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Agenda Item - 2020-11-23 - Number 09.1 - Staff Memo 11/19/20 w-Attach (PP 19-0008) MEMORANDUM CI °REGp,/ TO: Planning Commission FROM: Erik Olson, Senior Planner SUBJECT: HB 2001 and HB 2003 Rulemaking Update— November 2020 (PP 19-0008) DATE: November 19, 2020 MEETING DATE: November 23, 2020 BACKGROUND In late 2019, City Council requested that staff monitor the State of Oregon's rulemaking process regarding the implementation of House Bill 2001 (HB 2001), with particular attention to how the bill could impact Lake Oswego—which is defined as a "large and metro" city under the bill. Since that time, staff has tracked numerous meetings of the Rulemaking Advisory Committee (RAC) and other technical advisory committees established by the Oregon Department of Land Conservation and Development (DLCD) to develop and refine detailed recommendations on how to implement the middle housing provisions of the bill. These technical advisory committees have been working for several months now to develop recommendations regarding the minimum requirements for jurisdictions to comply with middle housing provisions, the model code that will apply to cities unable to adopt their own compliant housing code, and a reporting and monitoring process related to the Housing Production Strategies elements of HB 2003. Summaries of ongoing state Rulemaking activity can be found here: https://www.ci.oswego.or.us/planning/pp-19-0008-house-bills-2001-and-2003. DISCUSSION On Thursday, November 12, 2020, the Land Conservation and Development Commission (LCDC) held their second Hearing on House Bills 2001 and 2003. At the meeting, the LCDC adopted DLCD staff's proposed rules related to the creation of local Housing Production Strategies as required under House Bill 2003, with no recommended changes. A description of these rules can be found in previous Rulemaking updates as well as in Attachment B. These rules do not require any action by the City until 2023, when Lake Oswego is required to adopt an updated Housing Needs Analysis. With respect to House Bill 2001, the LCDC recommended that the RAC provide additional input regarding a few remaining topics of discussion at a Special LCDC meeting to be scheduled for 503.635.0290 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Page 2 December 9, 2020, during which LCDC is now expected to issue a final decision regarding the HB 2001 rules. Staff has provided a summary of key issues and the status of associated decision-making processes below. House Bill 2001 Rulemaking Though the LCDC did not formally adopt DLCD staff recommendations related to House Bill 2001 at the Hearing on November 12, they did agree on the recommendations in the staff proposal related to the performance metric approach, statewide planning goal protections, and cottage cluster standards. The LCDC asked the RAC to provide additional input regarding the proposed provisions related to master-planned communities, infrastructure-constrained lands, and alternative siting or design standards at the forthcoming Special Meeting on December 9th Performance Metric Approach At the Hearing, DLCD staff discussed the results of their recently-completed analysis of the performance metric approach in cities throughout the state to determine if it was workable or if the percentages needed to be modified. The analysis, which is summarized in Attachment A, compares the percentages of eligible residential lots that would be required to allow triplexes, quadplexes or cottage clusters under the performance metric approach to the percentages that would be required for those housing types under the minimum compliance standards related to minimum lot size. The analysis found that only one out of the 24 cities in the study would allow triplexes and cottage clusters on more lots under the performance metric approach, while 12 out of the 24 cities in the study would allow quadplexes on more lots using the performance metric approach. Attachment A also outlines what DLCD describes as a "potential policy deficiency" in the previously-proposed performance metric approach: "if a detached quadplex can be built on a 7,000 sf lot, given the footprint limitations and design efficiencies inherent cottage cluster developments, it is likely that there is a similar potential that a property owner could develop a cottage cluster on that same 7,000 sf lot". Based on this analysis, DLCD staff recommended that the proposed performance metric standards for cottage clusters be set at the same level as the standards for quadplexes. This could be considered a mandate for allowing cottage clusters comprised of tiny homes (typically 400-600 square feet of floor area) in areas where quadplexes are allowed. As discussed in Attachment A, this leaves the proposed performance metric standards for middle housing type allowances for triplexes at 80%, quadplexes at 70%, and townhouses at 60%, but would increase cottage clusters from 50%to 70%to match the performance metric percentage for quadplexes. The LCDC concurred with this recommendation, and indicated that they would not task the RAC with providing additional input on this topic. 503.635.0290 380 A Avenue PO Box 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Page 3 While previous meetings had included discussion of different metrics that could be used to identify locations vulnerable to gentrification or displacement, which could then be subject to a "partial whittle" from the areas where middle housing is required, DLCD staff ultimately did not recommend such changes to the LCDC. Staff continues to note that it will be essential to fully consider the potential displacement of lower income residents as existing affordable housing is displaced by middle housing developments, as it could be one of many unintended consequences of the implementation of House Bill 2001 under any approach. As mentioned above, the LCDC also agreed with DLCD staff recommendations related to statewide planning goal protections and cottage cluster standards, which are described in previous Rulemaking updates as well as in Attachment A. Staff notes that, despite the LCDC recommendation, a significant lack of clarity remains regarding the extent to which middle housing can be regulated on goal-protected lands, and how, specifically, lots or parcels can be exempted from performance metric calculations based on the presence of various different goal-protected resources. Master-planned communities The LCDC continued to hear concerns at the second Hearing from housing advocates and representatives from local jurisdictions about the master planned communities provisions in the proposed Administrative Rules. Much of the testimony received at the Hearing was related to the concern that these provisions could solidify existing patterns of exclusion and not allow future middle housing infill opportunities within such areas. As discussed in previous Rulemaking updates, the approach described in Attachment A would allow cities to set an allowed net density of a minimum of 15 dwelling units per acre and allocate residential units within different "subareas" of varying densities within a master planned community. The LCDC expressed general agreement with the need for special provisions within new master-planned communities, but tasked the RAC to further analyze the proposed minimum net density provisions and other standards intended to promote diverse housing types within master-planned communities, to ensure that they could not be utilized in a way that would continue patterns of exclusion. Staff will continue to monitor this topic when it is discussed in further detail at the December 9th Special LCDC Meeting. Infrastructure-constrained lands Though provisions related to infrastructure-constrained lands were a large topic of discussion at previous RAC and technical advisory committee meetings, several LCDC Commissioners conveyed that they had new concerns related to these provisions at their second Hearing. These concerns seemed to have little to do with the clarifications to the rules related to infrastructure-constrained lands proposed by DLCD staff in Attachment A, but more to do with 503.635.0290 380 A Avenue PO Box 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Page 4 concerns that these provisions could end up unnecessarily precluding middle housing development in certain situations. For example, LCDC Commissioner Hallova described a situation where a developer wants to provide the infrastructure needed to develop middle housing in an area with constrained infrastructure—which, by definition, would go beyond what would be expected based on a proportionality analysis for a typical middle housing development. Commissioner Hallova stated that she would not want the zoning code to prevent a developer from stepping in and providing the additional infrastructure to facilitate middle housing production in such situations, and said that she was leaning towards thinking that the ability to limit middle housing development on infrastructure-constrained lands should be removed from the proposed rules altogether. DLCD staff responded by reminding the LCDC that there were various legal considerations that led them to develop the proposed rules related to infrastructure-constrained lands, including the potential that an expectation for developers to provide extensive infrastructure in order to develop middle housing in certain area could conflict with the intent of House Bill 2001 to minimize unreasonable cost and delay. DLCD staff also pointed out that, as defined in the proposed rules, an "infrastructure constraint" is larger in magnitude than the infrastructure needs a developer is required to address through the improvements typically associated with a development. The LCDC asked the RAC to further explore these provisions to ensure that they do not unnecessarily preclude the development of middle housing in infrastructure-constrained areas where the infrastructure could otherwise be provided by alternatives to typical forms of private- or public-sector infrastructure investment. Staff will continue to monitor this topic when it is discussed in further detail at the December 9th Special LCDC Meeting. Alternative siting or design standards The LCDC also expressed concerns about the alternative siting and design standards in the proposed rules, which are intended to allow cities that have already adopted code changes to permit middle housing development to be able to prove that their existing standards meet the Rulemaking requirements. Specifically, the LCDC explored the question of whether such cities would need to meet the burden of proof that their standards do not result in unreasonable cost and delay, the burden of proof that their standards result in substantial housing production, or if they would need to meet the burden to prove both. LCDC Commissioners suggested that, because these provisions would impact only one or two cities in the state that have already adopted their own potentially-compliant code, there did not necessarily need to be an entirely new system developed to monitor compliance in these cities. The LCDC asked the RAC to explore the implications of establishing the same burden of proof for cities with existing middle housing codes as there are for cities that have yet to adopt 503.635.0290 380 A Avenue PO Box 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Page 5 their own compliant middle housing code. Staff will continue to monitor this topic when it is discussed in further detail at the December 9th Special LCDC Meeting. ATTACHMENTS A. DLCD Staff Report— Large Cities Model Code and Minimum Standards, 10/29/2020 B. DLCD Staff Report— Housing Production Strategy Rules, 10/29/2020 503.635.0290 380 A Avenue PO Box 369 Lake Oswego, OR 97034 www.ci.oswego.or.us 0-11fit* F��; aF' `. •j re on Department of Land Conservation and Development *7411:, 635 Capitol Street NE, Suite 150 Kate Brown,Governor Salem, Oregon 97301-2540 Phone: 503-373-0050 Fax: 503-378-5518 October 29, 2020 www.oregon.gov/LCD TO: Land Conservation and Development Commission IRMA FROM: Jim Rue, Director ' Gordon Howard, Community Services Division Manager Ethan Stuckmayer, Senior Housing Planner Robert Mansolillo, Housing Planner Sean Edging, Housing Policy Analyst SUBJECT: Agenda Item 4, November 12-13, 2020, LCDC Meeting MIDDLE HOUSING LARGE CITIES MODEL CODE AND MINIMUM STANDARDS I. AGENDA ITEM SUMMARY Purpose. This agenda item presents background for the second public hearing by the Land Conservation and Development Commission (LCDC or commission) on proposed Oregon Administrative Rules (OARs) for middle housing as required by HB 2001 (Attachment A), applying to Large Cities with a population over 25,000. To assist the commission in the review and the eventual adoption of the OARs for large cities, the Department of Land Conservation and Development (DLCD or department) has attached the proposed Oregon Administrative Rules (Attachment B), and the Large Cities Middle Housing Model Code (Attachment C). The required Fiscal and Housing Impact Statements for a new Administrative Rule are included as Attachment D. The Rulemaking Advisory Committee (RAC) appointed for this rulemaking has reviewed the Fiscal and Housing Impact Statements. As a result of public comments on draft proposed OAR language and based on commission guidance, department staff have made refinements to the rules that were proposed to the commission at its September 2020 meeting. This staff report and the subsequent staff presentation will detail the specific recommended changes to the large cities rules and model code for commission consideration and adoption. Outcome. Staff recommends the commission take action on this agenda item. At this meeting, upon closing the public hearing and completing their review of the updated proposed rules, the commission can make a motion for adoption of the model code and associated OARs using the recommended language in Section III.G of this report. These rules apply to cities outside of a metropolitan service district boundary with a population more than 25,000, a city with a population over 1,000 within the Portland PP 19-0008 ATTACHMENT A/ PAGE 1 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 2 of 28 Metro boundary, or county unincorporated urbanized areas within the Portland Metro boundary. II. BACKGROUND In 2019, the Oregon Legislature passed, and Governor Brown signed into law, House Bill 2001. This bill was passed with the intent to increase housing choice and supply. HB 2001 requires middle housing to be allowed in all areas zoned for single-family residential development for cities with population above 10,000 and, within the Portland Metro Urban Growth Boundary (UGB), all cities with population greater than 1,000 and urbanized portions of counties. Non-Metro cities ("medium cities") between 10,000 and 25,000 population must allow a duplex on all lots or parcels where single-family detached residences are currently allowed by city zoning. Cities greater than 25,000 population and the affected Portland Metro Area jurisdictions ("large and metro communities") must, in addition to the duplex requirement noted above, allow triplexes, quadplexes, townhomes, and cottage clusters in areas zoned for single-family residential development. The bill has various other provisions that modify or are peripheral to these basic requirements. This staff report concerns the adoption elements for the large city code. The commission adopted medium city code requirements at their meeting in July 2020. III. IMPLEMENTATION MEASURES In September 2019, with a charge developed by LCDC, department staff initiated a joint HB 2001/HB 2003 rulemaking process. With commission guidance, the department convened a rulemaking advisory committee (RAC) and a series of technical advisory committees (TACs) to assist in the development of the rules. The advisory committees consisted of a wide variety of housing, planning, and advocacy stakeholders and were co-chaired by two commission liaisons — Commissioner Anyeley Hallova and former Commission Chair Jerry Lidz. At the time of this staff report, the advisory committee process is complete. The RAC met a total of ten times to discuss all aspects of the HB 2001 rulemaking process, including proposed OAR 660-046, the Medium and Large Cities Model Codes, and related Fiscal and Housing Impact Statements. The technical advisory committee tasked with reviewing the middle housing model code and rules met a total of nine times. At each of these meetings, the technical advisory committee provided feedback and comments on draft versions of proposed OAR Chapter 660, Division 46. For commission consideration, summaries of these meetings are included as Attachments E and F to this report. Department staff are grateful to RAC and TAC members for their extensive review, guidance and participation. A list of RAC and TAC members is included in Attachments M and N. PP 19-0008 ATTACHMENT A/ PAGE 2 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 3 of 28 A. STAKEHOLDER AND COMMUNITY ENGAGMENT To inform the rule and committee guidance, staff conducted extensive community outreach via webinar and in meetings throughout Oregon. This outreach effort included a series of six community conversations on housing held in McMinnville, Medford, Beaverton, Milwaukie, Hermiston, and Redmond. Summaries of these events are also included as attachments to this report. Summaries of these events are included as Attachment G and had been previously provided to commission in May. Department staff have also sought guidance from other communities who historically may not have been able to or been asked to participate in the rulemaking process. These outreach efforts include focus groups with community organizations across the state, ensuring and supporting space for community members on the advisory committee roster. In an effort to reach various perspectives that have traditionally been disproportionately impacted by housing policies, department staff allocated funds for several priority populations to engage in focus groups or rulemaking advisory committee meetings. Organizations representing or serving these populations included: • Native American Youth and Family Center (NAYA) • Portland African American Leadership Forum (PAALF) • Community Alliance of Tenants (CAT) • Lane Independent Living Alliance (LILA) • Portland State University Homelessness Research & Action Collaborative (HRAC) Department staff also established a separate email address — housina.dlcd(cr�state.or.us — to collect additional written comments. Any comments the department received through this email address where provided to the rulemaking advisory committee and technical advisory committee for their consideration. The comments are also available to LCDC in Attachment H. Additionally, department staff coordinated a Speaker's Bureau to present information and receive feedback for the process. Speaker's Bureau events included various planning or housing committee or organization meetings including the Metro Technical Advisory Committee, city planning commission or city council meetings, League of Oregon Cities, and Oregon Chapter of the American Planning Association events. B. FRAMEWORK FOR MIDDLE HOUSING RULEMAKING Section (3)(2) of HB 2001 directs the Land Conservation and Development Commission to develop a model middle housing ordinance each for the medium cities and the large cities no later than December 31, 2020. This report discusses the Large Cities Model Code. Medium cities are required to allow duplexes in single-family zoned areas, while PP 19-0008 ATTACHMENT A/ PAGE 3 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 4 of 28 Large Cities are required to allow duplexes and, in addition, triplexes, quadplexes, townhomes, and cottage clusters in single-family zoned areas. Development of the Large Cities Model Code serves two purposes: 1) the ordinance will provide guidance to cities in implementing code provisions that comply with the intent of HB 2001, and 2) it will apply directly to a city that does not adopt a code that is consistent with HB 2001 provisions and the provisions of any administrative rule adopted by the commission before the applicable statutory deadline. To be in compliance with the provisions of HB 2001, a Large City must adopt updated local land use regulations by June 30, 2022. Prior to this adoption, the city must also submit code amendments through the post-acknowledgement plan amendment process for DLCD review and comment, pursuant to OAR 660-018. During the post- acknowledgement plan amendment process, department staff will review the proposed land use regulations and assess whether they comply with land use statutes and the statewide land use planning goals, including administrative rules and the provisions of Oregon Revised Statute Chapter 197 (Section 2 of HB 2001 is codified in ORS 197.758). If the code is not found to comply with the statute and rules noted above, DLCD staff will provide written comment to the submitting local government through the typical post-acknowledgement plan amendment process. Ultimately, any department appeal, or appeal by another party of a local government's middle housing code provisions would be heard and decided by the Land Use Board of Appeals (LUBA), with potential for appeal of LUBA's decision to Oregon's appellate courts. As outlined in HB 2001, a Large City may either adopt the Large Cities Model Code as- is, either intentionally or through inaction. The city may also adopt other code provisions outside of the Large Cities Model Code so long as the standards are in compliance with the intent of HB 2001 and do not, individually or cumulatively, cause unreasonable cost and delay to the development of middle housing. The Large Cities Model Code is drafted such that all of its standards do not cause unreasonable cost or delay. However, in order for department staff to review for compliance the proposed code amendments that may differ from the standards of the Large Cities Model Code, the department must establish a set of baseline criteria or "minimum compliance standards" to compare with adopted local government middle housing codes. To implement the bill, the department presents two products: 1) a model code that can provide guidance to cities and must be applied directly cities who do not take action to comply with HB 2001 and 2) Oregon Administrative Rule Chapter 660 Division 46 which outlines the middle housing rules applicable to medium and large cities and establishes middle housing minimum compliance standards that can be used to determine if middle housing land use regulations comply with HB 2001. Throughout the development of both products as applied to Large Cities, the advisory committees, department staff, the project consultant, and the advisory committees held several core concepts at the forefront: PP 19-0008 ATTACHMENT A/ PAGE 4 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 5 of 28 • The model code must define how middle housing other than duplexes should be allowed in areas that are zoned for residential use and also allow for the development of single-family dwellings. As with Medium Cities, Large Cities must allow duplexes on every lot or parcel zoned for residential use. • The standards within the model code must not individually or cumulatively cause unreasonable cost and delay to the development of middle housing in Large Cities. • The standards should be specific, clear, and objective. Both of these products are described in more detail below and are provided for LCDC review. Both products are subject to comment during the public hearing scheduled during this agenda item. 1. Large Cities Middle Housing Oregon Administrative Rules Oregon Administrative Rules Chapter 660, Division 46 - Middle Housing in Medium and Large Cities (OAR 660-046) is a new set of rules to implement HB 2001. The draft rules were collaboratively developed by DLCD staff and a consultant team from Angelo Planning Group (APG), EcoNorthwest, and SERA Architects (project team). The Rulemaking and Technical Advisory Committee reviewed and provided comments on the preliminary versions of the minimum compliance standards in Division 46. Division 46 establishes the minimum standards that a city must meet to be deemed compliant with the provisions of HB 2001. The standards outlined in Division 46 constitute the range of reasonable siting and design standards that local governments may adopt to regulate the development of middle housing. These standards are intended to allow local governments more flexibility than the standards included in the Large Cities Model Code. In addition to reasonable siting and design standards, Division 46 outlines important process and enforcement rules such as division applicability, definitions, implementation, and noncompliance. 2. Large Cities Model Code The Large Cities Model Code was developed in conjunction with the minimum compliance standards of Division 46. The content of the Large Cities Model Code is similar to Division 46. However, whereas Division 46 provides flexibility to local governments in how they regulate middle housing within the parameters of the minimum compliance standards, the model code is a set of specific standards a Large City can apply without further interpretation or amendments. PP 19-0008 ATTACHMENT A/ PAGE 5 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 6 of 28 Large Cities may also apply the model code in a modular fashion. A Large City is allowed to develop their own standards, adhering to the minimum compliance standards in Division 46, for most regulations but can apply the model code to other sections. A large city can apply all sections of the model code, or just the sections that will fit its unique implementation of HB 2001. The model code is formatted and written so that it would operate as stand-alone chapters of a local development code including purpose, definitions, applicability, development standards, design standards, and middle housing conversion sections. C. CHANGES TO OAR CHAPTER 660, DIVISION 046 At the meeting on September 25, 2020, the department presented the commission with a draft version of the proposed Division 46 rules for large cities. The commission made comments on the draft rules and kept the public hearing open until November 12, 2020 to gather additional comments and feedback from the public. Since the September commission meeting, department staff have reconvened the Rulemaking Advisory Committee and Middle Housing Model Code Technical Advisory Committee to further discuss the draft rules. Along with comments from the commission, staff used this final meeting with the advisory committees to refine and update the Division 46 rules for Large Cities. Department staff proposes several changes to the proposed rules since the commission last reviewed them in September. These changes are described in more detail below. 1. Master Planned Communities The commission received public comments on how the draft rules address "master planned communities." None of the comments received included any objections to providing some sort of exemption for the initial buildout of existing master planned communities. However some commenters recommended eliminating the provisions related to new master-planned communities, arguing that they were unnecessary and continued patterns of exclusion. The department continues to believe that the administrative rules need a special provision for new master-planned communities. For such communities, which involve large amounts of new development on larger, undeveloped and un-serviced sites, local governments must plan for provision of adequate public facilities, including transportation, utilities, parks, and public services. In planning these new communities, local governments need to know the approximate number of total new dwelling units proposed in master planned communities in order to provide adequate public facilities and infrastructure. While communities can expect incremental and modest increases in middle housing types in existing neighborhoods, the economics of development are much different for large undeveloped parcels, where middle housing allowances could PP 19-0008 ATTACHMENT A/ PAGE 6 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 7 of 28 lead to wide variations of up to four times the number of eventual residential units in such areas. Therefore, the department believes that a master plan area provision allowing local governments to set overall dwelling unit numbers is necessary. Other comments questioned the definition of a "master plan," adopted by a local government, questioning whether it would include a "concept plan" adopted by resolution, not ordinance, for an area not yet annexed to a city, or whether it would include a "community plan" that is adopted for areas that are already mostly or partially developed and have existing urban services. The department proposes modifications to the definition, shown below, that clarify a "master plan" is a plan that is adopted by resolution or ordinance as an amendment to a city's existing comprehensive plan or land use regulations, and that is for an area that is not currently developed with urban- intensity residential uses. The rule, as written, does not allow cities to prohibit redevelopment of housing in master planned communities with middle housing types once initial development has occurred. Staff received feedback that this will upset the balance of uses and planning with the community. The department's recommendation is based upon the fact that, once these neighborhoods are initially built, they become like any other neighborhood within the local government. It would be highly unusual to expect significant redevelopment of newly developed housing for decades beyond initial development, at which point the initial conditions that led to approval and development of a master planned community would have changed significantly. One comment staff and commission received noted problems with the draft rule language in that it does not distinguish between housing subject to HB 2001 and other housing types, such as multi-family development and manufactured homes in manufactured home parks. The department proposes revisions to correct this problem. "Master Planned Communities" are defined in OAR 660-046-0020 as follows (changes are underlined): 10. "Master Planned Community"means a site that is any one of the following: a. Greater than 20 acres in size within a Large City or adjacent to the Large City within the urban growth boundary that is zoned for or proposed to be Zoned For Residential Use, and which is not currently developed with urban residential uses, for which a Large City proposes to adopt, resolution or ordinance, a master plan or a plan that functions in the same manner as a master plan; b. Greater than 20 acres in size within a Large City or adjacent to the Large City within the urban growth boundary for which a Large City adopted, by resolution or ordinance, a master plan or a plan that functions in the same manner as a master plan after the site was incorporated into the urban growth boundary; or PP 19-0008 ATTACHMENT A/ PAGE 7 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 8 of 28 c. Added to the Large City's urban growth boundary after January 1, 2021 for which the Large City proposes to adopt, by resolution or ordinance, a master plan or a plan that functions in the same manner as a master plan. OAR 660-046-0205(2)(c) includes the following provisions regarding Master Planned Communities: c. Master Planned Communities: Large Cities may regulate or limit the development of Middle Housing in Master Planned Communities as follows: A. If a Large City has adopted a master plan or a plan that functions in the same manner as a master plan after January 1, 2021, it may not limit the development of any Middle Housing type on lands where detached single-family dwellings are also allowed, but may limit overall net residential density within the master plan area provided that the allowed net residential density is least 15 dwelling units per acre. A Large City may designate areas within the master plan exclusively for other housing types, such as multi-family residential structures of five dwelling units or more or manufactured home parks. A Large City may not limit future conversion or redevelopment of already constructed detached single-family dwellings or Middle Housing dwelling units to any Middle Housing type. B. If a Large City has adopted a master plan or a plan that functions in the same manner as a master plan before January 1, 2021, it may limit the development of Middle Housing other than Duplexes provided it authorizes, in the entire master plan area, a net residential density of at least eight dwelling units per acre and allows all dwelling units, at minimum, to be detached single-family dwellings or Duplexes. A Large City may only apply this restriction to portions of the area not developed as of January 1, 2021, and may not apply this restriction after the initial development of any area of the master plan or a plan that functions in the same manner as a master plan, except that a Large City may prohibit redevelopment of other housing types, such as multi-family residential structures and manufactured home parks. 2. Goal Protections Since the September commission meeting, several edits have been made to OAR 660- 046-0010(3) to reflect conversations with various goal experts. Revisions include the following: PP 19-0008 ATTACHMENT A/ PAGE 8 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 9 of 28 1. Goal 5 Natural Resources: These revisions reflect discussions with DLCD's Goal 5 Natural Resource specialist. The section and the revisions are intended to prevent additional development pressure near sensitive natural resources. The section also includes a provision for jurisdictions that do not have Goal 5 protections, because the regulatory mechanism that ensured jurisdictions apply Goal 5 protection (Periodic Review) is unfunded. OAR 660-046-0010(3)(a)(A): A. Goal 5 Natural Resources — Pursuant to OAR 660-023-0050 through 660-023-0110, Medium and Large Cities must adopt land use regulations to protect water quality, aquatic habitat, and the habitat of threatened, endangered and sensitive species. This includes regulations applicable to Middle Housing to comply with protective measures adopted pursuant to Goal 5. i. Medium and Large Cities may apply regulations to duplexes that apply to detached single-family dwellings in the same zone; ii. Medium and Large Cities may limit the development of Middle Housing other than Duplexes in significant resource sites identified and protected pursuant to Goal 5; and iii. If a Medium of Large City has not adopted land use regulations pursuant to OAR 660-023-0090, it must apply a 100-foot setback to Middle Housing developed along a riparian corridor. 2. Goal 6 Air, Water, and Land Quality: This revision is intended to better reflect the responsibility local jurisdictions have to fulfill federal and state air, water, and land quality laws and regulations. OAR 660-046-0010(3)(b): b. Goal 6:Air, Water and Land Resources Quality— Pursuant to OAR 660- 015-0000(6), a Medium or Large City may limit development within an urban growth boundary to support attainment of federal and state air, water, and land quality requirements. Medium and Large Cities may apply regulations adopted pursuant to Goal 6 to the development of Middle Housing. 3. Goal 9 Economic Development: Staff from the City of Portland raised the need for a narrow exemption to limit Middle Housing development on lands that are zoned for single-family detached residential use but designated for future industrial/employment uses, as redevelopment with Middle Housing would be in conflict with the area's intended future use and comprehensive plan designation. PP 19-0008 ATTACHMENT A/ PAGE 9 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 10 of 28 OAR 660-046-0010(3)(d): d. Goal 9: Economic Development - Pursuant to OAR 660-009-0025, Medium and Large Cities must adopt measures adequate to implement industrial and other employment development policies, including comprehensive plan designations. Medium or Large Cities may limit the development of Middle Housing on Lots or Parcels Zoned For Residential Use designated for future industrial or employment uses. 4. Goal 15 Willamette Greenway: Goal 15 requires local jurisdictions review intensifications, changes of use or developments to insure their compatibility with the Willamette River Greenway. Many of these standards were adopted prior to the establishment of clear and objective development standards applied to housing (ORS 197.307). While the bill does not require addressing this apparent conflict, this section leaves a pathway for jurisdictions to allow the development of Middle Housing in the Greenway, provided that applicable standards conform to both ORS 197.307 and Goal 15. OAR 660-046-0010(3)(e): e. Goal 15: Willamette Greenway— Pursuant to OAR 660-015-0005, Medium and Large Cities must review intensifications, changes of use or developments to insure their compatibility with the Willamette River Greenway. Medium and Large Cities may allow and regulate the development of Middle Housing in the Willamette Greenway, provided that applicable regulations adopted pursuant to Goal 15 comply with ORS 197.307. Staff would also like to clarify an important point on how Goal Protected Lands interact with higher Middle Housing requirements. Staff feels it is important to recognize that goal protections do not constitute full exemptions from higher Middle Housing requirements. Rather, the proposed OARs are drafted such that local governments can maintain the right to regulate higher Middle Housing in goal areas in conjunction with existing goal protections as provided in OAR 660-046-0010. While certain goals, including Goal 5 Natural Resources, Goal 6, Goal 7, Goal 9, and Coastal Goals allow reasonable limitations on Middle Housing development, Goal 15 provides a path to allow Middle Housing (and count lands towards compliance). Additionally, Goal 5 Historic Resources provisions do not allow for the prohibition of higher Middle Housing types, but do allow jurisdictions to apply standards that protect the integrity of historic resources. PP 19-0008 ATTACHMENT A/ PAGE 10 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 11 of 28 The provision in Goal 5 Historic Resources is particularly important to prevent the misuse of historic district designations by neighborhoods that seek to fortify patterns of exclusion. Historic Preservation experts including Kim Fitzgerald — City of Salem, State of Oregon Historic Preservation Office staff, Carrie Richter— Restore Oregon, and others indicated that standards related to use and the number of dwelling units do not relate to the historic integrity of a structure. Rather, standards related to the façade, form, and design of structures and districts are the elements that relate to historic integrity. While historic resources/districts may not exclude Middle Housing uses, local governments will still be able to apply to Middle Housing the same procedural, form, and design standards as they apply to other structures to ensure historic integrity of a resource/district is maintained. 3. Infrastructure Constrained Lands Participants have expressed concerns that the previous definition Infrastructure Constrained Lands included subjective language that made it difficult for a local government to know how to demonstrate that an area is subject to an infrastructure constraint and therefore triplexes, quadplexes, townhomes, and cottage clusters should not be allowed. It is true that the definition includes a number of subjective terms that will have to be evaluated by the department, such as "where it is not feasible", "acceptable services", and "limitations that a local government cannot correct". However, it is impossible to anticipate all the factors that may contribute to an infrastructure constraint. Likewise, it is very challenging to develop clear and objective standards that would be appropriate for all affected cities. Circumstances will vary widely between cities regarding their infrastructure systems. Considering the range of circumstances that may exist on the ground, the burden of proof will necessarily be on the local government to demonstrate that the infrastructure constraint is a limitation that could not be addressed through the IBTER process, nor by proportionate improvements that would be required in conjunction with middle housing development. It will not be sufficient for a local government to claim an infrastructure constrained area without producing findings demonstrating how the infrastructure limitation qualifies as a constraint that cannot be corrected. The existing definition for an "infrastructure constraint" follows: OAR 660-046-0020 Definitions (from proposed "Large City" rules) 7. "Infrastructure Constrained Lands"means lands where it is not feasible to provide acceptable water, sewer, storm drainage, or transportation services to serve new Triplexes, Quadplexes, Townhouses, or Cottage Cluster development; where the local government is not able to correct the infrastructure limitation by utilizing the process outlined in OAR 660-046-0300 through OAR 660-046-0370 due to cost,jurisdictional, or other limitations; PP 19-0008 ATTACHMENT A/ PAGE 11 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 12 of 28 and which cannot be remedied by future development of Middle Housing on the subject Lot or Parcel. To further clarify these issues, the following amended language has been added to the infrastructure constrained lands portion of OAR 660-046-0205 (additional language is underlined): 2. A Large City must allow for the development of Triplexes, Quadplexes, Townhouses, and Cottage Clusters, including those created through conversion of existing detached single-family dwellings, in areas zoned for residential use that allow for the development of detached single-family dwellings. A Large City may regulate or limit development of these types of Middle Housing on the following types of lands: a. Infrastructure Constrained Lands: Large Cities may limit the development of Middle Housing other than Duplexes on Infrastructure Constrained Lands. In order to demonstrate that an area is an Infrastructure Constrained Land, the Large City must either adopt findings in coniunction with the adoption of required Middle Housing allowances and limitations, or otherwise demonstrate to the Department that already adopted allowances and limitations are consistent with the definition provided in OAR 660-046-0020, could not be addressed throuqh the process provided OAR 660-046-0300, and could not be addressed with required improvements that would be expected with Middle Housing development. The Large City may not consider an area to be infrastructure constrained based on any lack of improvements beyond those listed in OAR 660-046- 0340. 4. Cottage Cluster Standards Staff received comments on the Division 46 minimum compliance standards regarding cottage cluster siting and design standards. Cottage clusters are a unique development type and require extra consideration of development feasibility in the drafting of minimum compliance standards. Comments received from the Advisory Committees, the City of Portland, and the Homebuilder's Association intend to make this development type more feasible in Large Cities. The minimum and maximum number of cottages in a cluster development has been an ongoing discussion by advisory committee members. Staff have reiterated that the minimum compliance standards should not allow a Large City to institute an unreasonably high minimum number of units for each cottage cluster development. Likewise, the minimum compliance standards should provide guidance to Large Cities PP 19-0008 ATTACHMENT A/ PAGE 12 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 13 of 28 on how many cottages should be allowed around a single common courtyard. Lastly, it is important to note that it is not necessary to provide parity between the number of cottages allowed on a lot or parcel compared to a triplex or quadplex. A developer could build as few as three units in a cottage cluster. It is important to create a framework where cities could provide this opportunity. OAR 660-046-0205(4)(d) is amended as such (underlines show new language): 4. Pursuant to OAR 660-046-0205 through OAR 660-046-0230, the following numerical standards related to Middle Housing types apply: 1...] d. Cottage Clusters— A. A Large City is not required to set a minimum number of dwelling units in a Cottage Cluster, but if it chooses to, it may require a minimum of three, four, or five dwelling units in a Cottage Cluster. A Large City may allow but may not require greater than five dwelling units in a Cottage Cluster. B. A Large City must allow up to eight cottages per common courtyard subiect to applicable siting or design standards as provided in OAR 660-046-0220 through OAR 660-046-0235. Nothing in this section precludes a Large City from permitting greater than eight dwelling units clustered per common courtyard. The Division 46 standards for cottage clusters state that a city "may not apply lot or parcel coverage or floor area ratio standards to cottage cluster developments". The City of Portland has expressed concerns that the cottage cluster standards related to lot coverage and floor area ratio could lead to a scenario that would preclude the city from regulating cottage cluster development to ensure stormwater catchment and runoff mitigation. Here it is important to again note that this provision, as with any other provision in Division 46, does not impact the city's ability to review, approve, approve with conditions, or deny a building permit on any number of factors, including due to insufficient stormwater detention and mitigation of the site due to development. Staff does not recommend changes to the Division 46 language on these grounds. 5. Performance Metric Approach Analysis At the commission meeting in September, commissioners heard extensive testimony from stakeholders about the Performance Metric Approach during the public hearing. Generally, the comments could be organized into two categories: 1) a call for additional flexibility and clarity in the process that will allow cities the ability to regulate middle housing within their own context, and 2) a description of how processes that provide flexibility for local governments to further regulate middle housing are counter to the intent of HB 2001 and should be removed from the proposed rules altogether. PP 19-0008 ATTACHMENT A/ PAGE 13 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 14 of 28 At the meeting in September, members of the commission generally agreed that the Performance Metric Approach, as a concept, was a workable solution to arguments on both sides. Commissioners were sensitive to the concept of providing local governments the opportunity to "right size" middle housing standards while remaining true to the intent of HB 2001 to increase housing options beyond what exists today. To better refine the approach and ground the performance metrics, the commission asked staff to conduct an analysis of the approach in a few cities to determine if it was workable or if the percentages needed to be modified. Staff chose to analyze data from the cities of Albany and Beaverton. This analysis will give staff an idea of how the approach could be used to determine where middle housing is allowed in a city, based on both the minimum standards and the Performance Metric Approaches. The department appreciates both cities' cooperation and assistance in the analysis. The analysis began by collecting zoning, tax lot, goal protected and infrastructure constrained Geographic Information System (GIS) data. The first step was to identify all residentially zoned lots, then to remove lots and parcels within the 100-year floodplain and infrastructure constrained areas. The 100-year floodplain, a Goal 7 - Natural Hazards protected resource, was the only goal protected area that was removed from the analysis. Other goal protections allow a city to regulate, but not restrict the development of Middle Housing. The next step in the analysis is to remove Infrastructure Constrained Lands from the subset of lots and parcels. The City of Albany has a Residential Reserve zoning district where adding middle housing would be impossible, due to the lots being on well and septic, and a large portion of this zoning district is within the 100-year floodplain. The City of Beaverton did not identify any Infrastructure Constrained Lands to be removed. The remaining subset of lots and parcels were the basis of further analysis. Using the minimum lot sizes in Division 46 (functionally 5,000 square feet for triplexes and 7,000 square feet for quadplexes and cottage clusters), the analysis can determine the "baseline" of lots where Middle Housing typically would be allowed under the minimum compliance standards. It can also identify the percentage of affected lots based on lot size, and how that relates to the percentages for each Middle Housing type identified in the Performance Metric Approach. City of Albany Analysis In the city of Albany, 86% of eligible residential lots are 5,000 square feet or larger, which corresponds to the minimum lot size for triplexes under Division 46. In the Performance Metric Approach, cities are required to allow triplexes on 80% of eligible lots or parcels. Only 52% of the city of Albany's eligible residential lots are 7,000 square feet or larger, the minimum lot size for quadplexes and townhouses in Division 46. In the Performance Metric Approach, 70% of lots are required to allow quadplex development. This is a PP 19-0008 ATTACHMENT A/ PAGE 14 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 15 of 28 significant differential between the two approaches, and Albany would have a choice as to which approach to take regarding quadplexes. In Division 46, Cottage Cluster development requires a minimum lot size of 7,000 square feet. The Performance Metric Approach requires a city to allow cottage clusters on 50% of lots. In Albany, 52% of eligible lots meet the 7,000 square foot minimum. This is very close to the required percentage in the Performance Metric Approach. City of Beaverton Analysis In the city of Beaverton, 83% of eligible lots are 5,000 square feet or larger. In the Performance Metric Approach, cities are required to allow triplexes on 80% of eligible lots or parcels. Residential lots 7,000 square feet or larger, the minimum lot size for quadplexes and townhouses in Division 46, comprise 66% of the city's eligible lots. In the Performance Metric Approach, 70% of lots are required to allow quadplex. Unlike Albany, there is only a minor difference in results using the two alternative methods in Beaverton for both triplexes and quadplexes. Cottage cluster development also requires a minimum lot size of 7,000 square feet in Division 46. If Beaverton chose to use the minimum standards, they would be allowing cottage clusters on 66% of their lots, vs. only 50% of lots under the Performance Metric approach. This is a significant difference in results. Other Cities Attachment J contains lot size data on most cities in Oregon that are classified as "Large Cities" and thus subject to these rules regarding middle housing. While department staff completed a more refined analysis for Albany and Beaverton, excluding lots in the 100-year floodplain and infrastructure-constrained lots, the percentages in each city changed very little from the base percentages in Attachment J, which did not exclude floodplain and infrastructure-constrained lots. For Albany, this represented a change from 88% to 86% of lots greater than 5,000 square feet; change from 56% to 52% of lots greater than 7,000 square feet. Thus, staff concludes that we can reasonably use and analyze the data in Attachment J as a proxy for the other cities surveyed to determine the individualized differences between the Performance Metric and Minimum Lot Size Approaches as it regards triplexes, quadplexes, and cottage clusters. The following table is a comparison for different cities, based upon the information in Attachment J: PP 19-0008 ATTACHMENT A/ PAGE 15 OF 28 Agenda Item 4 November 12-13, 2020 - LCDC Meeting Page 16 of 28 Albany: Bend: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 88% Lot Size over 5,000SF: 85% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 56% Lot Size over 7,000SF: 58% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 56% Cluster: Lot Size over 7,000SF: 58% Corvallis: Euaene: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 84% Lot Size over 5,000SF: 90% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 66% Lot Size over 7,000SF: 68% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 66% Cluster: Lot Size over 7,000SF: 68% Fairview: Gladstone: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 97% Lot Size over 5,000SF: 94% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 91% Lot Size over 7,000SF: 66% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 91% Cluster: Lot Size over 7,000SF: 66% Grants Pass: Gresham: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 91% Lot Size over 5,000SF: 95% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 77% Lot Size over 7,000SF: 79% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 77% Cluster: Lot Size over 7,000SF: 79% Keizer: Happy Valley: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 93% Lot Size over 5,000SF: 92% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 62% Lot Size over 7,000SF: 78% Cottage Performance Metric: 50% 1 Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 62% Cluster: Lot Size over 7,000SF: 78% PP 19-0008 ATTACHMENT A/ PAGE 16 OF 28 Agenda Item 4 November 12-13, 2020 - LCDC Meeting Page 17 of 28 Lake Oswego: McMinnville: Triplex: Performance Metric: 80% Triplex: Performance Metric: 92% Lot Size over 5,000SF: 93% Lot Size over 5,000SF: 85% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 85% Lot Size over 7,000SF: 70% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 85% Cluster: Lot Size over 7,000SF: 70% Medford: Milwaukie: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 94% Lot Size over 5,000SF: 94% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 77% Lot Size over 7,000SF: 71°A) Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 77% Cluster: Lot Size over 7,000SF: 71 Oregon City: Portland: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 92% Lot Size over 5,000SF: 77% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 74% Lot Size over 7,000SF: 41% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 74% Cluster: Lot Size over 7,000SF: 41% Redmond: Salem: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 93% Lot Size over 5,000SF: 87% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 62% Lot Size over 7,000SF: 56% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 62% Cluster: Lot Size over 7,000SF: 56% Springfield: Troutdale: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 94% Lot Size over 5,000SF: 93% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 61% Lot Size over 7,000SF: 80% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 61% Cluster: Lot Size over 7,000SF: 80% Washington County(unincorporated): West Linn: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 81% Lot Size over 5,000SF: 96% PP 19-0008 ATTACHMENT A/ PAGE 17 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 18 of 28 Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 64% Lot Size over 7,000SF: 80% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 64% Cluster: Lot Size over 7,000SF: 80% Wilsonville: Wood Village: Triplex: Performance Metric: 80% Triplex: Performance Metric: 80% Lot Size over 5,000SF: 89% Lot Size over 5,000SF: 99% Quadplex: Performance Metric: 70% Quadplex: Performance Metric: 70% Lot Size over 7,000SF: 60% Lot Size over 7,000SF: 84% Cottage Performance Metric: 50% Cottage Performance Metric: 50% Cluster: Lot Size over 7,000SF: 60% Cluster: Lot Size over 7,000SF: 84% In summary: For triplexes, 23 of the 24 cities would allow triplexes on more lots under the Minimum Lot Size approach. Only Portland would allow triplexes on more lots under the Performance Metric approach. For quadplexes, 12 of the 24 cities would allow quadplexes on more lots under the Minimum Lot Size approach, while 12 would allow quadplexes on more lots under the Performance Metric approach. For cottage clusters, 23 of 24 cities would allow cottage clusters on more lots under the Minimum Lot Size approach. Only Portland would allow cottage clusters on more lots under the Performance Metric approach. Three Proposed Performance Metric Approaches for Commission Consideration Option 1: Leave the Performance Metric Approach standards for middle housing type allowances as-is. 80% for triplexes, 70% for quadplexes, 60% for townhouses, and 50% for cottage clusters. Option 2: Leave the Performance Metric Approach standards for middle housing type allowances as-is for triplexes at 80%, quadplexes at 70%, townhouses at 60%, and increase cottage clusters from 50% to 70% to match the Performance Metric percentage for quadplexes. Option 3:Alter the Performance Standards Approach standards for middle housing type allowances to reflect the existing percentages of lots that are 5,000 square feet and over for triplexes (86% in Albany and 83% in Beaverton) and PP 19-0008 ATTACHMENT A/ PAGE 18 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 19 of 28 7,000 square feet and over for quadplexes and cottage clusters (52% in Albany and 66% in Beaverton). The Performance Metric Approach, as written, gives cities the ability to choose to apply the Performance Metric percentages to one or more Middle Housing types. The Performance Metric Approach requires additional considerations not related to lot size or maximum, where analysis of Middle Housing allowances are subject to the "equitable distribution" check as described in OAR 660-046-0205(3)(b)(F). As an example, a sample city could choose to regulate the minimum lot size of cottage clusters in conjunction with the allowable minimum compliance standards but could choose to regulate the minimum lot size for quadplexes differently subject to the Performance Metric Approach. In this case, the sample city would be choosing to utilize the Performance Metric Approach only for quadplexes and not for cottage clusters. For quadplexes, the sample city would be required to show that quadplexes are allowed on 70% of eligible lots (while also meeting the "equitable distribution" test as provided in OAR 660-046-0205(3)(b)(F)). The sample city would not need to do this same analysis for cottage clusters because they are choosing to utilize the minimum lot size acceptable in the minimum compliance standards of Division 46. Option 1 maintains this underlying structure of the Performance Metric Approach. It gives cities the ability to allow various housing types at the "high end" or "low end" of the acceptable ranges within either the Performance Metric or the Minimum Lot Size approach to reflect local policy preferences. However, for both approaches, a majority, and in most cases a substantial majority, of lots would accommodate triplexes and quadplexes (except the City of Portland, which has already adopted a high standard regulating Middle Housing through the Residential Infill Project). Additionally, the Performance Metric approach under this option would be relatively administratively easy to measure on an ongoing basis, as prescribed in the proposed rules. Option 2 (recommended option): This option maintains the Performance Metric Approach as described in Option 1, but increases the acceptable Performance Metric percentage for cottage cluster allowances from 50% to 70%. The increase is related to the correlation of the minimum lot size of 7,000 square feet for both quadplexes and cottage clusters in the minimum compliance standards of Division 46. The functional difference, in terms of space and developable land needed for all required site features, between a detached quadplex development and a cottage cluster development of three to five units seems to be marginal. The department's analysis of eligible lots in both the city of Albany and the city of Beaverton highlighted a potential policy deficiency in the existing Performance Metric Approach: if a detached quadplex can be built on a 7,000 sf lot, given the footprint limitations and design efficiencies inherent cottage cluster developments, it is likely that there is a similar potential that a property owner could develop a cottage cluster on that same 7,000 sf lot. Consequently, there may be limited justification to establish an PP 19-0008 ATTACHMENT A/ PAGE 19 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 20 of 28 allowable Performance Metric percentage for cottage cluster that is different from the allowable Performance Metric percentage for quadplexes. Because of this, staff recommends altering the Performance Metric percentage for cottage clusters from 50% to 70%. If the commission intends to maintain the existing tiered Performance Metric Approach, the decision between Option 1 and Option 2 represents a policy decision on the parity or overlap between where Large Cities could and should allow quadplex and cottage cluster developments. Option 3 moves away from the existing tiered Performance Metric Approach. Option 3 would be more precisely equitable in balancing the Performance Metric and Minimum Lot Size approaches for a city. Instead of allowable Performance Metric percentages that tier from "triplexes allowed on 80% of lots and parcel, quadplexes allowed on 70% of lots and parcels, etc", Option 3 would instead peg the acceptable Performance Metric percentages to the existing percentages of eligible lots of 5,000 sf and 7,000 sf. In this option, the city knows precisely the "target" percentage of lots that need to accommodate triplexes, quadplexes, and cottage clusters. Using the City of Albany and Beaverton analysis, Option 3 would functionally change the acceptable Performance Metric percentage for triplexes from 80% to 86% (Albany) and 83% (Beaverton) — the city-specific percentages of eligible lots 5,000 sf or larger. For quadplexes and cottage cluster, Option 3 would functionally change the acceptable Performance Metric percentage from 70% (quadplexes) and 50% (cottage clusters) to 52% in Albany and 66% in Beaverton. The advantages of this option is first that it removes the issue in the existing issue where, in some cases, the minimum compliance standards would allow less Middle Housing compared to the Performance Metric Approach (as described in the previous section). Secondly, it ensures that, at a minimum, cities are required to achieve at least the same amount of middle housing allowances as is acceptable under the minimum compliance standards. This is also the disadvantage of this approach, in that it would significantly limit city flexibility in making the decision as to where to allow various types of middle housing units. Consideration of Options The question raised by comparing Option 1, 2, and 3 is one of policy: is the additional flexibility provided by Option 1 and 2, which will vary among cities based upon their existing residential characteristics, too great? The department comes to the conclusion that it is not too great, at least regarding triplexes and quadplexes. While all but one city surveyed would allow more triplexes under the Minimum Lot Size standard than under the Performance Metric standard, the base percentage of the former, 80%, is very high to begin with. For quadplexes, the fact that half of the cities surveyed would allow more quadplexes under the Minimum Lot Size standard and half would allow more PP 19-0008 ATTACHMENT A/ PAGE 20 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 21 of 28 quadplexes under the Performance Metric standard would indicate that the 70% base percentage of the former is a reasonable median number, and in all but one city surveyed (Portland for the minimum lot size alternative) more than half of the city's lower density residential lots would allow quadplex development. Cottage Clusters present an interesting issue: in all but one city the percentage of lots allowing cottage clusters would be greater, in some cases significantly greater, under the Minimum Lot Size standard vs. the Performance Metric standard. Staff does not believe there is a legitimate policy reason for cities to be allowed the flexibility to place greater limits on cottage cluster development as compared to quadplexes, and therefore recommends the commission adopt Option 2. 6. Alternative Siting and Design Standards DLCD recognizes that some cities across the State have already been active in encouraging the development of middle housing, even before HB 2001 was passed into law. These existing development code standards and incentives may or may not be in compliance with Division 46. Rather than adjusting the rules to suit a select suite of existing provisions, staff, with the guidance of Advisory Committee members, have constructed the Alternative Siting and Design Standards. This section is intended to allow Large Cities the ability to prove that their existing standards are producing a substantial amount of middle housing already and the Large City should therefore be able to continue using those standards. OAR 660-046-0235(1) establishes a test for Large Cities to show that existing siting or design standards have resulted in the "substantial production" of Middle Housing in areas where the standard has been applied. OAR 660-046-0235(2) establishes a second test for Large Cities to show that other siting or design standards, other than what is already provided in Division 46, do not cause unreasonable cost or delay to the development of middle housing. Definition for Siting and Design Standards Staff has developed this approach to give jurisdictions more flexibility in how to apply siting and design standards without causing unreasonable cost or delay. However, a consequence of that flexibility is needing more clarification as what is a "siting" vs. a "design" standard, as each is now regulated separately in the rules. Defining these terms more clearly delineates how standards will be regulated, especially if they fall outside of the categories of standards identified in rule. Each term is defined briefly and includes examples of what is considered a "siting" or a "design" standard: 1. "Siting standard"means a standard related to the position, bulk, scale, or form of a structure or a standard that makes land suitable for development. Siting standards include, but are not limited to, standards that regulate perimeter PP 19-0008 ATTACHMENT A/ PAGE 21 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 22 of 28 setbacks, dimensions, bulk, scale, coverage, minimum and maximum parking requirements, utilities, and public facilities. 2. "Design standard"means a standard related to the arrangement, orientation, materials, appearance, articulation, or aesthetic of features on a dwelling unit or accessory elements on a site. Design standards include, but are not limited to, standards that regulate entry and dwelling orientation, facade materials and appearance, window coverage, driveways, parking configuration, pedestrian access, screening, landscaping, and private, open, shared, community, or courtyard spaces. Measuring Substantial Production OAR 660-046-0235 was developed to avoid penalizing jurisdictions that have adopted land use regulations that allow middle housing, provided the jurisdiction can demonstrate some reasonable threshold of Middle Housing production. However, RAC members have had significant discussion regarding the correct approach for the provision regulating existing alternative siting or design standards outlined in OAR 660- 046-0235(1). The primary intent of this standard is to better accommodate cities that have already adopted workable middle housing development provisions prior to the passage of HB 2001. To suit that intent, the standard must be written narrowly, such that a standard applied to middle housing may only apply to that middle housing type in the areas where it currently applies if the jurisdiction can demonstrate 3% production of the applicable middle housing type in that area over at least a two year timeframe. The city may not apply that standard citywide. Department staff also responded to a point raised by the City of Hillsboro staff who expressed interest in utilizing design standards that had undergone significant public process to other zones. Because Division 046 limits design standards to the Model Code or standards that apply to single-family detached dwellings, early adopters have limited options to continue the application of design standards they have worked to develop or use them in other zones. DLCD staff was concerned that applying these standards flatly across many zoning districts had the potential to cause unreasonable cost or delay. Accordingly, staff have drafted the provision to allow the application of only design standards to other zones where any standards that scale by dwelling unit (e.g. minimum open space requirements) scales proportionately by the minimum lot size of the underlying zone. Existing siting standards such as building setbacks, open space requirements, or similar standards that produce substantial production of middle housing cannot be expanded outside of existing areas and cannot be expanded to other zoning districts. In other words, the way the rule is currently constructed allows a city to apply design standards to other middle housing types in the city — such as open space or façade regulations, but does not permit a local jurisdiction to apply siting standards such as PP 19-0008 ATTACHMENT A/ PAGE 22 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 23 of 28 parking, setbacks, minimum lot size, maximum density, height, bulk, scale, coverage, or similar to Middle Housing citywide. Opposition to Proposed OAR 660-046-0235 Alternative Siting and Design Standards and Proposed Alternative Rules Staff has heard many concerns about the original provision in OAR 660-046-0235, including: • The metric does not accurately reflect anticipated development as outlined in House Bill 2001 (3% middle housing development expectation over twenty years). It compares Middle Housing building permits to single-family building permits, which can vary significantly annually, punish jurisdictions with strong housing markets, and reward jurisdictions with relatively weak housing markets; • An inaccurate metric can result in the effective undermining of parameters of Administrative Rules, especially those related to siting, which have direct and well-documented impacts on housing feasibility and affordability. Additionally, such standards would be "locked in place" after the initial determination; • The metric was not intended by the Legislature to be utilized as a "safe harbor" for acceptable Middle Housing development, and providing a safe harbor removes a core functional component of House Bill 2001 in which unreasonable standards can be challenged through appeal; and • Many of the jurisdictions the standard was seeking to accommodate are not able to utilize the standard, including the City of Bend, due to significant single-family detached development and the City of Portland with a limited time frame to demonstrate "substantial production" due to only recently adopting the Residential Infill Project (2020). To address these, department staff have prepared a series of alternatives for commission consideration. Specific rule language with revisions is included in Attachment L. Option 1 revises the rule language to incorporate the following changes: 1. Changes to the "substantial production" metric to better reflect an expectation for 3% production of Middle Housing over a twenty-year time horizon. Because most standards have been applied for less than twenty years, the percentage would be an annualized fraction of 3% based on the length of time the particular standard has been effective. Additionally, the metric now looks at the totality of an area, rather than the building permits for that particular year; 2. Establishes a routine check-in of "substantial production" similar to that of the check-in period established for the Performance Metric Approach in OAR 660- 046-0205(3)(b); 3. Limits the application of siting standards, ensuring that the bar to meet is high and that standards cannot be applied in areas that are not already subject to the particular standard. PP 19-0008 ATTACHMENT A/ PAGE 23 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 24 of 28 4. Provides an option for early adopters to "test" their design standards, with the expectation that they meet the more rigorous definition of"substantial production" at a designated check-in period. This allows for an iterative approach in which design standards that facilitate good housing outcomes can be incorporated into the Model Code, and will provide a longer time period to better understand the full scope of unreasonable cost or delay from design standards. The outcome of this option is that early adopters will be able to continue application of siting standards in areas where they meet "substantial production", or at least 3% of the applicable middle housing type over twenty years. They will also be able to retain and expand design standards to other zones without meeting the initial threshold to "test" them over a period of time, with an expectation that design standards either 1) achieve substantial production, 2) are incorporated into the Model Code, or 3) sunset over time. Option 2 includes revisions listed above, but removes the provision allowing for the continued application of siting standards. This option retains the provision that allows for flexibility and continued dialogue for design standards with future expectations to achieve meaningful results, but it will remove the ability for early adopters to continue application of siting standards that are not in compliance with Division 046. Department staff recommends this option. Option 3 removes OAR 660-046-0235(1). The outcome of this option is that all early adopters will be required to meet minimum compliance for siting and design standards outlined in Division 046, or demonstrate that their siting or design standard(s) do not cause unreasonable cost or delay as provided in OAR 660-046-0235(2). Department staff seek confirmation on which option the commission feels should be adopted into OAR 660-046-0235. Department staff recommend adopting Option 2. D. CHANGES TO THE LARGE CITIES MODEL CODE Department staff has received fewer public comments and testimony related to the Large and Metro Cities Model Code than the rest of Division 46. Comments received were mostly related to a need for further clarity of standards or minor adjustments to how the standards operate. Staff received written letters on the model code from the City of Portland and the Oregon Homebuilders Association. A comment received from the Homebuilder's Association requested allowing an exemption in building square footage for an attached garage. The definition of"building footprint" in the draft Model Code states that attached garages and carports are included in the building footprint calculation (which only applies to cottage clusters). The Homebuilder's Association recommended that up to 400 square feet of attached garage space be exempted from the 900 square feet footprint limit mandated by HB 2001. The argument hinged on that by including garage floor area in the footprint calculation it would excessively limit the remaining floor area that is available for living space. PP 19-0008 ATTACHMENT A/ PAGE 24 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 25 of 28 Staff is proposing to exempt up to 200 square feet of attached garage/carport space from the maximum building footprint, but still include it in the overall floor area calculation. Two hundred square feet is equivalent to a 1-car garage (10 ft by 20 ft). Given the footprint limitation, this would provide a bit more flexibility for inclusion of a modest garage. We recommend continuing to include garage area in the total floor area calculation, for the purpose of calculating average unit size in a cottage cluster. The total floor area of the cottage would still be subject to the maximum average unit size of 1,400 square feet for the overall cottage cluster. Related, department staff also recommend placing some limits on detached garages and accessory structures, as suggested in comments from the City of Portland. Currently, the draft Model Code does not limit the size of detached garages, sheds, or other accessory structures. Since the draft Model Code does not limit floor area ratio (FAR) or lot coverage for cottage clusters, this creates opportunities for excessively large accessory structures. The code could set an absolute limit on the floor area, and possibly height, of these structures, or could include them in the cottage floor area (but not footprint) calculation. E. OFF-STREET PARKING At the meeting on September 25, 2020, staff presented members of the commission seven major rulemaking highlights, one of which was off-street parking. Commissioners did not give staff any additional guidance with respect to the approach recommended by staff. Commissioner Lelack expressed concern that cities may not have the ability to require enough off-street parking. Staff have since met with Commissioner Lelack to explain the reasoning behind the draft rules as written. Committee discussions regarding off-street parking highlighted the need to balance the impact of off-street parking requirements and middle housing development viability. Zoning codes that require too many off-street parking spaces cause an unreasonable cost and delay to the development of middle housing. Another consideration in the parking discussion was the difference between appropriate Large Cities Model Code standards and the minimum compliance standards in Division 46. The DLCD staff team conducted an extensive literature review to better understand the costs of accommodating off-street parking spaces within middle housing developments. While there is limited specific literature on parking in conjunction with middle housing, there is a plethora of information that provides insight into how minimum parking requirements affect housing development. To summarize this information succinctly - minimum parking requirements substantially increase the costs of housing and development both directly and indirectly. PP 19-0008 ATTACHMENT A/ PAGE 25 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 26 of 28 The cost imposed by minimum parking requirements is several thousand dollars per space for surface parking and more for garage or covered spaces. Households that bear the costs imposed by minimum parking standards are disproportionately renter and lower-income households as well as households with fewer vehicles. Furthermore, such requirements place a cost on housing development that results in fewer units produced, especially for smaller and more affordable housing types. Furthermore, Governor Brown's Climate Executive Order 20-04 directs the Department to "exercise any and all authority and discretion vested in them by law to help facilitate Oregon's achievement of the greenhouse gas emissions reduction goals set forth in paragraph 2 of this Executive Order". There is a correlation with minimum parking standards and increased automobile mode share, and evidence that greater minimum parking standards are a cause, in addition to a symptom, of increased automobile mode share. Given all of these factors, off-street parking requirements clearly play a major role in the overall development cost of housing, and especially middle housing. Additional costs incurred during the development of housing are passed on to the eventual occupant of that housing, making it less affordable. Committee concerns remained over where residents would park their vehicles if off- street parking requirements were reduced or eliminated. Research shows that, when left to market conditions, developers typically provide some degree of off-street parking if their market analysis shows the need for it — even without the presence of off-street parking requirements. In cities like Seattle and Portland, where a smaller percentage of all households have vehicles, where the value of buildable land is high, and where off- street parking requirements have been reduced or eliminated, developers continue to provide some off-street parking spaces. In Seattle, about 70% of developments with no city-required parking included off-street parking spaces. In Portland, developers of multi- family housing in walkable areas well served by transit provide an average of 0.7 off- street parking spaces per unit in their development plans. Similarly, in Eugene, developers in downtown report that the lenders generally require developments to include off-street parking for marketability and financial viability reasons. In Corvallis, developers of new edge developments often exceed the city's mandated parking ratios. And in Salem, multi-family developers recently testified they would provide 1.75 spaces per unit even when off-street parking requirements were reduced or eliminated. The point of the department's recommendation on this issue is that provision of off-street parking should be a decision made by a project developer based upon the needs of the project, not a mandated city requirement. F. FISCAL IMPACT STATEMENT / HOUSING IMPACT STATEMENT PP 19-0008 ATTACHMENT A/ PAGE 26 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 27 of 28 The changes to the proposed rules as outlined above do not alter or change the Fiscal and Housing Impact Statements that were provided to the commission as part of its most recent meeting in September. The statements are provided for commission review in Attachment C of this Agenda Item. G. RECOMMENDED ACTION The department recommends that the commission: 1) Review the proposed changes to administrative rules (660-046) and the proposed changes to Large Cities Middle Housing Model Code; 2) Consider the input of the rulemaking advisory committee and its technical advisory committee; 3) Consider public comment on the draft rules, draft model code, and associated fiscal and housing impact statements provided in conjunction with both the September 2020 commission meeting and this meeting; 4) Provide the department direction regarding any questions or issues for which the commission needs further information in order to make a final decision; and 5) Adopt the proposed administrative rules and large cities middle housing code, with appropriate amendments, as necessary. Sample Motions for Adoption: "I move that the Land Conservation and Development Commission adopt Oregon Administrative Rule Chapter 660, Division 46, including the Large Cities Middle Housing Model Code and minimum compliance standards, as drafted in Attachments A and B of Agenda Item 4." "I move that the Land Conservation and Development Commission adopt Oregon Administrative Rule Chapter 660, Division 46, including the Large Cities Middle Housing Model Code and minimum compliance standards, as drafted in Attachments A and B of Agenda Item 4 with the following amendments...." PP 19-0008 ATTACHMENT A/ PAGE 27 OF 28 Agenda Item 4 November 12-13, 2020 — LCDC Meeting Page 28 of 28 IV. ATTACHMENTS A. ENROLLED HOUSE BILL 2001 B. PROPOSED MIDDLE HOUSING OREGON ADMINISTRATIVE RULES (660- 046) C. PROPOSED LARGE CITIES MIDDLE HOUSING MODEL CODE D. FISCAL IMPACT STATEMENT / HOUSING IMPACT STATEMENT E. RULEMAKING ADVISORY COMMITTEE SUMMARIES F. MIDDLE HOUSING TECHNICAL ADVISORY COMMITTEE SUMMARIES G. COMMUNITY CONVERSATIONS ON HOUSING SUMMARIES H. WRITTEN COMMENTS RECEIVED ON HOUSE BILL 2001 I. MIDDLE HOUSING DEVELOPMENT FEASIBILITY ANALYSES J. ANALYSIS OF LOT SIZES IN LARGE AND METRO CITIES AND COUNTIES K. ALTERNATE OPTIONS FOR OAR 660-046-0205(3)(B) — THE PERFORMANCE METRIC APPROACH L. ALTERNATE OPTIONS FOR OAR 660-046-0235 — ALTERNATIVE SITING AND DESIGN STANDARDS M. ROSTER OF RULES ADVISORY COMMITTEE (RAC) MEMBERS N. ROSTER OF MIDDLE HOUSING CODE TECHNICAL ADVISORY COMMITTEE (MCTAC) MEMBERS PP 19-0008 ATTACHMENT A/ PAGE 28 OF 28 0-11fit* F��; a �F' `. •j re on Department of Land Conservation and Development *7411:, 635 Capitol Street NE, Suite 150 Kate Brown,Governor Salem, Oregon 97301-2540 Phone: 503-373-0050 Fax: 503-378-5518 October 29, 2020 www.oregon.gov/LCD TO: Land Conservation and Development Commission rww FROM: Jim Rue, Director ' Gordon Howard, Community Services Division Manager Ethan Stuckmayer, Senior Housing Planner Samuel Garcia, Housing Planner SUBJECT: Agenda Item 5, November 12-13, 2020, LCDC Meeting HOUSING PRODUCTION STRATEGY REPORT STRUCTURE, REPORTING, REVIEW, AND ENFORCEMENT REQUIREMENTS AMENDMENTS TO OREGON ADMINISTRATIVE RULES CHAPTER 660 DIVISON 8 AGENDA ITEM SUMMARY Purpose. This agenda item presents background for the second public hearing by the Land Conservation and Development Commission (LCDC or commission) on proposed Oregon Administrative Rules (OARs) for Housing Production Strategy (HPS) Reports required by HB 2003 adopted in 2019 (Attachment A). These rules are applicable to cities with a population greater than 10,000 people. To assist the commission in the review, and the eventual adoption of the OARs for Housing Production Strategies, the Department of Land Conservation and Development (DLCD or department) has attached the proposed OARs (Attachment B), and the crowd-sourced list of ideas for Housing Production Strategies (Attachment C) compiled by practitioners, advocates, staff, developers, and policy makers over the course of rulemaking. The required Fiscal and Housing Impact Statements for noticing new Administrative Rule are included as Attachment D, and have been reviewed by the Rulemaking Advisory Committee (RAC) convened for this rulemaking. The RAC has also provided input and comment throughout the process of developing these draft rules. As a result of public comments on draft proposed OAR language and based on commission guidance, DLCD staff made refinements to the rules that were proposed to the commission at its September 25 meeting. This staff report and the subsequent staff presentation will detail the specific changes to the housing production strategy rules for commission consideration. PP 19-0008 ATTACHMENT B/PAGE 1 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 2 of 17 Additionally, House Bill 2003 directed LCDC to set a six and eight year schedule for local governments to update their Housing Needs Analyses. At their meeting in September 2019, LCDC delegated this authority to the Director. Staff subsequently recommend this action also be adopted in rule. The schedule and staff reports are included as Appendix E and F, respectively. To finalize the rulemaking process, staff held a last Housing Production Technical Advisory Committee meeting, summarized in Appendix G. Summaries of early 2019 community conversations are memorialized in Appendix H. Outcome. Staff recommends the commission take action on this agenda item. At this meeting, upon hearing public comments and completing its review of the proposed rules, staff request the commission adopt the Housing Production Strategy Program and associated OARs. HB 2003 provides that no scheduled housing needs analyses (HNA) can be required until two-years after the HPS rules are adopted by the commission. Accordingly, staff recommend the commission adopt these rules as soon as possible. II. BACKGROUND In 2019, the Oregon Legislature passed, and Governor Brown signed into law, House Bill 2003. This bill was passed to require cities to conduct studies of their housing needs on a more regular schedule and to compel cities to take steps to achieve the necessary housing production to meet the need identified in that analysis. The bill directs the commission to adopt a schedule by which cities over 10,000 population will conduct a housing capacity analysis (also known as a housing needs analysis). A city with over 10,000 population and outside of a metropolitan service district must complete its housing capacity analysis every six years. A city over 10,000 population within a metropolitan service district boundary must complete its housing capacity analysis every eight years. The department published the schedule by which cities will conduct housing capacity analyses in December 2019 and an accompanying memorandum which describes the details of the requirements. These documents are located in Attachment E and F of this report. The bill also requires that each city with over 10,000 population adopt a Housing Production Strategy Report within a year of adoption of its housing capacity analysis. The Housing Production Strategy must list specific actions the city will take to promote the development of all housing needs identified in the preceding housing capacity analysis—such as revising regulations, providing financial incentives, reducing regulatory impediments, and creating partnerships for housing development. The bill also directs the Oregon Housing and Community Services (OHCS) Department to conduct a pilot Regional Housing Needs Analysis (RHNA) project to calculate housing needs on a regional level. The Regional Housing Needs Analysis is described in Agenda Item 6. PP 19-0008 ATTACHMENT B/PAGE 2 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 3 of 17 III. IMPLEMENTATION MEASURES In September 2019, with a charge developed by the commission, department staff initiated a joint HB 2001/HB 2003 rulemaking process. The department convened a rulemaking advisory committee (RAC) and a series of technical advisory committees (TACs) to assist in the development of the rules. The advisory committees consisted of a wide variety of housing, planning, development, and advocacy stakeholders, and were co-chaired by two commission liaisons — Commissioner Anyeley Hallova and former Commission Chair Jerry Lidz. At the time of this staff report, the RAC has met ten times to discuss the HPS rulemaking process, including proposed amendments to OAR 660-008, and related Fiscal and Housing Impact Statements. The technical advisory committee tasked with reviewing the Housing Production Strategy and rules has met nine times. At each of these meetings, the technical advisory committee provided feedback and comments on draft versions of proposed OAR 660-008 rule amendments. For commission consideration, a summary of the last joint HPSTAC/RAC meeting on October 12 is included as Attachment G to this report. Finally, as HB 2003 has continued to garner the interest of housing advocates due to its long-term impacts related to housing production, DLCD has established a contract to work with Portland State University (PSU) to compile an anti-gentrification and displacement toolkit that can be used as a resource for cities. The toolkit will identify what cities can do to 1) measure the impacts of gentrification and displacement as they facilitate the production of needed housing, and 2) employ housing production strategies that work to stabilize communities in the midst of redevelopment. Dr. Lisa Bates and Dr. Marisa Zapata of PSU, well-known for their work on equitable housing and land use across the state, will lead this work. A. STAKEHOLDER AND COMMUNITY ENGAGEMENT To inform the rule and committee, staff initially began with extensive community outreach via webinar and in-meetings throughout various locations in Oregon. Summaries of these events are included in Attachment H. In addition, staff have also continued conversations with prominent stakeholders throughout the rulemaking process since the last LCDC meeting. These stakeholder meetings included discussion with housing advocates such as Fair Housing Council of Oregon and 1000 Friends of Oregon, as well as city advocates, like League of Oregon Cities. These conversations have further informed the overall structure of the Housing Production Strategy program, by inserting additional equity considerations when it comes to reporting, review, and enforcement measures, as well as support structures cities will be able to be resourced by DLCD once the program begins. Department staff also sought guidance from communities representing those that have been historically impacted by housing policies, have been unable to, or not asked to PP 19-0008 ATTACHMENT B/PAGE 3 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 4 of 17 participate in a major rulemaking process. These outreach efforts included focus groups with community organizations across the state, ensuring and supporting space for community members on the advisory committee roster. In an effort to reach various groups that have been disproportionately impacted by housing policies, department staff allocated funds for several groups to participate in focus groups or rulemaking advisory committee meetings. These groups included: • Native American Youth and Family Center (NAYA) • Portland African American Leadership Forum (PAALF) • Community Alliance of Tenants (CAT) • Lane Independent Living Alliance (LILA) • Portland State Homelessness Research & Action Collaborative (HRAC) Department staff also established a separate email address — housina.dlcd(c�state.or.us — to collect written comments. The rulemaking advisory committee and technical advisory committee considered comments the department received through this email address. Additionally, department staff coordinated a Speaker's Bureau to present information and receive feedback for the process. Speaker's Bureau events included various planning or housing organization meetings such as the Urban Land Institute, American Association of Retired Persons (AARP), and cities and counties across the state. B. HOUSING PRODUCTION STRATEGY RULEMAKING KEY CONSIDERATIONS Section 4(2) of HB 2003 directs cities over 10,000 to produce studies of needed housing through housing capacity analysis (also known as a Housing Needs Analysis). As an extension of the housing capacity analysis process, the bill also requires cities over 10,000 population to adopt a Housing Production Strategy (HPS) within one year of the city's housing capacity analysis update deadline. Per section 4(2) of HB 2003, a Housing Production Strategy Report must include a list of specific actions, including the adoption of measures and policies that the city shall undertake to promote development within the city to address a housing need identified in an adopted housing capacity analysis This section of the bill also states that actions to be considered may include the following: (a) The reduction of financial and regulatory impediments to developing needed housing, including removing or easing approval standards or procedures for needed housing at higher densities or that is affordable; PP 19-0008 ATTACHMENT B/PAGE 4 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 5 of 17 (b) The creation of financial and regulatory incentives for development of needed housing, including creating incentives for needed housing at higher densities or that is affordable; and (c) The development of a plan to access resources available at local, regional, state and national levels to increase the availability and affordability of needed housing. In creating a Housing Production Strategy Report, a city shall review and consider: (a) Socioeconomic and demographic characteristics of households living in existing needed housing; (b) Market conditions affecting the provision of needed housing; (c) Measures already adopted by the city to promote the development of needed housing; (d) Existing and expected barriers to the development of needed housing; and (e) For each section the city includes in its Housing Production Strategy Report: (A)The schedule for its adoption; (B)The schedule for its implementation; (C)Its expected magnitude of impact on the development of needed housing; and (D)The time frame over which it is expected to impact needed housing. The bill also includes language that empowers the department to review the work of cities for the purposes of prioritizing actions by the department, including: (a) Awarding available technical or financial resources; (b) Providing enhanced review and oversight of the city's housing production strategy; (c) Requiring a report and explanation if a city does not implement an action within the approximate time frame scheduled within a housing production strategy. (d) Entering into agreements with the city relating to the city's modification or implementation of its housing production strategy; or (e) Petitioning the commission for an enforcement action to require the city to comply with statewide land use planning goals related to housing or urbanization. The bill also directed the Land Conservation and Development Commission to develop rules for a Housing Production Strategy program, as well as rules for reporting requirements, review criteria, and enforcement measures in the event cities are unable to meet the minimum requirements of the program. All of these requirements and key policy decisions are described in more detail below and are provided for commission review. All requirements are subject to comment during the public hearing scheduled during this agenda item. PP 19-0008 ATTACHMENT B/PAGE 5 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 6 of 17 1. Housing Production Strategy Oregon Administrative Rules Rules adopted to implement the Housing Production Strategy program will be amendments to existing Oregon Administrative Rules in Chapter 660, Division 008 — Interpretation of Goal 10 Housing (OAR 660-008). The Rulemaking and Housing Production Strategy Advisory Committee (HPSTAC) reviewed and provided comments on the preliminary versions of the proposed amendments in Division 8, for sections 660- 008-0045 through 660-008-0070. The amendments to Division 8 are outlined as follows: • 660-008-0045 describes the requirement for cities over 10,000 across the State of Oregon to submit a Housing Needs Analysis on a fixed 6-8 year schedule • 660-008-0050 describes the various components and minimum requirements of a Housing Production Strategy Report. • 660-008-0055 outlines the various criteria by which the Department of Land Conservation and Development will review the submission of Housing Production Strategy Reports • 660-008-0060 outlines the reporting requirements for cities participating in the Housing Production Strategy Program • 660-008-0065 describes a series of actions the Department of Land Conservation and Development may take to ensure that cities adopt a Housing Capacity Analysis or Housing Production Strategy Report. • 660-008-0070 describes a series of actions the Department of Land Conservation and Development may take to ensure that cities adopt and implement specific Housing Production Strategies. In addition to providing standards for a Housing Production Strategy Report Structure, the draft rule amendments for Division 8 include additional definitions for "producers of needed housing" and "consumers of needed housing. CHANGES TO OAR CHAPTER 660, DIVISION 008 At the LCDC meeting held on September 25, staff presented the commission with a draft version of the proposed Division 8 rules for the Housing Production Strategy Program. The commission provided comment on the draft rules and provided further direction based on public feedback. Since the September commission meeting, staff have refined and updated the Division 8 rules for the Housing Production Strategy Program, considering additional consultation with the advisory committees and additional comments received. Changes and staff responses to comments are shown below: PP 19-0008 ATTACHMENT B/PAGE 6 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 7 of 17 OAR 660-008-0050(1) - Contextualized Housing Need Section 660-008-045(1) Contextualized Housing Needs is intended as an extension of the Housing Capacity Analysis described in OAR 660-008-045. The Housing Capacity Analysis, also known as a Housing Needs Analysis (HNA) is the document that cities over 10,000 are required to adopt on 6- or 8-year intervals. The HNA describes a city's housing need over a 20-year period. Even though rulemaking did not directly amend the fundamental components of the HNA, the advisory committees highlighted the importance of requiring cities to understand the full breadth and depth of housing need. As such, OAR 660-008-050(1) requires cities to study housing need of additional demographic groups as part of the Housing Production Strategy in addition to what cities are required to study as part of a typical HNA. By identifying the number of people experiencing homelessness, people experiencing a disability, and people in other State and Federal protected classes, cities will be to better contextualize the housing needs of residents. Without this analysis, the city would not be able to make informed decisions on appropriate housing production strategies with these priority populations in mind. Public comment during the September 25 meeting illustrated that several cities needed clarification on some items in the proposed text of OAR 660-008-0050. One example is a comment from the City of Wilsonville, requesting to omit the phrase "other housing needs" in OAR 660-008-050 (1)(E), in reference to housing needs that may arise in the future that the commission deems necessary to account for. The request to omit this phrase is that this clause is too broad, and gives LCDC authority to assign additional, arbitrary work as they see fit, leading to a lack of certainty for cities as they go through the process of completing their HNA and HPS. Department staff is in favor of this omission, understanding that the Housing Production Strategy Program has no intention of creating additional, arbitrary work for cities further than what is already listed. Still, given unforeseen future circumstances, such as housing need due to natural events or economic downturn, the commission reserves the right to request cities study specific attributes of housing need, knowing full well that an amendment to current rule language will require an open and clear rulemaking process. OAR 660-008-0050(2) - Engagement Another section of the Housing Production Strategy report titled Engagement has consistently garnered comments from housing advocates, especially from League of Women Voters. Specifically, the League has asked department staff to consider which and how different groups will be included in the engagement process as cities complete the Housing Production Strategy Report. As written, staff believe that "producers of needed housing" and "consumers of needed housing", as described in the Definitions section of OAR 660-008, is inclusive of the stakeholders who should be engaged in helping the city understand "true" housing need. The League of Women Voters has PP 19-0008 ATTACHMENT B/PAGE 7 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 8 of 17 recommended considering "taxpayers" as another group to be engaged throughout the process of selecting and implementing specific housing production strategies. Department staff understands the League's argument that taxpayers are necessary stakeholders who may be asked to pay for increases in public subsidy in order to implement housing production strategies. However, staff believes that the language written in the process is already inclusive of taxpayers as stakeholders, specifically with rule language that requires cities to engage "stakeholders who will be impacted by potential Housing Production Strategies" (660- 008-050(2)(a)), and therefore, have not amended OAR 660-008-0050(2) to explicitly add taxpayers as a special stakeholder group. OAR 660-008-0050(3) - Strategies to Meet Future Housing Need OAR 660-008(3) describes requirements for when cities document their proposed housing production strategies to meet their unmet housing need. Housing advocates urged department staff to consider how cities should address the impact of specific housing production strategies on Black, Indigenous, People of Color (BIPOC) and low- income communities of color. Fortunately, rule language in OAR 660-008(3)(C) requires that cities provide an analysis for each strategy proposed, summarizing the expected impact on specific demographic groups including income, race, ability, and other State and Federal protected classes. OAR 660-008-0050(4) - Achieving Fair and Equitable Housing Outcomes One of the most exciting results of the Housing Production Strategy rulemaking process is that the advisory committee felt it was important to ask cities to describe how they are striving to achieve a set of specific fair and equitable housing outcomes through the selection of their housing production strategies. OAR 660-008-0050(4) describes a process by which cities will need to, at both the initial submittal of a Housing Production Strategy report and the mid-term reflective report phase, describe how their actions and proposed actions achieve particular fair and equitable housing outcomes. This section will require cities to describe how their chosen Housing Production Strategies reinforce greenhouse gas emission reduction goals, meet state and federal Fair Housing Act requirements, increase the affordability of both rental and homeownership units, increase access to housing options, address the housing needs of people experiencing homelessness, and are increasing housing stability by limiting gentrification-induced displacement. These questions are a vital part of the Housing Production Strategy program, serving as a qualitative analysis that DLCD staff will use to measure a city's progress towards implementing housing production strategies and equitable measures. This will provide an additional layer of information that the commission and the department can use to understand how a city is meeting the full intent and letter of Goal 10 — Housing. PP 19-0008 ATTACHMENT B/PAGE 8 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 9 of 17 There have been ongoing changes to this section, as many RAC and TAC members have expressed interest in crafting questions that hold cities accountable to the Housing Production Strategy work, while understanding that cities are not always directly responsible for producing on-the-ground units. Some important changes to consider since the last commission meeting include: • Including the phrase "provisions of Executive Order No. 20-04" in the Location of Housing section, whereby cities will be required to link their housing production strategies to statewide greenhouse gas emission targets and to make compact, mixed-use neighborhoods available to as many residents as possible. Department staff agrees with comments from the City of Springfield that even though it is not reasonable to build compact, walkable neighborhoods for all of its residents, cities can strive to make these same neighborhoods available to as many of their residents as possible. • Not including an explicit definition for "high-quality community amenities" in the Housing Choice question. The city of Wilsonville believed that there should be a definition for this term, but department staff ultimately decided that further definition is not necessary since local jurisdictions will likely have a clear understanding of what amenities are important to the community either through Comprehensive Plans, systems plans, or other policy documents. Additionally, staff feels that by leaving this term undefined, it can offer cities the ability to adapt responses to this question to unique situations where certain amenities are considered "high-quality" to some demographics and not others. • Incorporating the phrase "advocating for" and "enabling" the provision of housing options for residents experiencing homelessness in the Housing Options for Residents Experiencing Homelessness question, whereby cities will need to link their strategies to their advocacy efforts and the building of a spectrum of housing options for residents experiencing homelessness. • Including the phrase "supporting and creating opportunities" for the Affordable Homeownership and Affordable Rental Housing question. This change came from comments at the City of Wilsonville, noting that cities will not be directly creating housing units, but will take part in creating the environment, to the best of their ability, for affordable homeownership and rentals through housing production strategies. • Rather than using the terms BIPOC, communities of color, and low-income communities interchangeably throughout the rules, staff decided to use the phrase "State and Federal protected classes" in order to be inclusive of all demographics listed under federal and state fair housing laws. PP 19-0008 ATTACHMENT B/PAGE 9 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 10 of 17 In summary, department staff have incorporated comments from above to update Fair and Equitable Housing questions since the last commission meeting. Changes have been reflected in the following excerpt from OAR 660-008-050(4): Achieving Fair and Equitable Housing Outcomes—A Housing Production Strategy Report must include a narrative summarizing how the selected Housing Production Strategies, in combination with other city actions, will achieve equitable outcomes with regard to the following factors: a. Location of Housing— How the city is striving to meet statewide greenhouse gas emission reduction targets, as established under Executive Order No. 20-04, by creating compact, mixed-use neighborhoods available to people part of State and Federal protected classes. b. Fair Housing— How the city is affirmatively furthering fair housing for all State and Federal protected classes. Affirmatively furthering fair housing means addressing disproportionate housing needs, patterns of integration and segregation, racially or ethnically concentrated areas of poverty, and disparities in access to housing opportunity; c. Housing Choice — How the city is facilitating access to housing choice for communities of color, low-income communities, people with disabilities and other State and Federal protected classes. Housing choice includes access to existing or new housing that is located in neighborhoods with high-quality community amenities, schooling, employment and business opportunities, and a healthy and safe environment. d. Housing Options for Residents Experiencing Homelessness— How the city is advocating for and enabling the provision of housing options for residents experiencing homelessness and how the city is partnering with other organizations to promote services that are needed to create permanent supportive housing and other housing options for residents experiencing homelessness; e. Affordable Homeownership and Affordable Rental Housing— How the city is supporting and creating opportunities to encourage the production of affordable rental housing and the opportunity for wealth creation via homeownership, primarily for State and Federal protected classes that have been historically locked out of these opportunities; and f. Gentrification. Displacement, and Housing Stability— How the city is increasing housing stability for residents and mitigating the impacts of PP 19-0008 ATTACHMENT B/PAGE 10 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 11 of 17 gentrification, as well as the economic and physical displacement of existing residents resulting from investment or redevelopment. OAR 660-008-0050(5) - Additional Elements of Housing Production Strategy Reports In addition to the above changes, department staff received further comments from housing advocates related to additional elements of the Housing Production Strategy program. One request from the Fair Housing Council of Oregon was that cities use the completed survey of permitted and produced units under ORS 197.178 to track housing production goals by affordability level and progress towards meeting these goals. Unfortunately, department staff is unable to agree with this recommendation, since the Housing Production Strategy Program is not built on the premise that cities achieve specific housing unit production targets. While this is an important metric to measure to determine progress, cities are not the only actors in the production of housing, and staff felt it would be unfair to task cities with measuring these goals by unit count. OAR 660-008-0055 — Review of Housing Production Strategy Reports Regarding review criteria for Housing Production Strategy Reports, department staff received comments from the consultant group EcoNW regarding the review of "unmet housing need" as used in OAR 660-008-055(6)(a), and clarification around definitions for the phrase. The basis for these questions are connected to the need for distinction between an "unmet housing need" and a "land deficit". The State refers to an "unmet housing need" as defined in ORS 197.296(6), as the difference between a housing need and housing capacity. If the housing need is greater than the housing capacity, there is an unmet housing need. A housing land deficit is actually a subset of an overall unmet housing need, as there are types of unmet housing needs that can be met through redevelopment or infill on existing developed lands. When cities complete a Housing Production Strategy Report they may find that they have a land deficit. The city must then describe measures the city plans to take to remedy a land capacity deficit, which will require a remedy, as stated in the Housing Production Strategy Report. In addition, regarding review criteria for the Housing Production Strategy Report, the City of Wilsonville commented that the phrase "other attributes that the Land Conservation and Development Commission considers relevant" was too broad of a review criteria and left too much open-endedness. Though department staff agree with the City of Wilsonville that the "other attributes" language is open-ended, it is necessary that the commission and the department have the ability to be agile as housing markets and Housing Production Strategies change in the future. It is likely that if the commission seeks to add housing attributes to the review process of the Housing Production Strategy program, the department would need to initiate a public and open PP 19-0008 ATTACHMENT B/PAGE 11 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 12 of 17 rulemaking process to make the necessary amendments if the "other attributes" language were omitted from the rule. OAR 660-008-0060 — Reporting on Housing Production Strategy Implementation The creation of reporting requirements for Housing Production Strategy implementation is another important part of this rulemaking. Ultimately, staff, RAC, and HPSTAC members agreed that outcomes will be better with a two-part reporting structure. One requirement would be qualitative, in the form of responding to the Fair and Equitable Housing Outcomes questions listed in OAR 660-008-0050(4) upon both initial submission and in a mid-point report. The other reporting requirement would be quantitative, requiring cities to submit annual permitted and produced reports according to ORS 197.178. Though this reporting format has had extensive discussion, some RAC and HPSTAC participants have some continued discomfort with the reporting requirements. For example, the cities of Wilsonville and Springfield believe that requiring a city to respond to the Fair and Equitable Housing Outcomes questions as part of the mid-term reporting may be too extensive for resource-limited cities. They asked the HPSTAC and RAC to consider removing the exercise altogether or limiting the scope of the work. Though staff disagreed with removing this reflection piece, the department understands that some communities may not have the staff capacity or resources to undertake extensive reporting requirements. To mitigate some of the capacity issues, department staff have been working with League of Oregon Cities to shape an educational and support program. This program is intended to educate city staff on the requirements of the Housing Production Strategy program as well as bridge interactions between department staff, cities, and peer cities. This will help the department to better understand the resources needed to ensure the Housing Production Strategy program is able to achieve the intended outcomes. Furthermore, participants have recommended an advisory committee structure to help the department analyze the effectiveness of the Housing Production Strategy Program and to provide recommendations for better implementation. This will be especially important as the Housing Production Strategy Program enters the first few years of implementation. This discussed further in the Ongoing Support for Cities section below. Publicizing Housing Production Strategy Reports Housing advocates believe that the mid-term reports present an opportunity for the public to be notified of city efforts, as well as provide comments on the city's Housing Production Strategy progress. Though the department agreed that Housing Production Strategy reports could and should be made public for open-source review and reference, it is unclear how and if the department would consider public comment on Housing Production Strategy progress in the department's review of the mid-term reports. However, if the department is able to staff a quarterly advisory committee, as described above, this body could also take part in reviewing the way the department PP 19-0008 ATTACHMENT B/PAGE 12 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 13 of 17 publicizes and shares reports via various electronic channels. As a result, staff have come to the conclusion that the department would notify the public, through already established channels such as the interested parties email notification list and through the Post-Acknowledgement Plan Amendment notification system, within 10 days of a submission of Housing Production Strategy mid-term reports, to review and comment, if needed. This language has been incorporated into OAR 660-008-0060(4). Survey Tool for Developers At the last joint HPSTAC/RAC meeting, participants proposed developing a survey tool designed specifically for developers, where cities will be able to ask for residential development data such as rent or sale price, number of units, number of bedrooms, which strategies the developer used, and which strategies they would have liked to have used. According to HPSTAC and RAC members, this tool would be useful in tracking permit data from developers, as well as additional information regarding the use of housing production strategies employed. The Housing Production Strategy report rules already require cities to indicate which income levels each specific strategy is expected to serve, as well as if it will serve renters or owners. Further, department staff believe a survey tool for developers is not something the department can require cities to implement. However, the department would like to emphasize that this tool is a best practice in determining the effectiveness of Housing Production Strategy documents, and have included in the list of tools/actions/policies resource in Attachment C. OAR 660-008-0065 — Non-Compliance in Adoption of Housing Capacity Analysis or Housing Production Strategy Report RAC and HPSTAC members also discussed enforcement tracks since the last commission meeting. The draft rules incorporate two separate enforcement tracks. The first is adoption of a Housing Capacity Analysis or Housing Production Strategy Report on the timeline required by HB 2003. The second track relates to the adoption and implementation of the city's Housing Production Strategies. Enforcement is important to housing advocates, who requested that enforcement tracks be prioritized for cities that are underserving BIPOC people and those earning low- incomes. Further, though enforcement tracks were mainly supportive and offered more incentives than penalties, housing advocates were concerned that some cities will routinely balk at the incentives to complete their work through the Housing Production Strategy program. Finally, housing advocates also questioned what the LCDC enforcement abilities entailed if cities were to become repeatedly delinquent participating in the program. Staff believed that though the approach of measuring service to particularly BIPOC and low-income communities is a helpful lens to prioritize enforcement tracks, it may be difficult to operationalize. The intent of the Housing Production Strategy program and PP 19-0008 ATTACHMENT B/PAGE 13 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 14 of 17 the enforcement tracks are not to track production of housing units alone, especially housing units for specific populations, but rather, the intent is to track the implementation of strategies that will result in housing production. As a result, DLCD staff will strive for the Housing Production Strategy program to be a collaborative process between cities and staff, with all intentions to help support cities in "getting to the finish line" of housing production. Enforcement measures, therefore, are written to emphasize support rather than penalty. They will necessarily be based on implementation of strategies rather than production of units outside a city's control. LCDC reserves the right to withhold funds and state revenue sharing or assign cities to Circuit Court for delinquency, as described in ORS 197.319 and ORS 197.335. Staff believe that this structure of the enforcement process sufficiently allows cities to work towards their housing production goals, while receiving support when they need to from DLCD staff and associated grant and other technical assistance resources as available. This process also provides the commission the ability to compel cities to act, and, when continuously delinquent, allows the commission to petition enforcement orders that bind cities to an implementation plan created collaboratively between the department and city staff. OAR 660-008-0070 — Non-Compliance in Adoption and Implementation of Strategies to Meet Future Housing Need Identified in a Housing Production Strategy Report There were no significant changes made to this section since the last commission meeting. Additional Considerations In closing, there were several questions and topics of discussion that consistently came up in the final HPSTAC/RAC meetings. Though not all were directly related to the scope of HB 2003, DLCD staff felt that they were important to communicate to the commission. These items are described below: Setting Housing Production Goals vs. Evaluating Housing Production Goals The Housing Production Strategy program includes several sections in OAR 660-008 with the intent of staff evaluating Housing Production Strategies. Housing advocates, however, have shared that the program does not clearly outline housing production targets for cities, which may pose a problem because it gives no real measurable goal for cities to achieve. Though DLCD staff understand this sentiment, the Housing Production Strategy program is really the preliminary step in this direction of articulating housing production strategy goals. Department staff believe that cities will need to ultimately set targets and goals themselves, as each jurisdiction will have more localized and regional discussion around the topic based on Housing Needs Analyses. Using requirements outlined in OAR 660-008, city staff will be better equipped to have data sets and reflection necessary to better articulate these goals and outcomes going PP 19-0008 ATTACHMENT B/PAGE 14 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 15 of 17 forward. Further, the Regional Housing Needs Analysis (RHNA), if adopted by the 2021 Legislature, is another program of HB 2003 that will use data to better allocate housing targets on a regional scale. This discussion furthers the importance of creating a comprehensive and interrelated Goal 10 framework that includes the RHNA, local HNAs, and the HPS. Ongoing Support for Cities In addition, RAC and HPSTAC members from cities have shared reservations between what will be expected of them through the Housing Production Strategy Program and their capacity to deliver. Department staff understand the capacity issues and limited resources many cities face, especially during today's challenging economic situations. Staff also understand that if the expectations are not set high enough to deliver housing production, the legislative intent of HB 2003 will never be realized. Staff expect to take an active role in supporting cities in reaching success in housing production through a collaborative process outlined throughout OAR 660-008. DLCD staff is also considering an ongoing engagement and education assistance program for cities needing more capacity-building as they implement HB 2003 locally. This will be broken down into two phases, where DLCD will 1) initially reach out to cities to provide information about the adopted HPS Program rules, and 2) continue an ongoing program by cohort of peer cities, or otherwise, to share information, resources, and best practices and to support the program going forward. In addition, as the Housing Production Strategy program is implemented, RAC, HPSTAC, and staff have all considered the possibility of a quarterly advisory committee to help implement and update elements of the program as needed. Limitations of the Housing Need Analysis Throughout rulemaking, many members expressed recommendations to update the Housing Needs Analysis program, especially with regards to data collected around race and ethnicity, income level, and housing type. Housing advocates also requested that HNAs be translated into housing production goals by affordability level to be able to track progress effectively. Unfortunately, changes to the Housing Needs Analysis program were not addressed in HB 2003, and therefore are not being considered during this rulemaking effort. The opportunity with the Housing Production Strategy Program, however, is that it has been able to act as an extension of the Housing Needs Analysis, especially with requirements outlined in OAR 660-008-0050(1) — Contextualized Housing Need. In this section cities will be required to account for their housing need, not just by unit type and income level, but also need by race and ethnicity, tenure, as well as those experiencing homelessness and living with disabilities and other state and federal protected classes Staff believe this will be a sufficient extension of the Housing Needs in lieu of a comprehensive review of the HNA and Goal 10 — Housing framework at this time. The PP 19-0008 ATTACHMENT B/PAGE 15 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 16 of 17 department hopes to obtain resources to comprehensively update our guidance for local governments in the preparation of HNAs in the 2021-2023 biennium. C. RECOMMENDED ACTION The department recommends that the commission: 1) Review the proposed final draft changes to administrative rules 660-008-045 through 660-008-070 2) Consider the input of the rulemaking advisory committee and its technical advisory committee; 3) Provide the department direction regarding any questions or issues for which the commission needs further information in order to make a final decision; and 4) Motion to adopt the proposed administrative rules for the Housing Production Strategy Program, with appropriate amendments, as necessary. D. SAMPLE MOTIONS FOR ADOPTION: "I move that the Land Conservation and Development Commission adopt Oregon Administrative Rule Chapter 660, Division 8, Sections 45 through 70, as drafted in Attachment B of Agenda Item 5. "I move that the Land Conservation and Development Commission adopt Oregon Administrative Rule Chapter 660, Division 8, Sections 45 through 70, as drafted in Attachment B of Agenda Item 5 with the following amendments..." IV. ATTACHMENTS A. ENROLLED HOUSE BILL 2003 B. PROPOSED HOUSING PRODUCTION STRATEGY ADMINISTRATIVE RULES (660-008) C. CROWD-SOURCED LIST OF HPS STRATEGIES TOOLS/ACTIONS/POLICIES D. FISCAL IMPACT STATEMENT / HOUSING IMPACT STATEMENT E. HNA SCHEDULE F. HNA SCHEDULE MEMO PP 19-0008 ATTACHMENT B/PAGE 16 OF 17 Agenda Item 5 November 12-13, 2020 — LCDC Meeting Page 17 of 17 G. SUMMARY OF OCTOBER 12 JOINT RAC/HPSTAC MEETING H. COMMUNITY CONVERSATIONS ON HOUSING SUMMARIES I. ROSTER OF RULEMAKING ADVISORY COMMITTEE (RAC) MEMBERS J. ROSTER OF HOUSING PRODUCTION STRATEGY TECHNICAL ADVISORY COMMITTEE (HPSTAC) MEMBERS K. WRITTEN COMMENTS SUBMITTED REGARDING HOUSING PRODUCTION STRATEGIES PP 19-0008 ATTACHMENT B/PAGE 17 OF 17