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Approved Minutes - 2022-02-15 rrA CITY COUNCIL REGULAR MEETING MINUTES February 15, 2022 OREGO'r\ 1. CALL TO ORDER Mayor Buck called the regular City Council meeting to order at 3:01 p.m. on February 15, 2022. The meeting was held both virtually via video conferencing and in-person in the City Council Chamber at City Hall, 380 A Avenue. 2. ROLL CALL Present: Mayor Buck, Councilors Wendland, Nguyen, Verdick, Rapf, Manz, and Mboup Staff Present: Martha Bennett, City Manager; Jason Loos, City Attorney; Erik Olson, Senior Planner; Scot Siegel, Community Development Director; Anthony Hooper, Deputy City Manager; Katy Kerklaan, Citizen Information Specialist; Kari Linder, City Recorder; Ivan Anderholm, Parks and Recreation Director Others Present: Lee Ward, Senior Project Manager with EPCOR via video conferencing 3. PLEDGE OF ALLEGIANCE Mayor Buck led the Council in the Pledge of Allegiance. 4. PUBLIC COMMENT • Jay Hamachek, Dorothy Atwood, and Lisa Adatto Ms. Adatto, Ms. Atwood, and Mr. Hamachek, of the Lake Oswego Sustainability Network (LOSN), briefly reviewed via PowerPoint the LOSN's objectives and updated Council on the Network's newly adopted focus and the work that lead to LOSN's four recommendations for the wastewater treatment project, which included: maximizing solar resources at the new treatment plant and future Foothills development; reserving three acres of the existing City of Portland wastewater treatment plant for future treatment options; synergize the wastewater treatment project with the Foothills development; and engage in a third-party sustainability review to address City Council Regular Meeting Minutes Page 1 of 17 February 15, 2022 issues like water reuse options, future regulatory issues, and incorporating realistic performance metrics for the new plant and EPCOR. • Carole Ockert Ms. Ockert, Chair, Neighborhood Chairs Committee, noted several committees she had served on, including the Middle Housing Committee created by City Council. In addition to the Middle Housing regulations discussed in the Staff report, she encouraged Council to consider three key additions allowed by the State, which were summarized in a handout she provided to Council: • Choose to allow triplexes, quadplexes, townhomes, or cottage clusters only on lots that meet the minimum zone size, which was the right choice for maintaining neighborhood character and appropriately siting middle housing in the city's neighborhoods. • Set a minimum floor area for cottage cluster units below 900 sq. ft., Ms. Ockert suggested 500 sq. ft. • Set 8 units as the maximum number of units in a cottage cluster, which would fit well in Lake Oswego's predominately built out, infill community. • Staff had confirmed the State allowed these recommended options for cities, and while not included in the Staff report, she expected them to be presented in Staff's oral presentation. Adding that, tonight's work session was the opportunity to provide direction on the key Middle Housing Code options to be incorporated into draft Code language. 4.1 PRIOR PUBLIC COMMENT FOLLOW-UP No prior public comment follow-up was provided. 5. STUDY SESSIONS 5. 1 Middle Housing Code Amendments - House Bill 2001 and Senate Bill 458 Eric Olson, Senior Planner, updated on the progress made on the proposed Middle Housing Code Amendments via PowerPoint since Staff's last meeting with Council in November when Council directed Planning Commission and Staff to prepare Development code amendments to meet minimum compliance provisions, as well as amendments in compliance with the expedited Middle Housing Land Division Requirements of Senate Bill 458 (SB 458). Mr. Olson reported on the virtual community forum held in early December that included a survey which received about 100 responses that were summarized and attached to the Staff report. Mr. Olson highlighted the Code elements addressed at each of the four Planning Commission work sessions, noting a draft of the amendments was expected to be released to the public on March 8th, followed by a second community forum planned for March 22n 1, and upcoming hearings at Planning Commission and City Council in April and May, respectively. Mr. Olson summarized the proposed amendments to the Development Code needed for compliance with House Bill 2001 (HB 2001) and Senate Bill 458 (SB 458), which included changes to the definitions, applicability within use zones and density. City Council Regular Meeting Minutes Page 2 of 17 February 15, 2022 Mr. Olson pointed out that the Density PowerPoint slide was a bit inaccurate (page 8 of the presentation), stating that with townhouses, the City was allowed to limit the density to four times the minimum lot size of single-family dwellings in the zone. Councilor Wendland asked for a specific example of what would be permitted on a lot and what was meant by four times the density. Mr. Olson replied a single-family residence, duplex, triplex, quadplex, a townhouse with up to four units, or a cottage cluster development with a minimum of five units as long as the minimum lot size was met. Density referred to units per lot, not floor area. Any development would retain the same cubic sq. ft. currently permitted but the square footage would be divided between dwelling units; essentially adding density without expanding the existing building envelope. Minimum lot size was the term typically used in the Planning Department versus density. On lots meeting the minimum lot size, a single-family dwelling and ADU could be built, and under middle housing, four dwelling units were allowed per lot for townhouses specifically. Councilor Nguyen asked for additional clarification regarding the number of units permitted per lot in specific zones. Mr. Olson clarified a lot in an R-5 zone could have one structure with four attached units; however there were exceptions. Regulations currently permit a single-family dwelling with an ADU on a 10,000 sq. ft. lot in an R10. Under Middle Housing proposal, up to four townhouse units would be permitted on the same lot. He clarified density regarded the number of dwelling units and did not account for garages, which were a floor area standard and a separate calculation. Councilor Manz understood HOAs would be excluded from middle housing land use laws. Mr. Olson replied that was correct, but some important technical details were involved. The City did not have purview over HOAs or private covenants and agreements that might prevent the development of Middle Housing and would not specifically exempt such agreements from Middle Housing since modifications could occur in the future allowing Middle Housing. Mr. Olson continued the presentation describing the lot sizes on which Middle Housing would be allowed under the proposal. As Ms. Ockert suggested, applying a larger lot concept to Middle Housing was recommended, as the State allowed the City to apply a larger minimum lot size for middle housing types. The large lot option preferred by the Commission and the public according to the survey. He confirmed 7,000 sq. ft. was the required minimum, larger minimums could not be required of larger middle housing types. Mayor Buck understood triplexes and quadplexes were currently permitted in R-3 zones. Mr. Olson responded no, noting a three-unit multi-family structure could be allowed under a minor development review process, but not in the same way as a middle housing type today, so a different process was required. Community Development Director, Scot Siegel explained separating the use and what was permitted outright might be helpful when discussing procedures. The State essentially provides a safe harbor, for example, allowing a minimum lot size for Middle Housing larger than the City's existing minimum lot size in some zones. Both the Planning Commission and the public wanted to provide more space on lots with Middle Housing. Mr. Olson noted Staff considered two options: apply the same minimum lot size used for single-family or use the larger lot size concept. Mayor Buck asked whether larger lot sizes existed in these zones. Mr. Olson responded yes they do, adding many larger lots would need to be divided to get to the City Council Regular Meeting Minutes Page 3 of 17 February 15, 2022 minimum lot size target in a given district. If already divided, it would more commonly be in the 3,000 sq. ft. range. Director Siegel added that when making its recommendations, the Planning Commission considered the minimum standards for compliance under the State rules, which the Commission interpreted to mean what would afford the greatest preservation of neighborhood character. However, with fewer lots meeting the minimum lot size there were fewer opportunities for Middle Housing. The Planning Commission understood the need to balance compliance with maintaining neighborhood pattern or character. Mr. Olson noted Staffs recommendations were based on the minimum compliance assumption, which would mandate allowing only single-family and duplexes on substandard lots. That concept would apply across all zones. Mr. Olson continued his presentation, addressing proposed amendments related to review procedures and development processes, noting middle housing development would be classified as a ministerial decision. He clarified cottage cluster development had to be treated the same as single-family housing. Theoretically, the City could change its process for single-family housing, so all housing types would go through a minor development, but Staff had not been given any such direction. Director Siegel added that since the State allows the City to apply the same rules for non- conforming single-family dwellings to Middle Housing, Staff was examining standards for non- conforming development and the definition of demolition because the issues were interrelated. There would be a separate study session on that topic in the future. Mr. Olson continued the presentation reviewing the background on the requirements for minor or ministerial developments and the impacts on the City's ability to apply conditioning authority. Staff proposed new, clear and objective mitigation requirements for all ministerial applications, allowing the City to determine appropriate mitigation for development. An alternative path would be offered for those wishing to use a discretionary process to determine appropriate mitigation. Councilor Manz confirmed the City would have some leeway on the proportionality aspects of the improvements that might be needed. Mr. Olson added that currently, the City had the authority under State law to apply mitigation to single-family dwellings, but just did not apply it. Director Siegel explained the City did not apply mitigation to single-family dwellings because it was presumed that the lots went through a land division process where public improvement standards were applied. Middle Housing would increase the theoretical density, giving the City the nexus for having that authority. Very clear and prescribed standards would be needed. On an individual lot basis, the City might have standards requiring the dedication of additional right-of-way, with the standards scaling up for a quadplex or cottage cluster. There were a few examples of development where the City would have benefitted from additional right-of-way, so Staff was looking to adopt mitigation requirements for all ministerial applications as a process improvement in the current system and to meet State requirements. Mr. Olson clarified the new standards would be included in the draft Code amendments for public review and then adopted into the Code. Mayor Buck asked why the proposal precluded more dense development, like R-2 and R-3 lots, from Middle Housing when those areas were designed for density and typically more walkable, and close to town centers and transportation. Mr. Olson explained the logic was that larger lots were more appropriate for more units and to limit the applicability. Mayor Buck noted homes on City Council Regular Meeting Minutes Page 4 of 17 February 15, 2022 smaller lots were huge, so he did not see much difference between a triplex or 5,000 sq. ft. single- family home on a lot. He would be open to expanding applicability especially in parts of town designed for dense use; otherwise the City was just precluding the use in areas where best suited for Middle Housing. Director Siegel agreed that was a good policy question. Staff's proposals followed the minimum compliance directive, as well as the language in State regulations requiring Middle Housing in zones that were primarily single-family detached. Additional policy changes could be explored in the next phase of housing work regarding HB2003. Ms. Bennett clarified Middle Housing types would be allowed in R-2 and R-3 zones, but they would not be eligible for ministerial review, so a land use process would be required which would allow for neighborhood involvement and conversation about conditions of approval. Director Siegel noted Middle Housing was permitted outright in R-2 and R-3 zones; it was not a conditional use, but at a higher standard than what the State would allow to be imposed. Mayor Buck expressed concern about the conditions of approval becoming a barrier to non- single-family developments. Mr. Olson replied that the requirements would be proportional and also clear and objective. The City would have to treat things similarly based on intensity of use, for example. In many ways, the proposal intended to respond to concerns that the City had not updated its citywide infrastructure planning to accommodate Middle Housing. City Engineer, Erica Rooney recommended handling the matter on an application by application basis as opposed to the larger assumption that all lots would develop as quadplexes, which staff perceives to be unlikely. Staff agreed that the new process could be seen as a disincentive in some way. Mr. Olson continued his presentation, describing how the dimensional standards discussed with the Planning Commission would apply to Middle Housing. The recommendation was to apply existing single-family standards to duplexes, triplexes, and quadplexes. A new term, townhouse project, would be introduced to Code allowing the City to regulate a townhouse project in the same way other Middle Housing structures were regulated. The City did not have as much discretion with cottage cluster dimensional standards, and Staff proposed adopting the minimum compliance track. Mayor Buck asked what size lot would be needed to develop a cottage cluster of five with the maximum floor area of 900 sq. ft. Mr. Olson replied a number of other factors came into play. The Dimensional Standards for Cottage Clusters slide showed a six-unit cottage cluster on a 12,000 sq. ft. lot, which would be in the R-10 district. The State determined a 7,000 sq. ft. lot size was the minimum that could fit a cottage cluster, and buildings could be smaller than 900 sq. ft. Director Siegel added the math for six units on a 12,000 sq. ft. lot would be appropriate considering a maximum 30 percent lot coverage in that zone based on height, adding that would be an absolute minimum but parking and other circulation would also have to fit on the lot. He explained the maximum lot coverage was a sliding scale per zone based on height. Structures less than a certain height were afforded more lot coverage,which decreased as the building height increased. The maximum lot coverage and maximum floor area ratio, which was inclusive of garages, along with height and setbacks would remain applicable to Middle Housing. Mr. Olson clarified that floor area and lot coverage standards could not be applied to a cottage cluster site. Councilor Wendland understood cottage clusters could cover 90 percent of the lot and asked if setbacks were included. He was concerned about the amount of water runoff. Mr. Olson replied there were 10 ft. setbacks, as well as a minimum courtyard requirement, parking with shared access and screening, etc. so getting to 90 percent coverage would be difficult. Stormwater would City Council Regular Meeting Minutes Page 5 of 17 February 15, 2022 still need to be managed onsite. Impervious surface limitations had been discussed with the Middle Housing Code Advisory Committee and requirements to manage stormwater onsite would remain in place, but further amendments did not move forward because they were not required to be adopted by the June deadline. Councilor Wendland asked if the City could use impervious surface limitations as a tool to limit lot coverage. Mr. Olson replied that generally, the City would have some flexibility imposing those limitations, however, the specifics of how to apply those limitations to cottage clusters required a conversation with DLCD. Director Siegel said input would also be needed from the City's Engineering Department, given the structural requirements and infrastructure for pervious surfaces, which increased costs. Councilor Verdick asked about any maximum heights and differing setback planes for cottage clusters. Mr. Olson replied 25 ft. was the maximum height for a cottage cluster unit, which was two stories. The City could not impose a lower maximum height and could not change the 10-ft front or rear setback. The DLCD did clarify the City's existing setback planes would apply to cottage clusters, preventing a 25 ft. wall right at the setback line. Councilor Verdick noted the minimum requirement for the courtyard distance was 15 ft., so cottage cluster sites could become extremely dense. Mr. Olson reminded other requirements would limit work together to limit building area but agreed cottage clusters did not have lot coverage requirements and could become quite dense. The City envisioned following the minimum compliance track to set a maximum of eight for cottage clusters, which Staff proposed. Councilor Verdick said she would like a maximum number. She was also concerned how the proposals would impact trees, so ensuring the City had good Tree and Building Codes that worked together would be even more critical. Preserving mature trees seemed more difficult with a cottage cluster. Mr. Olson agreed detached structures had a bit more flexibility to avoid impacting trees. Applying the City's discretionary Chapter 55 Tree Code with its Significant Tree Alternative Criteria could provide more flexibility for a cottage cluster to avoid trees than other Middle Housing types. Councilor Verdick asked if the setbacks were the same on corner lots, citing safety concerns.-Director Siegel noted the setbacks on corner lots would be controlled by sight-distance requirements at intersections or driveway approaches, so the 10 ft. setback might not be allowed, especially with parking and screening requirements. Councilor Wendland noted the 10 ft. front yard setback for cottage clusters versus 25 ft. setback for surrounding housing types would make cottage clusters out of character in neighborhoods. Mr. Olson noted while cottage cluster units had to be oriented toward a shared common courtyard,frontage and access requirements could help prevent a line of the units oriented toward the street with the 10 ft. setback, but such a design was possible. The flexible setback for cottage clusters was intended to redistribute the front setback area into a more internal focused courtyard, to allow more open space in the site. The City was required to allow cottage clusters in neighborhoods where they might not fit in aesthetically. Director Siegel added the cottages could have a very high level of finish and detailing, exceeding the appearances of neighboring houses. Mr. Olson added cottage clusters had received the most support out of Middle Housing types. Councilor Verdick stated the setback mandates by the State were not ideal. Page 13 of the Staff report stated the State's maximum building footprint was 900 sq. ft., and she confirmed with Staff that the City could set a minimum building footprint. Director Siegel noted the footprint and floor City Council Regular Meeting Minutes Page 6 of 17 February 15, 2022 area were separate definitions and suggested the City explore options about setting a minimum floor area, which could address concerns about tiny homes. Councilor Verdick understood building up made sense, but the housing needs of seniors and those with disabilities were not being addressed. The City should encourage more accessible housing types that were one level or had main level living with larger bathrooms, hallways and living space. Mr. Olson noted that Staff had considered ways to encourage 1.5 story options, but there was not much the City could do given the limited options. Councilor Rapf stated that he understood the City was being forced to implement Middle Housing and noted there maybe unintended consequences, including creating the opportunity to cut down more trees, exacerbating parking issues, and increasing land values. Possibly attracting more developers to build more expensive homes, which would not serve the intended purpose of HB 2001. The entire HB2001 process prohibited the public, community, and neighborhood associations from having a voice in decisions, which was the scariest thing. The City had until June, so he encouraged Staff and Council to take more time to think about worst-case scenarios and unintended consequences as well as more creative solutions to make Middle Housing right for Lake Oswego, including seniors. Councilor Nguyen asked how ownership would be handled for individual middle housing units placed on one lot originally planned for a single homeowner. Mr. Olson replied that was up to the developer. If their proposal complied as a parent lot, it would be allowed under a land division. The City must allow cottage clusters to be divided and sold under SB 458.A variety of agreements could be used to provide flexibility beyond condominiums. Director Siegel added condominiums were a current example of how the ownership would work. Cottage cluster unit ownership would be more straightforward as they could be divided fee simple because the land went with them, but without the additional costs or overhead of a condominium association. Councilor Nguyen understood in neighborhoods with HOAs or CC&Rs, only single-family homes could be developed, so no Middle Housing could be placed on those lots. Having a map of these lots showing which could not have Middle Housing would be helpful. Director Siegel replied some HOAs or CC&Rs within the neighborhoods had long been forgotten about and projecting which areas would be ineligible for Middle Housing given the current CC&Rs would require a legal analysis, which was not feasible for the City and outside its role. Prospective developers would have to contend with the many variables involved with the feasibility of development. Councilor Nguyen noted the map looked alarming because it seemed like every lot within the green areas could potentially be a duplex, triplex or quadplex, which was not the case; some lots would automatically be precluded due to HOAs and CC&Rs. Director Siegel agreed, adding a zoning map may have been more useful. Mr. Olson noted private agreements were subject to change and were not within the City's purview. He would be uncomfortable saying some areas would not see Middle Housing when it could be possible. It was good to plan for the worst-case scenario. Councilor Mboup asked if SDCs would be required for Middle Housing, if there was a maximum number of units allowed per cottage cluster, and what setbacks were required for quadplexes and triplexes. Staff confirmed SDCs were required for all building permits, except for affordable housing as Council had redefined it. Mr. Olson stated under minimum compliance, the City had City Council Regular Meeting Minutes Page 7 of 17 February 15, 2022 the option to set a maximum of eight units within a cottage cluster, which Staff proposed. Quadplexes and triplexes would be subject to the same setback requirements as single-family housing, which would vary by zone, but generally, it would be greater than 10 ft. Councilor Mboup said he trusted City Staff's proposals because the City had to comply with State law. If people could build units that made housing more expensive than expected, the State mandates for affordable housing would be negated. People should be able to afford clusters, but knowing they could be deeded, made them no longer affordable, so the law was no help. Councilor Verdick clarified the law was designed to promote Middle Housing, not affordable housing. The law regarded density, not affordability. Director Siegel added the law was about increasing the housing supply. The cost per square foot of cottage clusters would be higher than a larger volume home. Some townhomes developed in the city were more expensive than detached single-family homes, while some smaller units, primarily condominiums in certain neighborhoods, were not more economical. Councilor Mboup agreed but questioned why the City would not try to find ways to prevent people from building all these cottage clusters in neighborhoods if it would not allow people to acquire a home, but just build capacity for others to make more money and to totally change the neighborhood. He asked if cottage clusters could be located within blocks of one another in a residential neighborhood or was that determined by the availability of land. Mr. Olson stated cottage clusters had a minimum of five and maximum of eight units per lot if they met the minimum lot size of 7,000 sq. ft. under Staff's proposal. The cluster could be built on any site meeting the minimum square footage requirements. With regard to affordability, Staff received some recommendations from the Middle Housing Code Advisory Committee to explore incentives to encourage affordability and accessibility of Middle Housing units, but Staff was asked to postpone further discussion until all the required amendments were adopted. Staff intended to investigate incentives later in the year when considering the Housing Needs Analysis and housing capacity for HB2003 and the City's required Housing Production Strategy, so more recommendations were coming. Mr. Olson clarified for Councilor Manz that property owners annexing into the city and requiring City services would have to adhere to Lake Oswego building standards. Director Siegel noted the City's urban growth management agreement with the County required a certain level of development to annex and connect to City services. Mr. Olson added that the annexation process would not change for Middle Housing development. Mr. Olson continued the presentation, reviewing the areas of flexibility available with cottage clusters provided by the State. He explained the intent behind Staff's recommendations which included prior input from Council. Staff recommended requiring a minimum of five units for all cottage clusters and a maximum average size for cottage cluster units, generally making the combined floor area of all the units similar to the floor area standard for a single-family structure. The maximum average unit size in medium and low-density districts should be 1,000 sq. ft. to maintain consistency. Lower density districts would have a larger maximum average unit size of 1,200 sq. ft. to account for the larger size of those lots while also keeping the cumulative floor area as close as possible to single-family maximums. City Council Regular Meeting Minutes Page 8 of 17 February 15, 2022 Mayor Buck stated the trade-offs between the 4,000 sq. ft. and 5,000 sq. ft. lots have been explained, so more dense cottage clusters could be developed or there could more flexibility within the cluster sphere to create units more livable for seniors. The requirements were very different than those for other Middle Housing types. He confirmed the 1,000 sq. ft. would be the average size per dwelling unit, which was pretty small. Councilor Wendland said he liked Staff's reasoning behind the recommendations, as well as the five unit minimum, adding he would require an eight unit maximum. He verified the total floor area of the cottage cluster units combined would mirror what was allowed on the lot if a single-family house were built. Mr. Olson noted the tables included in the Planning Commission Staff report walked through how the calculations worked in more detail. Councilor Verdick said she appreciated Staff's thought process, adding she leaned toward the five unit minimum and eight unit maximum as well. She noted that the square footage would be an average, so some units could be smaller and some larger, which would allow for variety. Mr. Olson noted the diversity of housing was a goal of HB2001 and Staff did not want cookie-cutter looking cottage cluster units. Councilor Nguyen referenced tiny homes and asked if any restrictions would be proposed on manufactured or prefabricated structures, and if cottage clusters could potentially be five manufactured homes. Ms. Bennett stated restricting manufactured or prefabricated structures was not allowed under State law, though the City did not have to allow them to be on wheels as many tiny homes were. The State prohibited distinguishing how a house was built. She did not see a market for manufactured or prefabricated housing, but new manufacturing processes meant such housing might be indistinguishable from traditional housing. Director Siegel added it would be difficult for a conventional manufactured home to meet the orientation standards of a cottage cluster, but many types of modular and prefabricated housing were available now. Mr. Olson continued his presentation, noting Staff was directed to apply most existing single- family design standards to new Middle Housing. The biggest concern identified in the survey last year was the prominence of garages. He highlighted the existing standards and described the proposed amendments for driveway and garage standards, which would provide flexibility to allow for garages on townhouse lots and also limit the negative visual impact of garages. Mr. Olson clarified several questions from Councilor Wendland about garage designs for quadplexes stating, an accessory garage would be allowed, but it would add to the lot coverage. Restrictions existed on the size of accessory garages, but the City would not require any configuration. The proposed standards addressed only front-facing garages; side- or alley-facing garages would not have to comply with the proposed standards. A quadplex could have four off- street parking spaces; parking did not necessarily have to be enclosed. The required parking could not be within the setback, so no parking could be in front of the house. Councilor Wendland explained he was searching for holes that might create oddities in the neighborhood. The proposed formulas followed the garage standards for a single-family house, so even four garages or spaces must conform with the neighborhood. Mr. Olson clarified the proposed standards would apply to single-family homes as well, which enabled the City to require them of new Middle Housing. If the garage took up a larger percentage of the front facade, the City Council Regular Meeting Minutes Page 9 of 17 February 15, 2022 garage design standards were much more stringent, which was better than the existing standards. Director Siegel clarified "more stringent" meant the standards would be applied to lots less than 50 ft. wide. Currently, the City did not have the same set of standards for narrower lots. Councilor Verdick confirmed on lots 50-ft wide or less, up to 75 percent of the width could be driveway. Mr. Olson noted that currently, the Code allowed 100 percent to be driveway because lots less than 50 ft. were exempted from all garage and driveway standards. Councilor Verdick liked the proposed standards, stating they seemed to be an improvement. Mr. Olson continued the presentation, explaining the City's current design standards could be applied for cottage clusters, but Staff proposed incorporating the model code design standards, which exceeded the City's standards and were specific to cottage clusters. He concluded by reviewing the requirements of Senate Bill 458 regarding expedited Middle Housing land divisions and land division procedures and the differences in the City's existing required processes. He asked City Council for any additional input for the public hearing. Mayor Buck thanked Mr. Olson for the presentation. He valued different housing types and was not concerned about whether homes adjacent or within a neighborhood looked similar. He liked variety. The Task Force Advisory Committee and Planning Commission did a good job in thinking how Middle Housing could cohesively integrate into the neighborhoods. A benefit of Middle Housing was bringing in different types of housing. Embracing different housing types would allow seniors to age in place, future generations to live more sustainably, and could set Lake Oswego up as the community of the future. He wanted to be sure the priority was not setting up unnecessary barriers, as a lot of existing financial inertia would already make building Middle Housing types challenging. Concerns about every lot in the city having a Middle Housing type unity was not rational. The City should welcome these housing types, which should look good, and not place additional barriers to Middle Housing development. Councilor Wendland agreed with many of the mayor's comments, adding he believed economically, getting Middle Housing in Lake Oswego would be difficult. He remained concerned that Middle Housing could disrupt the character and flavor of Lake Oswego's neighborhoods, which was the balance he was seeking. He concurred with Ms. Ockert's suggestions about the 500 sq. ft. minimum floor area for cottage clusters, as well as the zone standard sizes discussed by Staff and the five minimum and eight maximum units for cottage clusters. He asked if Middle Housing could potentially become multi-purpose housing or a boardinghouse-type development. He recalled Council was not supportive of anything in that direction. Director Siegel replied such facilities involved a different type of land use and were not part of tonight's consideration. Mr. Olson added that housing might be a consideration later this year when Staff begins discussion on HB2003 and different housing production strategies. Director Siegel thanked Council and the City Manager for their support and appointing the Middle Housing Advisory Committee, which did a lot of the heavy lifting in developing the concepts and enabling the Planning Commission to process Middle Housing more efficiently. Councilor Manz added she appreciated the balanced view the Planning Commission and Middle Housing Task Force brought to the floor. She complimented Mr. Olson for his clear explanations of complex topics. City Council Regular Meeting Minutes Page 10 of 17 February 15, 2022 Mayor Buck called for a brief recess at 5:02 p.m. and reconvened the meeting at 5:14 p.m. 5.2 Wastewater Treatment Project Update. Anthony Hooper, Deputy City Manager, noted the short video he decided not to show due to time was available on the City's website as an introduction to the project. Katy Kerklaan, Citizen Information Specialist, presented via PowerPoint the City's robust public involvement outreach plan that was conducted to build awareness about the Wastewater Treatment Project, communicate its benefits, gather feedback, and maintain support for building a new wastewater treatment facility. She noted the events and communication methods used as well as the varying levels of information provided based on stakeholder and audience interest levels. She highlighted the project benefits and messaging for the project, which guided the development of more detailed FAQs on the project's dedicated website. A key goal was to provide meaningful opportunities for the community to provide input on the project throughout the design process. She reviewed the focus and key takeaways from the October community information session and the required land use neighborhood meeting held earlier in February, both held virtually. The top project values included producing clean water, increasing resiliency, providing energy efficiency, as well as affordable wastewater service to customers and being a good neighbor. Participants at neighborhood meeting wanted to learn more about site development, environment and sustainability, and stormwater drainage specific to land use and design elements. A formal development review application would be submitted soon. Upcoming public involvement opportunities were aligned with key milestones in the design process, such as an online open house this spring to coincide with the 60 percent design and a public open house this fall at the final design phase. Staff would also attend the local farmers market to reach others in the community and share information on the project. Target meetings were also held to discuss specific sustainability and climate related items. In partnership with Sustainability Program Manager,Amanda Watson, Staff held four meetings with the Lake Oswego Sustainability Network (LOSN) and five with Energy Trust of Oregon to explore energy savings and how sustainability could be incorporated into the treatment plant. Upcoming meetings included those with the Sustainability Advisory Board and continued meetings with a variety of special interest groups including the Chamber of Commerce, Historic Resources Advisory Board, and neighborhood associations. Councilor Manz asked if Staff had metrics on the different forms of communication the City sent out and the kind of responses received. Ms. Kerklaan replied yes, noting meeting participants were asked how they heard about meetings and how they would like to receive communications in the future.The recent community survey also asked participants how they received information, all of which could be used for other purposes in the future, especially if the responses trended together. Mr. Hooper continued the PowerPoint presentation, displaying the project site's location and surrounding features in the Foothills area. He noted the proposed design would include LOSN's recommendation to maximize solar onsite. LOSN's suggestions to reserve three acres of land and update the Foothills Plan were outside the scope of the current project but would be discussed in the fall. Only eight acres of the 12-acre City of Portland site were usable as they were outside City Council Regular Meeting Minutes Page 11 of 17 February 15, 2022 of Sensitive Lands, and 2.3 acres hidden on the slide behind the public storage facility owned by Portland were also Sensitive Land. He presented the proposed Wastewater Treatment Project via PowerPoint with the following key additional comments: • He clarified the site outlined in yellow did not include the three acres LOSN wanted reserved. Staff had discussed potential uses for the land, including doing biosolids on site. The City had an agreement with the City of Portland to treat biosolids at Portland's Columbia facility, which would continue. On-site treatment would require 50-ft silos of lime, which would not fit the neighborhood, as well as the potential for odor. Further discussion regarding on-site biosolid treatment and land usage would be addressed in the fall and Staff would provide information at that time to inform the discussion. • The project began in 2018 and was being done in partnership with the City of Portland. Building a new wastewater treatment facility was proposed instead of upgrading the current plant, and a yes/no decision would be made by City Council on September 20, 2022. • The projected wastewater rates were the same for upgrading the existing facility or constructing a new facility. A 3.9 percent increase was projected in the wastewater fee per year which included all the items for the wastewater system. The increase was determined by a 2020 FCS study and remained the same at the 30 percent design phase. The annual affordability cap slide reflected a project agreement on the combined rate Portland and Lake Oswego pay to EPCOR per year, and those amounts fit under the City's rate structure. • Additional utility, stormwater, and wastewater work would be required, as well as creating an access to maintain the pump station for the City of Portland. All processes were programmed on the site using AquaNereda for the technology, a biological granular mass process using sequence batch reacting. A hydro works building was also included to remove grit and a filter UV building like a tertiary treatment. • The proposed design included odor control units within the building to control smell up to 99 percent at the fence level, which would be in a massive improvement compared to the odors currently detected. The existing plant was open air making odor control difficult. The proposed facility was in an enclosed building and mitigating odor to the maximum degree possible was a high priority. • Solar panels were proposed on the roof of the administrative building. Staff was working with Energy Trust to do a feasibility study on solar panels and intended to maximize the space of the treatment facility roof as well. • LSON had also suggested engaging in a third-party sustainability review. Staff worked with Carollo Engineers and two branches of Energy Trust to ensure the project was constructed in an energy-efficient way. The City received grants for a portion of the project. The project would go before the Sustainability Advisory Board again on Monday for further discussion. • The project's architectural features were described. The administrative building's design was borrowed from the neighborhood, including William Stafford stone columns, wood elements, and metal panels as a nod to the foundry building. The design included 22 parking spots for nine employees. Public improvements included a sidewalk on Foothill Road and stormwater improvements. The 6,300 sq. ft. floorplan included a conference room, bathrooms, locker rooms with showers, offices, lunchroom, and a lab for testing. • The City wanted the site to remain like an open field with no fencing; however, constructing a driveway around the facility was necessary to accommodate large trucks. While the landscaping and colors in the presentation were subject to change, the final landscape design would be presented to Council and include sustainable, native Oregon plants. City Council Regular Meeting Minutes Page 12 of 17 February 15, 2022 • Stormwater gathered at the plant would be used for processes inside the site as well as for landscaping. A separate project bringing reclaimed rainwater to Foothills Park or George Rogers Park is being scoped and would be presented to Council for a decision over the summer. • The facility frontage on Foothill Road would feature stone columns in reference to the iron furnace at George Rogers Park. Staff spoke to the City's historian about ways to incorporate the history of the area within the project, possibly with an interactive exhibit on iron and other relevant history of the Foothills. • The proposed on-site generator was a necessary component of project. The generator would be sized to supply the full amount of electricity needed to run the plant. Additional information was included in the submitted reports. Comments and questions from Council addressed during the presentation were as follows: Mayor Buck stated Staff's report noted the cap increased by about $11 million, however the remodel costs would have gone up as well. Mr. Hooper agreed, adding the cost for Portland had not been adjusted up at all and the $11.3 million could decrease after value engineering. The rates matched what Portland and Lake Oswego would pay for 17 years, after which there was some flexibility. The $11.3 million over the affordability cap was about 2.3 percent of the project. The result of the cost of materials increasing dramatically in the current market. He noted the Willamette Water Supply Program increased its costs by $315 million, a 24.2 percent increase due to supply issues, which did not impact Lake Oswego to the same degree because of the critical thinking and efficacy of the team. Councilor Rapf noted the proposal included showers and asked if space could be found for an employee gym considering Council's goal to make Lake Oswego a Blue Zone for healthy living. Mr. Hooper agreed it was a good suggestion that would be considered, noting there would be trade-offs. Councilor Manz recalled earlier discussions with EPCOR and LOSN and understood the new facility would be able to filter microplastics and pharmaceuticals as technology advanced. Mr. Hooper replied AquaNereda treated microplastics to 99 percent through the main process, and up to 97 percent of the residual microplastics in the remaining one percent using a tertiary cloth process. Councilor Manz asked if the project qualified for the 1.5 percent for art. Mr. Hooper replied Staff did not believe it qualified, but that would not preclude the project from having art. Ms. Kerklaan noted Staff would be meeting with the Arts Council next week to discuss potential options, adding art remained at the forefront of their minds. Mayor Buck asked Staff to provide details on WIFIA. Mr. Hooper reported the EPA had invited the City to apply for the Water Infrastructure and Finance Innovation Act (WIFIA) and had earmarked the funds for the City. Only three other organizations in Oregon were granted that opportunity. WIFIA would allow the City to finance at a low cost, saving the City $30 million or more on the project. One of Council's motions tonight was to authorize $100,000 to submit the WIFIA application. The EPA program was designed for cities and organizations to received loan financing with favorable terms, including a low interest rate and possible payment deferments. One downside to a P3 was that the prime financing cost more, and WIFIA would defray a lot of City Council Regular Meeting Minutes Page 13 of 17 February 15, 2022 that cost because the City would get the best in public financing for half of the total project cost. The City was very fortunate to be awarded WIFIA financing. Lee Ward, Senior Project Manager, EPCOR, added the EPA's requirements for the WIFIA loan included meeting the Prevailing Wage Act provisions and buying U.S. steel. A third provision, Buy American, had not been fully implemented, and the EPA had advised Staff to expedite the application before those provisions were in place. Councilor Wendland moved to approve submitting an application for a Water Infrastructure Finance and Innovation Act loan for the Tyron Creek Wastewater Treatment Facility project and pay the $100,000 application fee. Councilor Verdick seconded the motion. A voice vote was held, and the motion passed,with Mayor Buck and Councilors Wendland, Nguyen, Verdick Rapf, Manz, and Mboup voting `aye', (7-0). Mr. Hooper thanked Council for its support and EPCOR for its partnership. 6. COUNCIL BUSINESS 6.1 Intergovernmental Agreements with the Lake Oswego School District for the Recreation and Aquatics Center Use and Construction. Ivan Anderholm, Parks and Recreation Director reviewed the history and details of the two intergovernmental agreements (IGAs) between the City and the Lake Oswego School District for the construction and use of a recreation and aquatics use center, noting the project's components remained the same as that described in the 2020 memorandum of understanding between the parties. The construction agreement was written based on a $30 million total project cost, but on June 15 2021, Council directed Staff to move forward with a construction option based on community engagement costing $36,846,000. At that time, those costs reflected portions of the building beyond the competitive swimming pool and the Staff report reflected the City share equaled $21,846,000, with the maximum share for the School District being $15 million. The overall fiscal impact to the City was $21,846,000 for construction and $1 million in capital maintenance over 20 years. The agreement split the capital maintenance, so the City had $2 million set aside capital maintenance. The City's subsidy for maintenance was an estimated $500,000 annually after contribution from the School District,which was$10 million over 20 years. Staff recommended Council authorize the mayor to sign the construction and use IGAs. Mr. Anderholm and Ms. Bennett addressed questions from Council with these comments: • The operating costs would be reevaluated after three years. The use IGA was identified the first three years of contributions from the District which escalated annually from $265,000 to $279,000 after which both parties would revisit how the facility was operating in real time. The IGA's numbers were calculated using a formula based on use and an actual portion of the subsidy, which was the difference between a community-built pool and a competitive athletic facility for the School District's use. • The District would contribute an additional $50,000 towards the capital costs, but that was not defined as being on an annual basis. The contribution would be further defined through the construction process and the development of a maintenance and repair manual, which the District's contribution would be based on. The District's contribution was approximately $50,000 per year, but the IGA included flexibility to allow the District to choose to fund it with $1 million up front or$250,000 every five years, etc. City Council Regular Meeting Minutes Page 14 of 17 February 15, 2022 • Staff was comfortable with the $2 million set aside over the next 20 years, though it was not intended to cover some catastrophic event. The facility would be insured, but the $2 million was based on the costs of other facilities and the anticipated lifespan of different major systems. • Staff had discussed and negotiated the District's share of capital costs and the fact that the District's share was locked in while the City would be responsible for any additional costs. Originally, the City and District were going to split the cost of the aquatic portion, but that would create variability for both entities. The District sought predictability and reliability. The District had to program the cost for a facility run by the City and wanted a consistent number for budgeting purposes, expecting the City to operate the facility in the most efficient way possible. The arrangement and negotiated amount met both the District's and City's needs. • The $10 million was the estimated annual operation subsidy. Staff estimated all but$500,000 would be recovered through operations and Staff would work to improve upon that loss when operating the facility. • The facility would be able to sell alcohol in its role as the clubhouse for the municipal golf course; however, there would not be a restaurant or bar. Public feedback indicated alcohol availability was a popular amenity. • The clubhouse portion of the facility would be integrated into the aquatic facility lobby and the existing clubhouse would be repurposed into a multi-purpose room that could be divided into two smaller rooms to accommodate meetings or special events. • There would be restrictions on alcohol sales during School District events. Alcohol would be purchased at the clubhouse and consumed in the clubhouse and on the patio and golf course. Councilor Wendland commented the $50,000 annual capital cost contribution by both parties was a new concept for the School District, but the District fully agreed the arrangement worked well as it ensured money was set aside for potential capital work needed in the future. He commended the project team, noting it was a fair agreement that created a good relationship between the City and School District. He added alcohol purchases would be part of the City's revenue model. The facility could become a wonderful event space and used in many creative ways to help offset the City's subsidy. It would also provide an outlet for residents not belonging to a country club. Mayor Buck commented there was overwhelming access to alcohol throughout the community and parks were nice spaces to provide an alternative. The proposed facility would help people physically and mentally, while nurturing the community's culture. The City had not done much to provide facilities for youth sports, which was done by the School District, and now the City was in a position to do more with the skate park and this new facility, which would provide a healthy, welcoming facility open to everyone; however, certain behaviors would not be tolerated to keep the spaces safe. Councilor Rapf commented that the agreement displayed a unique, positive and powerful partnership between the City and District to support health and children. Councilor Mboup moved to authorize the Mayor to sign, in substantially the form attached, Intergovernmental Agreements between the City of Lake Oswego and the Lake Oswego School District for the Construction and Use of the Lake Oswego Recreation and Aquatics Center. Councilor Wendland seconded the motion. City Council Regular Meeting Minutes Page 15 of 17 February 15, 2022 A voice vote was held, and the motion passed,with Mayor Buck and Councilors Wendland, Nguyen, Verdick Rapf, Manz, and Mboup voting `aye', (7-0). 7. CONSENT AGENDA 7.1 Approval of Meeting Minutes. January 4, 2022, Draft Regular Meeting Minutes January 13, 2022, Draft Special Meeting Minutes January 18, 2022, Draft Regular Meeting Minutes 7.2 Resolution 22-07, A Resolution of the City Council of the City of Lake Oswego Amending the Lake Oswego Council Administrative Procedures. END CONSENT AGENDA Councilor Rapf moved to adopt the Consent Agenda. Councilor Verdick seconded the motion. A voice vote was held, and the motion passed,with Mayor Buck and Councilors Wendland, Nguyen, Verdick, Rapf, Manz, and Mboup voting `aye', (7-0). 8. ITEMS REMOVED FROM CONSENT AGENDA No items were removed from the Consent Agenda. 9. INFORMATION FROM COUNCIL No Information from Council was provided. 10. REPORTS OF OFFICERS Ms. Bennett reminded that City Police Chief Dale Jorgensen would retire this summer, but had agreed to stay on until a new Chief was hired. She praised his work as progressive, innovative, and collaborative. Council would help develop a candidate profile and a recruitment firm would help the City find a replacement. 11. EXECUTIVE SESSION: The Lake Oswego City Council will meet under authority of ORS 192.660(2)(d) Conduct deliberations with persons designated to carry on labor negotiations and (f) Consider records that are exempt by law from public inspection. Jason Loos, City Attorney, read the legal parameters for the Executive Session. The broadcast portion of the meeting concluded at 6:10 p.m. with Council taking a break till 6:15 p.m. The City Council met in Executive Session from 6:15 p.m. to 6:27 p.m. 12. ADJOURNMENT City Council Regular Meeting Minutes Page 16 of 17 February 15, 2022 Mayor Buck adjourned the City Council meeting at 6:27 p.m. Respectfully submitted, Kari LindKr, City Recorder Approved by the City Council on April 19, 2022 7-L-ITS•---- Joseph M. Buck, Mayor City Council Regular Meeting Minutes Page 17 of 17 February 15, 2022