data in Table 7 includes employment that is located in non-employment plan designations, mostly residential plan designations. This employment includes home occupations (e.g., home offices or construction contractors working out of their home), as well as businesses located in non-employment plan designations (e.g., or assisted living facilities). 11 This estimate of the number of employees per firm is based on employment data from Lake Oswego’s business license database. The best available data about firm size is from the QCEW data because businesses with employees covered by unemployment insurance are required by the Federal Government to report all employment on a monthly basis. The purpose of presenting the data about firm size in this paragraph is to illustrate that home occupations have fewer employees than the City’s average firm size. 11 This estimate of population is based on the housing and population forecast in the 2009 Housing Needs Analysis conducted by Winterbrook Planning. Updated Review Draft May 5, 2011 15 Table 7.Employment in Lake Oswego’s urban services boundary, 2009 Employment Sector Firms Jobs % of Emp. Avg. Pay Per Job Agriculture, Forestry, Fishing & Hunting 3 17 0% $20,271 Utilites 3 10 0% $46,504 Construction 162 686 4% $54,995 Manufacturing 10 191 1% $31,175 Wood Product Manufacturing 13 226 1% $43,018 Primary Metal Manufacturing 25 468 2% $77,453 Wholesale Trade 265 1,115 6% $91,833 Retail Trade 96 1,216 6% $24,689 Sporting Goods, Hobby, Book, and Music Stores 51 158 1% $20,844 Transportation and Warehousing 12 126 1% $32,818 Postal Service 6 75 0% $57,373 Information 40 537 3% $106,415 Finance and Insurance 290 2,549 14% $78,665 Real Estate, Rental and Leasing 130 436 2% $45,251 Professional, Scientific and Technical Services 407 2,538 13% $74,203 Management of Companies and Enterprises 24 335 2% $81,397 Admin., Waste Mgmt. and Remediation Services 100 838 4% $34,892 Educational Services 55 1,862 10% $36,550 Health Care and Social Assistance 191 1,709 9% $38,217 Arts, Recreation and Entertainment 25 330 2% $18,404 Accommodation and Food Services 118 1,659 9% $17,596 Other Services 246 798 4% $29,324 Public Administration/Government 4 988 5% $45,633 All Other 21 12 0% $56,410 Total 2,297 18,879 100% $52,685 Source: Oregon Employment Department Quarterly Census of Employment and Wages (QCEW). Summary by industry and percentages calculated by FCS GROUP. Note: Only employment in “covered” jobs that include workman’s comprehensive insurance payments are reflected in Table 7. Analysis of the QCEW data shows that about 2,450 employees are located in non-employment plan designations, accounting for 12% of Lake Oswego’s employment. The most common types of employment located on non-employment plan designations are: Health Care and Social Assistance; Arts, Entertainment, and Recreation; Construction; and Other Services. It is likely that there is overlap in the employment reported from these data sources. The QCEW data probably includes some home occupations, such as contractors working from home or telecommuters that work for firms not located in Lake Oswego. The information in this analysis suggests that between 9% and 12% of Lake Oswego’s workforce is located on land that is not designated for employment uses. Updated Review Draft May 5, 2011 16 Lake Oswego’s Competitive Advantages and Challenges Economic development opportunities in Lake Oswego will be affected by local conditions in addition to national and state economic conditions. Economic conditions in Lake Oswego relative to other portions of the Portland metropolitan area form Lake Oswego’s competitive advantage for economic development. Lake Oswego’s competitive advantages have implications for the types of firms most likely to locate and expand in Lake Oswego. Lake Oswego’s primary competitive advantages are quality of life, prestige, market buying power, location, and access to highly educated and skilled labor. These factors make Lake Oswego attractive to residents and businesses that want a high quality of life where they live and work. A recent analysis by FCS GROUP revealed that Lake Oswego, and particularly the Kruse Way Corridor, is a major economic engine within Clackamas County. 12As shown in the figure below, the Lake Oswego Boones Ferry Road Corridor is one of the leading clusters of employment activity within Clackamas County (map depicts level of relative annual economic output per 10- acre grid that occurred in 2008). In 2008, the businesses within the Kruse Way Corridor (the 81 net acre area extending along Kruse Way from I-5 to Boones Ferry Road) included 199 separate businesses with a total covered workforce of 2,747 direct jobs (on site) and generated an annual direct payroll of $243 million, and annual direct/indirect regional economic output of $1.4 billion. While, total employment within the Kruse Way Corridor has declined since 2008 in the aftermath of the recent economic recession, this area continues to provide significant employment and economic output within the greater Portland region. 12 Clackamas County Economic Landscape, Economic Profiles, 2010; report for Clackamas County by FCS GROUP, Cogan Owens Cogan, and Real Urban Geographics. Updated Review Draft May 5, 2011 17 The local factors that form Lake Oswego’s competitive advantage are summarized below.  Quality of life. Lake Oswego’s high quality of life and significant amenities are a primary competitive advantage for attracting businesses to the City. Lake Oswego’s quality of life attributes include: high-quality housing, urban amenities (restaurants and shopping opportunities), Oswego Lake and lake front properties, parks and open space, proximity to Portland, beautiful setting, and access to urban and outdoor recreation. Lake Oswego’s high quality of life is likely to attract businesses and entrepreneurs that want to locate in a high amenity area.  Prestige. Office space in Lake Oswego, especially along Kruse Way, is considered a prestigious location. Businesses that want to locate in a prestigious, high amenity area are likely to be attracted to Lake Oswego.  Buying power of markets. The buying power of Lake Oswego’s households provides a strong market for goods and services. According to estimates on household spending by Oregon Prospector,13 households in Lake Oswego spent over $1.2 billion in 2008, about 18% of total household expenditures in Clackamas County. Lake Oswego households spend an average of $78,900 on commonly purchased items. Expenditures by households in Lake Oswego were 135% of the County average ($58,443 per household). The buying power of households in Lake Oswego is a competitive advantage for attracting retail and services.  Location. Lake Oswego is located in the Portland metropolitan area, immediately south of the City of Portland and near the intersection of I-5 and I-205. Lake Oswego is located near Tigard, Tualatin and West Linn. Lake Oswego is located in the northwestern part of Clackamas County, near Multnomah and Washington counties. Lake Oswego’s location affects economic development in the City because: the city is located in the most populous part of Oregon; residents have access to easy shopping in and around the city; residents have access to cultural and urban amenities in Lake Oswego and adjacent cities; and businesses in Lake Oswego have access to transportation and business infrastructure in the Portland metropolitan area.  Transportation. Businesses and residents in Lake Oswego have access to a variety of modes of transportation: automobile (I-5, I-205, Highway 43, Highway 217, and local roads); transit (Tri-Met buses, possible future bus rapid transit or Portland Streetcar extension); and air (Portland International Airport). Businesses that need relatively easy automobile access to I-5 and other major roads in the region may be attracted to Lake Oswego.  Labor market. The availability of labor is critical for economic development. Availability of labor depends not only on the number of workers available, but the quality, skills, and experience of available workers as well. Commuting is common in Lake Oswego. The commuting patterns show that businesses in Lake Oswego are able to attract skilled and unskilled workers from across the Portland metropolitan region. Businesses that need access to workers from across the Portland metropolitan region and that want a pool of local highly educated and skilled workers may be attracted to Lake Oswego.  Public policy. Public policy can impact the amount and type of economic growth in a 13 Oregon Prospector is the State of Oregon’s economic development website. It has city profiles, which include information about expenditures by residents of the city. The website can be accessed at: http://www.oregonprospector.com/ . Updated Review Draft May 5, 2011 18 community. The City can impact economic growth through its policies about the provision of land, redevelopment, and infill development. Success at attracting or retaining firms may depend on availability of attractive sites for development and public support for redevelopment. Although firms may be attracted to Lake Oswego because of the City’s competitive advantages, the choice to locate in Lake Oswego may be based, in large part, on public assistance with redevelopment (e.g., parcel assembly) because of the challenges associated with redevelopment.  Business taxes. Multnomah County levies a 1.45% business income tax. Clackamas and Washington Counties do not have a business income tax, which gives cities in these counties an advantage for attracting businesses over cities in Multnomah County. Lake Oswego’s proximity to Multnomah County presents an opportunity to attract firms that want to locate near Multnomah County. Lake Oswego also has a number of real or perceived challenges for economic development, relative to the Portland metropolitan region. Interviews with stakeholders identified the following barriers to economic development in Lake Oswego.  Land. The availability of land in Lake Oswego was the most commonly mentioned challenge to economic development. The challenges included: availability of vacant land, availability of sites over a few acres, and cost of land. The lack of light industrial land with highway access or flex space is a concern because the City has so little industrial land.  Infill and redevelopment. Infill and redevelopment, especially of sites larger than an acre, is difficult. This is especially true in Downtown, where parcel assembly of sites is very difficult because of the highly fragmented pattern of ownership. In addition, the City’s policies make it challenging to change existing uses through rezoning.  Parking. High land costs make providing parking costly, especially for structured or underground parking. The need for parking, both because of the lack of transportation alternatives and City policies, is cited by the stakeholders as a challenge to increasing densities in areas with office buildings. In addition, it is perceived that a lack of parking in Downtown makes retail uses more challenging, especially for small retailers that cannot afford to build parking structures. This seems to be more perception than reality based on a 2010 Downtown Parking Study.  Providing infrastructure. The cost of providing new infrastructure to increase intensity of uses and funding maintenance of existing infrastructure are also cited by stakeholders as a challenge to economic development.  Downtown. The distance from Downtown to I-5 and the capacity of Highway 43 and local roads are cited as a challenge to development in Downtown, with observations that the distance from I-5 will prevent Downtown from providing regional retail or services. In addition, increasing densities in Downtown substantially may create capacity issues on the street system, especially if people come from outside of Lake Oswego for retail and services.  Affordable housing. The lack of affordable housing, especially workforce housing, is seen as a challenge to businesses with lower paid employees. These employees generally cannot afford to live in Lake Oswego and must commute from other communities.  Community attitudes. Community attitudes are viewed as a challenge to development, especially development near established neighborhoods. In addition, community Updated Review Draft May 5, 2011 19 concerns about development often make the development process (from concept to receiving development approval from the City) slower.  City government. The complexity and speed of the planning process were cited in stakeholder interviews as a challenge to economic development. Potential Growth Industries in Lake Oswego The types of jobs and target industries Lake Oswego is focusing on have the following attributes: high-wage, stable jobs with benefits; jobs requiring skilled and unskilled labor; employers in a range of industries that will contribute to a diverse and sustainable economy; and industries that are compatible with Lake Oswego’s community values. Regional and Local Business Clusters Overall, Clackamas County’s clusters can be organized into five broad categories: Manufacturing; Warehousing & Transportation; Wholesale Trade; and Finance, Insurance, and Professional Services. Combined, the direct economic impacts of the 10 clusters account for roughly 39.8% of the Clackamas County economy. When secondary impacts, such as those realized by up- and downstream cluster suppliers are considered, the 10 clusters account for about 65% of the county economy. An analysis of how Lake Oswego fits into the Clackamas County economy based on job concentration by employment sector defined the region as nine counties from Salem to Vancouver.14 Location quotients (LQ) were calculated using value added of an industry as the best measure of economic importance.15 Related industry sectors are grouped into clusters and ranked according to size and LQ using value added. Key clusters are described in terms of size and other economic characteristics. The summaries were constructed using 2006 IMPLAN (IMpact analysis for PLANing software) data, supplemented by QCEW data. The analysis identified ten “key clusters” in Clackamas County. Each of these clusters met two basic criteria: (1) highest value added location quotients in Clackamas County relative to the nine county CMSA; and (2) a contribution of at least 0.25% to the County’s total Gross Domestic Product (GDP) (as measured by value added). Table 8 provides the results of this analysis. 14 This region is defined by the U.S. Census as the Portland Consolidated Metropolitan Service Area (CMSA). This area includes Clackamas, Columbia, Marion, Multnomah, Polk, Washington, and Yamhill counties in Oregon; and Clark County and Skamania County in Washington. 15 It is more typical for cluster studies to use employment as the basis for comparison. But the highest employment does not necessarily produce the highest value added. While the measures are highly correlated, value added is a theoretically preferable measure of an industry’s or cluster’s impact on the economy. Updated Review Draft May 5, 2011 20 Table 8. Clackamas County key industry clusters, with selection criteria, 2006 (dollar figures in millions of $) Cluster Name LQ Direct % County % Region Total % County % Region 1. Warehousing 2.58 102.3$ 0.8% 0.1% 149.7$ 1.2% 0.1% 2. Fabricated Metal Manufacturing 2.36 345.7 2.7% 0.3% 602.7 4.7% 0.6% 3. Nurseries and Greenhouses 2.10 197.6 1.5% 0.2% 273.6 2.1% 0.3% 4. Primary Metal Manufacturing 1.65 188.2 1.5% 0.2% 325.8 2.5% 0.3% 5. Truck Transport 1.62 235.9 1.8% 0.2% 433.0 3.3% 0.4% 6. Wood Product Manufacturing 1.43 134.8 1.0% 0.1% 255.8 2.0% 0.2% 7. Professional Consulting Services 1.41 677.8 5.2% 0.6% 1,168.4 9.0% 1.1% 8. Finance and Insurance 1.27 1,680.4 13.0% 1.6% 2,637.8 20.4% 2.5% 9. Wholesale Trade 1.22 1,453.4 11.2% 1.4% 2,283.9 17.7% 2.2% 10. Machinery Manufacturing 1.17 131.6 1.0% 0.1% 276.1 2.1% 0.3% Clusters Total N/A 5,147.7$ 39.8% 4.9% 8,406.8$ 65.0% 8.0% Value Added Source: ECONorthwest, using 2006 IMPLAN data. Note: “Region” is the nine-county Portland CMSA region as defined earlier; the Finance and Insurance cluster excludes banks. Location quotients for industry sectors (defined by 2-digit North American Industrial Classification System (NAICS) codes) were calculated for Lake Oswego compared to Clackamas County, using data on wages for covered employees for 2006. Because of the different methodologies used, these results are not directly comparable to the clusters identified for the County. However, this analysis does shed some light on the relationships between the Lake Oswego and Clackamas County economies. Four industries in Lake Oswego had more than double the employment concentration than Clackamas County, indicating possible employment clusters. Those sectors were Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; and Information. These sectors roughly correlate to two of the key industry clusters identified in Clackamas County: Professional Consulting Services, and Finance and Insurance. This analysis indicates the City of Lake Oswego has different economic strengths than the rest of Clackamas County. Manufacturing, Transportation and Warehousing are some of the County’s key clusters, compared to the Portland metropolitan region. Employment in these clusters is not concentrated in Lake Oswego. On the other hand, Finance, Insurance, and Professional Consulting Services were identified as key clusters in the County, where Lake Oswego has a high concentration of wages in these sectors, compared to the County as a whole. Were it not for the strength of these sectors in Lake Oswego, it is unlikely that Clackamas County would show a comparative advantage in these clusters. Target Industries Based on current employment trends, the City’s competitive advantages, and City land-use and economic development policies, types of businesses that may be attracted to Lake Oswego include:  Finance and Insurance. Lake Oswego currently has a high concentration of employment in finance and insurance. The City’s high quality of life, prestige, proximity to Downtown Portland, concentration of employment in finance and insurance, and access to high quality labor may make Lake Oswego firms particularly competitive in this Updated Review Draft May 5, 2011 21 industry.  Professional, Scientific, Technical Services and Information. The availability of highly educated and skilled labor, concentration of existing professional firms, and the high quality of life in Lake Oswego make it attractive to professional service firms and information firms. These types of businesses could include engineering, research, law firms, accounting firms, software development, and other professional services that are attracted to high-quality settings.  Real Estate. Lake Oswego’s high quality housing stock and reputation as a desirable commercial location make Lake Oswego attractive to real estate firms. The growth in this industry, however, may be limited because of limited supply of land (and real estate opportunities) in Lake Oswego. The City may continue to attract real estate firms that primarily operate in communities outside of Lake Oswego.  Corporate or Regional Headquarters. The availability of office space on Kruse Way (and other parts of Lake Oswego), quality of life, prestige, proximity to Portland, location along I-5, availability of executive housing, and availability of highly educated workers may make Lake Oswego attractive as a place to locate corporate or regional headquarters.  Green Businesses. There is no clear definition of what constitutes a green industry or business. In general, green businesses are those that produce products or services that improve or maintain environmental quality. Opportunities for environmentally conscious businesses are growing. The type of green businesses that may choose to locate or expand in Lake Oswego includes: training and support firms, research firms, or small scale, light industrial firms with environmentally friendly practices.  Health Care. One of the fastest growing sectors in the national and State economy is Health Care. The aging of the population in Lake Oswego, and the Portland metropolitan region, make Health Care a sector that is likely to grow in Lake Oswego. The types of health care businesses likely to locate or expand in Lake Oswego are medical offices rather than large complexes, given land supply.  Services for Residents. Population growth will drive development of retail and government services in Lake Oswego.  Services for Seniors. The Portland metropolitan region and Lake Oswego’s growing population of retirees or people nearing retirement, creates demand for services for seniors, such as medical services or high-amenity senior housing, which may be attracted to Lake Oswego.  Government and Public Services. Lake Oswego will continue to be the location for institutions such as: Lake Oswego City Services, the Lake Oswego School District, and Marylhurst University.  Advanced Continuing Education. Lake Oswego has shown a commitment to lifelong learning opportunities and is strategic located near Marylhurst University, Portland Community College, Oregon Health and Sciences University and Lewis and Clark University.  Arts. Lake Oswego supports and promotes the arts through the Arts Council of Lake Oswego, Lakewood Center for the Arts and annual Festival of the Arts among other opportunities. This is an integral part of the community that contributes to the excellent quality of life, one of the City’s competitive advantages. Updated Review Draft May 5, 2011 22 The draft employment land needs analysis will need to consider any special site requirements from these types of target clusters to ascertain whether the existing land supply and zoning regulations are adequate for retaining and enhancing job growth in these employment sectors. Inventory of Suitable Sites (Land Supply) Consistent with the employment land demand forecast, the buildable land inventory (BLI) for the Lake Oswego EOA documents industrial and commercial inventory that currently exists within the Lake Oswego USB. The BLI includes an analysis of existing vacant and partially vacant (sub-dividable) tax lots by current zoning classification and deducted all significant environmental constraints (wetlands, floodplains, stream corridors and slopes greater than 25%) to estimate buildable land area within the Lake Oswego USB. The buildable land area for each tax lot was derived by analyzing GIS data pertaining to environmental features that would constrain the amount of potential site development on vacant and partially vacant areas. The vacant and part-vacant land inventory includes tax lots or parcels that have at least 10,000 square feet (about 1/4 acre) of buildable land area (net of existing developed buildings and environmental and slope constraints). The land supply analysis focused on the land use classifications that can accommodate job growth within the USB and does not include zones with no buildable land. As shown in Table 9, Lake Oswego has four commercial, one institutional and one industrial zoning designation that meet these criteria. Table 9. Lake Oswego Employment Zone Designations Commercial East End General Commercial (EC) General Commercial (GC) West Lake Grove Office Commercial/Neighborhood Commercial (OC/NC) Campus Research & Development (CR&D) Institutional Campus Institutional (CI) Industrial Industrial Park (IP) Prepared by FCS GROUP. The vacant and partially vacant land inventory for the Lake Oswego USB includes 12 tax lots with a total buildable land area of 20.11 acres, as indicated in Table 10. Updated Review Draft May 5, 2011 23 Table 10. Distribution of Vacant and Part Vacant Lands by Land Use Zone Classification, Lake Oswego USB Vacant and Part-Vacant Property Zone 0.26 to 1 Acre 1 to 3 Acres 3 to 6 Acres > 6 Acres Total Lots Acres Lots Acres Lots Acres Lots Acres Lots Acres Commercial 7 2.98 2 4.63 1 4.67 10 12.3 EC 2 0.57 2 0.6 GC 4 1.89 2 4.63 6 6.5 OC/NC 1 0.52 1 0.5 CR & D 1 4.67 1 4.7 Institutional (CI) 1 6.92 1 6.92 Industrial (IP) 1 0.91 1 0.91 Total 8 3.89 2 4.63 1 4.67 1 6.92 12 20.11 Prepared by FCS GROUP. Redevelopment Potential In addition to the vacant and part-vacant BLI development opportunities, the City of Lake Oswego is also anticipating the potential for significant redevelopment to occur within these and other employment zones. This includes employment zones: Industrial (I), General Commercial (GC) Highway Commercial (HC); and mixed-use zones: Office Campus/Townhome Residential (OC/R-2.5); Neighborhood Commercial/Residential High Density (NC/R-0); Office Campus/Residential High Density (OC/R-3); and East End Commercial/Residential High Density (EC/R-0). Unique Refill and Redevelopment Considerations  Office vacancy rates end of 2010 were 18.3% in Kruse Way and 12.2% in Lake Oswego/West Linn. Equals 635,000 square feet of vacant space.  Vacant buildings could support about 1,500 jobs in Lake Oswego (with no vacant land need).  Retail has relatively low vacancy rates (4%).  Industrial had negative absorption during 2010 in Lake Oswego (lost 24,000 SF with 6% vacancy rate).  There are about 103 acres of mixed-use land area with medium to very high redevelopment potential in Lake Oswego (could accommodate about 1,600 net new jobs). The analysis of redevelopment opportunities is based on the ratio of assessed improvement value to land value for each tax lot using 2010 Clackamas County Assessor data where parcels with an improvement value of 150% or less of the land value are considered redevelopable. The results provided in Table 11 indicate that there is a significant amount of redevelopment potential within the Lake Oswego USB. The redevelopment analysis identifies more than 121 acres with economic development potential in the Downtown, Foothills, Kruse Way and Boones Ferry areas. Updated Review Draft May 5, 2011 24 Table 11. Potential Mixed-Use Redevelopment Parcels with less than 1.5:1 improvement- to-land-value ratio and greater than ¼ Acre, Lake Oswego USB Zoning Downtown Foothills Kruse Way Boones Ferry Subtotal GC 0.0 0.0 0.0 21.3 21.3 NC/R0 0.0 0.0 0.0 2.3 2.3 OC/R3 0.0 0.0 9.9 2.1 12.0 EC 14.8 0.0 0.0 0.0 14.8 HC 0.0 0.0 29.0 0.0 29.0 CR&D 0.0 0.0 0.0 0.0 0.0 EC/R0 0.0 25.7 0.0 0.0 25.7 I (Foothills area) 0.0 14.6 0.0 0.0 14.6 OC 0.0 0.0 0.0 1.6 1.6 Total 14.8 40.2 38.9 27.3 121.2 Source: Analysis by City of Lake Oswego and FCS GROUP, 2011. Site Suitability Analysis (Land Demand) In the case of Lake Oswego, the city is located within the Metro planning boundary and also needs to maintain consistency between adopted regional plans and requirements. The most recent adopted jobs and population forecast for the Lake Oswego area is from 2005 (Metroscope Generation 2.3) and is now being updated by Metro staff (release date expected December 2011). Preliminary employment and population forecasts for the Lake Oswego area have also been released as part of the 2009 Metro Urban Growth Report, as reflected in the “High” employment growth forecast. Lake Oswego is in the process of coordinating with Metro to update jobs and population forecasts, which are planned for release by Metro in December 2011. The draft EOA will be updated to reflect this forecast prior to final submittal. Hence, for planning purposes, four job growth forecast scenarios are assumed and summarized in Table 12:16 Low Growth Forecast is based on the average annual growth rate (AAGR) from the 2010 census between 2000 and 2010 and assumes that the overall job growth is consistent with population growth in the Lake Oswego USB, with no changes to existing land supply or zoning. In light of recent trends and local objectives, we have assumed no gain/loss in jobs within the government and industrial sectors, and growth to occur in the retail and service sectors. Medium Growth Forecast utilizes the most current trend and forecast data available from the Oregon Employment Department. Like the low growth forecast, it also is based on the AAGR from the 2010 census between 2000-2010 and assumes that the overall job growth is consistent with population growth in the Lake Oswego USB, with no changes to existing land supply or zoning. In light of recent trends and local objectives, we have assumed no gain/loss in jobs within the government and industrial sectors, and growth to occur in the retail and service sectors. To create this forecast, FCS GROUP adjusted the Lake Oswego USB 2009 employment estimates to year 2010 using current employment statistics for the January to December 2010 time period by job sector based on Oregon Employment Department data for Clackamas County. 16 Base year (2010) has been updated to reflect current Oregon Employment Dept. job estimates for Lake Oswego USB (Dec. 2009) adjusted to Dec. 2010 using current monthly employment statistics for Clackamas County. Updated Review Draft May 5, 2011 25 Medium-High Growth Forecast assumes future job growth is consistent with the Oregon Employment Department 2008-2018 employment sector forecasts for Region 15 (Clackamas County). Long-term average annual growth rates for employment sectors are based on the most recent 10-year (2008-2018) employment forecast for job sectors in Clackamas County (Region 15), and are extrapolated to year 2035. High Growth Forecast assumes that the job growth rate is consistent with the 2009 Metro Urban Growth Report (UGR) assumptions (which are still being refined for release in December 2011). Table 12. Employment Growth Forecasts, Lake Oswego USB, 2010-2035 Low Growth Forecast 2010 Estimate 2035 Projection Change 2010-2035 Average Annual Change AAGR* Employment 20,538 22,546 2,008 57 0.37% Retail 1,551 1,760 209 6 0.51% Commercial/Services 13,382 15,181 1,799 51 0.51% Industrial 2,834 2,834 ----- ----- 0% Government/Education 2,771 2,771 ----- ----- 0% Medium Growth Forecast 2010 Estimate 2035 Projection Change 2010-2035 Average Annual Change AAGR* Employment 20,538 24,354 3,815 109 0.68% Retail 1,551 1,948 396 11 0.91% Commercial/Services 13,382 16,801 3,419 98 0.91% Industrial 2,834 2,834 ----- ----- 0% Government/Education 2,771 2,771 ----- ----- 0% Medium-High Growth Forecast 2010 Estimate 2035 Projection Change 2010-2035 Average Annual Change AAGR* Employment 20,538 25,398 4,859 194 0.85% Retail 1,551 2,142 590 24 1.30% Commercial/Services 13,382 17,297 3,915 157 1.03% Industrial 2,834 2,492 (142)(14) -0.51% Government/Education 2,771 3,468 697 28 0.90% High Growth Forecast 2010 Estimate 2035 Projection Change 2010-2035 Average Annual Change AAGR* Employment 20,538 34,280 13,741 550 2.07% Retail 1,551 2,691 1,140 46 2.23% Commercial/Services 13,382 23,001 9,619 385 2.19% Industrial 2,834 4,251 1,417 57 1.63% Government/Education 2,771 4,336 1,565 63 1.81% *AAGR = average annual growth rate Note: a portion of the total net new job growth shown in Table 12 can and will occur within vacant buildings, including Kruse Way Corridor and locations, and a portion will need to be accommodated on vacant lands and through redevelopment opportunities. Prepared by FCS GROUP. The annual average job growth rates were used to create job forecasts which determined a 2010 to 2035 employment demand ranging from 1,377 jobs for the low growth forecast to 13,192 jobs for the high growth forecast, as indicated in Table 13. Updated Review Draft May 5, 2011 26 Table 13. Lake Oswego 2010-2035 Net New Employment Forecasts Industry Type Low Medium Med-High High Retail Trades 143 272 567 1,094 Services 1,234 2,345 3,758 9,234 Industrial ----- ----- (329) 1,360 Government ----- ----- 669 1,503 Total 1,377 2,616 4,665 13,192 Prepared by FCS GROUP. Once the annual average job growth rates and job forecasts were created, a series of assumptions were used to allocate: jobs to building types; building types to square feet of floor area; and building floor area to redevelopment or vacant lands by general zone classification. The following key assumptions are generally consistent with the Metro Urban Growth Report (UGR) and local experience. The methodology used to translate the employment growth forecast shown in Table 13 into the vacant land needs forecasts involved a series of assumptions to allocate jobs to building types (see Table 14), and assumptions to allocate building types into redevelopment and new construction floor area requirements (Table 15); and then building types into general land use classifications (Table 16). The assumptions for translating job forecasts into building and land needs were derived by FCS GROUP and City of Lake Oswego Long Range Planning staff based on local observations; with assumptions that are generally consistent with the methodology utilized by Metro in the Draft 2009-2030 UGR. Updated Review Draft May 5, 2011 27 Table 14. Assumptions for Allocating Employment Sectors to Building Types Employment Sectors Building Types Office Institutional Flex/Bus. Park General Industrial Warehouse Retail Total Retail 5% 1% 5% 0% 0% 89% 100% Services 72% 1% 5% 0% 0% 22% 100% Industrial 0% 0% 67% 31% 2% 0% 100% Government/ Education 30% 60% 5% 0% 0% 5% 100% Source: Metro Draft 2009-2030 Urban Growth Report; modified to reflect local observations. Table 15. Assumptions for Allocating Building Types to Land Needs* Office Government/ Institutional Flex/Bus. Park General Industrial Warehouse Retail Vacant Building/Redevelopment Job Allocation1 70% 20% 70% 70% 70% 50% Vacant Land Allocation2 30% 80% 30% 30% 30% 50% Building SF Per Job2 250 600 550 700 1,100 500 Floor-Area-Ratio2 0.50 0.35 0.35 0.30 0.30 0.30 Public Facility Net:Gross Adjustment3 1.10 1.05 1.10 1.05 1.05 1.10 Work at Home Adjustment4 0.15 0.05 0.05 0.05 0.03 0.05 * Assumptions are intended to reflect a long-term average. 1. Adjusts for building refill & vacancy allowances. 2. Building density assumptions for building types are generally consistent with the 2009 Metro Draft 2009-2030 Urban Growth Report development forecast methodology/ assumptions. 3. Allowances take into account land dedicated to public/utility easements. 4. Allowance based on local business license data; and is generally consistent with national statistics by US Dept. of Labor, Bureau of of Labor Statistics, Technical information: "Work at Home in 2004". Source: assumptions are generally consistent with the Metro Draft 2009-2030 Urban Growth Report; modified to reflect local observations. Table 16. Building to Land Use Assignment Assumptions Local Zoning Classification Office Institutional Flex/Bus. Park General Industrial Warehouse Retail Commercial 60% 30% 10% 10% 0% 65% Mixed Use 30% 10% 5% 5% 0% 30% Institutional 10% 60% 0% 0% 10% 0% Industrial 0% 0% 85% 85% 90% 5% Total 100% 100% 100% 100% 100% 100% Assumptions by FCS GROUP and City of Lake Oswego planning staff based on local observations. Updated Review Draft May 5, 2011 28 Table 17. Potential Employment Growth Forecasts and Required Building Floor Area, Lake Oswego USB, 2010 to 2035 Potential Building Floor Area Demand for Vacant Buildings and Redevelopment Low Medium Med-High High Office 190,000 361,000 624,000 1,520,000 Institutional 8,000 15,000 254,000 573,000 Flex/Business Park 36,000 69,000 16,000 786,000 General Industrial - - (67,000) 280,000 Warehouse - - (7,000) 29,000 Retail 190,000 360,000 648,000 732,000 Total 424,000 805,000 1,468,000 3,920,000 Potential Building Floor Area Demand for Development on Vacant Lands Low Medium Med-High High Office 57,000 108,000 187,000 456,000 Institutional 6,000 12,000 203,000 458,000 Flex/Business Park 11,000 21,000 5,000 236,000 General Industrial - - (20,000) 84,000 Warehouse - - (2,000) 9,000 Retail 95,000 180,000 324,000 732,000 Total 169,000 321,000 697,000 1,975,000 Total Potential Building Floor Area Demand (square feet of building area) Low Medium Med-High High Office 190,000 361,000 624,000 1,520,000 Institutional 8,000 15,000 254,000 573,000 Flex/Business Park 36,000 69,000 16,000 786,000 General Industrial - - (67,000) 280,000 Warehouse - - (7,000) 29,000 Retail 190,000 360,000 648,000 732,000 Total 424,000 805,000 1,468,000 3,920,000 Source: compiled by FCS GROUP, 2011. Updated Review Draft May 5, 2011 29 As shown in Table 18, the long-term analysis of vacant land need for employment growth within the Lake Oswego USB by year 2035 identifies a range in employment land needs from 14 acres (low) to 23 acres (medium) to 56 acres (medium-high) and up to 141 acres (high). Table 18. Vacant Employment Land Demand Forecast, Lake Oswego USB, 2010 to 2035 (gross buildable acres) Vacant Land Demand Land Use Classification Low Medium Med-High High Commercial and Mixed Use 10 20 40 95 Institutional 1 1 9 21 Industrial 1 2 0 24 Total Vacant Land Demand 14 23 56 141 Source: compiled by FCS GROUP. Assessment of Employment Land Needs A comparison of land supply and demand in Table 20 shows that the low vacant land demand forecast is the most likely scenario without more focused attention in terms of economic development policy since it is generally consistent with the remaining vacant employment land supply within the existing Lake Oswego USB. Table 20. Employment Vacant Land Needs and Vacant Land Supply, Lake Oswego USB, 2010 to 2035 (gross buildable acres) Commercial and Mixed Use Vacant Land Low Medium Med-High High Land Supply 12.3 12.3 12.3 12.3 Land Demand 10.0 20.0 40.0 95/0 Land Surplus or (Deficit) 2.3 (7.7) (27.7) (82.7) Institutional Vacant Land Low Medium Med-High High Land Supply 6.9 6.9 6.9 6.9 Land Demand 1.0 1.0 9.0 21.0 Land Surplus or (Deficit) 5.9 5.9 (2.1) (14.1) Industrial Vacant Land Low Medium Med-High High Land Supply 1.0 1.0 1.0 1.0 Land Demand 1.0 2.0 0.0 24.0 Land Surplus or (Deficit) 0.0 (1.0) 1.0 (23.0) Source: compiled by FCS GROUP. Short-Term Land Supply and Need Determination In addition to the long-term land supply, OAR 660-009-0005 also requires the identification of a short-term supply of land meaning “suitable land that is ready for construction within one year of an application of a building permit or request for a service extension.” OAR 660-009-0025 also requires that cities must provide “at least 25 percent of the total land supply within the urban growth boundary designated for industrial and other employment uses as short-term supply.” Updated Review Draft May 5, 2011 30 In Lake Oswego’s case all of the vacant employment land supply currently included within the Lake Oswego USB has urban services and infrastructure (roads, water, sewer, storm water drainage) facilities to handle some level of potential development, or such facilities could be expanded within a 1-3 year time frame to render the inventory suitable for accommodating short-term development. Implementation Vacant Land Supply/Redevelopment According to the City’s BLI, Lake Oswego has a limited supply of vacant land area inside the USB of approximately 20 acres, seven of which are at Marylhurst/Mary’s Woods. Therefore, the City must rely on redevelopment and optimization of the remaining vacant land inventory to retain and attract business investment and employment opportunities. Possible Strategies for Policy Consideration 1. Identify areas for increased, redeveloped employment densities. 2. Strengthen the City’s redevelopment program; identify redevelopment tools, strategies and priorities. 3. Use incentive-based approaches and/or regulatory strategies to promote redevelopment and greater development intensity (mixed-use redevelopment with combined retail or office uses and housing), especially in centers and corridors. Options include, but are not limited to:  Using urban renewal and tax increment financing for the development of infrastructure necessary to stimulate economic growth  Exploring reduced system development charges where merited  Changing development standards or restrictions (overall or for certain types of desired development)  Assembling land  Investing in structured parking, requiring less parking and/or increasing public transportation use Commitment to Provide a Short-Term Land Supply Cities must provide a competitive short-term supply of land. Short-term is defined as developable within one year. Cities must also include detailed strategies for preparing the total land supply for development and replacing the short-term supply of land as it is developed. The policies should identify a process for regular review of the short-term supply of employment land. Possible Strategies Monitor and update Buildable Lands Inventory to assess annually the adequacy of short and long-term supplies of buildable employment land. Commitment to Provide Adequate Sites and Facilities Cities must include policies to designate an adequate number of sites of suitable sizes, types and locations for their employment need. Cities also must have policies that provide necessary public facilities and transportation facilities through public facilities and transportation system planning. Updated Review Draft May 5, 2011 31 Possible Strategy Address the public facility needs of business and economic development through identifying and programming needed public facilities and services. Update public facility plans according to the economic development vision, objectives and strategies. Discuss and resolve the desired balance between industrial and employment land. Other Considerations Small Businesses Home occupations are an important form of land use efficiency in Lake Oswego. Home occupations offer employment land use efficiency because they are typically located in existing dwellings and do not require additional land or built space. Possible Strategy Emphasize policies that encourage or support home-based employment for sole practitioners while balancing neighborhood quality of life. Provide more opportunities by adding greater flexibility with home occupations. Updated Review Draft May 5, 2011 32 Appendix A. Stakeholder Interview Summary ECONorthwest conducted interviews with five stakeholders in Lake Oswego. The stakeholders were identified by City staff and included the following people: 1. Matt Coles with Shorenstein Properties 2. Jerry Wheeler with the Lake Oswego Chamber of Commerce 3. Steve Dodds with Norris, Beggs & Simpson 4. Robert LeFeber with Commercial Realty Advisors, Northwest LLC 5. Barry Cain and Matt Grady with Gramor Development We asked the stakeholders what the opportunities and barriers to economic development in Lake Oswego are. This appendix presents the themes from the interviews. Opportunities for economic development in Lake Oswego Interviewees identified the following opportunities to doing business in Lake Oswego: 1. High amenity. The amenities in Lake Oswego provide opportunities for business. The amenities attract high-quality workers to the City and make the City attractive to businesses that want to locate in a high amenity area. The amenities most frequently mentioned were: high-end housing, parks, high environmental quality, the Lake, restaurants, and retail. 2. Demographics. Lake Oswego’s demographics are an opportunity, especially for retail businesses. The demographics identified were: the concentration of high income households, the aging population, family households, and high educational attainment. The types of businesses that might be attracted to Lake Oswego because of the City’s demographics include services for the aging population (e.g., medical services) or high- end retail. 3. Transportation access. The City’s location along I-5, access to I-205, and access to Highway 43 are an opportunity for businesses in Lake Oswego. The City’s automotive access provides easy access to the rest of the Portland metropolitan region. If the streetcar is extended to Lake Oswego, that would provide earlier non-automotive access to Portland. 4. Location. Lake Oswego’s proximity to Portland and location near other communities in the area is an opportunity, especially for businesses that prefer to locate near Portland or other nearby businesses. 5. Small businesses. The greatest opportunity for business development in Lake Oswego is for small businesses (those with 50 or fewer employees). Lake Oswego provides opportunities for entrepreneurs, as well as high-paying services (e.g., attorneys, engineering firms, or accounting firms). 6. Home occupations. Lake Oswego is attractive to people that want to live and work at home, in a high amenity area. The City may have opportunity for reducing employment land needs and providing opportunities for economic development through home occupations and home offices. 7. Retail development. Lake Oswego has opportunities for retail development, such as boutique retail and retail for residents in Downtown. Other areas of Lake Oswego provide opportunities for retail development, such as village development in Lake Grove or high-end retail and services (e.g., a spa or financial institutions) in Lake View Village. Updated Review Draft May 5, 2011 33 8. Office development. Kruse Way and Meadow Road provide opportunities for office development and location of businesses that want a prestigious location, such as regional or corporate headquarters. Building vacancies provide opportunities for attracting new businesses to Lake Oswego. 9. Downtown. Lake Oswego’s downtown provides small, infill or redevelopment opportunities, as well as mixed-use opportunities with retail on the ground floor and commercial uses on the upper floors. 10. City government. The City government has opportunities to improve the business climate in Lake Oswego. Suggestions included: doing more to coordinate and promote economic development (e.g., assist with parcel assembly to make larger redevelopment project possible); modifying the planning process to make it easier and faster; modifying the zoning code to allow more flexibility with building design, building height (to allow five story buildings), and allow more flexibility with parking requirements. Several interviewees acknowledged that the City has made progress in making the development process easier but they felt it could be further improved. 11. Infill and redevelopment. The opportunities for employment growth in Lake Oswego are primarily through increasing densities through infill and redevelopment. There is little vacant land available for development but there is demand for commercial and retail growth in Lake Oswego. 12. Potential UGB expansion. If Metro expands the UGB and Lake Oswego expands into the Stafford basin, this would provide opportunities for light industrial and flexible commercial space. Additional land for employment uses would increase economic activity in Lake Oswego. Most interviewees said that they do not expect the City to expand into the Stafford basin in the foreseeable future. 13. Urban renewal. The urban renewal district in Downtown has made funding infrastructure improvements possible. Some interviewees suggested that the City should expand the urban renewal district to other areas that need improvements, such as the Foothills area. Barriers to economic development in Lake Oswego Interviewees identified the following barriers to doing business in Lake Oswego: 1. Land. The availability of land in Lake Oswego was the most commonly mentioned barrier to economic development. The barriers included: availability of vacant land, availability of sites over a few acres, and cost of land. The lack of light industrial land with highway access or flex space is a problem because the City has so little industrial land. 2. Infill and redevelopment. Infill and redevelopment, especially of sites larger than an acre, is difficult. This is especially true in Downtown, where parcel assembly of sites is very difficult because of the highly fragmented pattern of ownership. In addition, the City’s policies make it difficult to change existing uses through rezoning. 3. Parking. High land costs make providing parking costly, especially for structured or underground parking. The need for parking, both because of the lack of transportation alternatives and City policies, make it difficult to increase densities in areas with office buildings. In addition, the lack of parking in Downtown makes retail uses more difficult, especially for small retailers that cannot afford to build parking structures. The City could address this issue by building public parking structures. Updated Review Draft May 5, 2011 34 4. Providing infrastructure. The cost of providing new infrastructure and funding maintenance of existing infrastructure is a barrier to economic development. The lack of needed infrastructure or maintenance is a barrier to economic development. 5. Downtown. The distance from Downtown to I-5 and the capacity of Highway 43 and local roads are a barrier to development in Downtown. The distance from I-5 will prevent Downtown from providing regional retail or services. In addition, increasing densities in Downtown substantially may create capacity issues on the street system, especially if people come from outside of Lake Oswego for retail and services. 6. Affordable housing. The lack of affordable housing, especially workforce housing, is a barrier to businesses with lower paid employees. These employees generally cannot afford to live in Lake Oswego and must commute from other communities. 7. Community attitudes. Community attitudes about development are a barrier to development, especially development near established neighborhoods. In addition, community concerns about development often make the development process slower. 8. City government. The complexity and speed of the planning process is a barrier to economic development. Interviewees identified the following barriers to economic development in City policies:  The City’s design review process is inflexible and difficult.  The City’s sign regulations are highly restrictive and do not allow retail businesses enough latitude to advertise their business.  The City’s zoning ordinance prevents increases in density in some instances, with height limitations and parking requirements. The high cost of land combined with zoning restrictions may make some projects unviable, including some that the City might find desirable. For example, developers cannot build over four stories tall and must provide a certain amount of parking. The cost of the land, parking, and construction may make the project financially unviable. The same project might be financially viable if the building could be one or two stories tall. Updated Review Draft May 5, 2011 1 City of Lake Oswego Housing Needs Analysis Updated Review Draft May 5, 2011 2 Acknowledgements The City appreciates grant funds received from the State of Oregon Department of Land Conservation and Development (DLCD) for technical consultant assistance to complete this document. We thank the following citizens for their dedicated work on this topic. [Placeholder for City to insert for CAC, Work Group, Planning Commission] Staff [Placeholder for City to insert] Consultants [Placeholder for City to insert] This document updates and builds upon the work the Draft Housing Needs Assessment created by Winterbrook Planning and ECONorthwest in 2009-2010. Updated Review Draft May 5, 2011 3 Introduction: Background and Context The City of Lake Oswego is conducting a Housing Needs Analysis (HNA) as required by its State of Oregon Comprehensive Plan Periodic Review Work Program to update its long-range Comprehensive Plan (Plan) by June, 2013. The City received grant funds from the Department of Land Conservation and Development (DLCD) for technical consultant assistance to complete this task. The City elected to take advantage of this required periodic review Plan update to create a comprehensive vision for the City to guide policies, investments and associated implementing actions. This HNA presents current and projected demographic and housing data within the statewide land use planning regulatory context. The factual basis of assessment of housing needs and development potential frames preliminary implementation actions for the City to consider in order to provide housing opportunities consistent with legal requirements and community aspirations. Requirements As part of its Comprehensive Plan update, the City must address its Plan chapter associated with statewide land use planning Goal 10 (OAR 660-015-0000), its implementing/guiding measure, the Metropolitan Housing Rule (OAR 660-007), and the Portland Metropolitan Area Functional Plan Title 1, Requirements for Housing and Employment Accommodation. The intent of Goal 10 is to ensure provision for the housing needs of citizens of the State; and to ensure that each city accommodates its fair share of regional housing needs. To this end, Goal 10 requires that cities demonstrate sufficient buildable land that could produce a range of housing types appropriate to meet housing needs1. State laws in this area require that a range of housing types must be accommodated within Lake Oswego. Approval standards for needed housing types and densities must be “clear and objective” and must not have the effect, individually or cumulatively, of discouraging needed housing through unreasonable cost or delay.2 Statewide Metropolitan Housing Rule Goal 10 is implemented through the Metropolitan Housing Rule (MHR), OAR Chapter 660, Division 007. The rule applies to the cities and three counties within the Metro Urban Growth Boundary (UGB), including Lake Oswego and addresses the Metro area as a regional market in terms of housing demand and buildable land supply and establishes minimum housing type and density standards for each city. An important requirement of the MHR for Lake Oswego is to zone land to provide the opportunity for new residential construction to consist of at least 50% attached housing, and to provide an overall density of 10 or more dwelling units per net buildable acre3. 1 See ORS 197.295 through 197.314, also known as “the needed housing statutes.” 2 See ORS 197.307(6): “Any approval standards, special conditions and the procedures for approval adopted by a local government shall be clear and objective and may not have the effect, either in themselves or cumulatively, of discouraging needed housing through unreasonable cost or delay.” See also OAR 660-007-0015: “Clear and Objective Approval Standards Required Local approval standards, special conditions and procedures regulating the development of needed housing must be clear and objective, and must not have the effect, either of themselves or cumulatively, of discouraging needed housing through unreasonable cost or delay.” 3 OAR 660-007-(3) Multnomah County and the cities of Portland, Gresham, Beaverton, Hillsboro, Lake Oswego and Tigard must provide for an overall density of ten or more dwelling units per net buildable acre. These are larger urbanized jurisdictions with regionally coordinated population projections of 50,000 or more for their active planning areas, which encompass or are near major employment centers, and which are situated along regional transportation corridors. Updated Review Draft May 5, 2011 4 Metro’s Urban Growth Management Functional Plan Title 1 Title 1 of Metro’s Urban Growth Management Functional Plan is intended to promote efficient land use for housing and employment within the Metro UGB. This Functional Plan is essentially a regional Comprehensive Plan and seeks to assure that each city plans for adequate capacity of buildable land to accommodate future housing. The primary tool for achieving this objective is for local governments to determine the location of 2040 Growth Concept design types (town centers, main streets, corridors, etc.) and incorporate these designations into adopted comprehensive plans. In 1999, the 2040 Growth Concept design types were incorporated into the Comprehensive Plan by Ordinance 2204. Title 1 previously established dwelling unit capacity targets for each local government based primarily on the amount of buildable land within, and refill assumptions for each jurisdiction. In 1998 and 2002, Metro found that Lake Oswego met Title 1 capacity requirements. In December 2010, the Metro Council adopted Ordinance 10-1244B, known as the “capacity ordinance.” This ordinance replaced the dwelling capacity target number with a “no net loss policy.” Title 1 now requires the City to maintain the existing dwelling unit capacity by ensuring that any proposed zone change does not reduce the City’s overall dwelling unit capacity. The draft Metro Urban Growth Report (UGR) (December 2009) is currently being updated with an expected completion date of December 2011. Lake Oswego will continue working with Metro toward a coordinated local dwelling unit forecast for 2035 through their periodic review Plan update process. Vision and Goals (Local Aspirations) The City of Lake Oswego has prepared a 2035 draft vision which includes specific action areas. The action area for Complete Neighborhoods and Housing states: We manage growth by providing the opportunity for a variety of attractive and compatible housing that serves a range of ages, incomes and households. Our distinct and walkable neighborhoods contribute to the city’s small town feel. Mixed use districts enhance adjacent residential areas by providing access to quality jobs, housing, transit, entertainment, services and shopping. Higher density housing is located along transportation corridors and town centers to preserve the character of our existing neighborhoods. While Lake Oswego’s vision for Complete Housing and Neighborhoods includes an aspiration to accommodate a range of ages, incomes and households, demographic trends indicate an aging population. The largest population cohort in Lake Oswego is the 45 to 64 year old group, compared to Clackamas County and the Portland-Vancouver Metropolitan Statistical Area (MSA), where the 20 to 44 year old cohort is the largest. This suggests that people are remaining in or moving to Lake Oswego to retire and indicates a need to plan for housing oriented toward older age groups that typically desire well-located, safe, smaller units with lower property maintenance requirements. For more information on the changing demographics in Lake Oswego with respect to the older parts of the community, see “A Community Vision for Aging in Lake Oswego”, Report on the City of Lake Oswego 50+ Community Dialogues. Lake Oswego also has relatively few younger, working-age families when compared with Clackamas County and the region. Discussions with the Comprehensive Plan Citizen Advisory Committee and the community as a whole have indicated a specific desire to attract more young families with children, which are vital to the City and schools in particular. Other housing related aspirations adopted by City Council 2009 include articulation of specific hopes for new housing and redevelopment in the Downtown, Lake Grove and Foothills areas, supported by accessible, walkable pedestrian environments. Updated Review Draft May 5, 2011 5 Demographic and Population Overview Demographic Trends and Forecasts Lake Oswego is located in the desirable inner-urban area within the greater Portland region. This location is considered advantageous for accessing downtown Portland and its surrounding communities within a manageable commute. Downtown Lake Oswego’s ongoing renaissance and the City’s excellent parks, schools and community facilities continue to serve as attributes that make it a desirable place to live, work and visit. As Figure 1 indicates, the U.S. Census Bureau’s 2010 census count estimated there to be approximately 36,619 people in the City of Lake Oswego, which is an increase of 1,341 people since the 2000 U.S. Census.4 For comparison purposes, Figure 2 shows population estimates prepared by Portland State University that indicate a population of 36,845 within the Lake Oswego city limits as of July 1, 2010. Figure 1. Lake Oswego Historic Population Trends, 1920-2010 Source: U.S. Census; compiled by FCS Group. 4 Limited Census 2010 information was available at the conclusion of the grant period. Where information was available, it was included. Updated Review Draft May 5, 2011 6 Figure 2. Lake Oswego Recent Population Trends, 1990-2010 Source: Portland State University, Population Research Center; compiled by FCS Group. Lake Oswego experienced a net gain of approximately 898 households since year 2000, with an increase of 472 family households and 426 nonfamily households. As indicated in Table 1, according to the U.S. Census, the average household size and average family size increased over the 2000 to 2008 time period. The average household size was 2.48 and the average family size was 3.10 people per household according to the U.S. Census, 2006-2008 American Community Survey. More recent 2010 estimates by City of Lake Oswego Long Range Planning staff for the Lake Oswego USB indicate a relatively lower ratio of population to total dwelling units. Using GIS data, the City staff estimates that there were 43,094 people and 16,995 dwelling units in the Lake Oswego Urban Service Boundary (USB) in 2010; with a ratio of people per dwelling unit of 2.15. The fact that this ratio is lower than the average household size estimate reported by the U.S. Census is to be expected, since the U.S. Census tallies only occupied dwelling units and only population that resides in households (not group quarters) population. Updated Review Draft May 5, 2011 7 Table 1. Lake Oswego Demographic and Socio-economic Trends Data compiled by FCS Group, 2009. According to U.S. Census estimates, the median age of Lake Oswego residents also increased slightly, from 41.2 years in 2000 to 42.1 years of age in 2006/2008. This is more than five years older than the median age of residents within the Portland Vancouver MSA region (36.7). In fact, Lake Oswego has more residents over age 65 than all other cities in the greater Portland region, with the exception of King City. Lake Oswego continues to retain and attract upper-income households. The portion of all households with annual income levels of more than $100,000 increased from 35% to nearly 41%. The most significant gains occurred in households earning more than $200,000 per year, which increased by 808 households since year 2000, as indicated in Table 2. Updated Review Draft May 5, 2011 8 Table 2. Households by Income Level, Lake Oswego, 2000 and 2006-2008 Data compiled by FCS Group, 2009. According to the U.S. Census 2006-2008 American Community Survey, Lake Oswego’s average per capita income was $48,313, median household income was $83,486, and median family income was $105,593 in 2008 dollar amounts. While average income levels in Lake Oswego have increased in nominal dollars, inflation adjusted income levels have fallen since 2000. This trend towards lower real income levels has been well- documented in the Portland region and nationally, and is primarily attributed to the shrinking income levels in middle-income households and higher costs of living for items such as housing, transportation, food, energy and health care. Poverty levels in Lake Oswego are relatively low in the region, with an estimated 2,602 people in poverty, according to the U.S. Census 2006-2008 American Community Survey. Table 3 shows that the number of people living below the federal poverty level in the Lake Oswego area increased from 1,181 people in 2000 to 2,602 people by 2006-20085. 5 Federal Poverty Level is defined by the U.S. Department of Housing and Urban Development (HUD) as 70% of median income in a given year. Updated Review Draft May 5, 2011 9 Table 3. Federal Poverty Thresholds by Family Size, Urban Clackamas County, Current Year Dollar Amounts (Not Inflation Adjusted) Source: FCS Group, 2009. A closer look at population age cohort patterns for Lake Oswego reflects the aging “Baby Boom” population defined as those born between 1946 and 1965. As indicated in Figure 3 and Table 4, population cohorts that experienced the most significant increase include Baby Boomers within the 55-64 and 65-74 age ranges. These Baby Boomers age 55-74 recorded a combined gain of 3,889 people since 2000. As summarized in Figure 3 and Table 4 below, another rapidly growing cohort includes the “Generation Y” sector defined as people in their late teens to early thirties. Population within the age 15-24 cohort group has increased by 1,294 people since 2000. Updated Review Draft May 5, 2011 10 Figure 3. Population Age Cohort Trends, Lake Oswego, 2000 and circa 2007 Source: FCS Group, 2009. Table 4. Lake Oswego Area Population Age Cohort Trends Data compiled by FCS Group, 2009. Updated Review Draft May 5, 2011 11 Figure 4. Lake Oswego Population Trends and Forecasts Source: FCS Group. According to the U.S. Census, the following age cohorts experienced a decline in Lake Oswego between 2000 and 2007:  Age 1-14 (lost 465 people)  Age 25-44 (lost 326 people)  Age 45-54 (lost 614 people)  Age 75+ (lost 221 people) As older Baby Boomers tend to desire to remain in their current residence or community as long as possible, the population over age 75 is expected to increase measurably over the coming decades. However, the younger population cohorts (age 5-14) are likely to remain flat or experience negative growth. As shown in Tables 4 and 5, recent trends in Lake Oswego over the past decade reflect population gains in the under age 5 cohort, but significant population losses in the ages 5-19 and 45-54 cohorts, as well as a slight decline in population over the age of 75. Updated Review Draft May 5, 2011 12 Table 5. Lake Oswego Area Annual Historic Population Growth Rates Source: FCS Group, 2009. A declining younger (school age) population is also evidenced by Lake Oswego School District enrollment levels. After maintaining enrollment levels above 7,000 students between 1995 and 2001, School District enrollment levels have declined over the past several years. Between 2001 and 2009, total school district enrollment declined to 6,702 students. The most significant enrollment decline occurred in the elementary school level, which lost 368 students over the 2001-2009 time period, while the junior high school enrollment dropped by 110 students. This decline was countered by a slight increase in high school enrollment of 26 students during this time period. Current 10-year student enrollment forecasts prepared by the Lake Oswego School District range from no growth (best case) to a loss of 342 students (most likely scenario) to a loss of 632 students (worst case). The School District intends to update its forecast after the 2010 Census is completed. Since housing demand is generally a function of population change and household size, it is important to understand how changing demographics translate into evolving housing needs. As indicated in Table 6, U.S. Census estimates show the fastest growing segment of household formations in Lake Oswego since 2000 has occurred among senior households with a 753 increase, while the household segment with members less than age 18 added 224 households since 2000. In contrast, households with one or more members between age 18 and 65 declined by 79 households in Lake Oswego. An analysis of marital status indicates that Lake Oswego is attracting and retaining single (unmarried) households and is “losing” married households with children; which often occurs as kids move away to college or for work, and the household becomes reclassified as “empty nesters.” As evidenced by Updated Review Draft May 5, 2011 13 the data shown in Table 6, the city is still attractive to single-parent households, but the number of married households with kids is declining. Table 6. Lake Oswego Area Household Formation Trends Source: FCS Group. Housing Sales and In-Migration Trends The recent 2008-2009 economic recession created turmoil in the housing market for Lake Oswego, as with most cities across the United States. Median home prices in Lake Oswego have fallen about 22% since hitting a peak of $502,000 in February 2008. Median sales prices in Lake Oswego were $400,800 as of March 31, 2011 according to Zillow.com. The downward spiral in home prices appears to be leveling out. As indicated in Table 7, average home prices in Lake Oswego recorded a 9% loss from one year ago, though home prices still compare favorably to other areas within the Portland region. Table 7. Median Home Sales Price Trends in Selected Markets Median Home Sales Price Trends in  Selected Markets     Y‐o‐Y  Median Sales  Price  March  2010 to  March  2011  Lake Oswego ‐0.9%  $       400,800  West Linn ‐15.6%  $       288,200  Tualatin 0.0%  $       271,000  Beaverton ‐13.1%  $       213,000  Portland 0.5%  $       262,600  Source: FCS Group, Zillow.com. Updated Review Draft May 5, 2011 14 In 2010, Lake Oswego’s housing prices on a per-square-foot-of-floor area basis exceed neighboring jurisdictions in all price levels, with one exception in Portland. Average price/sq ft levels were higher in Lake Oswego relative to other jurisdictions with the exception of Portland homes priced between $350,000 and $500,000 as shown in tables Table 8 and Figure 5. There are many reasons why a variation in sales price per square foot occurs, such as: relative property taxes, quality of public education/schools; community image; and perceived quality of life. Other factors, such as the relative age of housing structure and level of amenities also play a role in the sales price per square foot. Recent home sales in the Portland market in the $350,000 to $499,000 price category were dominated by relatively new condominium units with relatively small floor plates, hence the cost per square foot tends to exceed Lake Oswego in this price category. With regard to the homes priced above $1 million, many of the most expensive homes in Lake Oswego are relatively new or rehabilitated dwellings with Mt. Hood Views and/or Oswego Lake access; amenities that command price premiums. Table 8. Average Home Sales Price Per SF of Floor Area in Selected Market Areas Updated Review Draft May 5, 2011 15 Figure 5. Average Home Sales Price Per SF by Price Range, March 2009 to March 2010 Source: FCS Group. One reason for the relatively high cost of Lake Oswego housing is the average age of the structure. Lake Oswego’s housing stock is relatively new in comparison to the Portland market. In Lake Oswego, nearly 26% of the dwellings were built since 1990, while less than 17% of the inventory in Portland was built since 1990. In Lake Oswego, only 13% of the housing inventory was built before 1950, whereas in Portland, 57% of the inventory predates 1950. Lake Oswego housing is predominantly owner-occupied, with 68% of the total housing inventory occupied by owners and 24% occupied by renters. However, the share of multifamily dwellings as a percentage of the total housing inventory is increasing. As indicated in Figure 6 and Table 9, recent increases in the housing inventory have been predominantly made up of multifamily structures (apartments and condominiums) and single family attached (townhome) units, which together accounted for 70% of the total housing inventory additions since 2000, according to U.S. Census estimates. Updated Review Draft May 5, 2011 16 Figure 6. Lake Oswego Housing Inventory Additions, 200 to circa 2007* *Estimates for circa 2007 reflect data from the U.S. Census American Community Survey 2006-2008. Table 9. Lake Oswego Housing Characteristics Updated Review Draft May 5, 2011 17 In light of the projected increase in seniors over the age of 65 and slight influx of single-parent households with children under age 18, the desired mix of future housing demand will likely be strongest for relatively smaller two bedroom dwelling units, including single family “cottages” and multifamily apartments and low rise flats or condominiums. These trends are consistent with the City’s vision and aspiration to see a significant demand for both for-sale and rental housing products that appeal to young families, empty nesters, young households and seniors. This report estimates about 10% of the population over the age of 75 will opt to live in assisted living facilities. Given that assumption, the City will likely see a measured increase in the demand for senior care assisted living facilities, but the vast majority of Lake Oswego Baby Boomers will opt to remain in their current residence as long as possible to “age in place”. A significant share may also opt to relocate into smaller dwellings within Lake Oswego, if attainable housing alternatives exist. Population Forecast The population growth forecasts for the Lake Oswego USB considered for this HNA are summarized in Table 12. Base year (2010) housing counts have been updated to reflect current Lake Oswego Planning Department staff estimates for housing units within the Lake Oswego USB. Population 2010 base year estimates for the Lake Oswego USB assume a ratio of total people per occupied housing unit ratio of 2.25, based on Lake Oswego Planning Department estimates. For regulatory compliance, Lake Oswego is required to eventually adopt a forecast “consistent” with that which Metro establishes for Lake Oswego. The most recent long-term jobs and households forecast for the Lake Oswego area adopted by the Metro Council is from 2005 (Metroscope Generation 2.3) and is currently being updated by Metro in coordination with City staff for anticipated release in December 2011. Preliminary employment and households forecasts for the Lake Oswego area have also been released as part of the 2009 Metro UGR, but are not expected to be finalized until December 2011. Based on available data, two growth forecast scenarios are assumed for this interim draft report. Low Growth Forecast: Based on 2000-2010 Census, this forecast reflects the estimated population growth rate trend in Lake Oswego. This forecast extrapolates the past 10-year population growth trend into the future and assumes housing unit growth equates to population growth. Please note that this forecast is not consistent with Metro’s 2005 adopted growth forecast for Lake Oswego as it assumes a much lower rate of growth than the adopted Metro growth forecast for households over the 2005 to 2035 time frame. Medium Growth Forecast: This forecast is in line with the Metro 2005 adopted growth forecasts for long-term 2005-2035 household growth in the Lake Oswego area. A higher growth forecast was considered, but not pursued because it would result in development assumptions that are far higher than market trends evidenced by Census counts and also would be inconsistent with Metro’s adopted growth forecast for the Lake Oswego area. Table 12. Summary of Growth Forecasts Forecast Units 2010 Estimate 2035 Projection 2010 - 2035 Change Average Annual Change AAGR* Low Population 43,094 47,307 4,213 169 0.37% Housing Units 19,166 21,040 1,874 75 0.37% Medium Population 43,094 51,000 8,006 320 0.68% Housing Units 19,166 22,726 3,560 142 0.68% Updated Review Draft May 5, 2011 18 *AAGR = Average Annual Growth Rate Policy implications associated with this trend and forecast section are included in the conclusions section of this report. Housing Land Supply and Capacity Analysis The housing demand and vacant buildable lands inventory (BLI) methodology in this section should be consistent with the state MHR requirements. The following steps were performed accordingly: 1. Calculated gross BLI of vacant and part-vacant residential-zoned land in Lake Oswego USB. 2. Removed environmental constraints and land for public facilities. 3. Determined minimum and maximum housing capacity allowed with current zoning on vacant buildable lands. 4. Determined 20-year housing needs for low and medium growth forecasts. 5. Compared dwelling demand forecast to dwelling capacity on vacant, part vacant and redevelopment lands using current zoning. 6. Applied Metropolitan Housing Rule (MHR) requirements: - Provide the opportunity for a 50/50 mix of attached and detached housing. - Provide for an overall density of 10 dwelling units/acre for needed land. - Provide types and densities for present and future area residents of all incomes. Buildable Land Inventory The City of Lake Oswego Planning Department estimates that the City currently has approximately 616 acres of buildable lands in residentially designated zones, including approximately 77 acres of vacant land and 539 acres of part-vacant residentially zoned land as shown in Table 13. Part vacant land may have a structure on it, but the footprint of that structure could easily allow for further residential unit(s) on the site under current zoning. Table 13. Summary of Vacant and Part-Vacant Residential Buildable Land Inventory and Expected Dwelling Capacity Levels Residentially Designated Land and Buildable Land Inventory, Lake Oswego USB Zone/Plan Designation Total Acres within USB Area as % of Total Land in USB Vacant Acres Part Vacant Acres Total Acres R-0 225.7 2.7% 0.0 5.6 5.6 R-2 10.1 0.1% 2.2 0 2.2 R-2.5 3.2 <0.1% 0.4 0 0.4 R-3 166.6 2.0% 0.5 12.5 13.0 R-5 503.7 6.0% 4.4 18.1 22.5 R-6 104.2 1.2% 0.6 0 0.6 R-7.5 2122.2 25.2% 33.0 242.7 275.7 R-10 1921.8 22.8% 18.5 179.5 198.0 R-15 822.8 9.8% 17.7 80.5 98.2 Total 77.3 538.9 616.2 Source: City of Lake Oswego, January 2011. Table 14 shows that the vacant land area is zoned to accommodate approximately 447 dwelling units at current capacity levels. Updated Review Draft May 5, 2011 19 Table 14. Summary of Vacant Residential Buildable Land Inventory and Expected Dwelling Capacity Levels Zone/Plan Designation Vacant Acres Maximum Allowed Density (DU/Acre) Maximum Allowed/ Permitted Dwellings R-0 0.0 34.0 0 R-2 2.2 28.5 63 R-2.5 0.4 28.5 11 R-3 0.5 12.9 6 R-5 4.4 8.7 38 R-6 0.6 7.3 4 R-7.5 33.0 5.8 191 R-10 18.5 4.4 81 R-15 17.7 2.9 51 Total 77.3 5.8 447 Source: City of Lake Oswego, Winterbrook Planning. As shown in Table 15, Lake Oswego has development opportunities currently that are mostly concentrated among lower-density land use zone/plan designations, including 242.7 acres of R-7.5, 179.5 acres of R-10, and 80.5 acres of R-15 land area. The part-vacant land inventory is estimated to accommodate 1,708 net new dwellings under existing land use zone/plan designations. Table 15. Summary of Part-Vacant Residential Buildable Land Inventory and Expected Dwelling Capacity Levels Zone/Plan Designation Part Vacant Acres Maximum Allowed Density (DUs/Acre) Maximum Allowed Dwellings Dwelling Unit Cap (Max) Less Existing Dwelling Units Maximum Net New Dwellings R-0 5.6 34.0 191 191 44 147 R-2 0 28.5 000 0 R-2.5 0 28.5 000 0 R-3 12.5 12.9 161 162 33 129 R-5 18.1 8.7 157 158 43 115 R-6 0 7.3 000 0 R-7.5 242.7 5.8 1,408 1,409 631 778 R-10 179.5 4.4 790 782 332 450 R-15 80.5 2.9 233 234 145 89 Total 538.9 5.5 2,941 2,936 1,228 1,708 Source: City of Lake Oswego, January 2011. Adding the expected dwelling units on vacant land (447) and part-vacant land (1,708) results in additional dwelling capacity level of 2,155 units. Updated Review Draft May 5, 2011 20 Redevelopment Analysis In order to better understand how many new housing units may be constructed on land within the Lake Oswego USB, FCS Group and Lake Oswego Planning staff estimated the potential number of net new units that could reasonably be expected to redevelop in residential and mixed-use zones. The residential redevelopment analysis focuses on medium and higher density residential zones in the USB (R-0, R-2, R-2.5, R-3, R-5). It includes lots with an assessed improvement value to land value ratio of 1.5 or less and tax lots over 0.20 acres (8,712 SF) in net buildable land area, defined as net acres with medium to very high redevelopment potential. Environmental constraints were removed, and the maximum capacity calculated based on net acreage by zone. Existing dwellings were estimated based on total developed residential floor area (assuming an average of 1,250 square feet per dwelling unit) then subtracted from the potential capacity to determine the net potential for additional units. As shown in Table 16 below, the preliminary redevelopment analysis identifies the potential for up to 1,331 net new dwellings in medium and high-density residential zones. Table 16. Summary of Redevelopment Potential in Medium and High-Density Residential Zones Zoning  Buildable  Redevelopment  Acres   Max.  Allowed DUs  Per Acre  Estimated   Existing DUs  Potential  Max DUs at  Zoned  Capacity    Net New DU  Capacity   R‐0 17.4 34.0 148 657 509  R‐2 4.2 28.5 31 91 60  R‐2.5 1.3 28.5 2 36 34  R‐3 36.9 12.9 196 493 297  R‐5 67.4 8.7 160 590 432  Total 127.1  537 1,867 1,331  Source: Analysis by FCS Group and City of Lake Oswego Long Range Planning staff, 2011. Redevelopment analysis also was conducted for mixed use zones allowing both residential and other uses (GC/R-0, NC/R-0, OC/R-3, EC, GC, HC, EC/R-0). This analysis focused on the following key districts: Foothills, Downtown, Kruse Way and the Boones Ferry Corridor. The same methodology was used to determine buildable land. In addition, this analysis assumes a range of building floor areas allocated toward housing. The residential allocation assumptions differ by zone based on City staff and consultant observations in the city and region. The preliminary findings, as shown in Table 17, results in up to 106.6 acres of mixed-use zoned land area that is likely to redevelop under market conditions over the next 20 years. The redevelopment potential in these mixed-use areas is zoned to accommodate up to 4.1 million square feet of building floor area, though not all of this development will be housing. An analysis of potential housing units on these mixed-use redevelopment lands results in up to 2,522 dwellings that could potentially be provided in these mixed-use areas under current zoning. After accounting for the existing 434 dwellings on these properties, the net new residential development potential on mixed-use redevelopment lands in the Lake Oswego USB is expected to be 2,088 dwelling units. The remaining portion of these redeveloped lands could serve non-residential development and employment/job growth. Updated Review Draft May 5, 2011 21 Table 17. Summary of Redevelopment Potential in Mixed-Use Zones Zoning  Net  Buildable  Redevelop‐ men Acres*  Estimated   FAR Max  Per  Zoning   Estimated  Max  Building SF  at Zoned  Capacity  Estimated  Residential  FAR as % of  Total FAR  Estimated  Maximum  New  Dwellings  at Zoned  Capacity**  Less  Existing  DUs  Estimated  Max Net  New DUs  GC 21.3 0.30 278,218 50% 121 ‐ 121  NC/RO 2.3 0.25 25,047 50% 11 1 10  OC/R3 12.0 0.30 157,208 50% 68 2 66  EC 14.8 3.00 1,936,678 80% 1,347 9 1,338  HC 29.0 0.30 378,319 10% 33 ‐ 33  CR&D 0.0 0.50 ‐ 10% ‐ ‐ ‐  EC/RO 25.7 1.20 1,340,777 80% 933 422 511  OC   1.6 0.30 20,386 50% 9 ‐ 9  Total 106.6  4,136,632  2,522 434 2,088  * includes tax lots with existing land improvement value to land value ratio of 1.5 or less. ** assumes 1,150 square feet average floor area per future dwelling unit. FAR = Building Floor-to-Land Area ratio. DUs = dwelling units. Source: Analysis by FCS GROUP based on City of Lake Oswego redevelopment assumptions. Based on the preceding analyses, the Lake Oswego USB has the potential of accommodating approximately 5,574 net new dwelling units under current zoning capacity. As indicated in Table 18, the vacant, part vacant and redevelopment lands have the potential of accommodating about 1,646 single family detached dwellings, 1,017 medium-density dwellings (townhomes, duplexes, etc.) and 2,911 multifamily dwellings (apartments and mid-rise flats) under current zoning. Table 18. Summary of Potential Net New Residential Dwelling Unit Capacity in Lake Oswego USB Land Classification  Low Density  Dwellings 5  Medium  Density  Dwellings 6  Higher Density  Dwellings 7 Total Dwellings  Vacant Land in "R Zones" 1                   329                     44                     74               447   Part Vacant Land in "R Zones" 2               1,317                    244                   147            1,708   Redevelopment Land in Medium  & High Density "R Zones" 3                      ‐                      729                   602            1,331   Redevelopment Land in "Mixed‐ Use Zones" 4                      ‐                         ‐                 2,088            2,088   Total              1,646                1,017               2,911            5,574   Notes: 1 derived from Table 14. 2 derived from Table 15. 3 derived from Table16. 4 derived from Table 17. 5 reflects land zoned R-6, R-7.5, R-10, and R-15. 6reflects land zoned R-3, and R-5. 7reflects land zoned R-0, R-2, and R-2.5; and the mixed-use zones (GC, NC/RO, OC/R-3, EC, HC, CR&D, EC/RO and OC). Source: compiled by FCS Group. Housing Needs Analysis Updated Review Draft May 5, 2011 22 Housing Requirements Housing Mix Requirement According to state Metropolitan Housing Rule (MHR) requirements (OAR 660-007-0000) , Lake Oswego “must provide the opportunity for at least 50 percent of new residential units to be attached single family housing or multiple family housing or justify an alternative percentage based on changing circumstances.” Lake Oswego meets this requirement by allowing zero lot line (attached single family) dwellings in all residential zones. Population Forecast Based on the expected development capacity levels described earlier, Lake Oswego could potentially provide up to 5,574 dwelling units without changes to existing zone/plan standards or USB boundary in excess of demand anticipated by the medium growth forecast. Housing Density Requirements The MHR also requires Lake Oswego to provide for needed housing at an overall residential density of 10 or more dwelling units per net buildable acre. Options for meeting the 10 dwelling unit per acre requirement are discussed in the following section. Housing Attainability Requirements The MHR requires cities in the Portland Metro region to provide housing opportunities based on the region’s income level distribution. Table 19 below summarizes regional income ranges by very low, low, lower middle, upper middle and high income ranges, according to the U.S. Department of Housing and Urban Development. FCS group updated the ranges to reflect 2010 as the base planning year. Between 2007 and 2010, the share of higher-income households went up; middle income households dropped from 40% to 34% and the lower income households share stayed about the same. The MHR requires Lake Oswego to meet the needs of the “area” or region (not city) residents at “all income levels”. For Lake Oswego, the area being considered is Clackamas County. Table 19. Income Levels and Distribution in 2010 Income Levels for Clackamas County  Lake Oswego   Qualifying Income       Income Cohort  Lower‐ end  Upper‐ End Households Percent  Dist. Households Percent  Dist.  High (120% or more of MFI*) $85,440    or more                  293,619  35%                 8,255  53% Upper Middle (80%‐120% of MFI) $56,960  $85,440                  166,716  20%                 2,519  16% Lower Middle (50% ‐80% of MFI) $35,600  $56,960                  118,609  14%                 1,617  10% Low (30%‐50% of MFI) $21,360  $35,600                  160,910  19%                 2,145  14% Very Low (less than 30% of MFI) $21,360    or less                    88,749  11%                     995  6% Total                   828,604  100%               15,531  100% * Median Family Income  Updated Review Draft May 5, 2011 23 The income levels and distribution in Table 19 have been translated into a range of housing prices, unit types and allocation for future dwellings. To reflect the demographic trend of an aging population and shrinking household size, along with the desire to attract more young households, the allocations in Table 20 have been adjusted slightly in favor of additional allocation toward the upper and lower middle income range. Table 20. Home Types and Price Points to Meet Attainability Goals*   Owner‐Occupied Housing          Approximate Attainable Home  Price*  Low  Range  High  Range  Attainable Housing  Product**  Net New DU  Allocation to  Address  Attainability   High (120% or more of Median  Income) $494,000 or more  SFD or other high end  type 25%  Upper Middle (80%  to 120% of  Median Income) $329,000 $494,000  SFD  or other mid‐value  type 30%  Lower Middle (50%  to 80% of  Median Income) $206,000 $329,000  Townhome/Small Lot  "cottage" SFD 15%  Low (30% to 50% of Median Income) $123,000 $206,000 Duplex/Triplex/Quadplex 19%  Very Low (less than 30% of Median  Income) or less $123,000  Condos/Townhomes &  gov. assisted 11%             100%  *Assumes 35% of income is used for mortgage payment, 20% downpayment, 6% interest, 30-year mortgage. ** Consistent with regional HUD income limits shown in Table.   Renter‐Occupied Housing          Approximate Attainable Monthly  Rents*  Low  Range  High  Range  Attainable Housing  Product  Net New DU  Allocation to  Address  Attainability   High (120% or more of Median  Income) $2,492  or more  Any housing type, higher  price 25%  Upper Middle (80%  to 120% of  Median Income) $1,661  $2,492   Any housing type, lower  price 30%  Lower Middle (50%  to 80% of  Median Income) $1,038  $1,661   Small‐lot "cottage" SFD,  SFA, or apt. 15%  Low (30% to 50% of Median Income) $623  $1,038   1‐2 bedroom apartment  or plexes 19%  Very Low (less than 30% of Median  Income) or less $623   Apartments & gov.  assisted housing 11%             100%  *Assumes 35% of income is used for rental payments. ** consistent with regional HUD income limits shown in Table. Updated Review Draft May 5, 2011 24 In consultation with the Goal 9/10 Work Group, the following distribution is currently recommended to attract more middle income households – with a focus on strategies that provide more small lot and attached dwelling developments. Table 21.Projected Residential Housing Need Mix, Lake Oswego USB, 2010 to 2035 Owner-Occupied Dus Renter-Occupied Dus All Dus Average density (DU/NBA) Housing Tenure Distribution 64.5% 35.5% 100% Distribution of Housing by Unit Type Detached Large Lot SF (>5,000 sq.ft.) 34% 5% 23.7% 5.0 Detached Small Lot SF (<= 5,000 sq.ft.) 20% 6% 15.0% 9.0 Attached SF (Rowhouses, SDUs, Zero Lot Line) 32% 19% 27.4% 14.0 Duplex/Triplex 6% 20% 11.0% 8.0 Multifamily (Apartments, Condos) 8% 50% 22.9% 30.0 Total 100% 100% 100% Source: Housing tenure estimates from Draft Housing Needs Analysis, Winterbrook/ECONorthwest; housing type mix assumptions by FCS GROUP. Comparison of Residential Capacity and Projected Demand Future Needed Housing Types Based on the preceding analysis, the Lake Oswego USB can accommodate approximately 5,574 net new dwelling units under current zoning capacity assumptions. There may also be additional dwelling unit capacity that could be reflected by the addition of secondary dwelling units (SDUs) which are conservatively excluded from these capacity forecasts. As indicated in Table 22, after applying the housing attainability assumptions (shown in Table 20) to the low and medium growth forecasts, it appears that the City can easily accommodate the low growth forecast but would need to adopt some new policies to fully accommodate the expected medium density housing need associated with the medium growth forecast. The analysis indicates that while the low density and high density residential needs can be met through a combination of development on vacant lands and redevelopment lands, Lake Oswego will likely have more demand for medium-density development than the zoned land supply would accommodate. Updated Review Draft May 5, 2011 25 Table 22. Residential Dwelling Capacity and Projected Housing Demand, Lake Oswego USB, 2010 to 2035 Land Use Classifications Potential Net Buildable Land Area in USB (acres) Avg. Density Assumption (Dwellings Per Acre) Potential New Dwelling "Capacity" Under Current Zoning New Dwellings Required by 2035 to meet MHR density and attainability issues Potential Acres of Land Surplus after year 2035 Vacant Part VacantRedevelop‐ment:  R Zones Redevelop‐ment: Mixed Use Zones Total Acres Potential Density (DU/acre) Potential Dwellings  Low  ForecastMedium Forecast Low  ForecastMedium Forecast Low Density (R‐7.5, R‐10, R‐15) 69.2 502.7                  ‐                      ‐   571.9 4.8                      2,755            415             795         485.8         406.9  Medium Density (R‐3, R‐5) 5.5 30.6 104.3                    ‐   140.4 10.2                      1,430            719         1,366           69.9              6.3  High Density (R0, R‐2, R‐2.5, GC, NC/RO, OC/R3, EC, HC, CR&D, EC/RO and OC) 2.6 5.6 22.8 106.6 137.6 33.7                      4,634            740         1,400         115.6           96.0  Total 77.3 538.9 127.1 106.6 849.9                        8,819        1,874         3,560         671.2         509.3  Notes: 1 derived from Table 18. 2 derived from Table 12. Source: compiled by FCS Group. Updated Review Draft May 5, 2011 26 The projected housing deficit for medium density housing could be addressed through a combination of local land use policy measures discussed in the Implementation section. Future Land Needs The results from the preliminary housing analysis generally indicate that the Lake Oswego USB has an adequate amount of low-density land area to meet the 2035 forecasts for its projected housing needs. However, there is an additional need to accommodate approximately 349 medium density (townhouse, duplex, SDU, etc.) dwelling units. This need could mainly be addressed by redevelopment in appropriate locations within the existing USB area. Summary and Policy Options Lake Oswego appears to have surplus of buildable low-density land area, but a deficit of medium density land area to meet MHR attainability requirements. To achieve this 10 dwelling units per net buildable acre or higher if desired locally, various policy measures could be considered, such as increasing housing density in designated centers like the Boones Ferry Road Corridor and the Foothills area, and supporting new policies that help encourage development of SDUs. Table 23 lists potential strategies and potential density levels associated with potential new development within the Lake Oswego USB. Given the projected housing need under the low to medium growth forecasts (1,874 to 3,561 dwellings), Lake Oswego has the potential to meet or exceed the MHR density requirements over the next 20 years, if the majority of net new development over the next 20 years occurs as medium to high density development on vacant lands or as redevelopment on existing R zones or mixed-use zones inside the USB. Table 23. Options for Meeting the MHR Density Requirement for Needed Land Estimated Acres in USB (net buildable) Dwelling Potential (net new) Potential Avg. Density (DU/acre) New Dwellings on Existing Vacant and Part-Vacant Land Inventory in Lake Oswego USB: 616 acres Low Density 571.9 1,640 2.9 Medium Density 36.1 292 8.1 Higher Density 8.2 221 30.0 Redevelopment: Net New Dwellings on Medium-Density R Zones (R-O, R-2, R-2.5, R-3, R-5): 127 acres 127 1,331 10.5 Redevelopment: Net New Dwellings on Mixed-Use Zones (GC/RO, NC/RO, OC/R-3, EC, GC, HC, EC/RO): 107 acres 107 2,088 19.5 Redevelopment: Increase housing in Boones Ferry Corridor (various strategies may be used) n/a 110+ n/a Specific Plan and Zone Change for Foothills Industrial Area (14.6 +/- acres) 14.6 1,300 89.0 New Goals and Standards for SDUs n/a 1,000 n/a Total 864.6 7,984 + Source: Compiled by City of Lake Oswego Long Range Planning Department, and FCS Group, April 29, 2011. Updated Review Draft May 5, 2011 27 Although the City appears to meet its MHR requirements for mix, needed housing types and locations, it should review its code to make sure these areas all operate under a clear and objective standard test. In other words, for needed housing types, policies and regulations should not prohibit or discourage the provision of affordable and needed housing. In addition, the City may want to consider policies and incentives from the set of options included in the next section to provide ample and adequate land in the right locations for Lake Oswego senior residents to age in place, and for young people and families to find a home in Lake Oswego. By the conclusion of Periodic Review, Council will need to adopt a population projection and update these strategies if and as needed. Implementation The following set of policy options have been developed in response to state requirements and local aspirations. These considerations and recommendations have been compiled from previous housing strategies as well as conversations with the Comprehensive Plan Citizen Advisory Committee, Goal 9 and 10 Work Group and Planning Commission. The policy options are intended to create a menu of options for the City to consider as they work to implement the findings and policy choices that have been identified through this HNA process. The demographic analysis suggests that people are remaining in or moving to Lake Oswego to retire and indicates a need to plan for housing oriented toward older age groups that typically demand smaller units with lower property maintenance requirements. Discussions with the Citizen Advisory Committee and the community as a whole have indicated a specific desire to attract more young families with children to which are vital to the City and schools in particular. This suggests that higher housing costs in Lake Oswego compared with neighboring jurisdictions may be a barrier for young families. In order to provide a diversity of housing types and densities, the City may want to consider planning for housing types more affordable for these families. Vacant Land Supply/Redevelopment Lake Oswego has a relatively limited supply of vacant land area inside the USB, and now must rely on redevelopment and optimization of the remaining vacant land inventory to meet future needs and be consistent with MHR requirements. Possible Strategy Lake Oswego should continue to emphasize policies that encourage or support redevelopment at designated areas (such as mixed-use and neighborhood centers); and policies and code that supports new accessory dwelling units; single family attached housing; and multifamily housing, especially in designated centers. Metropolitan Housing Rule Lake Oswego is required to meet the State’s MHR requirements for housing mix and density target levels on buildable land (see page 3) and Lake Oswego has a limited amount of vacant land and needs to develop strategies to meet future housing needs and MHR requirements in a way that fits within the city’s unique character. Lake Oswego’s residential zones allow for attached “zero lot line” housing and meets this requirement. The MHR also requires the City to provide an opportunity for all needed housing to be developed under clear and objective development standards. “Needed housing” includes all single family and multifamily attached and detached housing; this requirement is not exclusive to the “buildable” portion of the city. Multifamily and single family housing with three or more attached units in Lake Oswego Updated Review Draft May 5, 2011 28 currently goes through a design review process with the Design Review Commission. The City may need to change review criteria to ensure the opportunity for these housing types to be developed under clear and objectives standards. This does not mean that these uses have to be approved outright; conditional use and two-track review processes may still may be considered. This will need further discussion and refinement in 2011-2012, the implementation phase. Possible Strategies Lake Oswego has several policy options for meeting housing needs. 1. Increase certainty and comply with Division 007 MHR standards in Mixed Use Zones:  Amend mixed-use zones in town centers to encourage redevelopment with higher density attached and multifamily housing under clear and objective review standards. This may require a separate approval path for residential projects in these areas.  Ensure development standards do not impede residential investment in town centers 2. Develop policies to encourage SDUs in walkable areas close to transit and commercial nodes. Other Complete Neighborhood and Housing Strategies for Consideration In addition to the policy options above, other options to help implement the Complete Neighborhoods and Housing element of the vision include the following. 1. Strategically explore re-designation in select locations near centers with transportation options and other amenities to focus new development and redevelopment in the best areas for Lake Oswego while maintaining the integrity of single family neighborhoods. Options include:  Adopt a new R-4 small lot single family zone, to be used in combination with courtyard infill development standards in partially vacant areas.  Amend use standards in low and medium density residential zones to allow for more efficient infill development by encouraging, under clear and objective standards,:  Courtyard infill development in low and medium density residential zones in town centers  Cottage development  Secondary dwelling units in all low density residential zones  Allowing duplexes on corner lots in low and medium density residential zones 2. Amend zones and development standards related to parking, open space and building height in appropriate mixed-use locations to allow for higher densities under clear and objective standards. These could include adjustments to allowable heights and densities, reduction of parking requirements, allowances for meeting landscaping requirements, permitting greater floor lot coverage to make structured parking more feasible, and/or removing or limiting subjective buffering standards.  Remove or objectify and limit subjective buffering requirements in downtown areas. 3. Consider the following strategies to meet the need for lower income housing attainability:  Establish a minimum percentage of affordable units in all developments that receive assistance from the Lake Oswego Redevelopment Agency.  Work toward a goal of “no net loss” of existing affordable housing through incentives and other means.  Improve the permitting process to allow for needed housing types including secondary dwelling units while respecting neighborhoods.  Avoid “one size fits all” approaches for different geographic areas in Lake Oswego. Updated Review Draft May 5, 2011 29 Appendices - Housing Attainability Analysis - Buildable Lands Inventory Updated Review Draft May 5, 2011 30 Appendix A. Housing Attainability Analysis for Lake Oswego USB Urban Clackamas County Median Family Income Level (2010/2011)* $71,200    Market Segment by Income Level Lower‐end Upper‐End High (120% or more of MFI)   120% Upper Middle (80%  to 120% of MFI) 80% 120% Lower Middle (50%  to 80% of MFI) 50% 80% Low (30% to 50%) 30% 50% Very Low (less than 30% of MFI) 30%           Qualifying Income Level Lower‐end Upper‐End High (120% or more of MFI) $85,440 or more  Upper Middle (80%  to 120% of MFI) $56,960 $85,440 Lower Middle (50%  to 80% of MFI) $35,600 $56,960 Low (30% to 50%) $21,360 $35,600 Very Low (less than 30% of MFI) $21,360 or less         Available Annual Housing Payment (@35% of income level) Lower‐end Upper‐End High (120% or more of MFI) $29,904 or more  Upper Middle (80%  to 120% of MFI) $19,936 $29,904 Lower Middle (50%  to 80% of MFI) $12,460 $19,936 Low (30% to 50%) $7,476 $12,460 Very Low (less than 30% of MFI) $7,476 or less         Available Monthly Rent or Payment  (@35% of income level) Lower‐end Upper‐End High (120% or more of MFI) $2,492 or more  Upper Middle (80%  to 120% of MFI) $1,661 $2,492 Lower Middle (50%  to 80% of MFI) $1,038 $1,661 Low (30% to 50%) $623 $1,038 Very Low (less than 30% of MFI) $623 or less         Approximate Attainable Home Price** Lower‐end Upper‐End High (120% or more of MFI) $494,000  or more  Upper Middle (80%  to 120% of MFI) $329,000  $494,000  Lower Middle (50%  to 80% of MFI) $206,000  $329,000  Low (30% to 50%) $123,000  $206,000  Very Low (less than 30% of MFI) $123,000    or less   Notes: * based on Housing and Urban Development thresholds for Clackamas County in 2010/2011. ** assumes 20% downpayment on 30-year fixed mortgage at 6.0% interest. Source: analysis by FCS Group using Housing and Urban Development, and US Census data. Updated Review Draft May 5, 2011 31 Appendix B: Buildable Lands Inventory Net Buildable Acres in the USB, Spring 2011             Vacant  Part  Vacant Red‐R Red‐ Mxd Total  Acres Potential  Density     Mixed 0 0 0 106.6 106.6        RO 0 5.6 17.4 0 23 34     R2 2.2 0 4.2 0 6.4 28.5     R2.5 0.4 0 1.3 0 1.7 28.5     R3 0.5 12.5 36.9 0 49.9 12.9     R5 4.4 18.1 67.4 0 89.9 8.7     R6 0.6 0 0 0 0.6 7.3     R7.5 33 242.7 0 0 275.7 5.8     R10 18.5 179.5 0 0 198 4.4     R15 17.7 80.5 0 0 98.2 2.9     Total 77.3 538.9 127.2 0 743.4                       Weighted  Low         Acres Density Weights Density  R7.5 33 242.7 0 0 275.7 5.8 48%2.8 R10 18.5 179.5 0 0 198 4.4 35%1.5 R15 17.7 80.5 0 0 98.2 2.9 17%0.5 Subtotal 69.2 502.7 0 0 571.9   100%4.8                  Medium            Acres Density Weights Density  R3 0.5 12.5 36.9 0 49.9 12.9 36%4.6 R5 4.4 18.1 67.4 0 89.9 8.7 64%5.6 R6 0.6 0 0 0 0.6 7.3 0%0.0 Subtotal 5.5 30.6 104.3 0 140.4   100%10.2                     High         Acres Density Weights Density  Mixed 0 0 0 106.6 106.6 34 77%26.3 RO 0 5.6 17.4 0 23 34 17%5.7 R2 2.2 0 4.2 0 6.4 28.5 5%1.3 R2.5 0.4 0 1.3 0 1.7 28.5 1%0.4 Subtotal 2.6 5.6 22.9 106.6 137.7   100%33.7