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Agenda Item - 2024-04-02 - Number 09.1 - Housing Production Strategy (PP 22-0005)
9.1 o�� �s� COUNCIL REPORT o OREGO\-\ Subject: Housing Production Strategy (PP 22-0005) *Joint Study Session with the Planning Commission* Meeting Date: April 2, 2024 Staff Member: Erik Olson, Long Range Planning Manager Report Date: March 21, 2024 Department: Community Development Action Required Advisory Board/Commission Recommendation ❑ Motion ❑ Planning Commission Recommends Approval ❑ Public Hearing ❑ Denial ❑ Ordinance ❑ None Forwarded ❑ Resolution ❑X Not Applicable ❑ Information Only Comments: Staff received initial direction from the ❑X Council Direction Council regarding strategies the Housing Production ❑ Consent Agenda Strategy (HPS) Task Force should analyze in further detail at a study session held on November 7, 2023. Staff Recommendation: Provide further direction regarding which strategies should be included in the City's Housing Production Strategy (HPS) Report. Recommended Language for Motion: N/A Project/ Issue Relates To: Council Initiative to "Continue work on key housing initiatives, including the housing production strategy..." Issue before Council (Highlight Policy Question): Developing a Housing Production Strategy to meet the requirements of ORS 197A.100 [House Bill 2003 (2019)] ❑X Council Goals/Priorities ❑X Comprehensive Plan ❑Not Applicable Continue work on the housing production strategy ISSUE BEFORE COUNCIL Staff is seeking further direction regarding which strategies to include as a part of the City's Housing Production Strategy (HPS) to meet the requirements of ORS 197A.100. Respect. Excellence. Trust. Servi e. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY Page 2 EXECUTIVE SUMMARY The City is required by ORS 197A.1001 to adopt an HPS that documents the specific tools, actions, and policies that the City plans to take to address the housing needs identified in the 2023 Housing Needs Analysis (HNA) by December 31, 2024. Staff has conducted significant outreach related to the development of an HPS in recent months to develop the recommendations outlined in the Initial Housing Production Strategy Recommendations Memo (Attachment 4). The Council will conduct a joint study session with the Planning Commission on April 2 to provide direction to staff regarding which strategies to include in the draft HPS Report. The Council will then have an opportunity to review and provide input on the draft HPS Report at a study session scheduled for July 16, prior to the public hearing tentatively scheduled for October 15. BACKGROUND In 2019, the Oregon Legislature passed House Bill 2003, which aimed to help communities meet the housing needs of Oregonians. The law and related rules required all Oregon cities of more than 10,000 residents to study the future housing needs of their residents (through an HNA) [ORS 197A.335 and OAR 660-008-0045] and to develop strategies that encourage the production of the identified housing needs (through an HPS) [ORS 197A.100]. The Council adopted the 2023 HNA on October 17, 2023. The Council must now develop an HPS to identify a set of actions that the City will take to facilitate housing development that will best meet the needs of the community. Per ORS 197A.100, an HPS must document the specific tools, actions, and policies (collectively "strategies") that the City plans to take to address the housing needs identified in the HNA. The HPS includes the City's timeline for adopting and implementing each strategy. DISCUSSION Summary of Housing Needs Staff, project consultants at MIG, and the HPS Task Force used the findings from the HNA (Attachment 11), as well as additional information from the Census, other data sources, and from stakeholders involved in housing production in the city, to develop a Contextualized Housing Needs Assessment (Attachment 9) that puts Lake Oswego's housing needs into context with current demographic and development trends. Below are some key findings from both the HNA and Contextualized Housing Needs Assessment. 1 Cited ORS Ch. 197A statutes in this report available at https://www.oregonlegislature.gov/bills laws/ors/ors197A.html (Note:former ORS Ch. 197 sections renumbered in 2023) Respect. Excel'ence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 3 The following current needs were identified within the housing market in Lake Oswego: • While Lake Oswego is generally considered an affluent community, not all households are wealthy. Over 40% of households in the city earn less than $100k and nearly 20% of households earn less than $50k per year. • Homeownership costs increased significantly in Lake Oswego, consistent with national trends. The median home sale price in Lake Oswego has more than doubled over the past 10 years, from $395k in 2012 to $860k in 2022. • There is very little existing housing available to those in lower income segments. Around 2/3 of existing housing units (both rental and ownership units) are unaffordable to those earning less than $100k per year, and over 90% of existing units are unaffordable to those earning less than $50k per year. • Nearly half of renter households in Lake Oswego are considered housing cost burdened, meaning they pay more than 30% of their income for housing. The following future needs are projected to arise in the Lake Oswego housing market over the course of the next 20 years: • Lake Oswego will need nearly 2,000 new housing units by 2043 to meet projected demand. Housing will need to be produced across the income spectrum to meet these needs. • A wide range of housing types are needed to meet the range of household sizes and incomes. The majority of new needed homes (61%) are projected to be attached housing—this includes 27% as middle housing units (townhomes and "plexes" with two to four units) and 34% as multi-family housing (e.g., apartments). • More than 1/3 of new housing units over the next 20 years will be needed by "low- income" households—those earning at or below 80% of the median family income (MFI) for Clackamas County. • The private market will not deliver housing that is needed by low-income households on its own. Housing that is affordable to those earning below 80% MFI typically requires government subsidy and partnerships with affordable housing providers. • There is a shortage of buildable residential land across all zone types (low-to high- density) to meet the 20-year housing need in Lake Oswego (a deficit of 86 total acres). The following housing types have been identified as key gaps in Lake Oswego's housing market: • Affordable housing for low- and moderate-income households; • Greater housing choices within neighborhoods, including middle housing (e.g., townhomes, duplexes, cottage clusters); • Opportunities for aging in place— More than 20% of the population is over 65; • Options for more attainable homeownership (e.g., condos and middle housing); Respect, Excel'ence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 4 • Apartments with family-size units (2-3 bedrooms)— Nearly 1/3 of current households in the city have children; and • Multi-family housing outside the Town Center. Initial Housing Production Strategy Recommendations City staff and the consultant team recently produced a Memo (Attachment 4) with initial recommendations and an evaluation of housing strategies that the City may consider as a part of its HPS. The strategies outlined are intended to work towards meeting these housing needs and filling these gaps, and —if adopted —will serve as a work plan for the City's housing efforts over the next eight years. The Memo builds on prior work by City staff, consultants, and the HPS Task Force to outline potential strategies that the City can employ to address Lake Oswego's current and future housing needs, as identified in the HNA. The Memo includes a description of each strategy as well as a discussion of the strategy's anticipated impact, a proposed timeframe for implementation, actions necessary to implement the strategy, parties responsible for its implementation, and other relevant considerations. Strategies in the Memo have been categorized as either Recommended Strategies, Strategies Needing Further Discussion, Contingent Strategies, or Not Recommended. Recommended Strategies Strategies categorized as Recommended Strategies are those that (1) have received previous support from the HPS Task Force, Planning Commission, or City Council; (2) have a low-barrier to implementation; and (3) are expected to have a moderate to high impact on housing production. Recommended Strategies are identified as Near Term (1-3 years), Medium Term (within 3-5 years), and Longer Term (>5 years) actions. At the study session on April 2, the City Council and the Planning Commission will be asked to provide direction on whether to include the strategies listed below (Recommended Strategies) in the Draft HPS Report: Respect, Excel'ence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 5 Implementation Strategy DLCD Category* Time Frame 1. Recommended Strategies 1.1 Code Audit and Amendments(ZD1) Z.Custom Options Near Term 1.2 Remove or Reduce Minimum Parking Requirements B.Reducing Regulatory Impediments Near Term (B01) 1.3 Nonprofit Low-Income Housing Exemption(E01) E.Tax Exemption and Abatement Near Term 1.4 Low-Income Rental Housing Tax Exemption(E02) E.Tax Exemption and Abatement Near Term 1.5 Public-private partnerships for affordable housing(F04) F.Land,Acquisition, Lease,and NearTerm Partnerships 1.6 Fair Housing Policy and Education(B14) B.Reducing Regulatory Impediments Near Term 1.7 Rezone Land(Z02) Z.Custom Options Medium Term 1.8 Evaluate accessible design incentives or mandates(A23) A.Zoning and Code Changes Medium Term 1.9 Use Tax Increment Financing(TIF)to support affordable D.Financial Resources Medium Term housing development(D10) 1.10 Affordable Housing Preservation Inventory(F19) F.Land,Acquisition,Lease,and Medium Term Partnerships 1.11 Modify System Development(SDC)fee schedule(CO2) C.Financial Incentives Longer Term 1.12 Pre-Approved Plan Sets forADUs(A21) A.Zoning and Code Changes Longer Term The Council provided initial direction on a shortened list of high-impact strategies at a study session on November 7 (Council HPS Initial Strategies Voting Results,Attachment 10). While many of these strategies are included on the list of Recommended Strategies above, not all of these strategies have been discussed by the Council at previous HPS study sessions. For instance, while the Council indicated general support for tax exemptions as a tool for housing production, it did not go into detail about each type of tax exemption on the list of initial recommendations. See the Memo (Attachment 4) for more information on the Nonprofit Low- Income Housing Tax Exemption (p. 7) and the Low-Income Rental Housing Tax Exemption (p. 9). As discussed in the 'Adopted Measures' section of the Contextualized Housing Needs Assessment (Attachment 9, p. 28), other strategies included on this list are already being pursued by the City, such as the use of tax increment financing or public-private partnerships for affordable housing. Similarly, the City is undertaking efforts on a parallel timeline to reduce or eliminate minimum parking requirements by December 31, 2024 as a part of the Citywide Parking Reform project (PP 22-0001). See the Memo (Attachment 4)for more information on the strategies related to fair housing policy and education (p. 12), accessible design (p. 15), affordable housing preservation inventory (p. 21), and pre-approved plan sets for accessory dwelling units (ADUs) (p. 23). Strategies Needing Further Discussion Strategies categorized as Strategies Needing Further Discussion in the Memo (Attachment 4) had not yet received clear support from the HPS Task Force, Planning Commission, and City Council, but could have a meaningful impact on housing production. Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 6 At the study session on April 2, members of the City Council and the Planning Commission will also be asked to provide direction on whether to include each of the Strategies Needing Further Discussion in the Draft HPS Report. Strategies Needing Further Discussion are listed in the table below: Implementation Strategy DLCD Category* Time Frame 2. Strategies Needing Further Discussion 2.1 Zoning Incentives for Affordable Housing(A43) A.Zoning and Code Changes TED 2.2 Construction Excise Tax(CET)(D09) D_Financial Resources TED 2.3 Vertical Housing Development Zone Tax Abatement E.Tax Exemption and Abatement TED (E03) 2.4 Multiple Unit Property Tax Exemption(MUPTE)(E04) E.Tax Exemption and Abatement TED 2.5 Pre-Approved Plan Sets for Middle Housing Typologies A.Zoning and Code Changes TED (A20) The Council provided input at its November 7 study session on the strategies listed above related to zoning incentives and a construction excise tax (CET)(ORS 320.192), as well as general input on the concept of tax exemptions to promote housing development (Council HPS Initial Strategies Voting Results) (Attachment 10). See the Memo (Attachment 4, p. 27) for general information about the CET strategy. CET is one of the few available sources of locally-controlled funding for affordable housing. Several other strategies under consideration for the HPS would depend on adoption of a new funding source (see Contingent Strategies, below). At their work session on November 13, 2023, the Planning Commission requested additional information about using CET as a funding source for affordable housing. In response, the project team drafted the CET Supplemental Memo (Attachment 5), which includes information about how a handful of other cities in Oregon are implementing CET programs to support affordable housing, as well as an estimate of potential revenue generation from a CET if established in Lake Oswego, based on past permit data. Further, CET Interviews with Other Jurisdictions (Attachment 2) includes information regarding how CET has been implemented in their respective communities. Members of both the City Council and the Planning Commission have previously expressed concerns that a CET would add cost and serve as a barrier to new development that could help to meet the City's housing needs. Under state statute (ORS 320.173), regulated affordable housing, public buildings, hospitals, and certain other types of facilities must be exempted from the CET. Staff notes that the City could also choose to exempt other types of development from the CET in order to ensure that the tax does not adversely impact development that would help to meet the City's housing needs. For instance, multifamily housing, accessible housing, lower- cost residential developments, or smaller housing units could be exempted from the tax, or the tax could be crafted to exclude residential development altogether. As noted in the Memo (Attachment 4, p. 28), the City of Tigard chose to fully exempt ADUs of 1,000 sq. ft. or less and Respect. Excel'erce. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 7 projects valued at $50,000 or less from the CET, and to provide a 75% exemption for cottage clusters, courtyard units, and quadplexes. On December 19, 2023, the Council established a Vertical Housing Development Zone (VHDZ) at the North Anchor site to provide a financial incentive for mixed-used development at a key location in Downtown Lake Oswego (see PP 23-0006). Though the City has now approved a pilot project to allow the use of VHDZ at this location, the strategy discussed in the Memo (Attachment 4, p. 30) would involve a broader mapping of VHDZ elsewhere in the city. See the Memo (Attachment 4) for more information on the Multiple Unit Property Tax Exemption (MUPTE) (p. 31) and Pre-Approved Plan Sets for Middle Housing Typologies (p. 33) strategies. Contingent Strategies Contingent strategies rely on dedicated funding sources for their sustainability. Currently, the City has very little in the way of uncommitted resources that it can use to support affordable housing. Strategies categorized as Contingent Strategies in the Memo (Attachment 4, p. 34), listed below, describe various ways that the City could allocate funds to support affordable housing production or preservation. At the study session on April 2, members of the City Council and the Planning Commission will be asked to provide general direction regarding how hypothetical funding sources could be allocated by the City. Specifically, they will be asked whether to include the strategies listed below (Contingent Strategies) in the Draft HPS Report: Implementation Strategy DLCD Category* Time Frame 3. Contingent Strategies 3.1 Housing Trust Funds(D03) D.Financial Resources Contingent 3.Z Low-Interest Loans/Revolving Loan Fund{I013} D_Financial Resources Contingent 3.3 Community Land Trusts(F43) F. Land,Acquisition, Lease,and Contingent Partnerships 3.4 Preserving Low-Cost Rental Housing to Mitigate F. Land,Acquisition, Lease,and Contingent Displacement(F05) Partnerships Staff notes that larger cities—unlike Lake Oswego--generally have more capacity and access to federal Community Development Block Grant funding to pair with these contingent strategies, while Lake Oswego would probably need to rely on a broader mix of funding partners in order to implement these strategies. See the Memo (Attachment 4) for more information on the housing trust fund (p. 34), low- interest loans/ revolving loan fund (p. 36), community land trust (p. 37), and low-cost rental housing preservation (p. 38) strategies. Respect. Excel'erce. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 8 Not Recommended At the study session on April 2, the City Council and the Planning Commission will be asked to confirm that the strategy listed below (Not Recommended) should not be included in the Draft HPS Report: Implementation Strategy DLCD Category* Time Frame 4. Not Recommended 4.1 Homebuyer Opportunity Limited Tax Exemption E.Tax Exemption and Abatement FL A Program{HCLTE}(E06} The Homebuyer Opportunity Limited Tax Exemption (HOLTE) program was not recommended for implementation in the HPS because it is not expected to have a meaningful impact on housing production in Lake Oswego. See Memo (Attachment 4, p. 40) for more information on the HOLTE strategy. HPS Task Force Updates The HPS Task Force conducted its fifth meeting on December 8, 2023, to review initial input from the Planning Commission and City Council, reach a group consensus on project goals, and engage in group discussions focused on identifying housing production strategies that could best address high-priority housing needs. See Breakout Room Group Discussion Notes— HPS Task Force Meeting#5 (Attachment 7) for a summary of the group discussions, and Approved Minutes— HPS Task Force Meeting#5 (Attachment 8) for the approved meeting minutes. The HPS Task Force convened for its sixth meeting on February 16, 2024, and for its seventh meeting on March 1, 2024. During the course of these two meetings, the Task Force held an extended discussion of the Memo (Attachment 4) in order to develop the Task Force's recommended list of strategies for the Planning Commission and City Council to consider for inclusion in the HPS. More specifically, Task Force members were asked to provide input on whether the strategies under discussion will effectively help meet the City's highest-priority needs as identified in the HNA. In general, the Task Force expressed support for all of the Recommended Strategies (no opposition was stated). With respect to the Strategies Needing Further Discussion, the Task Force expressed support for the CET and pre-approved plan sets for middle housing strategies. The Task Force recommended incorporating the zoning incentives strategy into the code audit and amendments strategy, and incorporating MUPTE as a potential mechanism for encouraging accessible units as part of the accessible design strategy, but not to pursue these as standalone strategies. The Task Force did not recommend including the VHDZ strategy in the HPS. See Summary of HPS Task Force Meetings#6 and #7 (Attachment 1) for more information about the Task Force's recommendations that resulted from these two meetings. Respect. Excel'erce. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 9 Public Outreach Public engagement and outreach to identify an initial set of strategies for inclusion in the City's HPS began in October 2023 and is still actively ongoing. So far, this has included presentations at the Diversity, Equity and Inclusion Advisory Board, the 50+ Advisory Board, the November 2023 Mayor's Roundtable event, and the Fall 2023 Kruse Way Economic Forum, as well as three Planning Commission meetings, one City Council meeting, and four meetings of the HPS Task Force. Most recently, an HPS Community Forum event was held on Thursday, March 14; see HPS Community Forum Polling Results (Attachment 3) for a summary of the results of polling conducted at the meeting on the Recommended Strategies and the Strategies Requiring Further Discussion. Additionally, the City is hosting an Online Open House for individuals who were not able to make it to the Community Forum event that includes information on the recommended strategies and additional opportunities for public input. The Online Open House will remain open until March 31, 2024; staff will present a summary of the results of the Online Open House survey at the April 2 study session. Project Schedule A summary of the proposed project schedule and scope of consultant deliverables is included in HPS Project Schedule and Scope of Work (Attachment 6), with the project schedule summarized in Table 1 below. Table 1: HPS Project Schedule Task Milestone Date Evaluate existing housing Housing Producer Interviews Aug—Sep 2023 strategies HPS Task Force Meeting#4 Oct 6, 2023 [Aug— Nov 2023] Council Study Session#4 Nov 7 Planning Commission (PC) Work Session #4 Nov 13 Outline housing strategy Draft Housing Strategy Alternatives Memo Nov 2023 alternatives HPS Task Force Meeting#5 Dec 8 [Nov 2023 —Jan 2024] PC Update Jan 8, 2024 Refine housing strategy HPS Task Force Meeting#6 Feb 16 recommendations HPS Task Force Meeting#7 Mar 1 [Feb—Apr 2024] Community Forum/ Public Workshop Mar 14 CC-PC Joint Work Session Apr 2 Draft HPS Report Initial Draft HPS Report May 27 HPS Task Force Meeting#8 Jun 21 Resr.Dect. Excellence. Trust. Servi:.e. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY Page 10 [May—Jul 2024] PC Work Session Jun 24 Council Study Session Jul 16 Finalize HPS for adoption Final HPS Report Aug 2 [Aug— Nov 2024] PC Public Hearing Sep 9 Council Public Hearing Oct 15/ Nov 5 RECOMMENDATION Provide direction to staff regarding which strategies should be included in the draft HPS Report. ATTACHMENTS This staff memo and all attachments referenced below can be found by visiting the Planning Project webpage for the case file. Due to file size, attachments are available in the "Public Records Folder" using this link: https://www.ci.oswego.or.us/planning/pp-22-0005-housing-needs-and-production-strategies. 1. Summary of HPS Task Force Meetings#6 and #7, 03/20/2024 2. CET Interviews with Other Jurisdictions, 03/18/2024 3. HPS Community Forum Polling Results, 03/14/2024 4. Initial Strategy Recommendations Memo, 02/08/2024 5. CET Supplemental Memo, 02/08/2024 6. HPS Project Schedule and Scope of Work, 01/09/2024 7. Breakout Room Group Discussion Notes— HPS Task Force Meeting #5, 12/08/2023 8. Approved Minutes— HPS Task Force Meeting#5, 12/08/2023 9. Contextualized Housing Needs Assessment, 11/16/2023 10. Council HPS Initial Strategies Voting Results, 11/07/2023 11. City of Lake Oswego 2023 Housing Needs Analysis, 09/21/2023 To view these documents and other documents in the public records file, visit the Planning Project webpage: https://www.ci.oswego.or.us/planning/pp-22-0005-housing-needs-and-production-strategies Resrpect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY ATTACHMENT 1 p� 10�r� PLANNING AND BUILDING SERVICES V �- O OREGO� March 20, 2024 Summary of Input from Housing Production Strategy Task Force Meetings#6 and #7 The Housing Production Strategy (HPS) Task Force devoted two meetings to reviewing and discussing the Initial Housing Production Strategy Recommendations Memo: Meeting#6 on February 16 and Meeting#7 on March 1, 2024. The intended outcome of these meetings was to develop a preferred list of strategies for the Planning Commission and City Council to consider for inclusion in the HPS. More specifically,Task Force members were asked to provide input on whether the strategies under discussion would effectively help to meet the City's highest-priority needs as identified in the Housing Needs Analysis (HNA). Recommended Strategies At Meeting#6, the Task Force discussed the list of"Recommended Strategies," which are those that have either received previous support from the HPS Task Force, Planning Commission, and City Council; have a low-barrier to implementation; and/or are expected to have a moderate to high impact on housing production. Recommended Strategies are identified as Near Term (1-3 years), Medium Term (within 3-5 years), and Longer Term (>5 years) actions. Recommended Strategies Time Frame 1.1 Code Audit and Amendments(Z01) Near Term 1.2 Remove or Reduce Minimum Parking Requirements(B01) Near Term 1.3 Nonprofit Low-Income Housing Exemption (E01) Near Term 1.4 Low-Income Rental Housing Tax Exemption (E02) Near Term 1.5 Public-private partnerships for affordable housing(F04) Near Term 1.6 Fair Housing Policy and Education (B14) Near Term 1.7 Rezone Land (Z02) Medium Term 1.8 Evaluate accessible design incentives or mandates(A23) Medium Term 1 9 Use Tax Increment Financing(TIF)to support affordable Medium Term housing development(D10) 1.10 Affordable Housing Preservation Inventory(F19) Medium Term 1.11 Modify System Development Charge(SDC)fee schedule(CO2) Longer Term 1.12 Pre-Approved Plan Sets for ADUs(A21) Longer Term PP 22-0005 ATTACHMENT 1/PAGE 1 OF 3 503.635.0290 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Page 2 of 3 In general, the Task Force expressed support for all of the recommended strategies (no opposition was shared). Following is a summary of comments from Task Force members: • Recommend moving Strategy#1.12, Pre-Approved Plan Sets for ADUs, into the medium- term implementation time frame, or potentially near-term if there are plans already available from other jurisdictions. • Potentially move Strategy#1.9, Use Tax Increment Financing (TIF) to support affordable housing development, into the near-term implementation time frame, since the City Council has provided direction to explore the use of urban renewal in the Foothills neighborhood. • Add to the description of Strategy#1.5, Public-Private Partnerships, that the City should take advantage of regional funding sources, such as the Metro Housing Bond, for affordable housing. • Consider analyzing the potential for lost tax revenue due to tax abatement strategies. • DLCD suggests clarifying the implementation time frames (i.e., does medium-term mean that the City won't get started for 3-5 years, or that the action will be completed within 3-5 years)? Strategies Needing Further Discussion At Meeting#7, the Task Force focused their discussion on the strategies that the project identified as needing further discussion by the HPS Task Force, Planning Commission, and City Council. These strategies had not yet received clear support from these bodies, but could have a meaningful impact on housing production. Strategies Needing Further Discussion Time Frame 2.1 Zoning Incentives for Affordable Housing(A03) TBD 2.2 Construction Excise Tax(CET) (D09) TBD 2.3 Vertical Housing Development Zone Tax Abatement(E03) TBD 2.4 Multiple Unit Property Tax Exemption (MUPTE) (E04) TBD 2.5 Pre-Approved Plan Sets for Middle Housing Typologies(A20) TBD Following is a summary of comments and direction provided by the Task Force: • 2.1 Zoning Incentives For Affordable Housing o Direction: Incorporate this strategy into the Code Audit and Amendments Strategy. Consider including provisions from Senate Bill 8, which grants height and density bonuses to affordable housing, into the Community Development Code. Also address standards that could be a constraint to affordable housing, including lot coverage, setbacks, etc. PP 22-0005 ATTACHMENT 1/PAGE 2 OF 3 Page 3 of 3 • 2.2 Construction Excise Tax (CET) o Some Task Force members shared concerns about adding to construction costs for development. o However, others noted that there are a lot of challenges in Lake Oswego and other cities that add costs, and CET may not be as much of a burden as some other challenges. o Straw Poll results: Majority Support—8 out of 11 participants supported including CET as a "Recommended Strategy" by the HPS Task Force. • 2.3 Vertical Housing Development Zone (VHDZ) and 2.4 Multiple Unit Property Tax Exemption (MUPTE) o The City's pilot VHDZ has heard concerns from taxing districts about lost revenues, including from the school district. So, these strategies may not get buy-in from other districts. o A few Task Force members commented that market-rate development shouldn't receive a tax exemption. o Direction:The Task Force recommended including MUPTE as a potential mechanism for encouraging accessible units as part of Strategy 1.8, but not pursuing it as a standalone strategy. • 2.5 Pre-approved Plan Sets for Middle Housing o It could be challenging to create these plan sets in a way that works in a lot of circumstances. Consider modular, component plans that could be assembled in various ways on a site. o There's interest in the plan sets being geared toward smaller, more attainable units. o This is more of a market-rate/ housing variety strategy. It might be a way to signal that we as a community are interested in middle housing. o This strategy hasn't been tested in other cities in Oregon yet, but there's a lot of interest across the state. o Straw Poll results: Majority Support—7 out of 11 participants supported including Pre-Approved Plan Sets for Middle Housing as a "Recommended Strategy" by the HPS Task Force. PP 22-0005 ATTACHMENT 1/PAGE 3 OF 3 ATTACHMENT 2 CET Interviews with Other Jurisdictions [3/18/2024] City of Milwaukie—Joseph Briglio, Community Development Director(written responses): 1. I understand that you initially adopted a CET in 2017; what has been the impact of the CET so far, in terms of housing production?Do you have any figures regarding the number of units that it has helped to produce, or even a general sense of the relative scale of its impact? • I recently ran our first affordable housing competitive grant process using$2M of accumulated CET funds.Through that process we supported the production of 415 income-restricted units. • Part of the success was the timing of the solicitation.The city knew that we had affordable housing projects coming down the pike that needed help. 2. In your estimation, has the CET been a useful tool for Milwaukie?Are there any particular qualities about your jurisdiction that make CET an effective tool to produce housing? • Yes, it's been incredibly useful as a tool for supporting affordable housing and economic development initiatives. • The city doesn't have a lot of resources to utilize when it comes to providing incentives for affordable housing and economic development, so this tool has been pretty invaluable. • We'll be using some of the funds to support storefront improvement,tenant improvement, and similar programs,for uses outside our URA. It's helped create parity across the city. 3. Do you have any concerns about the implementation or impacts of CET in Milwaukie?Have you heard any concerns expressed by elected officials, developers, residents, etc? • Our elected officials have been proponents of it as a tool. • I think residents, generally feel the same. • However, I don't think anyone, residents and developers combined, enjoy paying an additional tax on their permits.They already feel like things are too expensive, especially right now with inflation and interest rates. City of Tigard—Schuyler Warren, Senior Planner(verbal responses): 1. I understand that you initially adopted a CET in 2019; what has been the impact of the CET so far, in terms of housing production?Do you have any figures regarding the number of units that it has helped to produce, or even a general sense of the relative scale of its impact? • Less than $1 million per year in revenue. • Used the money mostly to backfill waived SDCs. • Hasn't necessarily increased production, but has helped with preservation and ensuring equitable outcomes. • Program funds/flexible funds mainly go to Proud Ground, so do the OHCS funds 2. In your estimation, has the CET been a useful tool for Tigard?Are there any particular qualities about your jurisdiction that make CET an effective tool to produce housing? PP 22-0005 ATTACHMENT 2/PAGE 1 OF 3 • Useful for affordable home ownership—addressing historic inequities in homeownership, but not necessarily producing new units • Would be hard pressed to take in enough to finance a development of any size—City tax-base is too small 3. Do you have any concerns about the implementation or impacts of CET in Tigard?Have you heard any concerns expressed by elected officials, developers, residents, etc? • Not a ton of comments—Chamber did not weigh in • Had the most interaction with Homebuilders' Association • Based on the Affordable Housing Plan developed by the City in —2019—this pointed to a CET City of Eugene—Laura Hammond, Housing Tools Analyst (written responses): 1. I understand that you initially adopted a CET in 2019; what has been the impact of the CET so far, in terms of housing production?Do you have any figures regarding the number of units that it has helped to produce, or even a general sense of the relative scale of its impact? • To date,the Affordable Housing Trust Fund has awarded housing development funds to 5 projects totally 178 units. o Of those, 70 units have completed construction and are occupied, 14 units are under construction, 56 units have completed their financing and will likely start construction this spring, and 38 units are still working on completing financing. o We just held our 2024 RFP and received four proposals—so it will be exciting to see what we will be able to fund this year. • In January 2022, our Council approved a Housing Implementation Pipeline (HIP)that estimated the AHTF (funded by the collection of CET) could support the creation of approximately 320 income-qualified units including 220 rental units and 100 homeownership units for low-and moderate-income households that would be occupied during the 5-year HIP period. o It feels like we are making progress on those goals. • A portion of the fund is also put toward direct services for low to moderate income renters and homeowners. o That funding has been used for rental assistance,foreclosure prevention, and a homebuyer assistance pilot program. 2. In your estimation, has the CET been a useful tool for Eugene?Are there any particular qualities about your jurisdiction that make CET an effective tool to produce housing? • From my perspective, I would say having a dedicated, local affordable housing funding source that has the level of flexibility these funds have has been very helpful. • Based on the estimated combined total cost of the affordable housing developments awarded AHTF, $2.2 million of investment from AHTF will leverage$45 million worth of new affordable housing in Eugene. • It certainly helps that we have several experienced affordable housing developers in the Eugene area—so they, along with some newer developers, have been able to utilize the funding to support projects that range from limited equity cooperatives on community land trusts, to Permanent Supportive Housing in a converted hotel,to small cottage cluster middle housing homeownership units. PP 22-0005 ATTACHMENT 2/PAGE 2 OF 3 3. Do you have any concerns about the implementation or impacts of CET in Eugene?Have you heard any concerns expressed by elected officials, developers, residents, etc? • Overall, I think the community and Council have been supportive of the outcomes of the AHTF. • I wasn't in my current position at the time, but I believe when the CET was originally being discussed we heard concerns about the potential impact of an additional tax. • Ultimately, however, our local of Chamber of Commerce supported its implementation. PP 22-0005 ATTACHMENT 2/PAGE 3 OF 3 ATTACHMENT 3 HPS Community Forum—3/14/2024 Polling Results 1. In general, how do you feel about the implementation of pro-housing policies that aim to increase housing choices and create more affordable housing in the community? 1.In general,how do you feel about the implementation of pro-housing policies that aim to increase housing choices and create more affordable housing in the community? (Single choice) 12/12(100)%answered Strongly Support-I fully endorse the implementation of pro-housing policies and believe they arc essential for our community. 5/12(42)% Support-I am in favor of pro-housing policies and their goals,although I may have some reservations. 4/12(33)% Neutral-I am indifferent or have no strong opinion on the matter. 1/12(8)% Oppose have concerns about pro-housing policies and do not generally support them. 2/12(17)% Strongly Oppose-I am against the implementation of pro-housing policies and believe they are not beneficial for our community. 0/12(0)% 2. To what extent do you support the City of Lake Oswego implementing this Development Code update strategy as part of the HPS? 1.To what extent do you support implementing this development code strategy update? (Single choice) 13/13(1D0)%answered Strongly support 6/13(46)% Support 4/13(31)% Neutral 0/13(0)% Oppose 1/13(8)% Strongly Oppose 2/13(15)% PP 22-0005 ATTACHMENT 3/PAGE 1 OF 8 3. To what extent do you support the City of Lake Oswego implementing this affordable housing tax exemption strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this affordable housing tax exemption strategy as part of the HPS? (Sin choice) 13/13(100)%answered Strongly Support 4/13(31)% Support 5/13(38)% Neutral 0/13(0)% Oppose 3/13(23)% Strongly Oppose 1/13(8)% 4. To what extent do you support the City of Lake Oswego implementing this public-private partnerships strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this public-private partnership strategy as part of the HPS? ;Single choice) 11/11(100)%answered Strongly Support 6/11(55)% Support 0/11(0)% Neutral 2/11(18)% Oppose 1/11(9)% Strongly Oppose 2/11(18)% PP 22-0005 ATTACHMENT 3/PAGE 2 OF 8 5. To what extent do you support the City of Lake Oswego implementing this fair housing policy and education strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this fair housing policy and education strategy as part of the HPS? (Single choice) 12/12(100)%answered Strongly Support 6/12(50)% Support 3/12(25% Neutral 1/12(8)% Oppose 1/12(8% Strongly Oppose 1/12(8% 6. To what extent do you support the City of Lake Oswego implementing this accessible housing strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this accessible housing strategy as part of the HPS? (Single choice) 12/12(100)%answered Strongly Support 7/12(581% Support 5/12(42)% Neutral 0/12(01% Oppose 0/12(01% Strongly Oppose 0/12(01% PP 22-0005 ATTACHMENT 3/PAGE 3 OF 8 7. To what extent do you support the City of Lake Oswego implementing this rezoning strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this rezoning strategy as part of the H PS? ;Single choice) 12/12(10D)%answered Strongly Support 5/12(42)% Support 4/12(33)% Neutral 0/12(0)% Oppose 1/12(8)% Strongly Oppose 2/12(17)% 8. To what extent do you support the City of Lake Oswego implementing this tax-increment financing strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this tax increment financing strategy as part of the HPS? (Single choice) 12/12(100)%answered Strongly Support 4/12(33)% Support 3112(25)% Neutral 1/12(8)% Oppose 2/12(17)% Strongly Oppose 2/12(17)% PP 22-0005 ATTACHMENT 3/PAGE 4 OF 8 9. To what extent do you support the City of Lake Oswego implementing this affordable housing preservation inventory strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this affordable housing preservation inventory strategy as part of the HPS? (Single choice) 10/10(100)%answered Strongly Support 6/10(60)% Support 3/10(30)% Neutral 1/10(10)% Oppose 0/10(0)% Strongly Oppose 0/10(0)% 10. To what extent do you support the City of Lake Oswego implementing this scaled SDC strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this scaled SOC strategy as part of the HPS? (Single choice) 11/11(10D)%answered Strongly Support 4/11(36)% Support 5/11(45)% Neutral 0/11(0)% Oppose 1/11(9)% Strongly Oppose 1/11(9)% PP 22-0005 ATTACHMENT 3/PAGE 5 OF 8 11. To what extent do you support the City of Lake Oswego implementing this pre-approved plans for ADUs strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this pre-approved plans for AD Us strategy as part of the HPS? (Single choice) 12/12(100)%answered Strongly Support 7/12(58)% Support 2/12(17)% Neutral 0/12(0)% Oppose 0/12(0)% Strongly Oppose 3/12(25)% 12. To what extent do you support the City of Lake Oswego implementing this zoning bonus strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this zoning bonus strategy for affordable housing as part of the HPS? i ti ngle choice) 10/10(100)%answered Strongly Support 3/10(30)% Support 3/10(30)% Neutral 2/10(20)% Oppose 0/10(0)% Strongly Oppose 2/10(20)% PP 22-0005 ATTACHMENT 3/PAGE 6 OF 8 13. To what extent do you support the City of Lake Oswego implementing this construction excise tax strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this construction excise tax strategy as part of the HPS? (Single choice) 10/10(100)%answered Strongly Support 5/10(50)% Support 2/10(20)% Neutral 0/10(0)% Oppose 2/10(20)% Strongly Oppose 1/10(10)% 14. To what extent do you support the City of Lake Oswego implementing this Vertical Housing Development Zone strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this Vertical Housing Development Zone strategy as part of the HP5? ;Singie choice) 8/8(100)%answered Strongly Support 2/8(25)% Support 3/8(38)% Neutral 0/8(0)% Oppose 3/8(38)% Strongly Oppose 0/8(0)% PP 22-0005 ATTACHMENT 3/PAGE 7 OF 8 15. To what extent do you support the City of Lake Oswego implementing this MUPTE tax exemption strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this MIJPTE tax exemption strategy as part of the H PS? (Single choice) 9/9(100)%answered Strongly Support 3/9(33)% Support 4/9(44)% Neutral 0/9(0)% Oppose 2/9(22)96 Strongly Oppose 0/9(0)% 16. To what extent do you support the City of Lake Oswego implementing this pre-approved plans for middle housing strategy as part of the HPS? 1.To what extent do you support the City of Lake Oswego implementing this pre-approved plans for middle housing strategy as part of the HPS? (Single choice) 9/9(100)%answered Strongly Support 6/9(67)% Support 1/9(11)% Neutral 1/9(11)% Oppose 0/9[0)% Strongly Oppose 1/9(11)% PP 22-0005 ATTACHMENT 3/PAGE 8 OF 8 ATTACHMENT 4 LAKE OSWEGO HOUSING PRODUCTION STRATEGY Initial Housing Strategy Recommendations Memo I February 8, 2024 Introduction This memorandum provides an evaluation and initial recommendations for the housing strategies that the City of Lake Oswego may consider as part of its Housing Production Strategy(HPS).These are potential strategies that the City and its partners can employ to address Lake Oswego's current and future housing needs, as identified in the recently-completed Housing Needs Analysis (HNA). This memo builds on prior work by City staff, consultants, and the HPS Task Force.The Task Force reviewed the "Strategy Alternatives Memo" at their meeting on December 8, 2023.At that meeting, the Task Force formed breakout groups to discuss which housing strategies could best address high-priority housing needs identified in the HNA—Government-subsidized affordable housing units affordable to people with very low or low incomes; Housing affordable to households with moderate incomes; Housing options/choices to meet a full range of household needs and preferences; and Housing for seniors and opportunities for seniors, people with disabilities, and aging in place. Based on this feedback, and on further evaluation of each strategy's potential impact and feasibility, the project team has provided initial recommendations for which strategies to include in the HPS. MEMO ORGANIZATION This memo is organized into the following four sections: 1. Recommended Strategies The project team's initial recommendation is to include these strategies in the HPS.These strategies have either received clear support from the HPS Task Force, City Council, and HPS Task Force; have a low-barrier to implementation; and/or are expected to have a moderate to high impact on housing production. 2. Strategies Needing Further Discussion These strategies need further discussion by the HPS Task Force, Planning Commission, and City Council before the project team can make a recommendation as to whether they should be included in the HPS. If adopted,these strategies could have a meaningful impact on housing production. 3. Contingent Strategies These are various ways that the City could allocate funds to support affordable housing production or preservation. Each of these strategies are contingent on adoption of a new funding source, such as Construction Excise Tax,for the City to participate meaningfully 4. Not Recommended These strategies are not recommended for implementation in the HPS because they are not MIG, Inc. I Lake Oswego Housing Production Strategy 1 of 42 PP 22-0005 ATTACHMENT 4/PAGE 1 OF 42 Initial Strategy Recommendations Memo 2/8/2024 expected to have a meaningful impact on housing production. Currently, only one strategy is included in this category. STRATEGY EVALUATION This report provides additional background information for each of the housing strategies included in the "Strategy Alternatives Memo" and takes a closer look at the potential impacts to housing supply/affordability, benefits and burdens on priority populations,feasibility, and actions needed for implementation. The summary of each housing strategy includes the following information: Description What is the strategy? How can the strategy work to address identified housing needs in Lake Oswego?What are potential outcomes? Considerations What potential options,funding needs, challenges, etc. are applicable to the strategy?Are there potential trade-offs or negative externalities to consider? How feasible is this strategy, given other considerations? Anticipated What is the anticipated impact of the strategy?The following types of impacts Impact are considered: • Housing need addressed—Housing need identified in the HNA that is addressed by the strategy • Populations served by the strategy • Income levels addressed by the strategy • Benefits and burdens that priority populations may receive from the strategy. Priority populations include low-income households, people of color, people with disabilities, seniors, and other state or federal protected classes. • Housing tenure (either owner or renter) • Magnitude of the action for producing new housing: o Low impact:The strategy is unlikely to meet the relevant housing need. A low impact strategy does not mean an action is unimportant. Some actions are necessary but not sufficient to produce new housing. o Moderate impact:The strategy either may have a moderate impact on meeting the relevant housing need or be designed to target that need. o High impact:The strategy may directly benefit a certain housing need and is likely to be most effective at meeting that need relative to other strategies. Time Frame Implementation: When does the City expect the action to be adopted and implemented? Strategies are identified as Near Term (1-3 years), Medium Term (within 3-5 years), and Longer Term (>5 years) actions. Impact: Over what time period will the impact occur? Implementation What actions will the City and other stakeholders need to take to implement the Actions strategy? Lead & Partners Who will be responsible for implementing the strategy?What partnerships might be necessary or beneficial to the strategy? MIG, Inc. I Lake Oswego Housing Production Strategy 2 of 42 PP 22-0005 ATTACHMENT 4/PAGE 2 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Summary of Housing Strategies Implementation Strategy DLCD Category* Time Frame 1. Recommended Strategies 1.1 Code Audit and Amendments(Z01) Z. Custom Options Near Term 1.2 Remove or Reduce Minimum Parking Requirements B. Reducing Regulatory Impediments Near Term (B01) 1.3 Nonprofit Low-Income Housing Exemption (E01) E.Tax Exemption and Abatement Near Term 1.4 Low-Income Rental Housing Tax Exemption (E02) E.Tax Exemption and Abatement Near Term 1.5 Public-private partnerships for affordable housing(F04) F. Land,Acquisition, Lease,and Near Term Partnerships 1.6 Fair Housing Policy and Education (B14) B. Reducing Regulatory Impediments Near Term 1.7 Rezone Land (Z02) Z. Custom Options Medium Term 1.8 Evaluate accessible design incentives or mandates(A23) A.Zoning and Code Changes Medium Term 1.9 Use Tax Increment Financing(TIF)to support affordable D. Financial Resources Medium Term housing development(D10) 1.10 Affordable Housing Preservation Inventory(F19) F. Land,Acquisition, Lease, and Medium Term Partnerships 1.11 Modify System Development(SDC)fee schedule(CO2) C. Financial Incentives Longer Term 1.12 Pre-Approved Plan Sets for ADUs(A21) A.Zoning and Code Changes Longer Term 2. Strategies Needing Further Discussion 2.1 Zoning Incentives for Affordable Housing(A03) A.Zoning and Code Changes TBD 2.2 Construction Excise Tax(CET) (D09) D. Financial Resources TBD 2.3 Vertical Housing Development Zone Tax Abatement E.Tax Exemption and Abatement TBD (E03) 2.4 Multiple Unit Property Tax Exemption (MUPTE) (E04) E.Tax Exemption and Abatement TBD 2.5 Pre-Approved Plan Sets for Middle Housing Typologies A.Zoning and Code Changes TBD (A20) 3. Contingent Strategies 3.1 Housing Trust Funds(D03) D. Financial Resources Contingent 3.2 Low-Interest Loans/Revolving Loan Fund (D13) D. Financial Resources Contingent 3.3 Community Land Trusts(F03) F. Land,Acquisition, Lease, and Contingent Partnerships 3.4 Preserving Low-Cost Rental Housing to Mitigate F. Land,Acquisition, Lease, and Contingent Displacement(F05) Partnerships 4. Not Recommended 4.1 Homebuyer Opportunity Limited Tax Exemption E.Tax Exemption and Abatement N/A Program (HOLTE) (E06) MIG, Inc. I Lake Oswego Housing Production Strategy 3 of 42 PP 22-0005 ATTACHMENT 4/PAGE 3 OF 42 Initial Strategy Recommendations Memo 2/8/2024 *DLCD Category refers to the type of action each strategy entails, according to DLCD's Housing Production Strategy Guidance Document'): A. Zoning and Code Changes B. Reduce Regulatory Impediments C. Financial Incentives D. Financial Resources E. Tax Exemption and Abatement F. Land, Acquisition, Lease, and Partnerships Z. Custom Options 1. Recommended Strategies The following recommended strategies have either received clear support from the HPS Task Force, City Council, and HPS Task Force; have a low-barrier to implementation; and/or are expected to have a moderate to high impact on housing production. Recommended strategies are organized into Near-Term, Medium-Term, and Longer-Term strategies. NEAR-TERM STRATEGIES The project team's initial recommendation is to implement the following strategies in the Near Term (1-3 years after HPS adoption). 1.1 Code Audit and Amendments (Z01) Description Undertake a comprehensive audit of the Community Development Code (CDC)to identify and eliminate barriers to housing production. The CDC audit could potentially address: • Barriers to accessory dwelling units (ADUs) and middle housing; • Ways to facilitate smaller units; • Procedural requirements that add cost and delay to land use approvals; • Open space requirements in high-density zones; • Barriers to residential development within mixed-use districts; • The impact of neighborhood overlays or other regulatory provisions; and • Other identified Code barriers. Considerations • This strategy could help reduce or eliminate some of the major code and procedural barriers identified by housing stakeholders. 'For each strategy,the corresponding strategy number from DLCD's List of HPS Tools,Actions,and Policies is indicated in (parentheses). MIG, Inc. I Lake Oswego Housing Production Strategy 4 of 42 PP 22-0005 ATTACHMENT 4/PAGE 4 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • The strategy could be shaped to prioritize housing types identified as most needed in the city, based on the City's recently adopted HNA and stakeholder input, such as: o Middle housing (e.g., townhomes, duplexes, and cottage clusters) o Apartments with family-size units (2-3 bedrooms) o Multi-family housing (of any size) o Smaller homes • Simply removing code barriers will not lead to housing development.This strategy should be paired with others that directly influence housing production. • There may be neighborhood resistance to this strategy, particularly for any code amendments intended to modify existing neighborhood overlays or neighborhood planning efforts. Extensive community engagement would be necessary. Anticipated • Housing need addressed: General need for increased housing production Impact and increased housing choices.The HNA indicates that nearly 2,000 new housing units will be needed by 2043.This strategy could also specifically address the needs for multi-family housing, middle housing, and smaller units such as ADUs. • Population served: Low to higher-income households • Income level:All income levels • Benefits and Burdens:This strategy is broad, and therefore difficult to evaluate in terms of benefits and burdens for priority populations. However, it does give the opportunity to target efforts in beneficial areas such as reducing barriers to affordable development or housing that is more attainable to low-and moderate-income households (e.g., multi-family and middle housing); facilitating smaller housing options such as ADUs, which could benefit seniors; and other areas aimed at helping priority populations. In addition, increasing overall housing supply can help keep housing costs down by balancing supply and demand,which benefits all residents, including priority populations. However, because the strategy is intended to increase housing production overall, it could primarily benefit upper income households, while leaving less land available for more affordable housing. Implementation of this strategy should include a focus on meeting the needs of housing types that benefit low-and moderate-income households, seniors, and other priority populations. • Housing tenure: For rent or sale • Magnitude: Moderate—This strategy could have a moderate impact on new housing production given the limited remaining inventory of buildable residential lands.The low inventory and relatively high land prices in Lake Oswego incentivize making more intensive use of remaining sites, if the code permits it. MIG, Inc. I Lake Oswego Housing Production Strategy 5 of 42 PP 22-0005 ATTACHMENT 4/PAGE 5 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Time Frame Implementation: Near Term Impact:The action can begin to have impact after it is implemented in the CDC. However,the impact on housing development is expected to be longer-term. Implementation • Identify priorities for the code audit,focusing on high-priority housing needs. Actions • Conduct a comprehensive CDC audit, potentially with support from a consultant. • Work with developers/housing stakeholders and residents to vet potential CDC amendments. • Work with Lake Oswego's Planning Commission and City Council to adopt code amendments. • City Council Action: Legislative CDC text amendments. Lead & Partners Lead: Lake Oswego Community Development Partners: Developer and housing stakeholders 1.2 Remove or reduce minimum parking requirements (B01) Description Removing parking requirements for residential uses provides the opportunity to reduce the amount of lot area used for pavement and storage of vehicles and provides more space for housing and open space.This strategy offers greater flexibility to site housing and reduces costs associated with providing parking. The City is not enforcing minimum parking requirements within 1/2-mile of priority transit, which includes the entire Downtown Town Center, and will likely remove minimum parking requirements in the City's other climate-friendly area (Lake Grove Village Center)to comply with state rules on Climate Friendly and Equitable Communities (CFEC). There is interest from City Council in potentially repealing minimum parking requirements citywide. Considerations • Parking mandates are often cited as a major barrier for market-rate multi- dwelling and regulated affordable housing. • Developers often choose to provide parking, even if not required. Lenders/investors may require some parking to ensure marketability of units. • There could be community opposition to removing all parking mandates, due to the potential for higher usage of on-street parking and the potential for parking overflow from commercial areas to residential neighborhoods. Anticipated • Housing Need Addressed: General need for increased housing production. Impact This strategy would especially benefit production of multi-family and government-subsidized affordable housing. • Population served: Especially beneficial to low-to moderate- income households • Income level:All income levels—especially 30-120%AMI MIG, Inc. I Lake Oswego Housing Production Strategy 6 of 42 PP 22-0005 ATTACHMENT 4/PAGE 6 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Benefits and Burdens:This strategy has the potential to benefit low-income households and people of color by removing parking mandates as a barrier to development of affordable housing. Access to convenient parking has been raised as an important need for people with disabilities; therefore, removing parking mandates could potentially burden those populations if parking is not provided.The City could consider encouraging property owners to provide parking for people with disabilities and set policy on when on-street parking designated for people with disabilities is appropriate. On the other hand, some people with disabilities are unable to drive and could benefit from removing additional costs associated with parking. • Housing tenure: For rent or sale • Magnitude: High—This action is likely to have the most impact on market- rate multi-family and regulated affordable housing. Parking mandates are often cited as a major barrier for those types of development. Reduced parking often allows for greater density (i.e., additional housing) on a site, improving the financial feasibility via replacing the sunk cost of building and maintaining the parking area, with additional revenue-generating space. Reduced parking also allows developers to be more creative with site planning and design features in general, often improving the aesthetics and functionality of a property as well. Time Frame Implementation: Near Term Impact:The action will begin to have impact as soon as the parking mandates are removed. Impacts to housing production are expected to be longer term. Implementation • Conduct outreach and education related to parking mandates. Actions • Work with Lake Oswego's Planning Commission and City Council to adopt code amendments. • City Council Action: Adopt Development Code text amendments. Lead & Partners Lead: Lake Oswego Community Development Partners: N/A 1.3 Nonprofit Low-Income Housing Tax Exemption (E01) NOTE:The project team's initial recommendation is to implement either or both the Nonprofit Low- Income Housing Tax Exemption and/or the Low-Income Rental Housing Tax exemption. Description This tax exemption benefits low-income residents by alleviating the property tax burden on those organizations that provide this housing opportunity. Eligible properties must be offered to low-income persons (at or below 60% AMI), or held for the purpose of developing low-income rental housing.The housing may be for rent or for purchase, and could be new development or existing housing acquired by a nonprofit for the purpose of converting it to income-restricted affordable housing.Jurisdictions may adopt additional MIG, Inc. I Lake Oswego Housing Production Strategy 7 of 42 PP 22-0005 ATTACHMENT 4/PAGE 7 OF 42 Initial Strategy Recommendations Memo 2/8/2024 eligibility criteria for the exemption, provided they don't conflict with state statutes. Applicants must renew their tax exemption applications annually. As long as the housing remains affordable to low-income residents, there is no time limit to the tax exemption. While non-profit agencies can apply for tax exempt status through the state, that process is cumbersome and is not always successful.This strategy would provide a simplified and consistent method for eligible organizations to apply and qualify by adopting it as City policy and gaining participation from other taxing districts. (Authorized by ORS 307.540-548) Considerations Applicable to all tax exemptions: • Tax exemptions apply only to the tax levy of a governing body that adopts the exemptions. In order for the full property tax to be exempted,the City must seek approval from partner jurisdictions that,together with the City, make up at least 51%of the overall tax levy. Lake Oswego would need to secure agreement from either the School District or County or both. • The City and participating taxing districts will lose property tax income for the duration of any tax exemption, reducing revenue for City services and revenue for participating taxing districts. Such taxing districts may express resistance to new tax abatement or exemption programs that involve reduced revenue, particularly for programs intended to produce market-rate housing. Nonprofit Low-Income Housing Exemption: • By reducing operating income, property tax abatement programs can be a powerful tool to increase the feasibility of low-income housing, and perhaps increase the number of units that are feasible in planned projects. Many affordable housing developers cite abatements such as the Nonprofit Housing exemption as an essential tool in helping make projects financially feasible. • The City of Lake Oswego received a letter from Mercy Housing Northwest, the nonprofit developer of the Marylhurst Commons development, urging the City to adopt an affordable housing tax exemption.This letter(dated October 24, 2023) is included in the CAG#6 agenda packet.The letter describes various benefits of a property tax exemption—in particular, in reducing ongoing operations costs and supporting long-term stability for affordable housing developments. Anticipated • Housing need addressed: Government-subsidized affordable housing for Impact low-income households. • Population served: Low-income households • Income level:0-60%AMI (for residents' initial year of tenancy; after the first year, up to 80%AMI) • Benefits and Burdens:This strategy would primarily benefit low-income households by increasing the City's capacity to support production of subsidized affordable housing. MIG, Inc. I Lake Oswego Housing Production Strategy 8 of 42 PP 22-0005 ATTACHMENT 4/PAGE 8 OF 42 Initial Strategy Recommendations Memo 2/8/2024 No burdens on priority populations are anticipated. • Housing tenure: For sale or rent • Magnitude: High—This abatement can have a large impact on making low- income affordable housing more feasible to develop.The open-ended nature of the abatement (as long as the project maintains affordability) can offer very significant savings to the property manager over time and increase the viability of offering affordable rents indefinitely.The property tax level in Lake Oswego is roughly$20,000 per$1M in valuation per year.A mid-to large apartment complex could expect a valuation of many millions of dollars, amounting to potentially hundreds of thousands in taxes per year. An abatement of these taxes is a strong incentive and improves feasibility considerably. Time Frame Implementation: Near Term Impact:The tax exemption can be used once it is adopted, and for as long as the City offers the exemption.The impact on supply of affordable housing is expected to be longer-term. Implementation • Work with other taxing jurisdictions to gain approval. Actions • Develop application standards and guidelines. • City Council action:Adopt tax exemption policy by resolution or ordinance. Lead & Partners Lead: Lake Oswego Community Development Partners: Lake Oswego Finance Department; overlapping taxing jurisdictions 1.4 Low-Income Rental Housing Tax Exemption (E02) NOTE:The project team's initial recommendation is to implement either or both the Nonprofit Low- Income Housing Tax Exemption and/or the Low-Income Rental Housing Tax exemption. Description This is a 20-year tax exemption for any entity that provides income-restricted rental housing, including nonprofits and for-profit developers. Eligible properties must be offered for rent to low-income persons or held for the purpose of developing low-income rental housing.Jurisdictions may adopt additional eligibility criteria for the exemption, provided they don't conflict with state statutes. (Authorized by ORS 307.515-537) Comparison of low-income housing tax exemption programs: While these two exemption programs appear similar,they do have some key distinctions. Nonprofit Low-Income Low-Income Rental Housing Housing Eligible Developers Nonprofits only Nonprofit or for-profit Income Levels Up to 60%AMI Up to 60%AMI Tenure For rent or for sale For rent only MIG, Inc. I Lake Oswego Housing Production Strategy 9 of 42 PP 22-0005 ATTACHMENT 4/PAGE 9 OF 42 Initial Strategy Recommendations Memo 2/8/2024 New vs. Acquired New construction or New construction only Housing acquisition of existing housing Annual Renewal Yes No Required? Time Limit No limit 20 years NOTE:The project team does not see any issues with adopting both exemption programs. Each program has different opportunities and challenges, and it may be beneficial for housing developers to be able to choose which program best suits their project needs. Considerations • Key advantages of this abatement are that it is available to more than just non-profits and it does not require annual renewal.This can significantly reduce an organization's administrative burden in implementing the exemption. • However,this abatement has less flexibility compared to the Nonprofit Exemption because it is not available for ownership housing, cannot be used for acquisition of existing housing, and is limited to 20 years. Anticipated • Housing need addressed: Government-subsidized affordable housing for Impact low-income households. • Population served: Low-income households • Income level:0-60%AMI (for residents' initial year of tenancy; after the first year, up to 80%AMI) • Benefits and Burdens:This strategy would primarily benefit low-income households by increasing the City's capacity to support production of subsidized affordable housing. No burdens on priority populations are anticipated. • Housing tenure: For rent • Magnitude: High—Like the Nonprofit Exemption, this abatement can have a large impact on new affordable housing production.As noted above, an abatement of property taxes is a strong incentive and improves feasibility considerably.This abatement is available to for-profit developers and therefore may generate more new housing than the Non-Profit Exemption. While not open-ended, a 20-year exemption matches the period in which a property would otherwise undergo significant depreciation. However, at the end of the 20-year period,this housing often reverts to market-rate status. Time Frame Implementation: Near Term Impact:The tax exemption can be used once it is adopted, and for as long as the City offers the exemption.The impact on supply of affordable housing is expected to be longer-term. Implementation • Work with other taxing jurisdictions to gain approval. Actions • Develop application standards and guidelines. • City Council action:Adopt tax exemption policy by resolution or ordinance. MIG, Inc. I Lake Oswego Housing Production Strategy 10 of 42 PP 22-0005 ATTACHMENT 4/PAGE 10 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Lead & Partners Lead: Lake Oswego Community Development Partners: Lake Oswego Finance Department; overlapping taxing jurisdictions 1.5 Public-private partnerships for affordable housing (F04) Description Public-private partnerships (PPPs) are arrangements between public and private entities to develop housing, especially affordable housing. PPPs have the capacity to bring resources to the table that would otherwise not be available if each institution were to provide housing on its own. The City could partner with organizations to support their affordable housing efforts in a variety of ways: • Acquire land and/or donate city-owned land; • Provide grants or low-interest loans for specific development or rehabilitation projects; • Provide direct funding; and/or • Leverage federal, state, and regional resources. Additionally, the City can pursue specific types of PPPs such as: • Partnering to convert underutilized non-residential properties into housing.The City could work with landowners to evaluate opportunities for adapting vacant/underused buildings for new housing or mixed-use development. Implementing this strategy may depend, in part, on use of tools such as TIF funding (Strategy 1.9)to address infrastructure deficiencies or support development of affordable housing. • Utilizing surplus land owned by faith-based organizations for affordable housing.The City could work with faith organizations to utilize their excess land for affordable housing.The City could assist such organizations with favorable zoning, permitting, and financial incentives. NOTE: PPP is an "umbrella" strategy that overlaps significantly with other strategies in this document(funding support for affordable housing,tax incentives, community land trusts, etc.). Implementing a PPP strategy could take many forms. In the final HPS, it will be important for the City to be clear about the specific actions it will take to pursue and support PPPs for affordable housing. Considerations • The City is pursuing this strategy with several ongoing projects.This includes partnering with the Sisters of Holy Names of Jesus and Mary and Mercy Housing NW in facilitating the Marylhurst Commons affordable housing development. • PPPs are often opportunity-driven and may be spearheaded by the City or by private developers or partner agencies. • Cities are often asked to provide land,financial assistance, and or technical assistance, with potentially moderate costs. More significant financial assistance would depend on a new funding source,such as construction excise tax. MIG, Inc. I Lake Oswego Housing Production Strategy 11 of 42 PP 22-0005 ATTACHMENT 4/PAGE 11 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Anticipated • Housing Need Addressed: Government-subsidized affordable housing for Impact low-income households. • Population served: Low-income households • Income level:0-80%AMI • Benefits and Burdens:This strategy is intended to benefit low-income households by increasing the City's involvement in development of affordable housing. No burdens on priority populations are anticipated for this strategy. • Housing tenure: For rent or sale • Magnitude: High—Partnerships with private developers or non-profit housing agencies are very often a key component of a City contributing to new housing production. Few City governments directly build housing.The incentives and funding offered are aimed at these partners, who undertake the projects often with a development agreement to ensure the public goals are met.The magnitude of impact is high, and in a sense these partnerships are necessary for most successful City-based housing initiatives. Time Frame Implementation: Near Term Impact:Timing of impact depends on the nature of the public/private partnership. Given availability of funds, impact to housing production would be expected to occur over the longer term. Implementation • More clearly define the relationship to other HPS strategies and which types Actions of actions would be proactively undertaken by the City vs more opportunistic actions based on proposals from potential partners. • Work with nonprofit,faith-based, or other organizations to discuss opportunities in Lake Oswego. • Take action on partnership models and programs that best benefit the organization and the City's financial and/or administrative capacity. • Partnership activities depend on the project, organization, and available resources. Lead & Partners Lead: Lake Oswego Community Development Partners: Possibilities include landowners and organizations with excess land, as well as nonprofit affordable housing providers. 1.6 Fair Housing policy and education (B14) Description This strategy involves amending the Comprehensive Plan to explicitly make Affirmatively Furthering Fair Housing a Housing Policy. Fair Housing laws protect individuals in "protected classes" from housing discrimination. Protected classes in Oregon include race, color, national origin, religion, disability, sex(includes pregnancy), sexual orientation, gender identity, age, and marital status.The City could add additional protected classes, such as ancestry, ethnicity, or occupation. MIG, Inc. I Lake Oswego Housing Production Strategy 12 of 42 PP 22-0005 ATTACHMENT 4/PAGE 12 OF 42 Initial Strategy Recommendations Memo 2/8/2024 The City could also pursue the following types of actions to affirmatively further fair housing and work to reverse discrimination, exclusion, and concentrations of wealth in Lake Oswego: • Create an Analysis of Impediments to Fair Housing. • Conduct fair housing training for Council, Planning Commission, and other relevant policymakers. • Provide residents, property owners, property managers, realtors, lenders, and others involved with real estate transactions with access to fair housing information and referrals. • Ensure that City staff know how to identify potential fair housing violations and make referrals to the Fair Housing Council of Oregon and state and local enforcement agencies. In addition, other strategies identified in this list can also generally serve the purpose of affirmatively furthering fair housing to the extent they expand housing opportunities or choices for people in protected classes. Considerations • This strategy would not necessarily contribute to housing production except when it is implemented through other strategies described in this document that result in housing production. However, in all cases it would demonstrate the City's commitment to working towards fair housing outcomes. • Training and education would require staff time and resources to implement. Anticipated • Housing Need Addressed:This strategy would not directly address identified Impact housing needs in most cases, but it would help prevent housing discrimination against protected classes. • Population served: Protected classes • Income level:All income levels • Benefits and Burdens:This strategy is intended to benefit priority populations by formalizing the City's commitment to fair housing goals, better understanding fair housing issues in the community, and by educating City staff, housing stakeholders, and community members about fair housing laws and residents' rights. No burdens on priority populations are anticipated. • Housing tenure: For sale or rent • Magnitude: Low—Fair housing policy and education will not directly contribute to housing production, but it could provide additional protections against housing discrimination. It could also bolster the City's focus on prioritizing housing equity and affordability in its housing programs and investments. Time Frame Implementation: Near Term (Fair Housing Policy); Medium Term (other actions) Impact: Impact on community understanding of fair housing can be in the short term. Impact on fair housing outcomes is expected to be longer term. Implementation • Policy adoption requires Legislative Comprehensive Plan text amendment. Actions • Partner with organizations such as the Fair Housing Council of Oregon on training. MIG, Inc. I Lake Oswego Housing Production Strategy 13 of 42 PP 22-0005 ATTACHMENT 4/PAGE 13 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Develop informational materials. • Provide training to current staff and new hires. Lead & Partners Lead: Lake Oswego Community Development Partners: Fair Housing Council of Oregon MEDIUM-TERM STRATEGIES The project team's initial recommendation is to implement the following strategies over the Medium Term (3-5 years after HPS adoption). 1.7 Rezone Land (Z02) Description This strategy involves rezoning commercial, mixed-use, or other non-residentially zoned properties for residential uses, especially multi-family housing. It could also involve rezoning lower-density areas to allow higher-density housing. The HNA identified a need for additional residential land across all zone types to meet the 20-year housing need in Lake Oswego (a deficit of 86 total acres).As such, there may be a need to add to the city's capacity of residential land to meet the housing need. Rezoning is one way to help address this issue. Considerations • If nonresidential land is considered for rezoning, it would be important to ensure there is still adequate land available for employment and commercial/industrial needs in the city. Lake Oswego's Economic Opportunities Assessment identifies the city's future employment land needs. • In considering the most appropriate locations for City-initiated rezoning of land, the following criteria or factors should be considered: o Proximity to existing residential and higher-density areas. o Proximity to services (e.g.,transit, schools, parks, etc.). o Size and ownership—larger properties will be more attractive for development. • There may be neighborhood resistance to rezoning, especially"upzoning" single-family residential areas.This strategy would need significant community engagement. Anticipated • Housing need addressed: Rezoning would address the shortage of land for Impact housing, and the overall need for housing production in the city. Depending on how it is implemented, this strategy could also address the shortage of higher-density land by rezoning lower-density land. • Population served: Low to higher income households • Income level:All income levels • Benefits and Burdens: Rezoning can increase the availability of land zoned for residential development. Additional capacity for more housing MIG, Inc. I Lake Oswego Housing Production Strategy 14 of 42 PP 22-0005 ATTACHMENT 4/PAGE 14 OF 42 Initial Strategy Recommendations Memo 2/8/2024 development can include opportunities for multi-family housing that is generally more affordable to low-and moderate-income households. A potential burden from this strategy is the possibility of lower-income households being displaced if rezoning leads to increased development pressures or increased property values. Rezoning commercial areas, or impacts of increased property values, can also lead to commercial displacement of small businesses. Rising commercial rents or pressures to redevelop for residential uses may have a larger impact on small-scale entrepreneurs and immigrant or minority-owned businesses.The characteristics of areas being considered for rezoning should be carefully considered as part of implementation to avoid displacement impacts. • Housing tenure: For rent or sale • Magnitude: Moderate to High—The impact of rezoning might be relatively high given the limited supply and high demand for buildable residential land in the community.The effectiveness of rezoning will depend on the physical and infrastructure characteristics of the rezoned land for residential use.The density of housing under the new zone will also depend on the physical constraints (e.g., steep slopes)that might limit the buildable portion of a site. Time Frame Implementation: Medium Term Impact: Land inside city limits will become available for development immediately after rezoning. Land outside city limits can also be developed, but will need to overcome the additional hurdle of annexation.The impact on housing development is expected to be long-term. Implementation • Use the criteria listed above to identify potential areas for rezoning. Prioritize Actions sites with the best potential for housing production and access to services. • Consider the demographic characteristics of potential rezoning areas to avoid potential displacement impacts. • Engage with property owners as well as the broader community in targeted areas. • Work with Lake Oswego's Planning Commission and City Council to adopt Zoning and Comprehensive Plan Map amendments. • City Council action: Legislative Zoning Map and Comprehensive Plan Map amendment. Lead & Partners Lead: Lake Oswego Community Development Partners: Property owners 1.8 Evaluate accessible design incentives or mandates (A23) Description This strategy involves evaluating incentives or mandates to increase development of housing that is accessible for seniors and people with disabilities or mobility challenges. Potential incentives could include: MIG, Inc. I Lake Oswego Housing Production Strategy 15 of 42 PP 22-0005 ATTACHMENT 4/PAGE 15 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Bonuses for height, density, lot size, or floor area ratio (similar to Strategy 2.1). • Tax abatements, e.g., MUPTE (see Strategy 2.4). Potential mandates could include: • Requiring visitability in middle housing development—this would ensure that anyone using a wheelchair can visit the subject homes.Visitability is most relevant for buildings with fewer than four units,townhouses, and detached homes that aren't subject to ADA requirements. • Requiring housing that receives public funding to provide more accessible units or more universal design features than required under federal standards.This could mean applying the standards to a higher percentage of units than would otherwise be required (above 5%) and/or requiring units to meet higher Universal Design or Lifelong Housing Certification standards. • Requiring elevators in some or all multi-story buildings. Currently,the Building Code only requires elevators to reach common spaces (such as exercise rooms) or units that are federally required to be accessible. Requiring elevators in one or more multi-family buildings would provide access to all levels of that building. It would also make all units "covered" units under the Fair Housing Act, meaning all units would need to have baseline accessibility features. Accessibility Standards. Eligible units (for either incentives or mandates) could be required to meet certain standards—which would go beyond minimum federal requirements or could target housing not subject to these requirements (e.g., single-family homes and middle housing).2 Options include: • Universal Design is a building concept that incorporates design layouts and characteristics into residences to make them usable by the greatest number of people and respond to the changing needs of the resident. Universal Design incorporates standards for features such as hallways, doorways, bathrooms, and kitchens that make these features usable for people with disabilities or adaptable for that purpose.' • Lifelong Housing Certification is a program developed by the Rogue Valley Council of Governments (RVCOG) in partnership with AARP Oregon as a voluntary certification process for evaluating the accessibility and/or adaptability of homes. Residences can be certified at three levels based on the extent of their accessibility: (1)Visitable (basic accessibility for visitors); (2) Fully Accessible (accessible for a person in a wheelchair on the main floor); and (3) Enhanced Accessibility(customized for specific accessibility 2 Multi-family developments are subject to the Fair Housing Act;for buildings with an elevator,all units must be accessible;for those without an elevator,all ground floor units must be accessible. Housing projects receiving public funding are subject to federal laws(Section 504 of the Rehabilitation Act of 1973 and/or Title II of the ADA),which require 5%of units to be mobility-accessible.Source: Disability Law Handbook,Southwest ADA Center. http://www.southwestada.org/html/publications/dlh/housing.html 3 Universal Design Standards, West Virginia Housing Development Fund. https://tinyurl.com/yx63h792 MIG, Inc. I Lake Oswego Housing Production Strategy 16 of 42 PP 22-0005 ATTACHMENT 4/PAGE 16 OF 42 Initial Strategy Recommendations Memo 2/8/2024 needs).4 • Visitability is a design approach for new housing that allows anyone who uses a wheelchair or other mobility device to visit the home.A visitable home typically includes: o A zero-step entrance; o Wide interior doors; and o A half bathroom on the main floor. Considerations • This strategy would help address housing disparities for people with disabilities and provide more options for aging in place. • Strategies to promote accessible housing received support from the Middle Housing Code Advisory Committee as part of the House Bill 2001 code updates. • Accessibility features can add to the cost of construction for a development, which can make affordable housing projects less financially feasible. Elevators, in particular, add significant cost to a project. • While mandates may provide more accessible units,they could prevent some affordable housing projects from being developed. • Incentives must be calibrated effectively to be attractive to both a nonprofit and for-profit developer.The benefit of using the incentive should outweigh the costs associated with implementing accessible design features. Anticipated • Housing Need Addressed: Housing for people with physical disabilities and Impact mobility challenges.The HNA indicates that an estimated 8%of the population of Lake Oswego, or 3,140 people, report having some form of disability, including 2.9%with an ambulatory disability. However,the number of people that would benefit from physical accessibility in housing— especially amongst the senior population—likely exceeds these numbers. • Population served: Seniors; people with disabilities • Income level:All income levels • Benefits and Burdens:This strategy is anticipated to benefit seniors and people with disabilities by increasing the stock of accessible housing units in the city. However, a potential trade-off of mandating accessibility features— especially for subsidized housing—is that it would reduce the total number of units that could be provided in a building (because bathrooms and other areas would need to be larger). While this may provide more accessible units, it could make some affordable housing projects less feasible.This could be a potential burden on low-income households by limiting the opportunity for production of housing they can afford. Incentive-based strategies would not carry the same burden.This will be an important consideration for implementation. • Housing tenure: For rent or sale 4 Lifelong Housing Program, RVCOG. https://rvcog.org/home/sds-2/lifelong-housing-program/ MIG, Inc. I Lake Oswego Housing Production Strategy 17 of 42 PP 22-0005 ATTACHMENT 4/PAGE 17 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Magnitude: Moderate—Depending on how the strategy is structured, it could lead to production of a significant number of new units with accessibility features. However, the strategy could also have the effect of deterring housing production if requirements are too onerous.To improve feasibility, requirements may be applied to some but not all of the units in new multi-family development. New elevator requirements may significantly deter new development, due to high cost. Time Frame Implementation: Medium Term Impact:The action can begin to have impact after it is implemented in the CDC or adopted as a financial incentive.The impact on housing production is expected to be longer-term. Implementation • Code bonus. Actions o Evaluate a potential new height/FAR bonus with input from housing stakeholders. o Consider whether a bonus should apply in all zones or only certain zones. o A potential accessibility bonus should be carefully considered in conjunction with any other potential bonus provisions (see Strategy 2.1). o Implement via CDC updates. • Code requirement. o Evaluate potential new accessibility requirements, working closely with non-profit and market-rate housing developers to understand how their projects might be impacted. o Conduct a pro forma analysis to evaluate potential impacts to project costs. o Implement via CDC updates. • Financial incentive. o Evaluate an incentive program (e.g., MUPTE,Strategy 2.4)to increase the number of dwelling units designed accessibly. o Work with developers to gather feedback on program parameters and interest. o Implement incentive program through Council action. Lead & Partners Lead: Lake Oswego Community Development Partners: Home Building Association of Greater Portland; Fair Housing Council of Oregon;AARP; Rogue Valley COG; non-profit and for-profit housing developers. 1.9 Use Tax Increment Financing (TIF) to support affordable housing development (D10) Description This strategy involves using TIF funds to support affordable housing development.This could involve creating one or more new TIF districts and incorporating affordable housing into new TIF district plans. For example,the City MIG, Inc. I Lake Oswego Housing Production Strategy 18 of 42 PP 22-0005 ATTACHMENT 4/PAGE 18 OF 42 Initial Strategy Recommendations Memo 2/8/2024 could create a TIF set-aside for affordable housing development programs within the district. TIF is a funding mechanism in which future tax revenues in targeted development or redevelopment areas (TIF districts/urban renewal areas) are diverted to finance infrastructure improvements and/or development. At the time of adoption,the tax revenue flowing to each taxing jurisdiction from the TIF district is frozen at its current level. Any growth in tax revenues in future years, due to annual tax increase plus new development, is the "tax increment" that goes to the district itself to fund projects in that area.TIF is a good tool to use in areas where new development or redevelopment is anticipated. While many different types of projects are eligible for TIF funds,for the most part,TIF funds are used to pay for physical improvements in the district itself. These projects can include participating in public/private partnerships with developers—including for affordable, workforce, or market-rate housing—or can be used to complete off-site public improvements that benefit and encourage new development in the area, or to acquire key sites.TIF funds also can be used to purchase land. TIF can be a direct source of funding for projects that meet public goals such as providing affordable housing, increased density, or mixed-use buildings that might not otherwise be feasible. In return for some public funding through TIF, private sector or non-profit developers agree to provide these benefits. Urban Renewal can also be used to purchase and reserve a key building site in the district to ensure that the development that takes place there meets public goals.The site can be offered to a development partner at reduced cost to provide the incentive. Considerations • There is direction from the Lake Oswego Redevelopment Agency(LORA)to expand the use of urban renewal in the city—particularly in the Foothills neighborhood. • TIF results in foregone tax revenue for the City and any other overlapping taxing districts for several decades, although it can (and should)grow the tax base in the long-term by supporting development that would not otherwise have occurred. • If a new TIF district were established, it would likely be several years before there would be sufficient revenue in the district to make significant investment in housing. • Coordination and agreement with other taxing districts is also important. • There are many examples of the use of TIF revenue for housing-related projects in Oregon. o In the Downtown Tigard TIF district, projects include the Atwell Off-Main project, which includes 165 market rate apartments, along with commercial space; and the current mixed-use development underway on Main Street near Fanno Creek, which will include a coffee roaster, office space, and 22 new apartments. o The City of Portland has participated in many housing projects in its districts over decades. For instance, over the last decade Prosper MIG, Inc. I Lake Oswego Housing Production Strategy 19 of 42 PP 22-0005 ATTACHMENT 4/PAGE 19 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Portland agency has contributed to the creation of hundreds of mostly affordable and workforce housing units in multiple buildings in the Lents Town Center.TIF also contributed to many of the early projects in the Pearl District. o The City of Beaverton Urban Renewal Agency's (BURA) budget allocates $300,000 to $3.3M per year in tax increment set aside for joint investment in affordable housing.This amounts to approximately 10%of the City's 5-year URA budget.' Anticipated • Housing Need Addressed: Government-subsidized affordable housing. Impact • Population served: Low-income households • Income level:0-80%AMI • Benefits and Burdens:This strategy would primarily benefit low-income households by increasing the City's capacity to support production of subsidized affordable housing. An intended outcome of urban renewal is increased property values and redevelopment within the district. If not balanced by adequate investment in housing production, urban renewal can lead to displacement of existing residents facing increased property taxes and development pressures.This can be a burden on existing low-income residents and should be considered carefully when designating new TIF districts. • Housing tenure: For rent or sale • Magnitude: High—An extended TIF district or new programs focused on housing have the potential to have a large impact on specific new projects with LORA partners.The impact of an expanded TIF program on housing production will depend on the revenue-generating potential of the district in question and the prioritization of housing projects among the broader range of projects eligible for urban renewal funding (e.g., general infrastructure projects, beautification, economic development, etc.). If housing is prioritized for funding, and development opportunities are available within the district, it can directly bring about housing production. Time Frame Implementation: Medium Term Impact:Analysis and planning for a new TIF district can take several years. Once a TIF district is established, it is expected to take several more years before adequate revenues are accrued to begin spending the urban renewal funds.The impact on housing production is expected over the medium or longer term. Implementation • Evaluate the potential for creation of one or more new TIF districts. Actions • Incorporate affordable housing into new district plans. • City Council to adopt URA boundaries and plan via ordinance. Lead & Partners Lead: Lake Oswego Redevelopment Agency Partners: Development stakeholders 5 Beaverton BURA Annual Report and Five-Year Action Plan, 2020. https://www.beavertonoregon.gov/1017/The- Beaverton-U rba n-Redevelopment-Agency MIG, Inc. I Lake Oswego Housing Production Strategy 20 of 42 PP 22-0005 ATTACHMENT 4/PAGE 20 OF 42 Initial Strategy Recommendations Memo 2/8/2024 1.10 Affordable Housing Preservation Inventory (F19) Description Prepare an inventory of subsidized and naturally occurring affordable housing to support proactive policies intended to preserve the affordable housing stock.The inventory would be used to target potential properties for implementation of an affordable housing preservation strategy. Considerations • This strategy could help offset some of the need for costly new construction. • The strategy would be a good starting point for a housing preservation strategy(Strategy 3.4). Understanding the city's stock of affordable housing could influence decision-making and prioritization for a preservation strategy. • The strategy would require staff time and resources to implement. Anticipated • Housing Need Addressed: Housing for low-income residents. Impact • Population served: Low-income households • Income level:0-80%AMI • Benefits and Burdens:This strategy is expected to benefit low-income residents by evaluating the city's stock of naturally occurring affordable housing, in support of a low-cost housing preservation strategy. No burdens on priority populations are anticipated. • Housing tenure: For sale or rent • Magnitude: Low—This strategy will not contribute to new housing production, but it will contribute to the preservation of existing affordable housing, and aids in tracking performance metrics. Time Frame Implementation: Medium Term Impact:This strategy can provide information and influence decision-making about housing preservation in the shorter term. However, impacts to the city's housing inventory are expected to be longer term. Implementation • Use Census data as a starting point. Actions • Work with property owners to document housing costs. • Update inventory on a regular basis. Lead & Partners Lead: Lake Oswego Community Development Partners: Property owners LONGER-TERM STRATEGIES The project team's initial recommendation is to implement the following strategies over the Longer Term (>5 years after HPS adoption). MIG, Inc. I Lake Oswego Housing Production Strategy 21 of 42 PP 22-0005 ATTACHMENT 4/PAGE 21 OF 42 Initial Strategy Recommendations Memo 2/8/2024 1.11 Modify System Development (SDC) fee schedule (CO2) Description SDCs are one-time charges assessed on new development to pay for the costs of expanding public facilities to serve new development.The City of Lake Oswego charges SDCs for water, sewer, parks, and transportation.The Lake Oswego School District also charges a construction excise tax(effectively an SDC) for new construction in the city(except for affordable housing). This strategy involves updating the City's SDC fee schedule so it is tied more directly to dwelling size. Currently, the City charges the same rates for all single- family homes regardless of size. Each unit of a duplex is also charged the same single-family fee. Multi-family housing (3 or more units) is charged a lesser fee per unit.' Scaling SDC fees to dwelling size would better match a development's charges to its actual cost or impact on the system. Smaller housing units, including some middle housing types,typically have less impact on water, sewer, or transportation facilities,given the reduced average size and occupancy of these units.This is not fully reflected in Lake Oswego's current SDC schedule, although the current schedule does include lower fees for multi-family housing units. The City could consider charging fees on a per-square-foot basis, rather than per- unit. Considerations • This strategy would reduce barriers to construction of more affordable, smaller-scale homes, including small single-family homes and middle housing. • The City sets its SDC fee schedule based on projected needs for system construction and improvements. Modifying the SDC methodology would likely increase fees for larger homes to make up for the reduced fees for smaller units. • Notes on current SDC strategies: o The City has already adopted regulations to waive SDCs for income- restricted affordable housing (80%or less of AMI) and for accessory dwelling units. o As part of the current Parks Plan 2040 update project (completion expected in 2025),the City will consider modifying its Parks SDCs to be scaled by housing unit size.That could provide a jumping off point and a model for a larger discussion about SDC schedules and potential future refinements to SDCs for other services. Anticipated • Housing need addressed:This strategy will facilitate development of smaller, Impact more attainable housing units that may be affordable to moderate-income and smaller households.The HNA indicates that 16%of new needed housing units over the next 20 years will be needed by those earning 80-120%AMI. • Population served: Moderate to higher income households;first-time homebuyers; single or two-person households; seniors 6 Lake Oswego Master Fees and Charges, 2024. https://www.ci.oswego.or.us/finance/master-fees-and-charges MIG, Inc. I Lake Oswego Housing Production Strategy 22 of 42 PP 22-0005 ATTACHMENT 4/PAGE 22 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Income level: 80%AMI and above • Benefits and Burdens:This strategy can increase production of smaller and lower-cost units which may benefit lower-income households, but is more likely to benefit moderate-or higher-income households. Smaller unit sizes may be of particular benefit to seniors due to lower maintenance and lower housing costs. No burdens on priority populations are anticipated. However, reducing SDCs for smaller units would likely need to be offset by increased SDCs for larger units,the cost of which would be passed onto homebuyers. It is anticipated that homebuyers that can afford larger units likely can also afford the increased cost. • Housing tenure: For rent or sale • Magnitude: Low to Moderate—Given current SDC incentives already available,this tool may have a low to moderate impact in incentivizing additional housing units. It may incentivize some projects to produce a greater number of marginally smaller units,thus increasing density and unit production somewhat. Time Frame Implementation: Longer Term Impact:The process of modifying a city's SDC methodology can be lengthy, as it is necessary to analyze projected needs for system construction and improvements and ensure that SDC revenues will be adequate to meet projected needs. Once a new SDC schedule is implemented,the impact to housing development is expected to be longer-term. Implementation • Work with City Council, other departments (Public Works, Finance, Parks, Actions etc.), and development stakeholders on policy discussions around modifying SDCs. • Potentially work with a consultant to develop an updated SDC methodology. • City Council action: Adopt modified SDC schedule by resolution or ordinance. Lead & Partners Lead: Lake Oswego Engineering Partners: Development stakeholders 1.12 Pre-Approved plan sets for ADUs (A21) Description Pre-approved (or permit-ready) plan sets have been reviewed in advance for conformance with zoning and building codes. Permit-ready plan sets can reduce housing development costs by reducing design and permit process times and fees.This strategy could be used to encourage more development of accessory dwelling units (ADUs) or middle housing types (see Strategy 2.5). Permit-ready plans can reduce costs in three main ways: • Streamlining permit processes—Permitting times are frequently cited by market-rate builders as a major barrier to housing production, as delays in permitting often translate into increased costs. MIG, Inc. I Lake Oswego Housing Production Strategy 23 of 42 PP 22-0005 ATTACHMENT 4/PAGE 23 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Reducing permit fees—The Building Department may decrease permit review charges for applicants because of the simplified review. • Reducing design fees—The builder would pay less in professional services to architects, etc. ADUs are a type of housing located on the same lot (and sometimes in the same structure) as a primary dwelling unit.They are generally smaller in size compared to the primary home and come in a number of different configurations. In Lake Oswego,there may be one ADU per primary home. ADUs offer opportunities for multigenerational living, with family members living on the same site but in a separate dwelling.ADUs can also be rented out, allowing the homeowners to supplement their income. Considerations • This strategy potentially lowers site and building design costs,which could lead to an increase in new ADU units and increase rental stock. • There are upfront costs associated with developing the pre-approved plans, including paying design fees for architects that develop the base plans, and dedicating staff time for working with the architects and reviewing the plans. • The City could partner with a university, design institution, or develop a competition to produce plans. • ADUs may be a better candidate for this program due to their small size and relative simplicity(as compared to middle housing, which may require more customization).Also, homeowners wanting to build an ADU may be more interested in pre-made designs than experienced homebuilders. Anticipated • Housing Need Addressed: Increased housing choices within existing Impact neighborhoods. Increased rental opportunities. Options for multigenerational housing. Opportunities for aging in place. • Population served: Moderate to higher-income households; seniors; people with disabilities; multigenerational households; renters • Income level: Likely 80%AMI and above • Benefits and Burdens:ADUs are a popular choice for elders who wish to live on the same property as their children/grandchildren (ADUs are sometimes referred to as "granny flats"). As such,this strategy can offer benefits to seniors and multigenerational households. Because ADUs are often single- level, small homes,they may also benefit people with disabilities—with the potential added benefit of enabling family to live nearby for assistance and support. No burdens on priority populations are anticipated. • Housing tenure: For rent • Magnitude: Moderate—This strategy would likely lead to more development of ADUs in the city. Pre-approved plans can lower the logistical barriers for prospective ADU builders, and can be paired with a faster, cheaper permitting process.This could increase the number of available rental properties and increase housing choices in existing developed neighborhoods. However,the strategy would have a limited impact on overall housing supply. MIG, Inc. I Lake Oswego Housing Production Strategy 24 of 42 PP 22-0005 ATTACHMENT 4/PAGE 24 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Time Frame Implementation: Longer Term Impact:The action is expected to have impact over the longer term. Implementation • Develop ADU plans in collaboration with one of the partners listed below. Actions • Work with the Building Department to ensure plans meet all City Code standards, approve the plans, and adopt reduced fees for the plans. • Work with the Building Department to implement a streamlined review process. Lead & Partners Lead: Lake Oswego Community Development (including Building Department) Partners: Universities, design institutions, and/or design firms MIG, Inc. I Lake Oswego Housing Production Strategy 25 of 42 PP 22-0005 ATTACHMENT 4/PAGE 25 OF 42 Initial Strategy Recommendations Memo 2/8/2024 2. Strategies Needing Further Discussion The following strategies need further discussion by the HPS Task Force, Planning Commission, and City Council before the project team can make a recommendation as to whether they should be included in the HPS.These strategies have not yet received clear support from these bodies, but are expected to have a meaningful impact on housing production. 2.1 Zoning incentives for affordable housing (A03) Description This strategy involves allowing additional height, density, bonus floor area ratio (FAR), or relaxing other zoning standards for affordable housing. The City currently allows a limited height or density bonus for affordable developments in the WLG-OC and R-DD zones.The City could consider modifying the bonus, expanding it to apply in more zones, or adopting new bonuses, such as reduced open space for affordable housing. Considerations • Zoning incentives likely would not incentivize private developers to include affordable units in their projects.These types of bonuses typically don't lead to mixed-income development on their own unless the base entitlements are very low and there's a lot of demand for more density. • Incentives would more likely be a way to allow affordable developers to make more efficient use of land and potentially better compete for land with market-rate developers. Non-profit housing providers have indicated that such bonuses can be very effective in improving the financial feasibility of their developments. • Senate Bill 8 (2021 session, encoded as ORS 197A.445) requires cities to allow affordable housing that meets specific criteria on a wide range of sites and provides height and density bonuses. If the height/density bonus exceeds local bonuses for affordable housing,the SB 8 bonus will apply directly. Potential bonus provisions in Lake Oswego could be crafted to be consistent with or go above and beyond SB 8 requirements. Anticipated • Housing need addressed: Government-subsidized affordable housing for Impact low-income households.The HNA indicates that 30%of future needed housing units by 2043 will be needed by low-,very low-, or extremely low- income households, and also identified a current gap in supply of affordable units. • Population served: Low-income households • Income level:0-80%AMI • Benefits and Burdens:This strategy would benefit low-income households by increasing the feasibility of affordable developments, thereby enabling more such projects to be built and potentially enabling more units to be included within each project. No burdens on priority populations are anticipated. • Housing tenure: For rent or sale MIG, Inc. I Lake Oswego Housing Production Strategy 26 of 42 PP 22-0005 ATTACHMENT 4/PAGE 26 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Magnitude: Low to Moderate—This strategy might lead to a small percent increase in the number of units that are possible for affordable housing developments.This incentive may help increase affordable production in projects that are already being pursued but is unlikely to initiate new projects on its own. While the developer and property manager must demonstrate compliance, the administrative burden should be kept to a minimum to reduce added time and cost, both for the applicant and the City. Time Frame Implementation:To be determined based on further discussion Impact:The action can begin to have impact after it is implemented in the CDC. The statutory bonuses under SB 8 (ORS 197A.445) are already available.The impact on supply of affordable housing is expected to be longer-term. Implementation • Consult with affordable housing providers to determine what type(s) of Actions incentives would be most beneficial in supporting their work. • Evaluate SB 8 to determine how the statutory bonuses compare to the potential new bonuses. • City Council Action: Implement through CDC updates. Lead & Partners Lead: Lake Oswego Community Development Partners:Affordable housing providers 2.2 Construction Excise Tax (CET) (D09) Description CET is a one-time tax on construction projects and is a potential funding source for affordable housing. Cities and counties may levy a CET on residential construction for up to 1%of the project's permit value; or on commercial and industrial construction with no cap on the rate of the CET. The allowed uses for CET funding are defined by state statute'and can include support for a variety of housing-related projects and programs. • Residential CET revenues must be allocated as follows: o Up to 4%can be used to cover administrative expenses incurred from implementation of the CET. o 50% must be spent on developer incentives (e.g., permit fee and SDC reductions,tax abatements, or finance-based incentives). o 35% may be used flexibly for affordable housing programs. o 15%flows to Oregon Housing and Community Services (OHCS)for homeownership programs. OHCS's policy is to spend the revenue in communities where it's collected. • Commercial/industrial CET has fewer restrictions on how revenues are spent: o 50% must go towards housing-related programs (not necessarily limited to affordable housing). o 50% is unrestricted and can be used as the City sees fit. Oregon Revised Statutes 320.192-195. MIG, Inc. I Lake Oswego Housing Production Strategy 27 of 42 PP 22-0005 ATTACHMENT 4/PAGE 27 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Some cities have used CET to pay for gap financing of new affordable development, backfilling SDC waivers, acquisition of properties for affordable housing preservation, and down payment assistance for first-time homebuyers. As an example,the City of Eugene adopted a CET in 2019, and has used $2.2 million in revenues to leverage $45 million to fund the construction of 178 new affordable homes.' Additional examples are detailed in Appendix A: CET Supplemental Memo. Considerations • CET is one of the few available sources of the few available locally-controlled funding streams for affordable housing. • Several other strategies under consideration for the HPS would depend on adoption of a new funding source (see Section 3. Contingent Strategies, below). Without a new funding stream, the City could not participate meaningfully in those strategies. • CET is a tax on development, meaning that it raises costs for construction of commercial, industrial, and/or market-rate residential housing.The statute exempts regulated affordable housing, public buildings, hospitals, and certain other types of facilities. The City can also choose to exempt other types of development(e.g., multi-family housing, accessible housing,or small housing units) or exclude residential development altogether. For example,the City of Tigard exempts ADUs of 1,000 sq ft or less and projects valued at less than $50,000; and allows cottage clusters, courtyard units, and quadplexes to be exempted from 75%of the CET.' • Alternatively, by structuring a policy with offsetting incentives or tools for housing to reduce development barriers,the City could potentially limit the impact on feasibility for certain housing projects.This strategy can be paired with other complementary strategies to increase its effectiveness. • Because CET revenue is development-derived, it will fluctuate with market cycles. Anticipated • Housing need addressed: Government-subsidized affordable housing for Impact low-income households. CET implementation can be tailored to prioritize certain income levels or other housing needs, such as extremely low-income households (earning below 30%AMI) or residents needing housing with wrap-around support services. • Population served: Low-income households • Income level:0-80%AMI • Benefits and Burdens:This strategy would primarily benefit low-income households by increasing the City's capacity to support production of subsidized affordable housing and other housing programs. Because CET funds offer flexibility for the local government to choose which projects and $ City of Eugene,Affordable Housing Trust Fund. https://www.eugene-or.gov/4232/Affordable-Housing-Trust-Fund 9 Tigard Municipal Code, Chapter 3.90 Construction Excise Tax. https://library.gcode.us/lib/tigard or/pub/municipal code/item/title 3-chapter 3 90 MIG, Inc. I Lake Oswego Housing Production Strategy 28 of 42 PP 22-0005 ATTACHMENT 4/PAGE 28 OF 42 Initial Strategy Recommendations Memo 2/8/2024 programs to support,the City has opportunities to direct funding toward projects that benefit priority populations that need additional support. A CET has the potential to inhibit some development, including housing development(if a residential CET is pursued). However,the City has options to avoid impacts to the types of housing most needed by priority populations, thereby limiting burdens on these communities.Affordable housing already must be exempt. As noted above,the City could also exempt multi-family housing, small units,ADUs, housing that meets Universal Design criteria, and other types.This is a way to address or mitigate potential burdens. • Housing tenure: For rent or sale • Magnitude: High—The revenue potential of a CET in Lake Oswego is potentially quite high. Over the last five years,the value of residential construction and addition permits, including mixed-use projects, has totaled over$385M, or an average of$77M per year.Applying a standard 1%CET to this activity could have generated as much as$750k per year for a CET housing fund.A CET applied to commercial permits, which includes multi- family development, could generate an even greater$850k per year to a housing fund, based on the five-year average. (See Appendix A: CET Supplemental Memo for a more detailed analysis of revenue potential.) The CET is a tax on new development activity, and thus has the impact of raising costs on developers. Time Frame Implementation:To be determined based on further discussion Impact:This strategy may take several years for funds to accumulate to an amount that could be used to support development of housing. However, cities that have adopted a CET have seen real results in terms of housing production within 4 to 5 years. See above for the City of Eugene example. Implementation • Evaluate a potential approach. Include projections of potential revenue and Actions determine what programmatic goals could be accomplished with revenue. Consider both residential and commercial/industrial options. • Analyze potential impacts to development. • Engage with the development community—including both housing providers that could benefit from CET funds, and developers that might be impacted by the tax. • City Council could impose the CET by adoption of an ordinance or resolution that conforms to the requirements of ORS 320.192—ORS 320.195. • If directed, create a plan for the use of CET funds, in collaboration with housing providers, low-income communities, and other historically marginalized communities. Lead & Partners Lead: City of Lake Oswego Community Development Partners: Finance Department; local developers; non-profit housing partners could implement funded programs MIG, Inc. I Lake Oswego Housing Production Strategy 29 of 42 PP 22-0005 ATTACHMENT 4/PAGE 29 OF 42 Initial Strategy Recommendations Memo 2/8/2024 2.3 Vertical Housing Development Zone Tax Abatement (E03) Description This abatement is intended to incentivize multi-story mixed-use development and affordable housing in targeted areas.To qualify, a project must have improved, leasable, non-residential development on the ground floor and residential development on the floors above.The program allows a 10-year partial property tax exemption of 20% per floor(and up to 80%total)for mixed- use developments within the designated Vertical Housing Development Zone (VHDZ). The exemption is only allowed for the improvements to the property(not the land itself), unless the development provides low-income housing; in that case, the land can also be exempted from property taxes at the same rate as the improvements (on a per-floor basis).The low-income units must remain affordable for at least as long as the length of the tax exemption.The tax exemption is available for both new construction and rehabilitation projects. (Authorized by ORS 307.841-867) Considerations • A pilot VHDZ project was recently approved for the North Anchor development site.The City could consider a more broadly-applicable program in an area (or areas) where it wants to encourage mixed-use development. • As mentioned above under Strategy 1.3, the City and participating taxing districts will lose property tax income for the duration of the tax exemption, reducing revenue for City services and revenue for participating taxing districts. Some taxing districts expressed some resistance to the pilot VHDZ proposal at North Anchor due to this reduction in revenue, particularly as the VHDZ program is intended to produce market-rate housing. • VHDZ has the potential to displace residents by encouraging redevelopment in certain areas. Per state law, a city must consider the potential for displacement of households within a proposed VHDZ before designating the zone. Anticipated • Housing need addressed:This strategy has the potential to increase Impact development of high-density housing in targeted areas of the city. Stakeholders in the HPS process identified a particular need for more multi- family housing outside the Town Center. • Population served: Low-income to higher-income households • Income level:All incomes • Benefits and Burdens:This strategy is expected to primarily benefit moderate or higher income households, rather than low-income populations, because developers are not required to include affordable units to take advantage of a VHDZ. However,the extra exemption for affordable units may incentivize developers to include those units,thereby benefiting low-income populations. Further, increasing housing options in mixed-use areas with good access to services has the potential to benefit various populations, including seniors looking to downsize and people with disabilities who do not drive. MIG, Inc. I Lake Oswego Housing Production Strategy 30 of 42 PP 22-0005 ATTACHMENT 4/PAGE 30 OF 42 Initial Strategy Recommendations Memo 2/8/2024 As noted above, VHDZ has the potential to displace residents by encouraging redevelopment in certain areas—which could burden low-income households. Equity considerations, such as a displacement risk analysis and anti-displacement measures, should be part of implementation for this strategy. • Housing tenure: For rent or sale • Magnitude: Low to Moderate—This abatement may have a lower impact on new housing production than the low-income housing tax incentives because mixed-use housing tends to produce fewer units, and also because this program is more complicated for the City and applicants. If there are key districts where the City would like to incentivize more vertical buildings and mixed-use,this may be appropriate. If multiple programs are available,the VHDZ may compete poorly with more attractive and easier to use tax incentives. Time Frame Implementation:To be determined based on further discussion Impact:The tax exemption can be used once it is adopted, and for as long as the City offers the exemption.The impact on housing supply is expected to be longer-term. Implementation • Define VHDZ geography(ies).Analyze displacement risk and consider anti- Actions displacement strategies as part of this process. • Work with other taxing jurisdictions to gain approval. • City Council action: Adopt tax exemption program by resolution or ordinance. Lead & Partners Lead: Lake Oswego Community Development Partners: Lake Oswego Finance Department; overlapping taxing jurisdictions 2.4 Multiple Unit Property Tax Exemption (MUPTE) (E04) Description This exemption can be used to encourage multi-family or middle housing with particular features or at particular price points by offering qualifying developments a partial property tax exemption for 10 years (or longer,for housing subject to affordability agreements). It can be offered to new development or existing housing that is converted to meet the eligibility criteria. MUPTE is a flexible tax abatement that can be used in various ways to encourage needed housing.The City has broad discretion as to how to structure the program. Eligibility criteria could include requirements for affordability, accessibility/universal design, unit size, or other desirable features. The City must designate specific areas where the MUPTE applies, unless including affordability as a criterion, in which case the whole city could be eligible. (Authorized by ORS 307.600-637) MIG, Inc. I Lake Oswego Housing Production Strategy 31 of 42 PP 22-0005 ATTACHMENT 4/PAGE 31 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Considerations • Could incentivize multi-family developers to incorporate desirable features in their projects, such as accessible units or family-size units. Affordability to lower-income households could also be an eligibility criterion, if desired. • As noted below,this strategy could outcompete affordable housing tax incentives with for-profit developers who would rather build market-rate housing in some cases. Anticipated • Housing Need Addressed:This strategy has the potential to increase Impact development of multi-family housing in targeted areas of the city. Stakeholders in the HPS process identified a particular need for more multi- family housing outside the Town Center. Depending on how it is structured, this program could also encourage apartments with family-sized units (2-3 bedrooms) and accessible housing options for seniors—both of which were also identified by stakeholders as gaps in the local market. • Population served: Depends on how the program is structured; could be targeted to benefit low-income households, people with disabilities, larger families, etc. • Income level: Depends on how the program is structured. • Benefits and Burdens:This strategy has the potential to benefit various priority populations by encouraging housing needed by those communities (accessible units,family units, affordable units, etc.).The City could also target a MUPTE program to specific geographies to target housing development in neighborhoods where it is most needed.A challenge for the City will be to determine how best to balance those various needs to determine what housing types or features are most appropriate to include as criteria for the MUPTE abatement.This should be considered in the broader context of the HPS to ensure that the City's actions benefit all priority populations in equitable ways. No burdens on priority populations are anticipated for this strategy, provided it is implemented in the ways described above. • Housing tenure:Typically for-rent. • Magnitude: Moderate—This strategy could encourage production of more multi-family units that meet housing needs not currently being met by the private market. However this program does not necessarily require the provision of affordable housing;therefore, it may outcompete affordable housing tax incentives with for-profit developers who would rather build market-rate housing.This program should be carefully considered as competitive with the low-income tax exemptions. However,the MUPTE can also be designed to require affordable units as well. Time Frame Implementation:To be determined based on further discussion Impact:The MUPTE can be used once it is adopted, and for as long as the City offers the exemption.The impact on housing supply is expected to be longer- term. Implementation • Further evaluate the various options for structuring the MUPTE program to Actions determine whether—and how—it should be implemented. MIG, Inc. I Lake Oswego Housing Production Strategy 32 of 42 PP 22-0005 ATTACHMENT 4/PAGE 32 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Consult with developers and housing providers to determine their level of interest. • Determine desired eligibility criteria (e.g., affordability, accessibility, etc.). • Seek input from overlapping taxing districts on their willingness to support the exemption. • City Council Action: Adopt tax exemption program by resolution or ordinance. Lead & Partners Lead: Lake Oswego Community Development Partners: Lake Oswego Finance Department; overlapping taxing jurisdictions 2.5 Pre-approved plan sets for middle housing typologies (A20) Description The pre-approved plan sets strategy discussed above (Strategy 1.12) could also be used to encourage more development of middle housing typologies, such as duplexes, triplexes, and cottage clusters. Considerations • This could help attract developers that typically develop only single-family housing to get involved. • Middle housing builders have expressed support for this strategy and believe it would be frequently used and would cut down on costs. • A potential consequence is too much architectural uniformity. • Template plans may not work on all lot layouts or provide enough personal design flexibility, so they would not be appropriate for all projects. Lake Oswego has significant topography and often requires customized designs, so template plans for middle housing may be less feasible. • See other considerations under Strategy 1.12, Pre-Approved Plan Sets for ADUs. Anticipated • Housing Need Addressed: Increased housing choices, including Impact homeownership options. • Population served: Moderate to higher-income households • Income level: Likely 80%AMI and above • Benefits and Burdens:This strategy is expected to primarily benefit moderate-or higher-income households, rather than low-income populations. However,the strategy may support more affordable homeownership opportunities via middle housing development—thereby increasing the overall stock of attainable ownership housing available in the community.This has the potential to benefit people of color and other households that have faced systemic barriers to homeownership. Middle housing types with smaller footprints can also benefit seniors looking to downsize. Potential burdens from this strategy are that facilitating middle housing development could increase likelihood of demolition of older low-cost homes and displacement of low-income residents.This strategy should be MIG, Inc. I Lake Oswego Housing Production Strategy 33 of 42 PP 22-0005 ATTACHMENT 4/PAGE 33 OF 42 Initial Strategy Recommendations Memo 2/8/2024 paired with a displacement risk analysis and potentially displacement mitigation measures to support low-income residents as well as inclusive engagement, home repair assistance, and other programs that support low- income homeowners. • Housing tenure: For sale or rent • Magnitude: Moderate—This strategy would likely lead to more development of middle housing in the city.The cost savings to builders wouldn't necessarily translate to reduced sale prices or rents, but would have the potential to deliver more housing. In addition, many forms of middle housing will have a lower market-rate price point than detached single-family housing. Time Frame Implementation: Longer Term Impact:The action can begin to have an impact after the permit-ready plans are pre-approved and made available to builders. Implementation • Evaluate which housing type(s)to adopt plans for and which programmatic Actions approaches to pursue. • Develop middle housing type plans in collaboration with one or more of the partners listed below. • Work with the Building Department to ensure plans meet all City Code standards, approve the plans, and adopt reduced fees for the plans. • Work with the Building Department to implement a streamlined review process. Lead & Partners Lead: Lake Oswego Community Development (including Building Department) Partners: Universities, design institutions, and/or design firms 3. Contingent Strategies The following strategies describe various ways that the City could allocate funds to support affordable housing production or preservation. Each of these strategies are contingent on adoption of a new funding source, such as Construction Excise Tax,for the City to participate meaningfully. Currently,the City has very little in the way of uncommitted resources that it can use to support affordable housing. 3.1 Housing Trust Funds (D03) Description Housing Trust Funds are a public sector tool used to direct financial resources to support a variety of affordable housing activities. Housing Trust Funds are not revenue sources themselves, but rather are tools for consolidating revenue, planning for how the funds are spent, and directing them to housing programs. A Construction Excise Tax could be a potential revenue source (see Strategy 2.2). Other sources could include the City's general fund,TIF funds, state grant funding, and/or other types of taxes or fees. For example,the City of Ashland MIG, Inc. I Lake Oswego Housing Production Strategy 34 of 42 PP 22-0005 ATTACHMENT 4/PAGE 34 OF 42 Initial Strategy Recommendations Memo 2/8/2024 dedicates a portion of its local marijuana sales tax to fund Ashland's Affordable Housing Trust Fund.1° Considerations • Provides flexibility for opportunity-based investment. However, some funding sources (e.g., CET) have requirements for how funds are spent. • Takes time to accumulate enough to make a difference and requires consistent investment with a long-term outcome perspective. • Relies on identifying a sustainable funding source with sufficient revenue to have impactful contributions. • There is potentially a high cost to seed the program. Anticipated • Housing Need Addressed: Government-subsidized affordable housing. Impact • Population served: Low-income households • Income level:0-80%AMI • Benefits and Burdens:This strategy would primarily benefit low-income households by increasing the City's capacity to support production of subsidized affordable housing and other housing programs. Because Housing Trust Funds offer flexibility for the local government to choose which projects and programs to support,the City has opportunities to direct funding toward projects that benefit priority populations that need additional support.This could include extremely-or very-low income residents and those needing wraparound support services. No burdens on priority populations are anticipated. • Housing tenure: For rent or sale • Magnitude:The amount of housing production depends on the funds raised and contributed through these resources. See Strategy 2.2 (CET)for further evaluation. In and of itself,the strategy does not result in production of units. Time Frame Implementation:To be determined based on further discussion. Contingent on adoption of a new revenue source. Impact:This strategy may take several years for funds to accumulate to an amount that could be used to support development of housing. Implementation • Identify a potential funding source (or sources). Actions • Identify priorities for how funds will be spent. • Continuously fund a Housing Trust Fund. Lead & Partners Lead: Lake Oswego Community Development Partners: Nonprofit affordable housing providers 10 City of Ashland, Housing Trust Funds. https://www.ashland.or.us/page.asp?navid=10828 MIG, Inc. I Lake Oswego Housing Production Strategy 35 of 42 PP 22-0005 ATTACHMENT 4/PAGE 35 OF 42 Initial Strategy Recommendations Memo 2/8/2024 3.2 Low-interest loans/Revolving loan fund (D13) Description This strategy would provide low-interest loans or revolving loans for affordable housing production, preservation, or maintenance activities. Housing Repair and Weatherization Assistance is offered to low-income households through various County governments—the City could contribute funding for use within Lake Oswego. An example of offering loans for housing production is the City of Tigard's Middle Housing Revolving Loan Fund.This fund was created by the Tigard City Council in 2021, using funds from the American Rescue Plan Act, and was made available in September 2023.The fund is managed by the Network for Oregon Affordable Housing, Craft3, and the Community Housing Fund, and will provide short-term construction lending to developers building middle housing.At least 30 percent of the units must be made available to lower-income buyers participating in down payment assistance programs. Considerations • Opportunities depend on what type of loans are offered. • Loans for home repair could help prevent displacement by assisting existing low-income residents remain in their homes. • Loans for affordable housing development could help non-profit developers bridge gaps in construction lending. Anticipated • Housing Need Addressed: New or rehabilitated housing for low-income Impact households. • Population served: Low-income households • Income level:0-80%AM I • Benefits and Burdens:This strategy would primarily benefit low-income households by increasing the City's capacity to support production or preservation of affordable housing, or to contribute to programs that promote housing stability for low-income residents. No burdens on priority populations are anticipated. • Housing tenure: For rent or sale • Magnitude: High (if funded via a new revenue source; else Low)—This strategy can be used to participate in public/private partnerships and administer the types of programs discussed in previous sections.The benefit of this program is that it regenerates funding as loans are repaid to be used again on future projects. For developers who need financing for their projects (which is almost always the case), offering lower-interest loans that may have other favorable terms can have a large impact on the feasibility of a development, as interest rates are a significant cost factor over time. Time Frame Implementation:To be determined based on further discussion. Contingent on adoption of a new revenue source. Impact:The impact on housing production or preservation is anticipated to be longer term. MIG, Inc. I Lake Oswego Housing Production Strategy 36 of 42 PP 22-0005 ATTACHMENT 4/PAGE 36 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Implementation • Identify a potential funding source (or sources). Actions • Identify priorities for how funds will be spent. • Develop loan programs, potentially in partnership with lending institutions. Lead & Partners Lead: Lake Oswego Community Development Partners: Housing developers and providers; Clackamas County and other organizations offering home repair and weatherization services 3.3 Community Land Trusts (F03) Description Community land trust (CLT) is a model wherein a community organization owns land and provides long-term ground leases to low-income households to purchase homes on the land, agreeing to purchase prices, resale prices, equity capture, and other terms.This model allows low-income households to become homeowners and capture some equity as the home appreciates, but ensures that the home remains affordable for future homebuyers. Proud Ground is an example of a CLT working in the region. Proud Ground partners with other organizations to build the homes,then manages the sales, ground leases, and other programs. Habitat for Humanity uses a similar approach to CLT to maintain the affordability of the homes it builds—largely through volunteer labor and limiting resale prices, while allowing owners to accrue home equity. Portland Region Habitat for Humanity is the local affiliate organization. Cities can support CLT and other models for affordable homeownership by providing land, grants/loans, direct funding, or leveraging state/regional resources. Considerations • Dependent on partnership,funding stream, and land acquisition. • Financing the initial acquisition of land and securing enough equity to scale the strategy are key challenges for the CLT model.Across the country, land trusts use a variety of land acquisition mechanisms,from private financing and municipal subsidies to relationships with land bank entities. • CLTs are unlikely to produce substantial unit numbers unless significant resources are raised from a broad mix of funding partners, but they can provide permanent affordability of the units they develop.The City's funds can help to leverage investments from other partners. Anticipated • Population served: Low-income households Impact • Income level:0-80%AMI Benefits and Burdens: In addition to benefitting low-income households, depending on how it is administered,this strategy has the potential to benefit communities that have faced structural barriers to homeownership— particularly people of color and other marginalized communities. No burdens on priority populations are anticipated. • Housing tenure: For sale MIG, Inc. I Lake Oswego Housing Production Strategy 37 of 42 PP 22-0005 ATTACHMENT 4/PAGE 37 OF 42 Initial Strategy Recommendations Memo 2/8/2024 • Magnitude: Moderate (if funded via a new revenue source; else Low)—The effectiveness and impact of CLT programs is highly reliant on the partner who is developing and administering the property. Another factor is the availability of residential building sites large enough to accommodate multiple housing units, though CLT model can be applied to small developments as well. Cities can provide entitlements, incentives, and perhaps funding to the development partner(usually a non-profit agency). This is one of the few models to provide lower-cost ownership opportunities as opposed to rental opportunities. Time Frame Implementation:To be determined based on further discussion. Contingent on adoption of a new revenue source. Impact:Timing of impact depends on partnership opportunities with a CLT. Given availability of funds, impact to housing production would be expected to occur over the longer term. Implementation • Work with CLTs to discuss opportunities in Lake Oswego. Actions • Take action on partnership models and programs that best benefit the organization and the City's financial and/or administrative capacity. • Potentially provide on-going financial support through development/ rehabilitation grants, homeownership grants/loans, donation of City-owned land, and/or an annual funding set-aside. Lead & Partners Lead: Lake Oswego Community Development Partners: Proud Ground, Habitat for Humanity, and/or other nonprofit developers of for-sale units 3.4 Preserving low-cost rental housing to mitigate displacement (F05) Description This strategy involves preventing displacement and preserving "naturally occurring" affordable housing through acquisition, low-interest loans/revolving loan fund for preservation, and/or code enforcement. Most low-income households do not live in the limited supply of subsidized affordable units that are available. Rather they live in market rate housing that is "naturally" more affordable due to the location, age, size, condition, or other factors that lead to lower rent or cost. Often it is much more cost effective for housing agencies to try to preserve this type of housing(e.g., a mobile home park)than try to create an equivalent number of new units. While continuing to produce new higher-standard affordable units is necessary and key goal, protecting the units that are currently low cost is also important. Considerations • Dependent on partnership and funding stream. • Acquisition of existing low-cost housing is only possible if property owners are willing to sell. • Lake Oswego does not have a large stock of naturally occurring affordable housing. However,what's there is important to preserve if possible. MIG, Inc. I Lake Oswego Housing Production Strategy 38 of 42 PP 22-0005 ATTACHMENT 4/PAGE 38 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Anticipated • Housing Need Addressed: Government-subsidized affordable housing. Impact • Population served: Low-income households • Income level:0-80%AMI • Benefits and Burdens:This strategy is expected to benefit low-income residents by ensuring preservation of the city's low-cost housing stock, and ensuring it remains affordable long-term. No burdens on priority populations are anticipated. • Housing tenure: For rent • Magnitude: Moderate (if funded via a new revenue source, and if inventory is available; else Low)—This can be an effective approach and is a major focus of the Portland Housing Bureau,for instance, which has bought large older apartment complexes for preservation, and hotels/motels for conversion. In becoming involved in areas or properties where housing is naturally less expensive, it can be important to be cautious and take a "first do no harm" approach, as attempts to improve or invest in these properties can sometimes have the unintended effect of raising property value and rents/housing costs. Time Frame Implementation:To be determined based on further discussion. Contingent on adoption of a new revenue source. Impact:This strategy can begin to have an impact after the City has conducted an inventory of affordable housing and accumulated adequate funds to contribute to housing acquisition. Impact to the City's supply of affordable housing is expected to be longer term. Implementation • Identify a potential funding source (or sources). Actions • Identify affordable housing units to preserve (see Strategy 1.10. • Develop loan programs, potentially in partnership with lending institutions. Lead & Partners Lead: Lake Oswego Community Development Partners: Housing property owners; nonprofit affordable housing providers MIG, Inc. I Lake Oswego Housing Production Strategy 39 of 42 PP 22-0005 ATTACHMENT 4/PAGE 39 OF 42 Initial Strategy Recommendations Memo 2/8/2024 4. Not Recommended The following strategy is not recommended for implementation in the HPS because it is not expected to have a meaningful impact on housing production in Lake Oswego. 4.1 Homebuyer Opportunity Limited Tax Exemption Program (HOLTE) (E06) Description The purpose of this program is to encourage homeownership among low-and moderate-income households and to stimulate the purchase, rehabilitation, and construction of residences in certain areas as a form of infill development. The program allows a limited 10-year property tax exemption to owner-occupied single-unit housing that has a market value upon completion of no more than 120%of median sales price of dwelling units located within the city (or a lesser value adopted by the jurisdiction).The tax exemption can be granted for up to 10 successive years, and only applies to the value associated with property improvements, not the land value. While not required by statute, local governments can establish income criteria for eligible homebuyers. For example,the City of Portland limits eligible homebuyers to those earning no more than 100%of the area median income.' Single-family housing units,townhomes, multi-family homeownership units (i.e., condos), and manufactured housing are eligible for the exemption. Eligible units can be new construction or rehabilitated existing homes.The housing must be in an area defined and designated by the City.The City also would create criteria and establish required design elements or public benefits that would be applied to properties using the exemption. (Authorized by ORS 307.651-687) Considerations • Strategy to facilitate homeownership among moderate-income households. • Effectiveness depends on the local housing market and land costs.The recent median sale price in Lake Oswego is$780k, so this program could in theory apply to home values of$940k(120%of median).An income of about $200k is needed to afford the median home with a 20%down payment. With less of a down payment, even higher incomes would be needed.The HNA found that the number of homes selling at the lower end (less than $500k for instance)was a small share of the overall inventory. • The City could consider lower sales price limits (below 120%of median sales price), but this would be less enticing to developers given the profit potential of market-rate development in Lake Oswego. Anticipated • Housing Need Addressed: Homeownership options for moderate-income Impact households.The HNA indicates a need for 1,024 new ownership units (52% of new needed housing) over the 20-year period.The HNA also indicates that 11 City of Porland, HOLTE Program. https://www.portland.gov/phb/holte/sale-requirements MIG, Inc. I Lake Oswego Housing Production Strategy 40 of 42 PP 22-0005 ATTACHMENT 4/PAGE 40 OF 42 Initial Strategy Recommendations Memo 2/8/2024 16% of all new needed units will need to be affordable for moderate-income households (80-120%AMI). • Population served: Moderate-income households • Income level:80-120%AMI • Benefits and Burdens: If calibrated effectively, this strategy would be expected to benefit moderate-income households by increasing affordable homeownership opportunities.This would especially benefit first-time homebuyers that would otherwise be challenged to purchase a home in Lake Oswego, and potentially seniors looking to purchase a downsized home.This strategy also has the potential to benefit communities that have historically faced structural barriers to homeownership—particularly people of color and other marginalized communities. No burdens on priority populations are anticipated. • Housing tenure: For sale • Magnitude: Low—This program is expected to have limited impact due to the land and housing costs that prevail in Lake Oswego. Unfortunately,there will be few opportunities for appropriate homes for lower-income first-time homebuyers. While this exemption would certainly help with homebuyer finances, it would not apply to land cost, and there are few homes or neighborhoods in the community that are low-cost candidates for rehabilitation. Time Frame Implementation: Not Recommended Impact:The HOLTE can be used once it is adopted, and for as long as the City offers the exemption.The impact on housing supply is expected to be longer- term. Implementation • Define eligibility and design criteria. Actions • Work with other taxing jurisdictions to gain approval. • City Council action:Adopt tax exemption program by resolution or ordinance. Lead & Partners Lead: Lake Oswego Community Development Partners: Lake Oswego Finance Department; overlapping taxing jurisdictions MIG, Inc. I Lake Oswego Housing Production Strategy 41 of 42 PP 22-0005 ATTACHMENT 4/PAGE 41 OF 42 Initial Strategy Recommendations Memo 2/8/2024 Appendix A: CET Supplemental Memo The attached memo provides additional information about Construction Excise Tax (CET). An initial version of this memo was included in the agenda packet for the Planning Commission's January 8, 2024 Work Session.Additional information has been added, examining potential CET revenue generation based on past permit data in Lake Oswego. MIG, Inc. I Lake Oswego Housing Production Strategy 42 of 42 PP 22-0005 ATTACHMENT 4/PAGE 42 OF 42 ATTACHMENT 5 Appendix A: CET Supplemental Memo to City of Lake Oswego from Kate Rogers and Matt Hastie, MIG Brendan Buckley,Johnson Economics re Lake Oswego Housing Production Strategy Supplemental Information about Construction Excise Tax date February 8, 2024 Introduction This memorandum provides additional information about Construction Excise Tax(CET) and is intended to supplement the Initial Housing Strategy Recommendations memo dated February 8, 2024. An initial version of this memo was presented to the Lake Oswego Planning Commission as part of their January 8, 2024 work session agenda packet.The memo has since been expanded to include additional information. This memo provides further information about how a handful of other cities in Oregon are implementing CET programs to support affordable housing.The memo looks at CET programs in Tigard, Bend, Newport, Eugene, and Milwaukie. In addition, the following cities have also adopted a CET: Grants Pass, Medford, Corvallis, Cannon Beach, Hood River, and Portland (and likely others). This memo also provides an estimate of potential revenue generation from a CET if established in Lake Oswego, based on past permit data. Case Study Examples NOTE: According to state statute, all cities are required to exempt the following types of development from CET: regulated affordable housing, public buildings, places of worship, public and private hospitals, agricultural buildings, nonprofit facilities, long-term care facilities, residential care facilities, continuing care retirement communities, and housing replacing homes destroyed by a wildfire or similar event.' Tigard Adoption and Tax Rate:The City of Tigard adopted a CET in 2019,which levies a 1%tax on most residential and commercial construction within the city to fund affordable housing programs. 'Oregon Revised Statute 320.173. MIG, Inc. I Lake Oswego Housing Production Strategy 1 of 6 PP 22-0005 ATTACHMENT 5/PAGE 1 OF 6 Appendix A: CET Supplemental Memo 2/8/2024 Exemptions: In addition to the required exemptions,Tigard exempts the following types of development from CET:2 • Accessory dwelling units of 1,000 square feet or less. • Construction or improvements having a total improvement value of less than $50,000. • Construction or improvements to a residential structure that was partially or completely destroyed by unintentional means,such as fire or act of nature,where such construction or improvement results in a net increase of living area of 10%or less over the living area of the destroyed structure. • Cottage clusters, courtyard units, and quadplexes are exempted from 75%of the CET. Revenue Expenditure: Tigard's Municipal Code outlines the following CET revenue expenditure—this is the general expenditure structure required by state statute, and is also applicable to CET in other cities. • Retain up to four percent of the tax collected for payment toward administrative expenses. • Residential CET revenues will be expended in accordance with state statute, as follows: o 15%of net revenue will be remitted to the Oregon Department of Housing and Community Services to fund home ownership programs. o 50%of net revenue will fund incentives for the development and construction of affordable housing. o 35%of net revenue will fund programs and activities related to affordable housing. • Commercial CET revenues will be expended as follows: o 50%of the net revenue will fund programs of the city related to housing. o The remaining revenues can be spent flexibly to support affordable housing. • Projects:The City's share of revenues goes towards a program administered by Proud Ground for community land trust and affordable home ownership programs in Tigard.The revenue is also used to backfill the transportation and parks SDCs from which affordable housing projects are exempt. Bend Adoption and Tax Rate: • Affordable Housing Fee:The City of Bend adopted a construction tax, referred to as the "Affordable Housing Fee," in 2006, at a rate of 1/3 of 1%on residential,commercial, and industrial development.This tax was adopted prior to the State Legislature's authorization of CET for affordable housing in 2016 (via Senate Bill 1533). Although it does not meet all the current statutory requirements for CET expenditure, Bend's program was "grandfathered in," and has remained in effect. • Commercial/Industrial CET:Then, in 2021 the City adopted an additional CET of 1/3 of 1%for new commercial and industrial development, with revenues dedicated toward housing programs to support extremely low-income households.This amounts to a total CET on commercial and industrial development of 2/3 of 1%. 2 Tigard Municipal Code, Chapter 3.90 Construction Excise Tax. https://library.gcode.us/lib/tigard or/pub/municipal code/item/title 3-chapter 3 90 MIG, Inc. I Lake Oswego Housing Production Strategy 2 of 6 PP 22-0005 ATTACHMENT 5/PAGE 2 OF 6 Appendix A: CET Supplemental Memo 2/8/2024 Exemptions: Bend's Commercial CET exempts only the types of development required by state law. Estimated Revenues: • Affordable Housing Fee: According to a 2017 report,the program had collected $6.4 million since adoption in 2006, which had leveraged an additional $106 million in public and private funding.' • Commercial/Industrial CET:As of 2021, the tax was estimated to collect$1.1M over the following two years, the majority of which will be distributed by a formal request for proposal process.4 Revenue Expenditure: • Affordable Housing Fee: Funding received from this tax are deposited in Bend's Affordable Housing Fund and targeted for housing opportunities for residents at or below 100%of area median incomes 6 • Commercial/Industrial CET: Revenues from this tax will be dedicated toward funding programs for housing, and support, services, and other programs for people making up to 30%of area median income,which in 2021 was $22,980 for a family of four. • Projects: Bend reports that "[p]roceeds from this fund have been employed to develop a wide variety of housing throughout Bend. Currently,the Affordable Housing Fund is used to acquire land for deed restricted affordable housing, develop the land, construct homes, or rehabilitate homes.All funded developments are required to undertake a deed restriction, guaranteeing the homes will be affordable to lower income residents well into the future."'The City estimates that the funding has helped the creation of 770 affordable housing units. Newport Adoption and Tax Rate: The City of Newport adopted a CET in 2017, with a tax rate of 1%for both residential and commercial construction.' Exemptions: Newport's CET exempts only the types of development required by state law. Estimated Revenues: As of 2023,the CET has collected a little more than $540,000 since its adoption.' 'City of Bend,Affordable Housing. https://www.bendoregon.gov/government/departments/housing/affordable- housing 4 News from the City of Bend, https://www.bendoregon.gov/Home/Components/News/News/4296/ 'City of Bend, Financial Tools. https://www.bendoregon.gov/government/departments/housing/affordable- housing/developer-resources#FinancialTools 6 Bend Municipal Code,Ch.9.40 Affordable Housing Fee. https://bend.municipal.codes/BC/9.40.040 'City of Newport, Resolution 3787, 2017. https://www.newportoregon.gov/dept/cdd/documents/CET Res3787SettingCETRates.pdf 8 City of Newport, Housing Production Strategy, 2023. https://www.oregon.gov/Icd/UP/Documents/20230616 HPS Newport.pdf MIG, Inc. I Lake Oswego Housing Production Strategy 3 of 6 PP 22-0005 ATTACHMENT 5/PAGE 3 OF 6 Appendix A: CET Supplemental Memo 2/8/2024 Revenue Expenditure: Information about how Newport expends its CET revenues was not available. However,the City's 2023 Housing Production Strategy outlines potential uses for these revenues to support affordable housing development and programs.'The Housing Production Strategy implies that the City's share of the funding has accrued since the program's inception and recommends that the City undertake planning to decide how exactly to allocate it. Eugene Adoption and Tax Rate: Eugene adopted a CET in 2019,with a tax rate of 0.5%for both residential and commercial construction. Exemptions: In addition to exemptions required by state law, Eugene exempts residential dwellings sold for$250,000 or less and projects granted a multi-unit property tax exemption (MUPTE) by the City. Estimated Revenues: In fiscal year 2021,the CET generated $300,000 in revenue. In fiscal year 2022, it generated $1,140,000.9 Revenue Expenditure: Money collected from the CET goes into the City's Affordable Housing Trust Fund, which pays for projects and programs that increase availability and access to owner-and renter- occupied housing that is affordable to lower income community members. Most of the AHTF(75%)goes toward housing development; 25%goes toward direct assistance to renters and homeowners to help increase access to housing. Examples of how these funds are used include: • Gap financing for the development of new affordable housing; • Acquisition of existing housing that will become affordable; • Acquisition of land for future affordable housing development; • Down payment assistance for home buyers; and • Rental or security deposit assistance for people who rent their homes.'° Projects: In the 2022/23 year, Eugene's Affordable Housing Trust Fund contributed to five development projects and services, providing 178 new affordable homes.These include: • 70 tiny homes for homebuyers • 10 transitional housing units for veterans • 38 units with supportive services for former convicts • 56 units with supportive services for the chronically homeless • 4 new homes for low-income homebuyers • Foreclosure assistance ($150,000) • Homebuyer assistance ($281,000) • Rental assistance ($100,000) 'City of Eugene,Affordable Housing Trust Fund. https://www.eugene-or.gov/4232/Affordable-Housing-Trust-Fund io City of Eugene, CET FAQ. https://www.eugene-or.gov/DocumentCenter/View/46871/Affordable-Housing- Construction-Excise-Tax-FAQs MIG, Inc. I Lake Oswego Housing Production Strategy 4 of 6 PP 22-0005 ATTACHMENT 5/PAGE 4 OF 6 Appendix A: CET Supplemental Memo 2/8/2024 Milwaukie Adoption and Tax Rate: Milwaukie adopted a CET in 2017, with a tax rate of 1%for both residential and commercial construction.' Exemptions: In addition to exemptions required by state law, Milwaukie's CET exempts any building permits with a value of$100,000 or less. Initially,the CET also exempted accessory dwelling units; however, that exemption expired in 2022 (5 years after the ordinance was adopted).12 Estimated Revenues: As of 2022,the CET had accumulated $2 million in revenue. Revenue Expenditure: In 2022,the City released a competitive request for proposals to award up to $2 million in CET funds for qualifying income-restricted housing projects.As of 2023,the funds were awarded to a development of 275 units,to be affordable at 30%-60% MFI, and a community land trust courtyard development for affordable homeownership.As funds continue to accumulate over time, the City will release subsequent rounds of funding. CET funds generated from within Milwaukie are also utilized by the State to provide first-time homebuyer assistance for residents.' Lake Oswego CET — Potential Revenue Generation The following is an estimate of potential revenue generation from a CET if established in Lake Oswego. These calculations assume the maximum 1%excise tax rate, but a CET may be adopted at a lesser rate. The estimated permit values for the last five years were provided by the City of Lake Oswego, and include those permits for new construction, or additions or alterations resulting in additional square footage. Estimates are based on the last five years and are subject to fluctuations year-to-year depending on the amount of development activity, the real estate market, and general economic factors. As shown in the following table, a CET based on average annual residential permit valuations of the last five years could generate annual revenue of roughly$770k for housing programs, or over$3.8M over five years. Commercial permits could generate revenues of$850k per year, or$4.2M over five years. The table shows how revenues might be broken down based on the division of funds described in statutes. 11 Milwaukie Construction Excise Tax. https://www.milwaukieoregon.gov/communitydevelopment/milwaukie- construction-excise-tax-cet 1z Milwaukie Municipal Code, Ch.3.60 Affordable Housing Construction Excise Tax. https://library.gcode.us/lib/milwaukie or/pub/municipal code/item/title 3-chapter 3 60 13 City of Milwaukie, Housing Production Strategy 2023. https://www.oregon.gov/Icd/UP/Documents/20230802 HPS Milwaukie.pdf MIG, Inc. I Lake Oswego Housing Production Strategy 5 of 6 PP 22-0005 ATTACHMENT 5/PAGE 5 OF 6 Appendix A: CET Supplemental Memo 2/8/2024 Table 1: Hypothetical Five-Year CET Revenue Generation, Lake Oswego Res.&Mixed Use Commercial 2019 $93,030,000 $176,680,000 2020 $42,400,000 $30,020,000 2021 $46,390,000 $48,650,000 2022 $134,470,000 $92,960,000 2023 $68,300,000 $75,570,000 5-Year Tota I: $384,590,000 $423,880,000 Annual Average: $76,918,000 $84,776,000 CET(1.00%Rate) Annual Average Revenue: $769,180 $847,760 5-Year Total Revenue: $3,845,900 $4,238,800 DIVISION OF FUNDS(5 YEARS) 4%Progra m Admi n $154,000 $170,000 Of remainder: 50%Development Incentives $1,846,000 35%Other Aff.Hsg.Programs $1,292,000 15%to OHCS for Homeownership $554,000 50%Housing-Related Programs $2,034,000 50%Unrestricted $2,034,000 MIG, Inc. I Lake Oswego Housing Production Strategy 6 of 6 PP 22-0005 ATTACHMENT 5/PAGE 6 OF 6 ATTACHMENT 6 Lake Oswego HNA+HPS Project HPS Scope of Work, Revised Description of Tasks and Timelines 3.1 Evaluate existing housing strategies.The consultant will review the policies and other measures already adopted by the City for their effectiveness in promoting the development of needed housing. The City will identify and provide all available information about existing relevant measures.The consultant will also interview key City staff and up to eight (8) housing producers and/or service providers to seek input on existing policies and programs, and potential new strategies for housing.This input will be used to identify strategy alternatives to address the most housing and residential land needs as determined in previous tasks. Activities • Using the DLCD housing strategies "master list" as a starting point, draft an initial menu of strategies to consider. Identify strategies that are already being implemented by the City(most information already provided). • Conduct housing producer interviews • Draft Contextualized Housing Needs Assessment • Recommend strategies to be deleted from initial list and rationale for removal (e.g., requires change in state or federal law, beyond level of resources available to City, minimal projected benefit or impact, does not address needs identified in Contextualized Housing Needs Assessment, etc.). Consultant provide initial suggestions; meeting with City staff to review and refine. • Summarize results in a table or matrix for review with Task Force Timeline: Mid-August—late-September; meet with Task Force in early October Conduct Housing Producer Interviews Aug-Sep Draft Initial Menu of Strategies to Consider Sep 5 Draft Contextualized Housing Needs Assessment Sep 25 Table with Refined List of HPS Strategies Sep 25 HPS Task Force Meeting#4: Evaluate Existing Strategies Oct 6 CC-SS#4: Evaluate Existing Strategies Nov 7 PC-WS#4: Evaluate Existing Strategies Nov 13 3.2 Outline housing strategy alternatives, which shall be summarized in a Housing Strategy Alternatives Memo. The Consultant shall draft a Housing Strategy Alternatives Memo addressing any changes to the City's comprehensive plan, public facility master plans, land use regulations,fees, and other policies and programs, as applicable,that would be most effective in supporting the production of needed housing. For example,the Memo might identify strategies for prioritizing infrastructure investments, amendments 1 PP 22-0005 ATTACHMENT 6/PAGE 1 OF 5 to zoning and development standards, and new incentives (regulatory or financial)to encourage the production of needed housing, considering the results of previous tasks. The Consultant will present the Memo to the HPS Task Force in two meetings in order to introduce the housing strategy alternatives and receive input.The consultant will coordinate with the City on all meeting materials and presentations with City staff, and facilitate the HPS Task Force meetings. Activities • Provide preliminary recommendations for strategies to pursue, building on previous tasks • Briefly summarize: o The purpose of the strategy o The housing need fulfilled by the strategy o How strategies will be implemented and by whom (i.e., is the City the lead or another organization) o Initial opportunities, constraints or consequences • Present results in either table or narrative format • Review results with Task Force (1 meeting) Timeline: Mid-October—late-November; meet with Task Force in early December Preliminary Recommendations to City staff Nov 6 Draft Housing Strategy Alternatives Memo Nov 27 HPS Task Force Meeting#5: Housing Strategy Alternatives Dec 8 Refine Alternatives based on HPS input Dec 11- 15 PC Materials—Draft to JN Dec 21 PC Materials—Draft to Admin Dec 27 PC Materials—Distributed Dec 29 PC Update: Housing Strategy Alternatives Jan 8 3.3 Refine housing strategy recommendations. The consultant will work with City staff and the HPS Task Force to refine the list of alternative housing strategy options developed in Task 3.2 in an Initial Housing Strategy Recommendations Memo, pursuant to direction from the Planning Commission and City Council. The Consultant shall draft a Housing Strategy Recommendations Memo with a refined list of strategies based on input from Task 3.2.The Consultant will also attend and present this Memo at 2 HPS Task Force meetings for review and input in order to develop a preferred list of strategies for inclusion in the HPS. Recommended strategies will be presented to the Planning Commission and City Council for further direction. The City will schedule and provide notice and an agenda for each HPS Task Force meeting.The consultant will be expected to coordinate all meeting and presentation materials with City staff, and facilitate the meetings. The HPS Task Force may review more than one strategy option at each meeting. The Consultant shall provide a brief paper, case study, or similar written description illustrating each strategy, as generally outlined below. 2 PP 22-0005 ATTACHMENT 6/PAGE 2 OF 5 For the strategies that are recommended for inclusion in the City's HPS,the consultant will produce the following for each strategy within the Initial Housing Strategy Recommendations Memo, based on the consultant's evaluation, input from staff, and feedback gathered through outreach and engagement: • A description of the strategy; • Identified housing need being fulfilled and analysis of the income and demographic populations that will receive benefit and/or burden from the strategy, including low income communities, communities of color, and other communities that have been discriminated against, according to fair housing laws; • Approximate magnitude of impact, including (where possible/applicable) an estimate of • the number of housing units that may be created, and the time frame over which the strategy is expected to impact needed housing; • Timeline for adoption and implementation; • Actions necessary for the local government and other stakeholders to take in order to implement the strategy; • Potential cost and funding source options; • Feasibility of the strategy based on a general assessment of opportunities and constraints. Activities—As described above/no change Timeline: Mid-December—mid-April; meet with Task Force in early and late February; conduct community meeting in early March Draft Initial Housing Strategy Recommendations Memo Jan 29-31 Task Force 6+7 Materials—Draft for_IN Feb 5 Task Force 6+7 Materials—Draft for Admin Feb 7 Task Force 6+7 Materials—Distributed Feb 9 HPS Task Force Meeting#6: Initial HPS Recommendations#1 Feb 16 HPS Task Force Meeting#7: Initial HPS Recommendations#2 Mar 1 Community Forum/Public Workshop Event Mar 14 Summary of Task Force+ public input Mar 18 CC-PC Materials—Draft to JN Mar 19 CC-PC Materials—Draft to Admin Mar 21 CC-PC Materials—Due Mar 22 CC-PC Joint Work Session: Initial Recommendations Apr 2 3.4 Draft Housing Production Strategy(HPS) Report.The consultant will prepare a first draft of a Housing Production Strategy Report for City review and feedback.The consultant's analysis will be informed by the recommendations contained in the HNA, and shall be developed in consultation with the HPS Task Force, the Planning Commission, and the City Council before being synthesized into a draft HPS. The HPS Report is to incorporate the results of Tasks 3.1, 3.2, and 3.3, including an explanation of how the City's existing measures and final proposed strategies help to achieve fair and equitable housing outcomes, affirmatively further fair housing, and overcome discriminatory housing practices and racial segregation. HPS Report shall include: 3 PP 22-0005 ATTACHMENT 6/PAGE 3 OF 5 1. A qualitative assessment of how the strategies collectively address the contextualized housing needs identified in the HNA and, taken collectively, will increase housing options for population groups experiencing a current or projected disproportionate housing need, including: • Existing City policies, codes, and programs; • Proposed actions; 2. An explanation for any identified needs not otherwise addressed above; and 3. An outline the City's plan for monitoring progress on the housing production strategies. Activities—As described above/no change Timeline: Mid-April—late-July; meet with Task Force in late June Initial Draft HPS Report Jun 3 PC/Task Force 8 Materials—Draft for JN Jun 10 PC/Task Force 8 Materials—Draft for Admin Jun 12 PC/Task Force 8 Materials—Distributed Jun 14 CC Materials—Draft for JN Jul 1 CC Materials—Draft for Admin Jul 3 CC Materials—Distributed Jul 5 HPS Task Force Meeting#8: Review Draft HPS Report Jun 21 PC-WS#7: Review Draft HPS Report Jun 24 CC-SS#7: Review Draft HPS Report Jul 16 Revise Draft HPS Report based on Task Force+CC/PC input Jul 17—Jul 29 3.5 Finalize the HPS for adoption as an appendix to the Comprehensive Plan. Following review by staff and revisions, as needed,the consultant will produce a public review draft of the Final HPS Report for review and comment by the HPS Task Force, Planning Commission, City Council, and other interested parties.The consultant will summarize the HPS Task Force comments on the draft and make any minor updates to the draft as required. Following public review and comment,the consultant will produce a final version of the HPS Report. The City will host one public open house or similar meeting to present and receive feedback on the key strategies outlined in the draft HPS.The consultant will assist staff with the presentation. Activities—As described above/no change Timeline: Mid-July—mid-October Final HPS Report Jul 29 PC Hearing Materials—Draft for JN Jul 31 PC Hearing Materials—Draft for Admin Aug 2 PC Hearing Materials—Distributed Aug 5 DLCD Notice Aug 5 Planning Commission Public Hearing(PC-PH) Sep 9 +Adoption of Findings Sep 23 CC Hearing Materials—Draft for JN Sep 30 CC Hearing Materials—Draft for Admin Oct 2 4 PP 22-0005 ATTACHMENT 6/PAGE 4 OF 5 CC Hearing Materials—Due Oct 4 City Council Public Hearing(CC-PH) Oct 15+Nov 5 +Adoption of Findings Nov 5 or 19 5 PP 22-0005 ATTACHMENT 6/PAGE 5 OF 5 ATTACHMENT 7 Lake Oswego Housing Production Strategy Task Force Meeting#5- December 8, 2023 Breakout Session Discussions During the HPS Task Force Meeting on December 8, 2023,Task Force members engaged in breakout group discussions focused on identifying housing production strategies that could best address the housing needs identified in the Lake Oswego Housing Needs Analysis and Contextualized Housing Needs Analysis.The conversations were related to the following categories of housing need: 1. Government-subsidized housing units affordable to people with very low or low incomes; 2. Housing affordable to households with moderate incomes; 3. Housing opt-ions/choices to meet a full range of household needs and preferences; and 4. Housing opportunities for seniors, people with disabilities, and aging in place. During these individual breakout sessions focused on high-priority housing needs,Task Force members will be asked to consider the following questions: • What strategy or strategies would be most effective in meeting this need? • Do you have any concerns about the strategy or its implementation? • What opportunities does this strategy present? • Which organizations or community groups could the City partner with to better address this need? Breakout Session#1: Government-subsidized housing units affordable to people with very low or low incomes • Donation of land seems critical o Land cost versus what you can build on it; if it's spread across more units, it's much more doable o Tax credits prioritize high opportunity areas o Zoning code is very restrictive; height limit is very restrictive;there are NIMBYs—older demographic doesn't want to see things change • City needs to rezone; there's not enough land for multi-family o AH developers having to buy land that has development on it; there's not enough vacant land o So many underutilized uses on Boones Ferry • Kate: We've been discussing nonresidential to residential; should we consider upzoning lower density areas? o Would need to be very strategic, only very underutilized areas. • Adapting homes for multi-generational living; Making homes available to be divided to add units; make it easy to build an ADU o Allowing two ADUs on a lot o Strategically promote the idea of multigenerational living; grassroots outreach/education o Education to the community about housing, affordable housing; promoting understanding; allaying fears PP 22-0005 ATTACHMENT 7/PAGE 1 OF 4 • Height limits and design standards was a common theme from developers • Construction Excise Tax (CET) o City doesn't have a lot of industrial development; non-residential CET may not provide much funding o Can use for backfilling SDCs o Concerned about a strategy that has a negative impact on development • Housing Trust Funds—regional fund could be funded by state dollars rather than local revenues Breakout Session#2: Housing affordable to households with moderate incomes What strategy or strategies would be most effective in meeting this need?What are the concerns and opportunities of these strategies? (Note: we didn't get through all the strategies we wanted to discuss) • Code Audit and amendments—high impact strategy since code can be a barrier to all types of housing and this low-hanging fruit; concerns that it could impact neighbors if setbacks or heights are adjusted or if parking is reduced. • Rezone land—could be impactful, particularly where office buildings may be becoming obsolete and ripe for repurposing or redevelopment, but should focus on mixed-use zones; concerns about noise and other impacts of incompatible uses comingling • Modify SDC fee schedule—this will benefit all types of housing, but need to be sure it doesn't significantly constrain City's ability to provide infrastructure and services that are supported by these fees Breakout Session#3: Housing options/choices to meet a full range of household needs and preferences What strategy or strategies would be most effective in meeting this need? • Promote accessory dwelling units (ADUs) • Middle housing—duplexes/triplexes • Prepare underutilized land for development—particularly affordable housing—City needs to be opportunistic Do you have any concerns about the strategy or its implementation? • People want neighborhoods to stay the same;there will be a variety of problems with introducing new types of housing in these areas • Need to look at ways to provide housing options without disrupting neighborhood character; each individual community has unique character that should be responded to with new housing designs • Should focus on areas currently zoned for multifamily as well • How to incorporate livability in new developments? • There should be a reasonable transition between high-and low-density areas;they should look more alike PP 22-0005 ATTACHMENT 7/PAGE 2 OF 4 • Housing construction/production takes time, need more immediate solutions that take effect *now* • A lot of these strategies will likely be rentals—how do we increase homeownership opportunities?This will increase access to wealth and transfer of wealth to future generations over time • There could be a lack of available land... however, Oregon has a fairly large amount of developable land compared to other states (despite urban growth boundary) What opportunities does this strategy present? • Could effectively increase density by a moderate amount within existing neighborhoods— opportunity to talk to residents about which ways they would like to see this happen • Can help increase walkability, proximity to schools/open space/ retail/commercial/amenities • Don't have housing located in areas without access to retail/amenities—perhaps new commercial nodes would be helpful in these areas • Opportunity to provide housing for folks who work in LO but live outside of LO—could focus on City employees and ensuring that they can afford to live in LO, it would be good for us Which organizations or community groups could the City partner with to better address this need? • Education and outreach are critical—folks should understand that this new development is positive for our community; can't complain about people living on the streets and then refuse them housing • Need special folks to connect with neighborhood associations and help them understand the positives about middle housing and housing production; HPS Task Force members are well- suited to play this role. Negative attitudes can make it incredibly difficult to have these discussions Breakout Session#4: Housing opportunities for seniors, people with disabilities, and aging in place What strategy or strategies would be most effective in meeting this need? • Tax abatement isn't very popular but for folks aging in place this is very important. Your income goes down as you retire...depends on how. • There is support for tax abatement-to make subsidized projects feasible. Lots of levels of subsidy are needed. Age-restricted multifamily developments could use tax abatement. • Size is the biggest issue-seniors are in larger homes that they cannot maintain inside or outside. But they can't find condos etc to downsize into. Independent living. Condos are expensive. • Just having more housing options will help loosen the market somewhat.There are lots of seniors in the City. Want community around. Cottage clusters are a good idea for this as well. The issue is having land availability. People are allowed to build them now. Community pushback to novel cluster projects exacerbate this. • 1st addition cottage cluster was pulled back as well. • City won't give a subsidy unless there's an affordability threshold. Very. • Do you have any concerns about the strategy or its implementation? PP 22-0005 ATTACHMENT 7/PAGE 3 OF 4 What opportunities does this strategy present? Which organizations or community groups could the City partner with to better address this need? • Not sure who we have locally. Location of the buildings near services would be important. Looking at the transportation system - if you have mobility issues that's a bit problem. • Adult community center-door to door work with folks in the community. • Improving transportation options for seniors-shuttle, etc. • What's happened so far- hesitancy from the community.This pushes the smaller lots to the hinterlands. Seniors should be closer in to the town centers. • If you can build a large enough complex it'll fill. • Inclusionary zoning-subsidizing senior living. • Incentives for ADA features are a good idea. "Master on the main" features will be provided by the market in all likelihood. • New mixed use communities-apartments with commercial areas. • Areas with potential for redevelopment (older single family to newer single family) -town centers. If we don't want the redevelopment deep in the neighborhoods maybe we can densify our main corridors. Unannexed areas are a potential as well. • "Homeshare" I'd rather be in a very small condo. • Ashland -some cottage clusters recently completed. PP 22-0005 ATTACHMENT 7/PAGE 4 OF 4 APPROVED: 02/16/2024 ATTACHMENT 8 \ � o o\ J/' CITY OF LAKE OSWEGO v i o Housing Production Strategy Task Force Meeting #5 Action Minutes '°EG°a December 8, 2023 1 1. CALL TO ORDER 2 Erik Olson, Long Range Planning Manager, called the meeting to order at approximately 1:00 p.m. 3 This was a video conference meeting held via Zoom. 4 5 2. ROLL CALL 6 Members Present: 7 Kasey Adler, Transportation Advisory Board Representative - was excused 8 Joseph M. Buck, Mayor and City Council Liaison (non-voting) 9 Douglas Corder, 50+Advisory Board Representative 10 Philip Stewart, Planning Commission Liaison (non-voting) 11 Bruce Poinsette, Development Review Commission Representative - was excused 12 Kimvi To, DEI (Diversity, Equity, and Inclusion Board) Advisory Board Representative 13 14 At-Large Members— Housing Producers: 15 Kyrsten Baumgart- was excused 16 Phil Bertrand 17 David Tangvald 18 Sarah Walker, Chair 19 20 At-Large Members— Housing Consumers: 21 Yoko Kinoshita 22 Rosalie Nowalk 23 Pat Ginn - was excused 24 Diana Howell 25 Cara Kao-Young - was excused 26 Betty Jung- was excused 27 Rebecca Lane 28 John E. Pauley 29 John Turchi, Vice-Chair 30 Logan Bryck- was excused 31 32 Staff Present: 33 Jessica Numanoglu, Community Development Director; Erik Olson, Long Range Planning Manager, 34 and Cristina Siquina Calderon, Admin Support. 35 36 Consultants Present: 37 Kelly Reid, Oregon Department of Land Conservation and Development (DLCD); Andrew Parish, 38 Senior Planner with MIG; Matt Hastie, Project Manager with MIG; and Kate Rogers, Senior Planner 39 with MIG 40 Respect. Excellence. Trust. Service. 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY PP 22-0005 ATTACHMENT 8/PAGE 1 OF 2 1 2 3. GREETINGS AND ANNOUNCEMENTS 3 • HPS received input from both the Planning Commission and with City Council in early 4 November. 5 • The Planning department has hired a new staff member and will work to slowly 6 incorporate them. 7 8 4. MINUTES 9 Member John Turchi moved to approve the minutes of October 6, 2023. Member Rebecca Lane 10 seconded the motion, and it passed unanimously. 11 12 5. SUMMARY OF INPUT ON INITIAL STRATEGY LIST 13 Task force members received a presentation from Mr. Olson on recent input from City Council, 14 and the Planning Commission regarding the initial list of housing production strategies discussed 15 at the last HPS meeting, followed by question and comments. 16 17 6. PRIMARY HOUSING NEEDS AND PROJECTS GOALS 18 The Task Force Continued the presentation wtih Kate Rogers on the major housing needs 19 identified in the Housing Needs Analysis followed by group discussion. 20 21 7. STRATEGIES TO ADDRESS PRIMARY HOUSING NEEDS 22 The Task force met in breakout rooms to further discuss the following topics and questions: 23 Topic: 24 • Government-subsidized housing units affordable to people with very low or low incomes 25 • Housing affordable to households with moderate incomes 26 • Housing options/choices to meet a full range of household needs and preferences 27 • Housing opportunities for seniors, people with disabilities, and aging in place. 28 29 Questions: 30 • What strategy or strategies would be most effective in meeting this need? 31 • Do you have any concerns about the strategy or its implementation? 32 • What opportunities does this strategy present? 33 • Which organizations or community groups could the City partner with to better address 34 this need? 35 36 8. NEXT STEPS 37 • Planning Commission and City Council work sessions (January). 38 • HPS Task Force Meeting#6 tentative February. 39 40 9. ADJOURNMENT 41 There being no further business, the meeting was adjourned at 3:07 p.m. HPS Task Force Meeting Minutes Minutes of December 8, 2023 Page 2 of 2 PP 22-0005 ATTACHMENT 8/PAGE 2 OF 2 ATTACHMENT 9 LAKE OSWEGO CONTEXTUALIZED HOUSING NEEDS ASSESSMENT DRAFT I November 16, 2023 CONTENTS Executive Summary 2 I. Introduction 7 II. Market Conditions 8 Housing Tenure 8 Market Conditions (For-Sale Housing) 8 Market Conditions (Rental Housing) 10 III.Socio-Economic and Demographic Trends Affecting Housing Needs 13 Family Households 14 Group Quarters Population 14 Diversity Trends 16 People with a Disability 18 Income Trends 20 Poverty 21 People Experiencing Homelessness 22 Households Needing Publicly Assisted Housing 23 Agricultural Workers 23 Veterans 23 IV. Barriers to Development of Needed Housing 25 V.Adopted Measures 27 MIG,Inc. I Lake Oswego Housing Production Strategy 1 PP 22-0005 ATTACHMENT 9/PAGE 1 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 EXECUTIVE SUMMARY The City of Lake Oswego completed its most recent Housing Needs Analysis (HNA) in the fall of 2023.The analysis included an inventory of buildable land for residential uses and a projection of future housing need, consistent with state and regional requirements.The HNA found that, despite a very low assumed growth rate over the 20-year planning horizon, the City of Lake Oswego has a need for nearly 2,000 new housing units, including over 1,100 multi-family and middle housing units. According to the HNA, about half of those units are needed to meet upper income ranges (greater than 120%of the Area Median Income, or AMI), while the remaining half are needed to meet very low to middle income household needs. To advance the City's planning efforts to encourage and allow for development of needed housing,the City is in the process of creating a Housing Production Strategy(HPS), the purpose of which is to identify a set of actions that the City of Lake Oswego will take to facilitate housing development that meets the needs of the community.The HPS focuses on how to fill the gap between the City's housing need and supply, particularly housing available to low-and moderate-income households—and particularly low- cost rental housing. A key step in this process is developing a Contextualized Housing Needs Assessment (CHNA) per OAR 660-008-0050(1).This assessment is intended to build on previous work conducted for the HNA to describe demographic, housing, and market conditions; housing affordability issues; barriers to meeting identified housing needs, including the needs of traditionally underserved and disadvantaged populations; and existing or previous programs implemented to address housing needs. Data sources for this report include the US decennial census and 5-year American Communities Survey (ACS)tables, CoStar, Regional Multiple Listing Service (RMLS), and Johnson Economics. Key takeaways from this report follow. Summary of Market Conditions • For-Sale Housing. The median sale price was$860,000, while The average (mean) sale price was $1,075,000 during the last 12 months.The median square footage was 2,300 sq.ft. Attached units and condominiums currently make up a significant share of home sales (28%).The median home sale price in Lake Oswego has more than doubled over the past 10 years,from $395k in 2012 to $860k in 2022. Median price growth has averaged 8% per year over the past decade but has recently experienced the strongest one-year growth in 2020 (14%) and 2021 (19%). • Rental Housing.The average effective rent in Lake Oswego is$2,038/mo. In the last decade, rent growth has been 52%or 4.3% per year. By comparison, inflation has been 31%or 2.7% per year for the same period. Rents peaked in 2022 and have moderated slightly since. • Housing Affordability. 75%of recent sales in Lake Oswego were priced at least$600,000. Homes in this range would be mostly affordable to households earning at least$175,000 per year.This is well above the median household income of$123,000. In addition, nearly half of renter households in Lake Oswego are considered housing cost burdened (i.e., pay more than 30%of their income for housing). MIG,Inc. I Lake Oswego Housing Production Strategy 2 PP 22-0005 ATTACHMENT 9/PAGE 2 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 • Publicly Assisted Housing.The state tracks three current subsidized affordable housing properties in Lake Oswego, with a total of 76 units in 2023.The majority (75) of these units are offered for elderly residents.The Marylhurst Commons will offer an additional 100 affordable units for families when it is constructed. Upon completion in 2024, the total 176 subsidized units in Lake Oswego will represent 1% of the local housing stock.The Housing Authority of Clackamas County administers over 1,600 Section 8 housing choice, some of which are used in Lake Oswego. No agricultural worker housing exists currently in Lake Oswego. Figure EX-1.Lake Oswego Home Sales(12 months,Ju1y2022 to July2023) Home Sales by Unit Type Home Sales by Price Level $900,000+ 319 $800,000-$899,000 66 20% $700,000-$799,000 67 $600,000-$699,000 56 8% $500,000-$599,000 ■ 39 0%0 72% $400,000-$499,000 . 31 $300,000-$399,000 . 47 $200,000-$299,000 ■ 43 $100,000-$199,000 13 Detached Home Manuf. Home <$100,000 0 Attached Home Condo 0 100 200 300 400 Source: RMLS,Johnson Economics Socio-Economic Information • Racial Diversity. Lake Oswego is roughly 80%white, 8%Asian, and 9%two or more races.The City is more diverse today than ten years ago when approximately 90%of the population was white. • Disability.There are roughly 3,140 individuals in Lake Oswego with one or more disabilities. • Veterans.Veterans are 6% of the adult population. 63%are 65 and older. Veterans have lower than average poverty levels, and 21% have some sort of disability. MIG,Inc. I Lake Oswego Housing Production Strategy 3 PP 22-0005 ATTACHMENT 9/PAGE 3 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure EX 6.Population by Race Share of Population by Race 100-0 Lake Os;tirego (2010) as SO4 ■Lake Oswego (2424) 60% CIackamas Co. 40° Oregon 20% _ - f 0% — i — — J aJ c -o w C c.) aW o .-4 c > .-o U 41 C IE 0 C r° „ -LT) -C +A al L 0 4 p rp o ra Yi _ — o o R- i 0 3 SOURCE: US Census,Johnson Economics LLC; Census Tables: P1, P2 (2010, 2020) Figure EX 7.Population with Disabilities Share of Population Population with a disability 7.8% Hearing difficulty 2.4% Vision difficulty 1.7% Cognitive difficulty 2.7% Ambulatory difficulty 2.9% Self-care difficulty 1.1% Independent living difficulty 2.3% 0% 2% 4% 6% 8% 10% SOURCE: US Census,Johnson Economics LLC; Census Tables: DP02, (2020 ACS 5-year) MIG,Inc. I Lake Oswego Housing Production Strategy 4 PP 22-0005 ATTACHMENT 9/PAGE 4 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Existing Adopted Housing Measures The City of Lake Oswego already implements a variety of measures intended to enable or facilitate the production of needed housing. In combination with the other findings in the Contextualized Housing Needs report,this list will help the City and community understand where there are gaps in the City's approach toward meeting its housing needs. Below is a brief summary of the key housing measures adopted by the City, organized into the categories defined by DLCD. Zoning Strategies • Height/density bonus for affordable developments in the West Lake Grove Design District (WLG- OC) and R-DD zones. • Increased code flexibility for accessory dwelling units (ADUs) as to occupancy and size limits. • Regulates short-term rentals to help preserve long-term rental opportunities regulations • Requires affordable housing in limited areas of the city. • Allows increased density near transit stations. • Lot coverage bonus for housing within the Lake Grove Village Center Overlay(LGVCO). Reducing Regulatory Impediments • Removed parking mandates near transit. • Expedites permitting for affordable housing. Financial Incentives • Waives system development charges (SDCs) and development review fees for affordable housing and ADUs. Financial Resources • Uses urban renewal funds to support housing (recently with the North Anchor development). Land Acquisition, Lease,and Partnerships • Donates surplus City-owned land for affordable housing. • Engages in public-private partnerships with non-profit organizations to produce affordable housing units. • Enables conversion of underperforming commercial assets into housing (recently with the North Anchor site). • Utilizing surplus land owned by faith-based organization for housing(recently with the Marylhurst University Campus). Barriers to Development of Needed Housing Numerous factors contribute to the availability of housing in Lake Oswego—market factors, physical conditions, regulations, public investments, etc. Some of these factors can serve as barriers to the production of housing that is most needed in the city.To understand the major barriers to developing needed housing in Lake Oswego,the project team interviewed a number of stakeholders involved in housing production in the city. Following are some of the key housing needs that the stakeholders identified as gaps in the market: MIG,Inc. I Lake Oswego Housing Production Strategy 5 PP 22-0005 ATTACHMENT 9/PAGE 5 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 • Affordable housing for low-and moderate-income households • Middle housing (e.g.,townhomes, duplexes, and cottage clusters) • Housing options for seniors and opportunities for aging in place • Options for more attainable homeownership (e.g., condos and middle housing) • Apartments with family-size units (2-3 bedrooms) • Multi-family housing outside the Town Center Stakeholders identified the following barriers to meeting these housing needs, and to housing production more generally: • The high cost of land in Lake Oswego translates to high rental and sale prices, and makes deed- restricted affordable housing especially challenging to pencil out. • There are few large, developable sites within the City and urban service boundary to support multi-family housing and other development types that typically rely on larger parcels of land. • The City's Development Code can pose barriers to housing development. Stakeholders identified issues such as highly-prescriptive Overlay and Design District standards,tree protection/planting standards, and open space standards as particular challenges for housing. • The City's development review and permitting processes can be lengthy and contribute to housing costs. • Neighbor opposition to affordable or higher-density housing can drag out the process and add to costs. A focus of the Housing Production Strategy will be to identify tools and strategies to remove or reduce these barriers or help housing producers overcome them. MIG,Inc. I Lake Oswego Housing Production Strategy 6 PP 22-0005 ATTACHMENT 9/PAGE 6 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 I. INTRODUCTION The City of Lake Oswego completed its most recent Housing Needs Analysis (HNA) in the fall of 2023.The analysis included an inventory of buildable land for residential uses and a projection of future housing need, consistent with state and regional requirements.The HNA found that, despite a very low assumed growth rate over the 20-year planning horizon, the City of Lake Oswego has a need for nearly 2,000 new housing units, including over 1,100 multi-family and middle housing units. According to the HNA, about half of those units are needed to meet upper income ranges (greater than 120%of the Area Median Income, or AMI), while the remaining half are needed to meet very low to middle income household needs. To advance the City's planning efforts to encourage and allow for development of needed housing,the City is in the process of creating a Housing Production Strategy(HPS), the purpose of which is to identify a set of actions that the City of Lake Oswego will take to facilitate housing development that meets the needs of the community.The HPS focuses on how to fill the gap between the City's housing need and supply, particularly housing available to low-and moderate-income households—and particularly low- cost rental housing. To provide context to Lake Oswego's housing needs, the memorandum uses data from the 2023 Housing Needs Analysis, US Census, and other available sources describe in greater detail the context of socio- economic, demographic trends, and market conditions.This memorandum also incorporates information obtained though stakeholder engagement meetings with affordable housing producers and consumers, landowners, and representatives of underrepresented communities, including people experiencing homelessness, low-income households, renters, and non-profit and governmental organizations serving those in need of housing. 0,1•0•0 i 4 fA i k / 1 P• , ditIN Aitt- .. PEI „,,e , - t. , . 0 loy )frit .i -- jIN, Its . _ i_ -___. pill_ .4, .4t, ., , tic" . . w ' ,, _ ialr":1 r:)r / \\#. ,„--,,,,. tip kitrm- ,' .../ p , yr il t \:‘41‘ ' illfr I. I , MIG,Inc. I Lake Oswego Housing Production Strategy 7 PP 22-0005 ATTACHMENT 9/PAGE 7 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 II. MARKET CONDITIONS The information on housing market conditions provides a look into the way the housing market is or is not meeting the needs of the residents of Lake Oswego. Housing Tenure Lake Oswego has a greater share of homeowner households than renter households.The 2021 ACS estimates that 71%of occupied units were owner occupied, and only 29% renter occupied.The ownership rate is little changed since 2000.The estimated ownership rate is higher across Clackamas County(73%) and lower statewide (63%). Market Conditions (For-Sale Housing) This section presents home sales data from the Regional Multiple Listing Service (RMLS)for the prior 12 months (July 2022 to July 2023).There were 671 home sales in Lake Oswego over this period, or an average of 56 sales/month. Currently, RMLS tracks 181 active listings, or over three months of for-sale inventory at the average rate of the prior 12 months (see Figure 1). Of these listings: • The median sale price was $860,000. • The average (mean) sale price was$1,075,000. • The average price per square foot was$430/square foot • The median square footage was 2,300 square feet • Attached units and condominiums make up a significant share of home sales (28%). • 48%of sales were priced above$900,000. • 34%of sales were priced between $500,000 and $899,000. • Only 18%of sales were priced at less than $500,000. • Only 7%of sales were priced below$300,000. As shown in Figure 2,the median home sale price in Lake Oswego has more than doubled over the past 10 years,from $395k in 2012 to$860k in 2022. Median price growth has averaged 8% per year over the past decade but has recently experienced the strongest one-year growth in 2020 (14%) and 2021 (19%). Mobility patterns and work-from-home trends during the COVID pandemic were the likely contributors to this trend, as remote workers from more expensive markets such as California and Seattle were able to relocate to attractive Oregon communities. Competition for limited housing inventory during those years also contributed to rising prices.The price increases moderated in 2022, growing by only 2%from 2021. MIG,Inc. I Lake Oswego Housing Production Strategy 8 PP 22-0005 ATTACHMENT 9/PAGE 8 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure 1.Lake Oswego Home Sales(12 Months) Home Sales by Unit Type Home Sales by Price Level $900,000+ 319 $800,000-$899,000 66 20% $700,000-$799,000 67 $600,000-$699,000 56 8% $500,000-$599,000 ■ 39 0 0 72% $400,000-$499,000 . 31 $300,000-$399,000 . 47 $200,000-$299,000 ■ 43 $100,000-$199,000 3 Detached Home Manuf. Home <$100,000 0 Attached Home Condo 0 100 200 300 400 Sources: RMLS,JOHNSON ECONOMICS Figure 2.Median Home Sale Price(2010-2022) Median Sale Price $900,000 $soo,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 o oti oti tioti � tiN. N. ti ti ,od d ,oy 'Vd ,o 'V yo� 'oti ,yo Sources: RMLS,JOHNSON ECONOMICS MIG,Inc. I Lake Oswego Housing Production Strategy 9 PP 22-0005 ATTACHMENT 9/PAGE 9 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Affordability: As indicated, roughly 75%of recent sales in Lake Oswego were priced at least$600,000. Homes in this range would be mostly affordable to households earning at least$175,000 per year, which is well above the median household income of$123,000. Roughly 66%of households earn less than $175,000 per year, meaning that the bulk of housing supply on the current for-sale market (75%) is likely too expensive for most of these households. Market Conditions (Rental Housing) Lake Oswego has experienced an uneven vacancy rate over the last two decades, according to data from CoStar.The following figure shows that rental vacancy in the area fell in the prior decade to a low vacancy of under 4%. By 2017, when new apartment inventory was built in Lake Oswego, vacancy climbed temporarily and has been moderating ever since (see Figure 3). Average rents have climbed steadily since 2011 (Figure 4 and Figure 5).The average rent in Lake Oswego has nearly doubled over that period, increasing to roughly$2.20/square foot, or an average of $2,050/month according to data from CoStar. Rents peaked in mid-2022 at an average monthly rate of $2,200/month and an average $2.35/square foot. Figure 6 presents the average annual rent growth since 2001. Rent growth has remained mostly positive since the prior recession.After rents fell at the outset of the COVID pandemic, it reversed by 2010 and growth was positive until the most recent quarters. Since the second quarter of 2023, average rents have fallen an estimated 5%on a year-over-year basis. Figure 3.Rental Vacancy In Lake Oswego(2000-2023) Vacancy Rate 12% 10% 8% 6% 4% 2% 0% 5" ti �i R ti ti R ti 1' " R ti 1' '� R ti ti •c) N. �o- �a �a (o- Ao- 0 0a N. , ') �o- 'o- ,AO 0 Do- tio- �a o- o° o° o° o° o° o° o° o° 6N. 6N. 6N. o, 6N. 6N. 6N. , o1' 61, 6,, ti ti ti ti ti ti ti A, ti ti ti A, ti ti ti ti A, ti ,yo Source:CoStar,Johnson Economics MIG,Inc. I Lake Oswego Housing Production Strategy 10 PP 22-0005 ATTACHMENT 9/PAGE 10 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure 4.Average Rent/Square Foot,Lake Oswego(2000-2023) Effective Rent Per SF $2.50 $2.00 $1.50 $1.00 — $0.50 $0.00 00otitiotio tio° ontio° 01 ow ° o titi tititi� ti° ti`' ti° tit ti° ti° yo tititio- 0 0 0 0 0 0 ti 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti,�,,a ,yo Source:CoStar,Johnson Economics Figure 5.Average Monthly Rent,Lake Oswego(2000-2023) Effective Rent Per Unit $2,500 $EE $500 $0 atia� a� c? o-tia� a'' a°` o-tio-� a'' a°` o-tia� 6? atia"� s° o. oti ) o° o° o� o�' o`� titi titi ti� ti° ti ti ti� ti titi titi �,° yo yo �o yo yo ,yo yo yo yo do yo yo �o yo yo yo yo yo�o yo Source:CoStar,Johnson Economics MIG,Inc. I Lake Oswego Housing Production Strategy 11 PP 22-0005 ATTACHMENT 9/PAGE 11 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure 6.Annual Rent Growth Rate,Lake Oswego(2000-2023) Effective Rent % Growth/Yr 16% 12% 8% 4% 0% -4% — -8% o-0) o-0, o-'' a'' o-') o-. o-0) o-50'5O' o-') o-. o-� o-50'50' o-) o-. o-� o-50'50' �° otiotioo° o`' o° o� oc' ooti° tititiyti� ti° ti`' titi� tititi° titititi3� yo yo yo ,yo ,yo ,yo ,yo yo yo yo ,yo yo ,yo ,yo yo yo yo yo yo yo o ti 1, Source:CoStar,Johnson Economics Affordability: Figure 7 shows the percentage of household income spent on gross rent'for rental households. Roughly half of renter households in Lake Oswego spend more than 30%of their income on rent—meaning that they are housing cost burdened. Further, an estimated 29%of renter households are spending 50%or more of their income on housing and are considered severely housing cost burdened. Figure 7.Percentage of Household Income Spent on Gross Rent,Lake Oswego Renter Households 35% 30% 29% 25% 25% 22% 0 v 20% 15% 14% 46 10% 7% 5% 3% 0% o\o Noo�a ti�\o ��\o �oo\° ore co co �o co t- o� °o %of Income to Gross Rent Sources: US Census,JOHNSON ECONOMICS Census Table: B25070(2021 ACS 5-yr Estimates) 1 The Census defines Gross Rent as"the contract rent plus the estimated average monthly cost of utilities(electricity,gas,and water and sewer) and fuels(oil,coal,kerosene,wood,etc.)if these are paid by the renter(or paid for the renter by someone else)."Housing costs for homeowners include mortgage,property taxes,insurance,utilities and condo or HOA dues. MIG,Inc. I Lake Oswego Housing Production Strategy 12 PP 22-0005 ATTACHMENT 9/PAGE 12 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 III. SOCIO-ECONOMIC AND DEMOGRAPHIC TRENDS AFFECTING HOUSING NEEDS The following table (Figure 8) presents a profile of City of Lake Oswego demographics from the 2000 and 2010 Census. It also reflects the estimated population of this area as of 2023 from PSU estimates, forecasted forward to 2023 using the estimated growth rate between 2010 and 2022. • Lake Oswego is a City of over 41,500 people located in Clackamas County in the southern-central area of the Portland metropolitan region. • Based on estimated population, Lake Oswego is the 13th largest city in the state by population, similar in size to Oregon City regionally, or Keizer and Grants Pass statewide. Lake Oswego has about 1.5 times the population of neighboring West Linn or Tualatin, and about 75%of the population of Tigard. • Lake Oswego has experienced modest growth, growing roughly 18%since 2000, or less than 1% per year. In contrast, Clackamas County and the state experienced population growth of 26% and 25% respectively during the same period. (US Census and PSU Population Research Center) Figure 8.Lake Oswego Population,Households,and Income POPULATION, HOUSEHOLDS, FAMILIES,AND YEAR-ROUND HOUSING UNITS 2000 2010 Growth 2023 Growth (Census) (Census) 00-10 (PSU) 10-23 Population' 35,278 36,619 4% 41,550 13% Households2 14,824 15,893 7% 17,481 10% Fa mil i es3 9,775 10,079 3% 11,842 17% Housing Units4 15,668 16,995 8% 18,345 8% Group Quarters Populations 163 222 36% 329 48% Household Size(non-group) 2.37 2.29 -3% 2.36 3% Avg.Family Size 2.93 2.88 -2% 2.97 3% PER CAPITA AND MEDIAN HOUSEHOLD INCOME 2000 2010 Growth 2023 Growth (Census) (Census) 00-10 (Proj.) 10-23 Per Capita ($) $42,166 $53,652 27% $74,600 39% Median HH($) $71,597 $84,186 18% $123,300 46% SOURCE:Census,Metro Consolidated Forecast,PSU Population Research Center,and Johnson Economics Census Tables: DP-1(2000,2010);DP-3(2000);S1901;519301 1 From Census,PSU Population Research Center,growth rate 2010-2022 extended to 2023 2 2023 Households=(2023 population-Group Quarters Population)/2023 HH Size 3 Ratio of 2023 Families to total HH is based on 2021 ACS 5-year Estimates 4 2023 housing units are the'20 Census total plus new units permitted from'20 through'22(source: Census,City) 5 2023 Group Quarters Population based on 5-year ACSestimates 2017-2021 MIG,Inc. I Lake Oswego Housing Production Strategy 13 PP 22-0005 ATTACHMENT 9/PAGE 13 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Lake Oswego was home to an estimated 17,500 households in 2023, an increase of over 2,650 households since 2000.The percentage of families has increased slightly from 66%of all households in 2000 to 68% in 2023.The city has a similar share of family households to Clackamas County(69%) but higher than the state (63%). Average household size is estimated to have remained fairly stable during this period. Lake Oswego's estimated average household size is 2.4 persons.This is lower than the Clackamas County average of 2.6 and similar to the statewide average of 2.44. Figure 9 shows the rental/ownership split by household size in Lake Oswego. Figure 9.Household Size in Lake Oswego 00 7-or-more � Renter 6-person 1% Owner 2% 5-person 3% , 4% in 2 4-person 11% a) 18% O = 3-person 11/ 19% 2-person 35% 38% 1-person 40% 20% 0% 5% 10% 15% 20% 25% 30% 35% 40% Share of Households Family Households As of the 2021 ACS, 68%of Lake Oswego households were family households, up from 63.4%of households in 2010.The total number of family households in Lake Oswego is estimated to have grown by over 2,060 since 2000.The Census defines family households as two or more persons, related by marriage, birth or adoption and living together. In 2023,family households in Lake Oswego have an estimated average size of 2.97 people. Group Quarters Population As of the 2020 Census,the City of Lake Oswego had an estimated group quarters population of 0.8%of the total population, or 329 persons. Group quarters include such shared housing situations as nursing homes, prisons, dorms, group residences, military housing, or shelters. For the purposes of this analysis, these residents are removed from the estimated population total, before determining the number of MIG,Inc. I Lake Oswego Housing Production Strategy 14 PP 22-0005 ATTACHMENT 9/PAGE 14 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 other types of housing that are needed for non-group households. In Lake Oswego, nearly 90%of the group quarters population is found in assisted living facilities. Age Figure 10 shows the share of the population falling in different age cohorts between the 2000 Census and the most recent 5-year American Community Survey estimates.There is a general trend for middle age and young cohorts to fall as share of total population, while older cohorts have grown in share.This is in keeping with the national trend caused by the aging of the Baby Boom generation. Overall, Lake Oswego has an older population than the county, with a similar share of children, but a smaller share of those aged 25 to 44 years.The cohorts which grew the most in share during this period were those aged 55 to 74 years. Still, an estimated 79%of the population is under 65 years of age. In the 2021 ACS,the local median age was an estimated 46 years, compared to 40 years in Oregon, and 39 years nationally. Figure 10.Age Cohort Trends,2000-2021 25% Lake Oswego(2000) ti o N Lake Oswego(2021) 20% " o 0 o o Clack.Co.(2021) 15% orn m v .-1 ti c N N N o .-I o `1 `-i e - � O o .-I O ." ,-I O .--1 o -1 10% rn 0 lD o 0 5% v o N N c-1 0% Ob. aet �o �o �o �o �o �o ,�o 4) J.C. '• 'V 0) C. 4, (, A(' SOURCE:US Census,JOHNSON ECONOMICS LLC;Census Tables:QT-P1(2000);S0101(2021 ACS 5-yr Estimates) The cohorts which grew the most in share during this period were those aged 55 to 74 years. Still, an estimated 79%of the population is under 65 years of age. In the 2021 ACS, the local median age was an estimated 46 years, compared to 40 years in Oregon, and 39 years nationally. Figure 11 presents the share of households with children, and the share of population over 65 years for comparison. Compared to state and national averages, Lake Oswego has a similar share of households with children. However, at 21%,the share of population over 65 is higher than the state and national figures. MIG,Inc. I Lake Oswego Housing Production Strategy 15 PP 22-0005 ATTACHMENT 9/PAGE 15 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure 11.Share of Households with Children/Population over 65 Years(Lake Oswego) Share of Households with Children Share of Population Over 65 Years 40% 40% 31% 31% 30% 28% 30% 21% 20% 20% 18% a 16/0 10% 10% 0% 0% Lake Oswego Oregon USA Lake Oswego Oregon USA SOURCE:US Census,JOHNSON ECONOMICS LLC;Census Tables:B11005;S0101(2021 ACS 5-yr Estimates) Diversity Trends Figure 12 presents the distribution of Lake Oswego's population by race and Hispanic ethnicity.The community grew more diverse between the 2010 and 2020 Census,with the population's white (non- Hispanic)share falling from 90%to 80%.The Asian population makes up 8%of the population, and the Hispanic or Latino population makes up 5%of residents. 9%of residents identify as two or more races. Figure 12.Racial and Ethnic Diversity,2010-2020(Lake Oswego) 100% o Share of Population by Race o Lake Oswego(2010) oo 80% •Lake Oswego(2020) 60% •Clackamas Co. 40% Oregon 20% c ° o 000 o Lil o o 0% �� ME _■ — J N C -0 N C C a) 4O1 O m C > ro N C o QwU z Q -6 CO C Cfo N ce N °1 J °1 O O La U (6 := ti� U Ii O= co E I- m o cn 2 SOURCE:US Census,JOHNSON ECONOMICS LLC;Census Tables:P1,P2(2010,2020) In comparison, the share of the population identifying as white is also 80% in Clackamas County, and 75%statewide.The share of Lake Oswego's population identifying as Hispanic or Latino is 5%of the population, indicating over 2,100 people as of the 2020 Census.This is lower than the 14%share statewide. MIG,Inc. I Lake Oswego Housing Production Strategy 16 PP 22-0005 ATTACHMENT 9/PAGE 16 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure 13.Average Number of Persons per Household by Racial and Ethnic Category(Oregon) Average Household Size by Race& Ethnicity(Oregon) All Households 2.5 White alone 2.4 Black or African American alone 2.5 American Indian and Alaska Native alone 2.8 Asian alone 2.8 Native Hawaiian and Pacific Islander 3.5 Hispanic or Latino 3.7 Some Other Race alone 4.0 Two or more races: 2.7 0.0 1.0 2.0 3.0 4.0 5.0 Avg.Number of Persons per Household SOURCE:US Census,JOHNSON ECONOMICS LLC;Census Tables:P17A-H,(State of Oregon,2020) *This data is presented on a statewide basis using the most recent Census data available(2010). The data for the Lake Oswego or Clackamas County geographies feature unusually large margins of error due to the small sample size. As shown in Figure 13, minority households tend to have a larger average household size than the average of all households. (This figure presents statewide data due to the high margin of error for local data in this data set.) Households identifying as "white alone" have the lowest average household size (2.4 persons), while all other racial and ethnic categories have a larger estimated average household size. Some of the non-white categories, such as black households and those of two or more races, are still similar in average size (2.5 and 2.7 persons, respectively).Those with the largest estimated households are Latinos, Pacific Islanders, and those identifying as "some other race." Larger average household size indicates a need for units with more bedrooms on average among many minority households. Each household has its own housing needs in terms of the number of bedrooms and other factors, based on the specific makeup of each family. Based on voluntary guidelines provided by HUD for public housing programs, households of between 2 persons generally need a one-bedroom unit, households with 3 persons might need two bedrooms, and those with 4 persons might need three bedrooms. Larger households may need four or more bedrooms, which are typically found in single detached homes. Based on statewide data, many racial and ethnic minorities are currently less likely to own the homes they occupy(Figure 14)—meaning that they tend to occupy rental units.These communities face systemic obstacles to home ownership, including lower generational wealth, less access to capital and financing, and a history of discrimination in lending and geography(e.g., redlining). While the country and state try to address explicit discrimination through the law, the legacy of these barriers continues to hamper home ownership for many minority households. Going forward, many communities would MIG,Inc. I Lake Oswego Housing Production Strategy 17 PP 22-0005 ATTACHMENT 9/PAGE 17 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 benefit from more entry-level homebuying opportunities for these households, as well as additional rental housing for those who are still unready or unable to buy a home. Figure 14.Home Ownership Rate by Racial and Ethnic Category(Oregon) Owner-Occupied Households by Race& Ethnicity(Oregon) All Households 63% White alone 65% Black or African American alone 36% American Indian and Alaska Native alone 48% Asian alone 63% Native Hawaiian and Pacific Islander 32% Hispanic or Latino 45% Some Other Race alone 43% Two or more races: 50% 0% 20% 40% 60% 80% 100% Ownership Rate SOURCE:US Census,JOHNSON ECONOMICS LLC;Census Tables:B25003A-H,(State of Oregon,2021 ACS 5-year) *This data is presented on a statewide basis using the most recent Census data available(2020). The data for the Lake Oswego or Clackamas County geographies feature larger margins of error due to small sample size in some of the racial categories. Populations from some racial and ethnic minority groups also have lower average incomes and are more likely to have income below the official poverty level when compared to the total population. Such income levels are correlated with a greater share of renter households and impact the types of housing these populations consume, as discussed in further detail below. People with a Disability An estimated 8%of the population of Lake Oswego, or 3,140 people, report having some form of disability.This is lower than the statewide rate of 14%and the Clackamas County rate of 12%of people with a disability. (The Census reports these statistics for the "non-institutionalized population.") Figure 15 presents Census estimates of the types of disability reported among Lake Oswego residents. Any type of disability impacts the type of housing that may be appropriate for a resident, but those with the greatest impact on needed unit type are generally an ambulatory, self-care, or independent living disability.Those with an ambulatory disability often need units with expanded access for a wheelchair, walker, or scooter.Those with self-care or independent living disabilities may require additional safety precautions around the home to protect a resident who cannot always be directly monitored. MIG,Inc. I Lake Oswego Housing Production Strategy 18 PP 22-0005 ATTACHMENT 9/PAGE 18 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure 15.Lake Oswego Share of the Population with Disability,By Type Share of Population Population with a disability 7.8% Hearing difficulty 2.4% Vision difficulty 1.7% Cognitive difficulty 2.7% Ambulatory difficulty 2.9% Self-care difficulty 1.1% Independent living difficulty 2.3% 0% 2% 4% 6% 8% 10% SOURCE:US Census,JOHNSON ECONOMICS LLC;Census Tables:DP02,(2020 ACS 5-year) Figure 16.Lake Oswego Population with a Disability,byAge Share of Population with Disability by Age Total population 7.8% Under 18 years . 2.0% 18 to 64 years 5.8% 65 years and over 19.5% 0% 5% 10% 15% 20% 25% SOURCE:US Census,JOHNSON ECONOMICS LLC;Census Tables:DP02,(2020 ACS 5-year) Older residents are more likely to report a disability, including nearly 20%of those over 65 years. Of those aged 18 to 64 years, 6%of the local population reports a disability, and 2%of children. Because Census data tends to undercount the homeless and other vulnerable populations,there are likely more disabled residents in Lake Oswego than reflected in these data. MIG,Inc. I Lake Oswego Housing Production Strategy 19 PP 22-0005 ATTACHMENT 9/PAGE 19 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Income Trends As shown in Figure 17, Lake Oswego's estimated median household income was$123,000 in 2023.This is nearly 40% higher than the Clackamas County median of$88,500, and 75% higher than the statewide median of$70,000. Lake Oswego's per capita income is roughly$75,000. Median income has grown an estimated 46% between 2010 and 2023, in real dollars. Inflation was an estimated 34%over this period, so the local median income has well exceeded inflation.This is not the case in many regions and nationally,where income growth has not kept pace with inflation. Figure 17.Income Trends,2000-2023(Lake Oswego) PER CAPITA AND MEDIAN HOUSEHOLD INCOME 2000 2010 Growth 2023 Growth (Census) (Census) 00-10 (Proj.) 10-23 Per Capita ($) $42,166 $53,652 27% $74,600 39% Median HH($) $71,597 $84,186 18% $123,300 46% SOURCE:Census,Metro Consolidated Forecast,PSU Population Research Center,and Johnson Economics Census Tables: DP-1(2000,2010);DP-3(2000);S1901;S19301 Figure 18.Household Income Cohorts,2021(Lake Oswego) Household Income Groups $200,000 or more 27% $150,000 to$199,999 12% $100,000 to$149,999 20% $75,000 to$99,999 11% $50,000 to$74,999 11% $35,000 to$49,999 6% $25,000 to$34,999 4% $15,000 to$24,999 4% $10,000 to$14,999 2% Less than$10,000 3% 0% 5% 10% 15% 20% 25% 30% SOURCE: US Census,Census Tables:S1901(2021 ACS 5-yr Est.) Figure 18 presents the estimated distribution of households by income as of 2021.The largest income cohorts are those households earning between $100k and $200k per year(32%), followed by households earning over$200k(27%). Approximately 41%of households earn less than $100,000. Roughly 19%of households earn less than $50k per year. MIG,Inc. I Lake Oswego Housing Production Strategy 20 PP 22-0005 ATTACHMENT 9/PAGE 20 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Poverty According to the US Census,the official poverty rate in Lake Oswego is an estimated 4%over the most recent period reported (2021 5-year estimates).z This is roughly 1,700 individuals in Lake Oswego. In comparison, the official poverty rate in Clackamas County is 9%, and at the state level is 17%. As shown in Figure 19, in the 2017-21 period: • The Lake Oswego poverty rate is low among all groups, but highest among those 65 years and older at 5%.The rate is 4%among those 18 to 64 years of age.The estimated rate is lowest for children at 3%. • For those without a high school diploma,the poverty rate is 11%. • Among those who are employed the poverty rate is 2%,while it is 7%for those who are unemployed. • Information on affordable housing is presented in Section II F of this report. Figure 19.Poverty Status by Category(Lake Oswego) Poverty Level of Subgroups Under 18 years 3% 18 to 64 years 4% 65 years and over 5% Employed 2% Unemployed 7% Less than high school 11% High school 10% Some college, associate's 7% Bachelor's degree or higher 3% 0% 5% 10% 15% 20% SOURCE: US Census;Census Tables: S1701(2021 ACS 5-yr Est.) 2 Census Tables:S1701(2018 ACS 5-yr Estimates);Methodology The Census Bureau uses a set of income thresholds that vary by family size and composition to determine who is in poverty.There are 48 separate income thresholds set based on the possible combinations of household composition. MIG,Inc. I Lake Oswego Housing Production Strategy 21 PP 22-0005 ATTACHMENT 9/PAGE 21 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 People Experiencing Homelessness The Census makes a multi-faceted effort to include the unhoused population in the total Decennial Census count, by attempting to enumerate these individuals at service providers, and in transitory locations such as RV parks or campgrounds, as of the official Census data (4/1/20). However, it is difficult to make an accurate count of this population, and it is generally presumed that the unhoused are undercounted in the Census. The most recent(January 2023) Point-in-Time count of people experiencing homelessness and households experiencing homelessness in Clackamas County'found 410 unhoused individuals on the streets, in shelters, or other temporary and/or precarious housing.This is a 31%decrease from the 597 individuals counted in 2022, which was likewise a decline from the prior count.The estimated 410 unhoused individuals represent 0.1%of the county's total estimated population in 2023. A detailed breakdown of the data from the 2023 count is not yet available. The following are some demographic indicators from the 2022 count: • An estimated 45%of individuals were in some sort of temporary shelter, while 55%were unsheltered. • Of those indicating a gender, 60%of those counted identified as men,40%women. • Five percent of those counted were Hispanic or Latino compared to 9.5% in the general population. • Approximately 51%,were counted as "chronically homeless".4 While the Point-in-Time count is one of the few systematized efforts to count people experiencing homelessness across the country in a regular, structured way, it is widely thought to undercount the population of unhoused individuals and households. People who are doubled up, couch surfing, or experiencing domestic violence may not always be accurately counted. In addition to the impossibility of finding all unsheltered individuals experiencing homelessness,the count is conducted in late January, when homeless counts are likely near their lowest of the year due to inclement weather. It also relies on self-reporting. Data on unhoused school-aged children is tracked in keeping with the McKinney-Vento Act.The Department of Education reports that in the 2021/22 school year, there were 41 enrolled students experiencing homelessness in Lake Oswego School District, and an estimated 304 children between the ages of 5 and 17 living in poverty. The persistence of people experiencing homelessness speaks to the need for continuing to build a full spectrum of services and housing types to shelter this population, from temporary shelter to subsidized affordable housing.An analysis of the ability of current and projected housing supply to meet the needs of low-income people and the potential shortfall is included in the following sections of this report. 3 Figures are for the entire County 4 HUD defines "chronically homeless" as an individual with a disability as defined by the McKinney-Vento Assistance Act, who has been in uninhabitable conditions for more than 12 mo.or on four separate occasions in the last three years;or has been in institutional care for less than 90 days;or a family with an adult head of household who meets this definition. MIG,Inc. I Lake Oswego Housing Production Strategy 22 PP 22-0005 ATTACHMENT 9/PAGE 22 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Households Needing Publicly Assisted Housing Oregon Housing and Community Services (OHCS)tracks three currently operating subsidized affordable housing properties in Lake Oswego,with a total of 76 units.These are properties that are funded through HUD programs,tax credits and other programs which guarantee subsidized rents for qualified households.All of these units, save one, are offered for elderly residents. The Marylhurst Commons, currently under development, is planned to offer 100 affordable units for families when constructed. Upon completion in 2024,the total 176 subsidized units in Lake Oswego will represent 1%of the local housing stock. An additional 8 units of 80%AMI housing are also in the pipeline as part of the North Anchor project. The Housing Authority of Clackamas County administers over 1,600 Section 8 housing choice vouchers that allow low-income participants to find rental units anywhere in the county. Under this program,the renters can find participating landlords and the voucher helps to subsidize the cost of a market-rate rental unit.The unit does not have to be in a property dedicated to subsidized affordable housing but can be in any rental property. The high share of renters still paying over 30%of their income towards housing costs indicates that there is an ongoing need for rental units at the lowest price points. Agricultural Workers Lake Oswego is not currently home to properties dedicated to agricultural workers.This population may also be served by other available affordable units. Veterans This group is called out as a population with specific needs and which is often under-represented in planning for future needed housing. In general,veterans often may have physical or mental health disabilities resulting from injuries or stress experienced during their service.They also frequently have fixed, lower incomes and need access to services provided by the US Veterans Administration or other service providers.As a result,they share many of the same unmet needs described here for people with disabilities, low-income households, and in some cases senior residents. MIG,Inc. I Lake Oswego Housing Production Strategy 23 PP 22-0005 ATTACHMENT 9/PAGE 23 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Figure 20. Veterans in Lake Oswego Individuals Share of Adult Population Total Veterans 1,801 5.7% Period of Service Share of Veterans Gulf War(9/2001 or later)veterans 344 19.1% Gulf War(1990 to 8/2001)veterans 335 18.6% Vietnam era veterans 634 35.2% Korean War veterans 140 7.8% World War II veterans 83 4.6% Other 265 14.7% Veteran Age Share of Veterans 18 to 34 years 107 5.9% 35 to 54 years 335 18.6% 55 to 64 years 232 12.9% 65 to 74 years 474 26.3% 75 years and over 653 36.3% Veteran Poverty Status 61 3.4% Veterans with a Disability 375 20.9% Source:Table 52101,ACS 2021 5-Year,Johnson Economics MIG,Inc. I Lake Oswego Housing Production Strategy 24 PP 22-0005 ATTACHMENT 9/PAGE 24 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 IV. BARRIERS TO DEVELOPMENT OF NEEDED HOUSING Numerous factors contribute to the availability and/or lack of needed housing in Lake Oswego—market factors, physical conditions, regulations, public investments, etc. Some of these factors can serve as barriers to the production of housing that is most needed in the city.To understand the major barriers to developing needed housing in Lake Oswego,the project team interviewed a number of stakeholders involved in housing production in the city.These interviews were conducted in September and October 2023 and included market-rate developers and architects with experience in single-family, middle housing, and multi-family housing production; nonprofit housing providers, including Habitat for Humanity and Mercy Housing Northwest; and City staff involved in Planning and Redevelopment. Following are some of the key housing needs that the stakeholders identified as gaps in the market: • Affordable housing for low-and moderate-income households • Middle housing (e.g., townhomes, duplexes, and cottage clusters) • Housing options for seniors and opportunities for aging in place • Options for more attainable homeownership (e.g., condos and middle housing) • Apartments with family-size units (2-3 bedrooms) • Multi-family housing outside the Town Center In terms of barriers to meeting these needs, and to housing production more generally, some of the major themes are summarized below. • High cost of land in Lake Oswego.The city has very high land values,which translates to high rental and sale prices, and makes deed-restricted affordable housing especially challenging to pencil out. • Few large, developable sites.There is limited land within the City and urban service boundary to support multi-family housing and other development types that typically rely on larger parcels of land.The Buildable Lands Inventory prepared as part of the Housing Needs Analysis also supports this notion—finding a deficit of buildable land to meet future housing needs, including lands zoned for high-density housing. • Code barriers.Stakeholders identified a range of barriers to housing development in the Lake Oswego Community Development Code. Stakeholders expressed that the City's code is especially challenging to work with compared to some other jurisdictions.The following specific code barriers were identified: o Overlay and Design District standards are highly prescriptive,which can add to the cost of development and limit flexibility. Stakeholders pointed to detailed architectural standards as being a particular challenge—e.g., requirements for specific siding materials adding to construction costs. o Tree protection and tree planting and landscaping standards are also very prescriptive and can be difficult to meet on constrained sites. MIG,Inc. I Lake Oswego Housing Production Strategy 25 PP 22-0005 ATTACHMENT 9/PAGE 25 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 o Open space standards for multi-family housing are considered by stakeholders to be excessive, limit the available space on a site for housing units, and don't necessarily lead to great outcomes.They note that open spaces can be smaller and more concentrated while still providing appealing amenities for residents. o Setbacks and other standards limit middle housing infill opportunities. Stakeholders shared that siting standards can make it difficult for middle housing such as duplexes and townhomes to fit on existing lots. • Process barriers. Stakeholders also noted that Lake Oswego's development review and permitting processes can be lengthy and contribute to housing costs.A few stakeholders noted that this limits the number of developers that are interested in building in the city. In particular: o The design review process in Design Districts adds time and cost. o Building permit review can also be slow. o Due to prescriptive standards, applicants often need to apply for multiple variances, which lengthens the process and adds uncertainty. o Public improvements (e.g., road improvements and utilities) can be very costly. • Neighbor opposition. A few stakeholders also noted that neighbor opposition to affordable or higher-density housing can drag out the process and add to costs. • Market trends.At the time of this analysis,there are some headwinds to development of new housing regionally and nationwide.These include inflation in the cost of building inputs such as labor, materials, and land. Increasing interest rates in recent years that haven't been offset by a proportionate fall in property prices are another major impediment. A focus of the Housing Production Strategy will be to identify tools and strategies to remove or reduce these barriers or help housing producers overcome them. MIG,Inc. I Lake Oswego Housing Production Strategy 26 PP 22-0005 ATTACHMENT 9/PAGE 26 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 V. ADOPTED MEASURES The City of Lake Oswego already implements a variety of measures intended to enable or facilitate the production of needed housing.The City submitted a "Pre-HPS Survey"to DLCD in 2022, as required by former subsection 2 of ORS 456.586, which includes an exhaustive list of the housing measures the City has adopted and implemented. In combination with the other findings in the Contextualized Housing Needs report,this list will help the City and community understand where there are gaps in the City's approach toward meeting its housing needs. Below is a summary of the key housing measures adopted by the City, organized into the categories defined by DLCD.The full list of adopted measures will be included as an appendix to the HPS Report. Zoning Strategies • Height/density bonus for affordable developments—The City allows a limited height or density bonus for affordable developments in the West Lake Grove Design District(WLG-OC) and R-DD zones. • Increased code flexibility for accessory dwelling units—The City removed occupancy requirements for ADUs and expanded maximum ADU size to 1,000 sq.ft.for internal remodels of primary dwellings. • Short-term rental regulations—The City requires that short-term rental is a home occupation where a resident lives on the lot. Short-term rentals are not permitted in ADUs where the ADU received a system development charge (SDC)waiver. • Mandatory affordable housing—City requires affordable housing(affordable to those earning 80%or less of AMI) on a portion of the Marylhurst Special District and a portion of the West Lake Grove Design District (WLG-OC zone)where multifamily use is allowed. • Increased density near transit stations—The mixed-use zoning that is in place near transit— Metro 'town centers'—allows residential use and does not limit density. These areas have developed/redeveloped with high-density(50-100 units per acre) development in recent years. • Lot coverage bonus for housing—The City allows a limited lot coverage bonus within the Lake Grove Village Center Overlay (LGVCO) for developments where housing is provided. Reducing Regulatory Impediments • Removed parking mandates near transit— In compliance with the state's Climate-Friendly and Equitable Communities rules, the City does not apply minimum parking requirements within 1/2-mile of priority transit, which includes the entire Downtown Town Center, and will remove minimum parking requirements in the City's other climate-friendly area (Lake Grove Village Center)to comply with CFEC rules. • Expedites permitting for affordable housing—The City has a practice of expediting the permitting process for deed-restricted affordable units. Financial Incentives • Waives fees for affordable housing and ADUs—The City has adopted regulations to waive SDCs and development review fees for income restricted affordable housing(80%or less of AMI) and for accessory dwelling units.The City has exempted $388,073 in SDCs for ADUs since 2019. MIG,Inc. I Lake Oswego Housing Production Strategy 27 PP 22-0005 ATTACHMENT 9/PAGE 27 OF 28 Contextualized Housing Needs Assessment(DRAFT) 11/16/2023 Financial Resources • Uses urban renewal funds to support housing—The Lake Oswego Redevelopment Agency underwrote some of the costs in the North Anchor development downtown to ensure the provision of deed-restricted affordable housing units using funds from the City's urban renewal program. Land Acquisition, Lease, and Partnerships • Surplus City-owned land/land banking for affordable housing—The City does this with vacant or underutilized sites, most recently the 1.4-acre construction staging property for the Boones Ferry Road Improvement Project.The site will be used to create 50 deed-restricted affordable housing units, using Metro Affordable Housing Bond funds. • Public-private partnerships—The City has worked with organizations such as Habitat for Humanity and Mercy Housing Northwest to produce affordable housing units. • Conversion of underperforming commercial assets—The Lake Oswego Redevelopment Agency acquired the North Anchor site to convert this commercial property into a mixed-use development with affordable and market-rate housing. • Utilizing surplus land owned by faith-based organization for housing—The City worked collaboratively with the Sisters of Holy Names of Jesus and Mary(Sisters)when they were considering reuse of the former Marylhurst University Campus. Ultimately,the Sisters entered into an agreement with Mercy Housing NW for construction of 100 units of affordable family housing. MIG,Inc. I Lake Oswego Housing Production Strategy 28 PP 22-0005 ATTACHMENT 9/PAGE 28 OF 28 ATTACHMENT 10 Council Voting Results Housing Production Strategies for Council Discussion City Council Study Session— November 7, 2023 Housing Production Strategy#1:Zoning Bonuses for Affordable Housing Very High Support 0 High Support 3 Medium Support 2 Low Support 1 Very Low Support 1 Housing Production Strategy#2:Code Audit and Amendments Very High Support 4 High Support 1 Medium Support 2 Low Support t} Very Low Support t} PP 22-0005 ATTACHMENT 10/PAGE 1 OF 5 Housing Production Strategy#3:Minimum Density Requirements for to-be-Annexed Land Very High Support 0 High Support 0 Medium Support 1 Low Support 2 Very Low Support 4 Housing Production Strategy#4:Rezone Land Very High Support 3 High Support 4 Medium Support 0 Low Support 0 Very Low Support 0 PP 22-0005 ATTACHMENT 10/PAGE 2 OF 5 Housing Production Strategy#5:Infrastructure Planning to Support Housing Very High Support 1 High Support 0 Medium Support 0 Low Support 4 Very Low Support 2 Housing Production Strategy#6:Modify Systems Development Charges(SDCs) Very High Support 2 High Support 3 Medium Support 0 Low Support 1 Very Low Support 1 PP 22-0005 ATTACHMENT 10/PAGE 3 OF 5 Housing Production Strategy#7:Construction Excise Tax(CET) Very High Support 0 High Support 0 Medium Support 0 Low Support 3 Very Low Support 4 Housing Production Strategy#8:General Obligation(GO)Bonds Very High Support 1 High Support 0 Medium Support 0 Low Support 1 Very Low Support 5 PP 22-0005 ATTACHMENT 10/PAGE 4 OF 5 Housing Production Strategy#9:Tax Exemption and Abatement Very High Support 3 High Support 2 Medium Support 1 Low Support 1 Very Low Support 0 PP 22-0005 ATTACHMENT 10/PAGE 5 OF 5 ATTACHMENT 11 hk z. - _ -71 Source:Lake Oswego Chamber of Commerce CITY OF LAKE OSWEGO, OR HOUSING NEEDS ANALYSIS (OREGON STATEWIDE PLANNING GOAL 10) 20-YEAR HOUSING NEED 2023 - 2043 September 21, 2023 JOHNSON ECONOMICS PP 22-0005 ATTACHMENT 11/PAGE 1 OF 55 Acknowledgments Johnson Economics prepared this report for the City of Lake Oswego.Johnson Economics and the City of Lake Oswego thank the many people who helped to develop this document. City Staff Erik Olson, Long Range Planning Manager Jessica Numanoglu, Interim Community Development Director Lake Oswego Housing Task Force Kasey Adler,Transportation Advisory Board Yoko Kinoshita, Resident Kyrsten Baumgart, Housing producer Rebecca Lane, Resident Phil Bertrand, Housing producer Rosalie Nowalk, Resident Joseph M. Buck, City Council Liaison John E. Pauley, Resident Thea Croman, DLCD Bruce Poinsette, Development Review Commission Kelly Reid, DLCD Phillip Stewart, Planning Commission Liaison Douglas Corder, 50+Advisory Board David Tangvald, Housing producer Pat Ginn, Resident Kimvi To, D.E.I. Advisory Board Diana Howell, Resident John Turchi, Resident Cara Kao-Young, Resident Sarah Walker, Housing producer Betty Jung, Resident Consultants Brendan Buckley,Johnson Economics Andrew Parish, MIG Matt Hastie, MIG This report was prepared in accordance with the requirements of OAR 660 Division 8:Interpretation of Goal 10 Housing. This project is funded by the State of Oregon through the Department of Land Conservation and Development. The contents of this document do not necessarily reflect the views or policies of the State of Oregon. City of Lake Oswego Johnson Economics 380 A Ave. 621 SW Alder Street Lake Oswego, OR 97034 Suite 605 (503) 635-0270 Portland, OR 97205 (503) 295-7832 CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 1 PP 22-0005 ATTACHMENT 11/PAGE 2 OF 55 TABLE OF CONTENTS I. INTRODUCTION 3 II. CITY OF LAKE OSWEGO DEMOGRAPHIC PROFILE 4 A. POPULATION GROWTH 5 B. HOUSEHOLD GROWTH &SIZE 5 C. FAMILY HOUSEHOLDS 5 D. GROUP QUARTERS POPULATION 6 E. HOUSING UNITS 6 F. AGE TRENDS 6 G. DIVERSITY TRENDS 8 H. PEOPLE WITH A DISABILITY 10 I. INCOME TRENDS 11 J. POVERTY STATISTICS 12 K. EMPLOYMENT LOCATION TRENDS 12 III. CURRENT HOUSING CONDITIONS 14 A. HOUSING TENURE 14 B. HOUSING STOCK 14 C. NUMBER OF BEDROOMS 14 D. UNIT TYPES BY TENURE 15 E. AGE AND CONDITION OF HOUSING STOCK 16 F. HOUSING COSTS VS. LOCAL INCOMES 17 G. PUBLICLY ASSISTED HOUSING 18 IV. CURRENT HOUSING NEEDS(CITY OF LAKE OSWEGO) 20 V. FUTURE HOUSING NEEDS-2043(CITY OF LAKE OSWEGO) 26 VI. RECONCILIATION OF FUTURE NEED(2043)&LAND SUPPLY 32 APPENDIX A: BUILDABLE LAND INVENTORY SUMMARY 35 CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 2 PP 22-0005 ATTACHMENT 11/PAGE 3 OF 55 I. INTRODUCTION This analysis outlines a forecast of housing need within the City of Lake Oswego. Housing need and resulting land need are forecast to 2043,consistent with the 20-year need assessment requirements of Oregon Revised Statutes.' This report presents a housing need analysis (presented in number and types of housing units) and a residential land need analysis, based on those projections. The primary data sources used in generating this forecast were: ■ Portland State University Population Research Center ■ Metro ■ U.S. Census ■ Claritas2 ■ Oregon Employment Department ■ City of Lake Oswego ■ Clackamas County ■ Other sources are identified as appropriate. This analysis relies heavily on Census data from both the 2020 Decennial Census and the American Community Survey (ACS).All Census data feature some margin of error but remain the best source of data available on many demographic and housing subjects. One limitation of the 2020 Census is the release schedule of data sets,which takes place over several years following the year of the Census. Thus far, data has been released on: Population; Race; Latino ethnicity; number of Households; number of Housing Units; and Group Quarters population. While these are key baseline data sets utilized in this analysis, any additional nuance on demographics and housing from the 2020 Census are not yet available,with the next data release expected later in 2023. Despite the limitations,the 2020 Census is relied upon here as the best available source for the key indicators listed above in Lake Oswego,as of 2023. For more detailed data sets on demographics and housing,this analysis relies on the American Community Survey (ACS), which features a higher margin of error on all tables than the Decennial Census. The ACS is a survey of a representative sample of households which the Census uses to make estimates generalized to the population of the relevant geography.This analysis relies whenever possible on the most recent 2021 ACS 5-year estimates.The 5-year estimates have a lower margin of error than the ACS 1-year estimates. 1 ORS 197.628;OAR 660-025 2 Claritas is a third-party company providing data on demographics and market segmentation.It licenses data from the Nielson Company which conducts direct market research including surveying of households across the nation. Nielson combines proprietary data with data from the U.S.Census,Postal Service,and other federal sources,as well as local-level sources such as Equifax,Vallassis and the National Association of Realtors. Projections of future growth by demographic segments are based on the continuation of long-term and emergent demographic trends identified through the above sources. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 3 PP 22-0005 ATTACHMENT 11/PAGE 4 OF 55 II. CITY OF LAKE OSWEGO DEMOGRAPHIC PROFILE SUMMARY The following table (Figure 2.1) presents a profile of City of Lake Oswego demographics from the 2000 and 2010 Census. It also reflects the estimated population of this area as of 2023 from PSU estimates,forecasted forward to 2023 using the estimated growth rate between 2010 and 2022. ■ Lake Oswego is a City of over 41,500 people located in Clackamas County in the southern-central area of the Portland metropolitan region. ■ Based on estimated population, Lake Oswego is the 13th largest city in the state by population, similar in size to Oregon City regionally,or Keizer and Grants Pass statewide.Lake Oswego has about 1.5 times the population of neighboring West Linn or Tualatin,and about 75%of the population of Tigard. ■ Lake Oswego has experienced modest growth, growing roughly 18% since 2000, or less than 1% per year. In contrast, Clackamas County and the state experienced population growth of 26% and 25% respectively. (US Census and PSU Population Research Center) FIGURE 2.1:LAKE OSWEGO DEMOGRAPHIC PROFILE POPULATION, HOUSEHOLDS, FAMILIES,AND YEAR-ROUND HOUSING UNITS 2000 2010 Growth 2023 Growth (Census) (Census) 00-10 (PSU) 10-23 Population1 35,278 36,619 4% 41,550 13% Households2 14,824 15,893 7% 17,481 10% Families3 9,775 10,079 3% 11,842 17% Housing Units4 15,668 16,995 8% 18,345 8% Group Quarters Populations 163 222 36% 329 48% Household Size(non-group) 2.37 2.29 -3% 2.36 3% Avg.Family Size 2.93 2.88 -2% 2.97 3% PER CAPITA AND MEDIAN HOUSEHOLD INCOME 2000 2010 Growth 2023 Growth (Census) (Census) 00-10 (Proj.) 10-23 Per Capita ($) $42,166 $53,652 27% $74,600 39% Median HH($) $71,597 $84,186 18% $123,300 46% SOURCE:Census,Metro Consolidated Forecast,PSU Population Research Center,and Johnson Economics Census Tables: DP-1(2000,2010);DP-3(2000);S1901;519301 1 From Census,PSU Population Research Center,growth rate 2010-2022 extended to 2023 2 2023 Households=(2023 population-Group Quarters Population)/2023 HH Size 3 Ratio of2023 Families to total HH is based on 2021 ACS5-year Estimates 4 2023 housing units are the'20 Census total plus new units permitted from'20 through'22(source: Census,City) 5 2023 Group Quarters Population based on 5-year ACS estimates 2017-2021 ■ Lake Oswego was home to an estimated 17,500 households in 2023, an increase of over 2,650 households since 2000. The percentage of families has increased slightly from 66% of all households in 2000 to 68% in 2023. The city has a similar share of family households to Clackamas County (69%) but higher than the state (63%).Average household size is estimated to have remained fairly stable during this period. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 4 PP 22-0005 ATTACHMENT 11/PAGE 5 OF 55 • Lake Oswego's estimated average household size is 2.4 persons. This is lower than the Clackamas County average of 2.6 and similar to the statewide average of 2.44. A. POPULATION GROWTH Since 2000, Lake Oswego has grown by nearly 6,300 people within the UGB, or 18% in 23 years. This was lower than the countywide rate of growth. Clackamas County as a whole has grown an estimated 26%since 2000, while other cities in the county such as West Linn and Oregon City grew by 23% and 46% respectively. Portland's population grew by an estimated 19%during this period (PSU Population Research Center). B. HOUSEHOLD GROWTH&SIZE As of 2023,the city has an estimated 17,500 households. Since 2000, Lake Oswego has added an estimated 2,650 households.This is an average of roughly 115 households annually during this period. The growth since 2000 has paced the growth in new housing units,which have been permitted at the rate of roughly 117 units per year. There has been a general trend in Oregon and nationwide towards declining household size as birth rates have fallen, more people have chosen to live alone, and the Baby Boomers have become "empty nesters." While this trend of diminishing household size is expected to continue nationwide,there are limits to how far the average can fall. Lake Oswego's average household size of 2.4 people,with 68%family households,is smaller than Clackamas County (2.6 persons; 69%families). Figure 2.2 shows the share of households by the number of people for renter and owner households in 2021(latest data available),according to the Census.Renter households are more likely to be one-person households,with 75% having two or fewer residents. Owner households are more likely to have two or more persons. FIGURE 2.2:NUMBER OF PEOPLE PER HOUSEHOLD,CITY OF LAKE OSWEGO 0 7-or-more 0% Renter 6 person 1% Owner 2% 5-person 3% 4% in 2° 4-person 11% 18% a = 3-person 11/0 0 19/0 2-person 35/ o 38/o 1-person 40% 20% 0% 5% 10% 15% 20% 25% 30% 35% 40% Share of Households SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables: B25009(2021 ACS 5-yr Estimates) C. FAMILY HOUSEHOLDS As of the 2021 ACS,68%of Lake Oswego households were family households,up from 63.4%of households in 2010. The total number of family households in Lake Oswego is estimated to have grown by over 2,060 since 2000.The Census defines family households as two or more persons, related by marriage, birth or adoption and living together. In 2023,family households in Lake Oswego have an estimated average size of 2.97 people. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 5 PP 22-0005 ATTACHMENT 11/PAGE 6 OF 55 D. GROUP QUARTERS POPULATION As of the 2020 Census, the City of Lake Oswego had an estimated group quarters population of 0.8%of the total population, or 329 persons. Group quarters include such shared housing situations as nursing homes, prisons, dorms, group residences, military housing, or shelters. For the purposes of this analysis, these residents are removed from the estimated population total, before determining the number of other types of housing that are needed for non-group households.In Lake Oswego,nearly 90%of the group quarters population is found in assisted living facilities. E. HOUSING UNITS Data from the City of Lake Oswego and the US Census indicate that the city added roughly 2,680 new housing units since 2000, representing 17% growth in the housing stock. This number of new units is slightly higher than the growth in new households estimated during the same period (2,660), indicating that housing growth has kept pace with growing need. As of 2023, the city had an estimated housing stock of roughly 18,350 units for its 17,500 estimated households. This translates to an estimated average vacancy rate of 4.7%. Residential Permits:An average of 117 units have been permitted annually since 2000,with 24%being multi-family units. Most multi-family housing in Lake Oswego has been built in the last decade. FIGURE 2.3:HISTORIC AND PROJECTED RESIDENTIAL PERMITS,CITY OF LAKE OSWEGO Housing Permits •Multi-Family 350 •Single Family 300 250 200 150 100 ■ 50 I I I I I I I ' I I I I I I I Hi . 0 00 O1 liii Oco Orb O 'L yR tico ti� LO y'L ,LO .y0 ,LO ,LO ,LO .y0 ,LO ,LO ,LO .y0 ,LO ,LO SOURCE:HUD F. AGE TRENDS The following figure shows the share of the population falling in different age cohorts between the 2000 Census and the most recent 5-year American Community Survey estimates. As the chart shows,there is a general trend for middle age and young cohorts to fall as share of total population, while older cohorts have grown in share.This is in keeping with the national trend caused by the aging of the Baby Boom generation. Overall, Lake Oswego has an older population than the county,with a similar share of children, but a smaller share of those aged 25 to 44 years. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 6 PP 22-0005 ATTACHMENT 11/PAGE 7 OF 55 FIGURE 2.4:AGE COHORT TRENDS,2000-2021 25% Lake Oswego(2000) o N Lake Oswego(2021) 20% N o o Clack.Co.(2021) ti Ln o v o � o 15% * - r m N o 4 o `� c O o -1 O 10% `" D o 0 al 11. In I 5% 111 0, N N c-I 0% x y��ea,5 ���eate ���ea,5 ��a(2, h��ea<5 ���e, ���e, ��aea,h Je. a aec �o �o ,o �o co ,co �o cb SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables:QT-P1(2000);S0101(2021 ACS 5-yr Estimates) • The cohorts which grew the most in share during this period were those aged 55 to 74 years.Still,an estimated 79%of the population is under 65 years of age. • In the 2021 ACS, the local median age was an estimated 46 years, compared to 40 years in Oregon, and 39 years nationally. Figure 2.5 presents the share of households with children, and the share of population over 65 years for comparison. Compared to state and national averages, Lake Oswego has a similar share of households with children. However,at 21%,the share of population over 65 is higher than the state and national figures. FIGURE 2.5:SHARE OF HOUSEHOLDS WITH CHILDREN POPULATION OVER 65 YEARS(LAKE OSWEGO) Share of Households with Children Share of Population Over 65 Years 40% 40% 31% 31% 30% 28% 30% 21% 20% 20% 18% 16% 10% 10% 0% 0% Lake Oswego Oregon USA Lake Oswego Oregon USA SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables: 611005;S0101(2021 ACS 5-yr Estimates) CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 7 PP 22-0005 ATTACHMENT 11/PAGE 8 OF 55 G. DIVERSITY TRENDS The following figure presents the distribution of Lake Oswego's population by race and Hispanic ethnicity. The community grew more diverse between the 2010 and 2020 Census, with the population's white (non-Hispanic) share falling from 90%to 80%. The Asian population makes up 8% of the population, and the Hispanic or Latino population makes up 5%of residents.9%of residents identify as two or more races. FIGURE 2.6:RACIAL AND ETHNIC DIVERSITY,2010—2020(LAKE OSWEGO) 100% o Share of Population by Race o Lake Oswego(2010) co 80% •Lake Oswego(2020) 60% I •Clackamas Co. 40% Oregon 20% o o oo o e rn L. Hi o o HiME -. a, c v c a, v o co c > coc m O c LE o47, w• (o Z Q CO C (o cc a, J a, U Q l.1 CO N a, O i ` ▪ Q U H 3Ii 1= ~ SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables:P1,P2(2010,2020) In comparison,the share of the population identifying as white is also 80%in Clackamas County,and 75%statewide. The share of Lake Oswego's population identifying as Hispanic or Latino is 5% of the population, indicating over 2,100 people as of the 2020 Census.This is lower than the 14%share statewide. FIGURE 2.7:AVERAGE NUMBER OF PERSONS PER HOUSEHOLD BY RACIAL AND ETHNIC CATEGORY(OREGON) Average Household Size by Race & Ethnicity(Oregon) All Households 2.5 White alone 2.4 Black or African American alone 2.5 American Indian and Alaska Native alone 2.8 Asian alone 2.8 Native Hawaiian and Pacific Islander 3.5 Hispanic or Latino 3.7 Some Other Race alone 4.0 Two or more races: 2.7 0.0 1.0 2.0 3.0 4.0 5.0 Avg.Number of Persons per Household SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables:P17A-H,(State of Oregon,2020) *This data is presented on a statewide basis using the most recent Census data available(2010).The data for the Lake Oswego or Clackamas County geographies feature unusually large margins of error due to the small sample size. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 8 PP 22-0005 ATTACHMENT 11/PAGE 9 OF 55 Minority households tend to have a larger average household size than the average of all households (Figure 2.7). (This figure presents statewide data due to the high margin of error for local data in this data set.) Households identifying as"white alone" have the lowest average household size(2.4 persons),while all other racial and ethnic categories have a larger estimated average household size. Some of the non-white categories, such as black households and those of two or more races,are still similar in average size(2.5 and 2.7 persons,respectively).Those with the largest estimated households are Latinos, Pacific Islanders,and those identifying as"some other race." Larger average household size indicates a need for units with more bedrooms on average among many minority households. Each household has its own housing needs in terms of the number of bedrooms and other factors, based on the specific makeup of each family. Based on voluntary guidelines provided by HUD for public housing programs, households of between 2 persons generally need a one-bedroom unit, households with 3 persons might need two bedrooms, and those with 4 persons might need three bedrooms. Larger households may need four or more bedrooms,which are typically found in single detached homes. Based on statewide data, many racial and ethnic minorities are currently less likely to own the homes they occupy (Figure 2.8)—meaning that they tend to occupy rental units.These communities face systemic obstacles to home ownership,including lower generational wealth, less access to capital and financing,and a history of discrimination in lending and geography(e.g.,redlining).While the country and state try to address explicit discrimination through the law, the legacy of these barriers continues to hamper home ownership for many minority households. Going forward, many communities would benefit from more entry-level homebuying opportunities for these households, as well as additional rental housing for those who are still unready or unable to buy a home. FIGURE 2.8:HOME OWNERSHIP RATE BY RACIAL AND ETHNIC CATEGORY(OREGON) Owner-Occupied Households by Race& Ethnicity(Oregon) All Households 63% White alone 65% Black or African American alone 36% American Indian and Alaska Native alone 48% Asian alone 63% Native Hawaiian and Pacific Islander 32% Hispanic or Latino 45% Some Other Race alone 43% Two or more races: 50% 0% 20% 40% 60% 80% 100% Ownership Rate SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables:B25003A-H,(State of Oregon,2021 ACS 5-year) *This data is presented on a statewide basis using the most recent Census data available(2020).The data for the Lake Oswego or Clackamas County geographies feature larger margins of error due to small sample size in some of the racial categories. Populations from some racial and ethnic minority groups also have lower average incomes and are more likely to have income below the official poverty level when compared to the total population. Such income levels are correlated with a greater share of renter households and impact the types of housing these populations consume, as discussed in further detail below. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 9 PP 22-0005 ATTACHMENT 11/PAGE 10 OF 55 H. PEOPLE WITH A DISABILITY An estimated 8%of the population of Lake Oswego, or 3,140 people, report having some form of disability.This is lower than the statewide rate of 14%and the Clackamas County rate of 12%of people with a disability.(The Census reports these statistics for the"non-institutionalized population.") The following figure presents Census estimates of the types of disability reported among Lake Oswego residents. Any type of disability impacts the type of housing that may be appropriate for a resident,but those with the greatest impact on needed unit type are generally an ambulatory,self-care, or independent living disability.Those with an ambulatory disability often need units with expanded access for a wheelchair,walker,or scooter.Those with self- care or independent living disabilities may require additional safety precautions around the home to protect a resident who cannot always be directly monitored. FIGURE 2.9:LAKE OSWEGO SHARE OF THE POPULATION WITH DISABILITY,BY TYPE Share of Population Population with a disability 7.8% Hearing difficulty 2.4% Vision difficulty 1.7% Cognitive difficulty 2.7% Ambulatory difficulty 2.9% Self-care difficulty 1.1% Independent living difficulty 2.3% 0% 2% 4% 6% 8% 10% SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables:DP02,(2020 ACS 5-year) FIGURE 2.10:LAKE OSWEGO POPULATION WITH A DISABILITY,BY AGE Share of Population with Disability by Age Total population 7.8% Under 18 years . 2.0% 18 to 64 years NM 5.8% 65 years and over 19.5% 0% 5% 10% 15% 20% 25% SOURCE:US Census,JOHNSON ECONOMICS LLC Census Tables:DP02,(2020 ACS 5-year) CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 10 PP 22-0005 ATTACHMENT 11/PAGE 11 OF 55 Older residents are more likely to report a disability, including nearly 20%of those over 65 years.Of those aged 18 to 64 years, 6% of the local population reports a disability, and 2% of children. Because Census data tends to undercount the homeless and other vulnerable populations, there are likely more disabled residents in Lake Oswego than reflected in these data. I. INCOME TRENDS The following figure presents data on Lake Oswego's income trends. FIGURE 2.11: INCOME TRENDS,2000—2023(LAKE OSWEGO) PER CAPITA AND MEDIAN HOUSEHOLD INCOME 2000 2010 Growth 2023 Growth (Census) (Census) 00-10 (Proj.) 10-23 Per Capita ($) $42,166 $53,652 27% $74,600 39% Median HH ($) $71,597 $84,186 18% $123,300 46% SOURCE:Census,Metro Consolidated Forecast,PSU Population Research Center,and Johnson Economics Census Tables: DP-1(2000,2010);DP-3(2000);S1901;S19301 ■ Lake Oswego's estimated median household income was$123,000 in 2023.This is nearly 40%higher than the Clackamas County median of$88,500, and 75%higher than the statewide median of$70,000. ■ Lake Oswego's per capita income is roughly$75,000. ■ Median income has grown an estimated 46% between 2010 and 2023, in real dollars. Inflation was an estimated 34%over this period,so the local median income has well exceeded inflation.This is not the case in many regions and nationally,where income growth has not kept pace with inflation. FIGURE 2.12: HOUSEHOLD INCOME COHORTS,2021(LAKE OSWEGO) Household Income Groups $200,000 or more 27% $150,000 to$199,999 12% $100,000 to$149,999 20% $75,000 to$99,999 11% $50,000 to$74,999 11% $35,000 to$49,999 6% $25,000 to$34,999 4% $15,000 to$24,999 4% $10,000 to$14,999 2% Less than$10,000 3% 0% 5% 10% 15% 20% 25% 30% SOURCE: US Census,Census Tables:S1901(2021 ACS 5-yr Est.) Figure 2.12 presents the estimated distribution of households by income as of 2021. The largest income cohorts are those households earning between $100k and $200k per year (32%), followed by households earning over $200k(27%). ■ 41%of households earn less than$100,000. ■ Roughly 19%of households earn less than$50k per year. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 11 PP 22-0005 ATTACHMENT 11/PAGE 12 OF 55 J. POVERTY STATISTICS According to the US Census,the official poverty rate in Lake Oswego is an estimated 4%over the most recent period reported (2021 5-year estimates).3 This is roughly 1,700 individuals in Lake Oswego. In comparison, the official poverty rate in Clackamas County is 9%,and at the state level is 17%. In the 2017-21 period: • The Lake Oswego poverty rate is low among all groups, but highest among those 65 years and older at 5%.The rate is 4%among those 18 to 64 years of age.The estimated rate is lowest for children at 3%. • For those without a high school diploma,the poverty rate is 11%. • Among those who are employed the poverty rate is 2%,while it is 7%for those who are unemployed. Information on affordable housing is presented in Section II F of this report. FIGURE 2.13:POVERTY STATUS BY CATEGORY(LAKE OSWEGO) Poverty Level of Subgroups Under 18 years 3% 18 to 64 years 4% 65 years and over 5% Employed 2% Unemployed 7% Less than high school 11% High school 10% Some college,associate's 7% Bachelor's degree or higher -9 3% 0% 5% 10% 15% 20% SOURCE: US Census Census Tables: S1701(2021 ACS 5-yr Est.) K. EMPLOYMENT LOCATION TRENDS This section provides an overview of employment and industry trends in Lake Oswego that are related to housing. Commuting Patterns: The following figure shows the inflow and outflow of commuters to Lake Oswego according to the Census Employment Dynamics Database.These figures reflect"covered employment" as of 2019,the most recent year available. Covered employment refers to those jobs where the employee is covered by federal unemployment insurance. This category does not include many contract employees and self-employed and therefore is not a complete picture of local employment.The figure discussed here is best understood as indicators of the general pattern of commuting and not exact figures. As of 2017,the most recent year available,the Census estimated there were roughly 23,100 covered employment jobs located in Lake Oswego. Of these, an estimated 2,250 or 10%, are held by local residents,while nearly 21,000 employees commute into the city from elsewhere.This general pattern is fairly common among many communities Census Tables:S1701(2018 ACS 5-yr Estimates);Methodology The Census Bureau uses a set of income thresholds that vary by family size and composition to determine who is in poverty. There are 48 separate income thresholds set based on the possible combinations of household composition. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 12 PP 22-0005 ATTACHMENT 11/PAGE 13 OF 55 in the Metro area, but the pattern is particularly stark here.The most common homes of local workers commuting into the city are Portland, Beaverton,or Tigard. This data set predates the surge in remote working that has taken place over the last few years. In prior years, it was safe to assume that most residents holding jobs outside the community likely commuted physically. Now, a resident might hold a job in another city but work from home. Unfortunately, these data do not quantify this growing segment. Similarly, of the estimated 18,000 employed Lake Oswego residents, 88% of them commute elsewhere to their employment. The most common destinations for Lake Oswego commuters are Portland and Beaverton. Smaller shares work elsewhere in the Portland metro or in the mid-Willamette Valley. FIGURE 2.14: COMMUTING PATTERNS(PRIMARY JOBS),LAKE OSWEGO Metzger • el •-. 1V1ilwaukie Hospi c A.I-T JL HILI • iJ 14 Tryon Cre=ek State - Q 1 IIwaukie Et M Natural Area .ti • 'D4a e 6L " .i�'. - . - -- � 1— lard :i:.:i '? !)k:..IA,: \I Os..ve 'o 20,900 2,250 15,800 Work in Lake Oswego, Live and work Live in Lake Oswego, live elsewhere •\ in Lake Oswego work elsewhere rya n l - , .../, nos i Wm arrd ing . Durham tri ± ) _ — ,, t ritage Center / 10% 12% / 88% Jena ii v MARYLF1URNI •, 1 •River Grove�- ualifi1 Stafford ) 1 Legacy Meridian ` m Source: US Census Longitudinal Employer-Household Dynamics Jobs/Household Ratio: Lake Oswego features a balanced jobs-to-households ratio.There are an estimated 23,000 jobs in Lake Oswego (covered), and an estimated 17,500 households in Lake Oswego.This represents 1.3 jobs per household.There is no standard jobs-to-households ratio that is right for all communities,but it can provide a guide to the balance between employment uses and residential uses in the city. There is an average of 1.0 job held for each Lake Oswego household, a majority of which are located outside the city. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 13 PP 22-0005 ATTACHMENT 11/PAGE 14 OF 55 III. CURRENT HOUSING CONDITIONS This section presents a profile of the current housing stock and market indicators in Lake Oswego.This profile forms the foundation to which current and future housing needs will be compared. A. HOUSING TENURE Lake Oswego has a greater share of homeowner households than renter households.The 2021 ACS estimates that 71% of occupied units were owner occupied, and only 29% renter occupied. The ownership rate is little changed since 2000.The estimated ownership rate is higher across Clackamas County(73%)and lower statewide (63%). B. HOUSING STOCK As shown in Figure 2.1, Lake Oswego had an estimated 18,350 housing units in 2023, with a vacancy rate of 5% (includes ownership and rental units).The housing stock has increased by roughly 2,680 units since 2000,or growth of over 17%. FIGURE 3.1: ESTIMATED SHARE OF UNITS,BY PROPERTY TYPE,2023 Lake Oswego, Oregon 80% 63% 60% 40% 21% 20% 0% 9% 6% - 1% 0% 0% Single Single Duplex 3-or 4-plex 5+Units Manuf. Boat, RV, Detached Attached MFR home other temp SOURCE: US Census,City of Lake Oswego Figure 3.1 shows the estimated number of units by type in 2023 based on US Census. Detached single-family homes represent an estimated 63%of housing units. Units in larger apartment complexes of 5 or more units represent 21%of units,and other types of attached homes represent 16% of units. (Attached single family generally includes townhomes, and some 2 to 4-plexes which are separately metered.) Manufactured homes represent well less than 1%of the inventory. C. NUMBER OF BEDROOMS Figure 3.2 shows the share of units for owners and renters by the number of bedrooms they have. In general, owner-occupied units are much more likely to have three or more bedrooms,while renter-occupied units are much more likely to have two or fewer bedrooms. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 14 PP 22-0005 ATTACHMENT 11/PAGE 15 OF 55 FIGURE 3.2: NUMBER OF BEDROOMS FOR OWNER AND RENTER UNITS,2021(LAKE OSWEGO) Number of Bedrooms 5 or more 1% Renter 11% Owner 4 bedrooms 5% 39% 3 bedrooms 19% 33% 2 bedrooms 43% 14% 1 bedroom ° 27% 2% Studio ° 6% 0/ 0% 10% 20% 30% 40% 50% SOURCE: US Census Census Tables: B25042(2021 ACS 5-year Estimates) D. UNIT TYPES BY TENURE As Figure 3.3 and 3.4 show, a large share of owner-occupied units (81%), are detached homes, which is related to why owner-occupied units tend to have more bedrooms. Renter-occupied units are much more distributed among a range of structure types.About 18%of rented units are estimated to be detached homes or manufactured homes, while the remainder are some form of attached unit. Nearly 60%of rental units are in larger apartment complexes. FIGURE 3.3: CURRENT INVENTORY BY UNIT TYPE,FOR OWNERSHIP AND RENTAL HOUSING(LAKE OSWEGO) OWNERSHIP HOUSING OWNERSHIP HOUSING Single Single 5+Units Manuf. Boat,RV, Total Detached Attached Duplex 3-or 4-plex MFR home other temp Units Totals: 10,557 1,292 9 337 781 32 0 13,008 Percentage: 81.2% 9.9% 0.1% 2.6% 6.0% 0.2% 0.0% 100% RENTAL HOUSING RENTAL HOUSING Single Single 5+Units Manuf. Boat,RV, Total Detached Attached Duplex 3-or 4-plex MFR home other temp Units Totals: 934 332 250 675 3,145 0 0 5,337 Percentage: 17.5% 6.2% 4.7% 12.7% 58.9% 0.0% 0.0% 100% Sources: US Census,JOHNSON ECONOMICS,CITY OF LAKE OSWEGO CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 15 PP 22-0005 ATTACHMENT 11/PAGE 16 OF 55 FIGURE 3.4: CURRENT INVENTORY BY UNIT TYPE,BY SHARE Lake Oswego, Oregon 100% 81% ■Owner 80% • Rental 59% g 60% 0 40% 20% 18/ 10/° 13% 6% 6% 0% 5% 3% 0% 0% 0% 0% 0% Single Single Duplex 3-or 4-plex 5+Units Manuf. Boat, RV, Detached Attached MFR home other temp Unit Type Sources: US Census,JOHNSON ECONOMICS,CITY OF LAKE OSWEGO E. AGE AND CONDITION OF HOUSING STOCK Lake Oswego's housing stock reflects the pattern of development over time.The greatest periods of development in Lake Oswego were in the 1970's and 1980's. Roughly 15%of the housing stock has been built since 2000. FIGURE 3.5: AGE OF UNITS FOR OWNERS AND RENTERS(LAKE OSWEGO) 30% 25% Owner 25% % Renter 20% j0i10JI2i4fP23 * :5% 3%■ 1/05 of 3� Year Housing Unit Built � SOURCE: US Census Census Tables: B25036(2021 ACS 5-year Estimates) • Unfortunately, good quantitative data on housing condition is generally unavailable without an intensive on- site survey of all local housing,which is beyond the scope of this analysis.Census categories related to housing condition are ill-suited for this analysis, dealing with such issues as units without indoor plumbing,which was more common in the mid-20th Century, but is an increasingly rare situation.Age of units serves as the closest reliable proxy for condition with available data. • For ownership units, older homes may be in poor condition, but are also more likely to have undergone some repair and renovation over the years. Rental units are more likely to degrade steadily with age and wear-and- CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 16 PP 22-0005 ATTACHMENT 11/PAGE 17 OF 55 tear, and less likely to receive sufficient reinvestment to keep them in top condition, though this is not universally true. F. HOUSING COSTS VS. LOCAL INCOMES Figure 3.6 shows the share of owner and renter households who are paying more than 30% of their household income towards housing costs, by income segment. (Spending 30%or less on housing costs is a common measure of"affordability" used by HUD and others,and in the analysis presented in this report.) As one would expect, households with lower incomes tend to spend more than 30%of their income on housing, while incrementally fewer of those in higher income groups spend more than 30% of their incomes on housing costs.Of those earning less than$20,000,an estimated 91%of owner households and 100%of renters spend more than 30%of income on housing costs. Even among households earning between $50,000 and $75,000 per year, a majority are housing cost burdened. Because Lake Oswego has an income distribution skewed towards higher income levels,there are relatively few households in these lower income segments,compared to most other cities. In total,the US Census estimates that over 31%of Lake Oswego households pay more than 30%of income towards housing costs(2021 American Community Survey, B25106) FIGURE 3.6: SHARE OF LAKE OSWEGO HOUSEHOLDS SPENDING MORE THAN 30% ON HOUSING COSTS, BY INCOME GROUP 100% 100% 91% 92% 88% Owner Households o 82% 80% 74% Renter Households 64% A 60% 51% L0 U, N tto 40% •c = 20% 12% 16% v 0% n Less than $20,000 to $35,000 to $50,000 to $75,000 or $20,000 $34,999 $49,999 $74,999 more Household Income Sources: US Census,JOHNSON ECONOMICS Census Table: B25106(2021 ACS 5-yr Estimates) Housing is generally one of a household's largest living costs,if not the largest.The ability to find affordable housing options, and even build wealth through ownership, is one of the biggest contributors to helping lower income households save and cultivate wealth. Even if renting, affordable housing costs allow for more household income to be put to other needs, including saving. The following figures show the percentage of household income spent towards gross rent' for local renter households only.This more fine-grained data shows that not only are 49%of renters spending more than 30%of their income on gross rent, but an estimated 29%of renters are spending 50%or more of their income on housing and are considered severely rent-burdened. 'The Census defines Gross Rent as"the contract rent plus the estimated average monthly cost of utilities(electricity,gas,and water and sewer) and fuels(oil,coal,kerosene,wood,etc.)if these are paid by the renter(or paid for the renter by someone else)."Housing costs for homeowners include mortgage,property taxes,insurance,utilities and condo or HOA dues. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 17 PP 22-0005 ATTACHMENT 11/PAGE 18 OF 55 Renters are disproportionately lower income relative to homeowners. Housing cost burdens are felt more broadly for these households, and as the analysis presented in a later section shows there is a need for more affordable rental units in Lake Oswego,as in most communities. FIGURE 3.7: PERCENTAGE OF HOUSEHOLD INCOME SPENT ON GROSS RENT,LAKE OSWEGO RENTER HOUSEHOLDS 35% 30% 29% 25% 25% 22% 0 20% =• 15% 14% v • 10% 7% N 5% � ■ 0% olo y�olo 'Lc) ��Io ��olo oe, o O O 0 Lod \ 01 of %of Income to Gross Rent Sources: US Census,JOHNSON ECONOMICS Census Table: B25070(2021 ACS 5-yr Estimates) G. PUBLICLY ASSISTED HOUSING Oregon Housing and Community Services(OHCS)tracks three currently operating affordable housing properties in Lake Oswego,with a total of 76 units.These are properties that are funded through HUD programs,tax credits and other programs which guarantee subsidized rents for qualified households.All of these units,save one,are offered for elderly residents. The Marylhurst Commons, currently under development, is planned to offer 100 affordable units for families.Completion is expected in 2024. The Housing Authority of Clackamas County administers over 1,600 Section 8 housing choice vouchers that allow low-income participants to find rental units anywhere in the county. Under this program, the renters can find participating landlords and the voucher helps to subsidize the cost of a market-rate rental unit.The unit does not have to be in a property dedicated to subsidized affordable housing but can be in any rental property. The high share of renters still paying over 30% of their income towards housing costs indicates that there is an ongoing need for rental units at the lowest price points. Agricultural Worker Housing: Lake Oswego is not currently home to properties dedicated to agricultural workers. This population may also be served by other available affordable units. People Experiencing Homelessness: The Census does make a multi-faceted effort to include the unhoused population in the total Decennial Census count, by attempting to enumerate these individuals at service providers, and in transitory locations such as RV parks or campgrounds,as of the official Census data (4/1/20). However, it is difficult to make an accurate count of this population, and it is generally presumed that the unhoused are undercounted in the Census. The most recent (January 2022) Point-in-Time count of people experiencing homelessness and households experiencing homelessness in Clackamas County' found 597 unhoused individuals on the streets, in shelters, or 5 Figures are for the entire County CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 18 PP 22-0005 ATTACHMENT 11/PAGE 19 OF 55 other temporary and/or precarious housing. The estimated 597 unhoused individuals represent 0.1% of the county's total estimated population in 2022. • An estimated 45%of individuals were in some sort of temporary shelter,while 55%were unsheltered. • The total included 51 children (under age 18), and 26 youth (aged 18-24). • Of those indicating a gender, 60%of those counted identified as men,40%women. • 5%of those counted were Hispanic or Latino compared to 9.5%in the general population. • 304 individuals,or 51%,were counted as"chronically homeless".6 While the Point-in-Time count is one of the few systematized efforts to count people experiencing homelessness across the country in a regular, structured way, it is widely thought to undercount the population of unhoused individuals and households. People who are doubled up,couch surfing,or experiencing domestic violence may not always be accurately counted. In addition to the impossibility of finding all unsheltered individuals experiencing homelessness,the count is conducted in late January,when homeless counts are likely near their lowest of the year due to inclement weather. It also relies on self-reporting. A recent analysis prepared for OHCS to test a potential approach for preparing Housing Capacity Analyses on a regional basis included estimates of the unhoused population in Oregon communities,including Lake Oswego.The approach utilizes a combination of data from the bi-annual Point-in-Time count and from tracking of unhoused school-aged children in keeping with the McKinney-Vento Act.The analysis estimates 239 households experiencing homelessness in Lake Oswego as of mid-2020. These include households that are unsheltered, in temporary shelters, or staying with friends or relatives. These households are a component of current and future housing need. The persistence of people experiencing homelessness speaks to the need for continuing to build a full spectrum of services and housing types to shelter this population,from temporary shelter to subsidized affordable housing. An analysis of the ability of current and projected housing supply to meet the needs of low-income people and the potential shortfall is included in the following sections of this report. 6 HUD defines "chronically homeless" as an individual with a disability as defined by the McKinney-Vento Assistance Act,who has been in uninhabitable conditions for more than 12 mo.or on four separate occasions in the last three years;or has been in institutional care for less than 90 days;or a family with an adult head of household who meets this definition. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 19 PP 22-0005 ATTACHMENT 11/PAGE 20 OF 55 IV. CURRENT HOUSING NEEDS (CITY OF LAKE OSWEGO) The profile of current housing conditions in the study area is based on Census 2010, which the Portland State University Population Research Center(PRC) uses to develop yearly estimates through 2019. The 2019 estimate is forecasted to 2023 using the estimated growth rate realized since 2010. FIGURE 4.1:CURRENT LAKE OSWEGO HOUSING PROFILE(2023) CURRENT HOUSING CONDITIONS(2023) SOURCE Total 2023 Population: 41,550 PSU Pop.Research Center - Estimated group housing population: 329 (0.8%of Total) US census Estimated Non-Group 2023 Population: 41,221 (Total-Group) Avg. HH Size: 2.36 US Census Estimated Non-Group 2023 Households: 17,481 (Pop/HH Size) Total Housing Units: 18,345 (Occupied+Vacant) Census 2010+permits Occupied Housing Units: 17,481 (=#of HH) Vacant Housing Units: 864 (Total HH-Occupied) Current Vacancy Rate: 4.7% (Vacant units/Total units) Sources: Johnson Economics,City of Lake Oswego,PSU Population Research Center,U.S.Census *This table reflects population,household and housing unit projections shown in Figure 2.1 We estimate a current population of 41,550 residents, living in 17,481 households (excluding group living situations).Average household size is 2.4 persons. There are an estimated 18,345 housing units in the city, indicating an estimated vacancy rate of 5%.This includes units vacant for any reason, not just those which are currently for sale or rent. ESTIMATE OF CURRENT HOUSING DEMAND Following the establishment of the current housing profile, the current housing demand was determined based upon the age and income characteristics of current households. The analysis considered the propensity of households in specific age and income levels to either rent or own their home (tenure), in order to derive the current demand for ownership and rental housing units and the appropriate housing cost level of each.This is done by combining data on tenure by age and tenure by income from the Census American Community Survey(tables: B25007 and B25118, 2021 ACS 5-yr Estimates). The analysis takes into account the average amount that owners and renters tend to spend on housing costs. For instance, lower income households tend to spend more of their total income on housing, while upper income households spend less on a percentage basis. In this case, it was assumed that households in lower income bands would prefer housing costs at no more than 30% of gross income (a common measure of affordability). Higher income households pay a decreasing share down to 20%for the highest income households. While the Census estimates that most low-income households pay more than 30%of their income for housing,this is an estimate of current preferred demand. It assumes that low-income households prefer (or demand) units affordable to them at no more than 30%of income, rather than more expensive units. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 20 PP 22-0005 ATTACHMENT 11/PAGE 21 OF 55 Figure 4.2 presents a snapshot of current housing demand (i.e. preferences)equal to the number of households in the study area (17,481).The breakdown of tenure(owners vs. renters) reflects data from the 2021 ACS. FIGURE 4.2:ESTIMATE OF CURRENT HOUSING DEMAND IN LAKE OSWEGO(2023) Ownership Price Range #of Income Range /of Cumulative Households Total $0k-$80k 330 Less than$15,000 2.7% 2.7% $80k-$130k 267 $15,000-$24,999 2.2% 4.9% $130k-$180k 357 $25,000-$34,999 2.9% 7.8% $180k-$250k 636 $35,000-$49,999 5.2% 13.0% $250k-$350k 1,051 $50,000-$74,999 8.6% 21.7% $350k-$440k 1,147 $75,000-$99,999 9.4% 31.1% $440k-$510k 1,109 $100,000-$124,999 9.1% 40.2% $510k-$560k 892 $125,000-$149,999 7.3% 47.5% $560k-$680k 1,827 $150,000-$199,999 15.0% 62.5% $680k+ 4,577 $200,000+ 37.5% 100.0% Totals: 12,191 %of All: 69.7% Rental Rent Level #of Income Range /of Cumulative Households Total $0-$400 348 Less than$15,000 6.6% 6.6% $400-$700 383 $15,000-$24,999 7.2% 13.8% $700-$900 554 $25,000-$34,999 10.5% 24.3% $900-$1300 621 $35,000-$49,999 11.7% 36.0% $1300-$1800 837 $50,000-$74,999 15.8% 51.9% $1800-$2200 764 $75,000-$99,999 14.4% 66.3% $2200-$2500 505 $100,000-$124,999 9.6% 75.9% $2500-$2800 410 $125,000-$149,999 7.8% 83.6% $2800-$3400 271 $150,000-$199,999 5.1% 88.7% $3400+ 596 $200,000+ 11.3% 100.0% All Households Totals: 5,290 %of All: 30.3% 17,481 Sources: PSU Population Research Center,Claritas.,Census,JOHNSON ECONOMICS Census Tables: B25007, B25106,B25118(2021 ACS 5-yr Estimates) Claritas: Estimates of income by age of householder The estimated home price and rent ranges are irregular because they are mapped to the affordability levels of the Census income level categories. For instance, an affordable home for those in the lowest income category (less than $15,000)would have to cost$80,000 or less.Affordable rent for someone in this category would be $400 or less. The affordable price level for ownership housing assumes 30-year amortization,at an interest rate of 5%(somewhat less than the current market rate,but in line with historic norms),with 10%down payment.These assumptions are designed to represent prudent lending and borrowing levels for ownership households. The 30-year mortgage commonly serves as the standard. In the 2000's, down payment requirements fell significantly, but lending standards tightened significantly since the 2008/9 credit crisis. While 20% is often cited as the standard for most buyers,it is common for homebuyers,particularly first-time buyers,to pay significantly less than this using available programs. Interest rates are subject to disruption from national and global economic forces, and therefore impossible to forecast beyond the short term. The 5% used here is roughly the average 30-year rate over the last 20 years.The CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 21 PP 22-0005 ATTACHMENT 11/PAGE 22 OF 55 general trend has been falling interest rates since the early 1980's,but coming out of the recent inflationary period, the Federal Reserve has raised its base rate significantly in recent years and mortgage rates have also climbed to levels not seen in almost 20 years. CURRENT HOUSING INVENTORY The profile of current housing demand(Figure 4.2)represents the preference and affordability levels of households. In reality, the current housing supply (Figures 4.3 and 4.4 below) differs from this profile, meaning that some households may find themselves in housing units which are not optimal, either not meeting the household's own/rent preference,or being unaffordable(requiring more than 30%of gross income). A profile of current housing supply in Lake Oswego was estimated based on permit data from the City of Lake Oswego and Census data from the most recently available 2021 ACS, which provides a profile of housing types (single family, attached, manufactured home, etc.), tenure, housing values, and rent levels. The 5-year estimates from the ACS were used because margin of error is lower than 1-year ACS estimates. • An estimated 71% of housing units are ownership units, while an estimated 29% of housing units are rental units. This is slightly different than the estimated demand profile shown in Figure 4.2, which estimated a bit higher demand for rental units given local income and age levels.The inventory includes vacant units. • 81%of ownership units are detached homes,and very few are manufactured homes. 17.5%of rental units are either single family homes or manufactured homes,while 59%are in structures of 5 units or more. • Of total housing units, an estimated 63%are detached homes or manufactured homes. 37%are some sort of attached unit type. FIGURE 4.3:PROFILE OF CURRENT HOUSING SUPPLY BY TYPE(2023) Lake Oswego, Oregon 100% 81% ■Owner 80% S9/ Rental 60% 0 v 40% 18% 20% 10% 0 13% - 6/ 0% 5% 3% 6% 0% 0% 0% 0% 0% Single Single Duplex 3-or 4-plex 5+Units MFR Manuf. Boat, RV, Detached Attached home other temp Unit Type Sources: US Census,PSU Population Research Center,JOHNSON ECONOMICS Census Tables: B25004, B25032,B25063, B25075(2021 ACS 5-yr Estimates) • The affordability of different unit types is an approximation based on Census data on the distribution of housing units by value(ownership)or gross rent(rentals). • Most subsidized affordable housing units found in the city are represented by the inventory at the lowest end of the rental spectrum. • Ownership housing found at the lower end of the value spectrum generally reflect older, smaller homes, or homes in poor condition on small or irregular lots. It is important to note that these represent estimates of CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 22 PP 22-0005 ATTACHMENT 11/PAGE 23 OF 55 current property value or current housing cost to the owner,not the current market pricing of homes for sale in the city. These properties may be candidates for redevelopment when next they sell but are currently estimated to have low value. FIGURE 4.4:PROFILE OF CURRENT HOUSING SUPPLY,ESTIMATED AFFORDABILITY IN LAKE OSWEGO(2023) Ownership Housing Rental Housing Affordable Estimated Affordable Estimated Income Range Share of Total Units Price Level Units Rent Level Units Less than$15,000 $0k-$80k 135 $0-$400 70 I 1% $15,000-$24,999 $80k-$130k 129 $400-$700 43 I 1% $25,000-$34,999 $130k-$180k 170 $700-$900 106 I 2% $35,000-$49,999 $180k-$250k 406 $900-$1300 518 • 5% $50,000-$74,999 $250k-$350k 735 $1300-$1800 1,852 14% $75,000-$99,999 $350k-$440k 839 $1800-$2200 1,289 12% $100,000-$124,999 $440k-$510k 753 $2200-$2500 602 7% $125,000-$149,999 $510k-$560k 924 $2500-$2800 223 - 6% $150,000-$199,999 $560k-$680k 2,217 $2800-$3400 229 13% $200,000+ $680k+ 6,700 $3400+ 404 39% 71% 13,008 29% 5,337 0% 10% 20% 30% 40% Sources: US Census,PSU Population Research Center,JOHNSON ECONOMICS Census Tables: B25004, B25032,B25063, B25075(2021 ACS 5-yr Estimates) ■ Most housing (58%) in Lake Oswego is found in price and rent levels affordable to those earning at least $125,000 per year,which is close to the city's median income.There is very little housing available to those in lower income segments. Over 90% of housing is affordable to those earning at least $50,000, and only 9% affordable to those earning less than this. COMPARISON OF CURRENT HOUSING DEMAND WITH CURRENT SUPPLY A comparison of estimated current housing demand with the existing supply identifies the existing discrepancies between needs and the housing which is currently available. The estimated number of units outnumbers the number of households by roughly 865 units, indicating an average vacancy rate of 4.7%. In general, this identifies that there is currently support for more ownership housing at lower price points, while the upper end of the market is generally well supplied.This is because most housing in Lake Oswego is clustered at higher property values, which matches the community's high average household income but leaves some households underserved. The analysis finds that the current market rates for most rental units are in the $1,300 to $2,200/month range. Therefore,this is where most of the rental unit supply is currently clustered. However,the greatest unmet need is found at the lower end of the income scale, where many current renters pay more than 30% of their income in housing costs. Rentals at the most expensive levels generally represent single family homes for rent. Figures 4.5 and 4.6 present this information in chart form,comparing the estimated number of households in given income ranges,and the supply of units currently valued(ownership)or priced(rentals)within those income ranges. The data is presented for owner and renter households. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 23 PP 22-0005 ATTACHMENT 11/PAGE 24 OF 55 FIGURE 4.5:COMPARISON OF OWNER HOUSEHOLD INCOME GROUPS TO ESTIMATED SUPPLY AFFORDABLE AT THOSE INCOME LEVELS IN LAKE OSWEGO(2023) Owner Households vs.Current Units 7,000 6,000 •Est.Owner Households N = 5,000 Units Valued at Income Level D - 4,000 0 v 3,000 0 0 2,000 o 1,000 � xk 0 M ■ ■ ■ I 0 0 < < < x0 ) ) ) ) 0) 0 0 00 0 0 0 0 0 0 00 h, p, p, op e c c 0 t gyp, 1, '0 0 0hy hL hgy h h 'lc) O • • • • • h ra� 0 0 0 0 00 0 0 0 0 0 0 0 ys� 0 0 0 0 0 0 0 00h, h, 'h, 0, Ah' 0, h, 0 He hti hu h' h h 0 � h h'\ hti hti Income Cohorts Sources: PSU Population Research Center,City of Lake Oswego,Census,JOHNSON ECONOMICS FIGURE 4.6:COMPARISON OF RENTER HOUSEHOLD INCOME GROUPS TO ESTIMATED SUPPLY AFFORDABLE AT THOSE INCOME LEVELS IN LAKE OSWEGO(2023) Renter Households vs.Current Units 2,000 •Est.Renter Households E1,500 Units Affordable at Income Level t° 1,000 a) U, = 500 x 0 ■ ■ 1II I I I I . h h h h h ti ti ' O ' wren 000 000 000 000 000 00 00 00 hL �e`'� htih hlh, h''h, h`'0 huh 000 1h0 h00 h,' h, 'IN' Income Cohorts Sources: PSU Population Research Center,City of Lake Oswego,Census,JOHNSON ECONOMICS The home value and rent segments which show a"surplus"in Figures 4.5 and 4.6 illustrate where current property values and market rent levels are in Lake Oswego. Housing prices and rent levels will tend to congregate around those levels.These levels will be too costly for some(i.e.require more than 30%in gross income)or"too affordable" for others(i.e.they have income levels that indicate they could afford more expensive housing if they chose). In general, these findings demonstrate that there are few lower-value housing opportunities for many owner households, and potential support for some less expensive types of ownership housing.There is a need for more rental units at lower rent levels(<$900/mo.). HOME SALE PRICES It is important to note that the figures presented in the prior section represent estimates of current property value or current housing cost to the owner, not the current market pricing of homes for sale in the city. For instance, a household living in a manufactured home that has been paid off over many years may have relatively low housing costs.This indicates that one owner household is living in a"lower value"unit. It does not indicate that units at this price point are available on the current market. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 24 PP 22-0005 ATTACHMENT 11/PAGE 25 OF 55 If this hypothetical household were to sell their home, it would sell at a higher price reflecting inflation and current achievable market prices. For this reason,many of the lower value or lower rent units found in the previous section will actually become higher-priced units when they are sold or become vacant. For reference,this section presents home sales data from 2022 to indicate housing costs for new entrants into the market(Figure 4.7). • The median sale price was$860,000. • The average(mean)sale price was$1,075,000. • The average price per square foot was$430/s.f. • The median square footage was 2,300 s.f. FIGURE 4.7:LAKE OSWEGO HOME SALES(12 MONTHS) Home Sales by Unit Type Home Sales by Price Level $900,000+ 319 $800,000-$899,000 66 20% $700,000-$799,000 67 $600,000-$699,000 56 8% $500,000-$599,000 ■ 39 0 ° 72% $400,000-$499,000 . 31 $300,000-$399,000 . 47 $200,000-$299,000 ■ 43 $100,000-$199,000 13 Detached Home Manuf. Home <$100,000 0 Attached Home Condo 0 100 200 300 400 Sources: RMLS,JOHNSON ECONOMICS • 48%of sales were priced above$900,000. • 34%of sales were priced between$500,000 and$899,000. • Only 18%of sales were priced at less than $500,000. • Only 7%of sales were priced below$300,000. Affordability: As indicated, roughly 75%of recent sales in Lake Oswego were priced at least $600,000. Homes in this range would be mostly affordable to households earning at least $175,000 per year, which is well above the median household income of$123,000. Roughly 66% of households earn less than $175,000 per year, meaning that the bulk of housing supply on the current for-sale market(75%) is likely too expensive for most of these households. The findings of current need form the foundation for projected future housing need, presented in the following section. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 25 PP 22-0005 ATTACHMENT 11/PAGE 26 OF 55 V. FUTURE HOUSING NEEDS-2043 (CITY OF LAKE OSWEGO) The projected future(20-year) housing profile(Figure 5.1)in the study area is based on the current housing profile (2023), multiplied by an assumed projected future household growth rate. The projected future growth is the forecasted 2043 population for the City of Lake Oswego included in the most recently adopted Coordinated Population Forecast from Metro for all cities in the region.This was adopted in 2021 and projected a very modest growth rate for Lake Oswego of well less than 1%per year.' FIGURE 5.1:FUTURE HOUSING PROFILE(2043),LAKE OSWEGO PROJECTED FUTURE HOUSING CONDITIONS(2023-2043) SOURCE 2023 Population(Minus Group Pop.) 41,221 (Est.2022 pop.-Group Housing Pop.) PSU Projected Annual Growth Rate 0.05% Metro Coordinated Forecast(2021) Metro 2043 Population(Minus Group Pop.) 41,629 (Total 2043 Population-Group Housing Pop.) Estimated group housing population: 332 1.7%of total pop.(held constant from 2022) US Census Total Estimated 2043 Population: 41,961 Metro Coordinated Forecast(2021) Metro Estimated Non-Group 2043 Households: 19,298 Metro Coordinated Forecast(2021) Metro New Households 2023 to 2043 1,816 Avg. Household Size: 2.16 Projected 2043 pop./2043 houseolds US Census Total Housing Units: 20,313 Occupied Units plus Vacant Occupied Housing Units: 19,298 (=Number of Non-Group Households) Vacant Housing Units: 1,016 (=Total Units-Occupied Units) Projected Market Vacancy Rate: 5.0% Stabilized vacancy assumption Sources: PSU Population Research Center,Metro,Census,JOHNSON ECONOMICS LLC *Projections are applied to estimates of 2023 population,household and housing units shown in Figure 2.1 The model projects growth in the number of non-group households over 20 years of over 1,800 households, but with accompanying population growth of just 411 new residents. The difference is that the household size is expected to decrease significantly to 2.2 persons,meaning more smaller households to house the same population. (The number of households differs from the number of housing units, because the total number of housing units includes a percentage of vacancy. Projected housing unit needs are discussed below.) 7 The projected growth and housing need presented in this report conforms to the statutory approach to completing a Goal 10 needs analysis. To comply with state rules,the analysis relies on estimates of current population from the Portland State University Population Research Center (PRC)and projections of future growth from the most recent Metro distributed forecast.The forecasted growth rates from Metro are very low in comparison to rates experienced during the past 20 years and low in comparison to projected rates in other parts of the region and state. The City's population increased by about 18%,with an average annual growth rate of about 1%between 2000 and 2020 per year. During the next 20 years,forecasted growth is projected to be a total of 1%,with an average annual growth rate of just 0.05%per year.Many community members in Lake Oswego,including members of the project Task Force,as well as members of the City's Planning Commission and City Council, have questioned the accuracy of the projected growth rates,but no contrary expert testimony of the population forecast is presented.To the extent the City grows faster than the growth rates predict,the deficit of land available to accommodate housing over the long term will be more acute and the City will consume remaining buildable land more quickly,potentially running out of buildable land within several years. Per ORS 197.297,the City is required to adopt an updated HNA at least once every six years;thus,the City will have an additional opportunity in 2029 to correct the population forecast,if the projections in the 2023 HNA are notably different than observed trends.It will be important for the City to coordinate closely with Metro as it updates its growth rates and to continue to monitor actual growth patterns,as well as the supply of buildable land in the City.To the extent growth occurs at a faster rate than projected,the City will need to identify and implement strategies to address a potential shortage in available land for housing in the near term. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 26 PP 22-0005 ATTACHMENT 11/PAGE 27 OF 55 PROJECTION OF FUTURE HOUSING UNIT DEMAND(2043) The profile of future housing demand was derived using the same methodology used to produce the estimate of current housing need. This estimate includes current and future households but does not include a vacancy assumption. The vacancy assumption is added in the subsequent step. Therefore,the need identified below is the total need for actual households in occupied units(19,298). The analysis considered the propensity of households at specific age and income levels to either rent or own their home, in order to derive the future need for ownership and rental housing units, and the affordable cost level of each.The projected need is for all 2043 households and therefore includes the needs of current households. The price levels presented here use the same assumptions regarding the amount of gross income applied to housing costs,from 30%for low income households down to 20%for the highest income households. The affordable price level for ownership housing assumes 30-year amortization,at an interest rate of 5%,with 10% down payment. Because of the impossibility of predicting variables such as interest rates 20 years into the future, these assumptions were kept constant from the estimation of current housing demand. Income levels and price levels are presented in 2023 dollars. Figure 5.2 presents the projected occupied future housing demand(current and new households,without vacancy) in 2043. FIGURE 5.2:PROJECTED OCCUPIED FUTURE HOUSING DEMAND(2043),LAKE OSWEGO Ownership #of Price Range Households Income Range %of Total Cumulative $0k-$80k 364 Less than$15,000 2.7% 2.7% Extremely <30%MFI $80k-$130k 295 $15,000-$24,999 2.2% 4.9% Low Income $130k-$180k 394 $25,000-$34,999 2.9% 7.8% Very Low <50%MFI $180k-$250k 702 $35,000-$49,999 5.2% 13.0% I Income $250k-$350k 1,160 $50,000-$74,999 8.6% 21.7% Low Income <80%MFI $350k-$440k 1,266 $75,000-$99,999 9.4% 31.1% $440k-$510k 1,224 $100,000-$124,999 9.1% 40.2% $510k-$560k 984 $125,000-$149,999 7.3% 47.5% $560k-$680k 2,017 $150,000-$199,999 15.0% 62.5% $680k+ 5,053 $200,000+ 37.5% 100.0% Totals: 13,458 %of All: 69.7% Rental #of Rent Level Households Income Range %of Total Cumulative $0-$400 385 Less than$15,000 6.6% 6.6% Extremely <30%MFI $400-$700 423 $15,000-$24,999 7.2% 13.8% li Low Income $700-$900 611 $25,000-$34,999 10.5% 24.3% Very Low <50%MFI $900-$1300 686 $35,000-$49,999 11.7% 36.0% I Income $1300-$1800 924 $50,000-$74,999 15.8% 51.9% Low Income <80%MFI $1800-$2200 843 $75,000-$99,999 14.4% 66.3% $2200-$2500 558 $100,000-$124,999 9.6% 75.9% $2500-$2800 453 $125,000-$149,999 7.8% 83.6% $2800-$3400 299 $150,000-$199,999 5.1% 88.7% $3400+ 658 $200,000+ 11.3% 100.0% All Units Totals: 5,840 %of All: 30.3% 19,298 Sources: Census,Claritas,JOHNSON ECONOMICS CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 27 PP 22-0005 ATTACHMENT 11/PAGE 28 OF 55 The number of households across the income spectrum seeking a range of both ownership and rental housing is anticipated to grow. It is projected that the homeownership rate in Lake Oswego will fall somewhat over the next 20 years to under 70%from 71%. COMPARISON OF FUTURE HOUSING DEMAND TO CURRENT HOUSING INVENTORY The profile of occupied future housing demand presented above(Figure 5.2)was compared to the current housing inventory presented in the previous section to determine the total future need for new housing units by type and price range(Figure 5.3). This estimate includes a vacancy assumption. As reflected by the most recent Census data, and as is common in most communities, the vacancy rate for rental units is typically higher than that for ownership units. An average vacancy rate of 5%is assumed for the purpose of this analysis. FIGURE 5.3: PROJECTED FUTURE NEED FOR NEW HOUSING UNITS(2043),LAKE OSWEGO OWNERSHIP HOUSING Multi-Family Single Single 3-or 4- 5+Units Manuf. Boat,RV, Total %of Unit Type: Detached Attached 2-unit plex MFR home other temp Units Units Totals: 708 132 31 57 92 3 0 1,024 52.0% Percentage: 69.2% 12.9% 3.1% 5.6% 9.0% 0.2% 0.0% 100% RENTAL HOUSING Multi-Family Single Single 3-or 4- 5+Units Manuf. Boat,RV, Total %of Unit Type: Detached Attached 2-unit plex MFR home othertem P Units Units Totals: 52 87 73 148 585 0 0 944 48.0% Percentage: 5.5% 9.2% 7.7% 15.7% 61.9% 0.0% 0.0% 100% TOTAL HOUSING UNITS Multi-Family Single Single 3-or 4- 5+Units Manuf. Boat,RV, Total %of Unit Type: Detached Attached 2-unit plex MFR home other temp Units Units Totals: 760 220 104 205 677 3 0 1,968 100% Percentage: 38.6% 11.2% 5.3% 10.4% 34.4% 0.1% 0.0% 100% Sources: PSU,City of Lake Oswego,Census,Claritas,JOHNSON ECONOMICS • The results show a need for 1,968 new housing units by 2043. • Of the new units needed, roughly 52% are projected to be ownership units, while 48% are projected to be rental units.This represents more renters than the estimated tenure split, but it is projected that more rental units will need to be added to correct the current modest deficit of rental units, plus the future ownership rate will fall slightly. This results in a proportionately greater share of future units being rental, rather than ownership units. • There is some need for new ownership housing at the middle to low-end of the pricing spectrum. But income trends suggest that the greatest demand will remain in the upper-middle price ranges($300k to$600k). • The greatest need for rental units is found at the lowest and some higher price points. Market rents are currently clustered in the $1,300 to $2,200 range in current dollars.Therefore, most units are to be found in this range. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 28 PP 22-0005 ATTACHMENT 11/PAGE 29 OF 55 ■ There is insufficient rental housing for the lowest income households making $35,000 or less or detached single-family homes for rent. Many households will need rent levels lower than the market rate in order to maintain housing costs that are affordable(see more detail below). Needed Unit Types The mix of needed unit types shown in Figure 5.3 reflects both past trends and anticipated future trends. Single detached units are expected to continue to make up a large share of new housing development for ownership households over the next 20 years. However,an increasing share of new needed units is anticipated to be attached housing types to accommodate renters and first-time home buyers. ■ 39%of the new units are projected to be single detached homes or new manufactured homes, while 61% is projected to be some form of attached housing. ■ Single attached units(townhomes on individual lots)are projected to meet roughly 11%of future need. These are defined as units on separate tax lots,attached by a wall but separately metered,the most common example being townhome units. ■ Duplex,triplex,and four-plex units are projected to represent a growing 16%of the total need, reflecting new state rules for middle housing zoning. Duplex units would include a detached single-family home with an accessory dwelling unit on the same lot, or with a separate unit in the home (for instance, a rental basement unit.) ■ 34%of all needed units are projected to be multi-family in structures of 5+attached units. ■ Less than 1% of new needed units are projected to be manufactured home units, which meet the needs of some low-income households for both ownership and rental. ■ Of ownership units, 69% are projected to be single detached homes or manufactured homes, and 31% are projected to be attached forms. ■ Nearly all new rental units are projected to be found in new attached buildings,with 62% projected in rental properties of 5 or more units, and 33% in other attached housing forms. Only 5.5% of new rental units are projected to be detached homes, including manufactured homes. Group Housing Needs:There is an estimated population of 332 individuals living in group housing in 2043, based on an assumption that the share of the population living in group quarters (1.7%) remains stable from current levels. This would represent an increase of just a few people living in group quarters, as forecasted population growth is modest. In Lake Oswego, the Census estimates that nearly all of Lake Oswego's group housing population lives in nursing facilities. NEEDED AFFORDABILITY LEVELS Figure 5.4 presents the estimated need for net new housing units by major income segment,based on the projected demographics of new households to the market area.The needed affordability levels presented here are based on current dollars. Figure 5.4 also discusses the housing types typically attainable by residents at these income levels. Note that Figure 5.4 presents the official state measure of "low income" used to set rent and income limits for various affordable housing programs. This estimate via OHCS and HUD are based on an estimate of median income in Clackamas County of$106k in 2022, based on a family of four,while the median income in Lake Oswego was a higher$123k. For this analysis,the estimated Median Family Income(MFI)for a family of four($106k)was adjusted to match the average household size in Lake Oswego of 2.4 persons ($89.5k) so that the estimates presented below reflect the city average. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 29 PP 22-0005 ATTACHMENT 11/PAGE 30 OF 55 Figure 5.4 presents some of the types of housing product that might commonly serve households in these income ranges. Many households below 60% MFI or even higher income will require some sort of subsidized affordable unit or voucher to find housing affordability.Those at 60%to 100%MFI may find housing in older and substandard market rate rentals, manufactured homes,and middle housing types. FIGURE 5.4: PROJECTED NEED FOR NEW HOUSING AT DIFFERENT INCOME LEVELS,LAKE OSWEGO Income Level Owner Renter Household Income Segment Total Share Common Housing Product (Rounded) Units Units Government-subsidized;Voucher; Extremely Low Inc. <30%MFI <$27,500 56 149 205 10% Shelter;Transitional Aging/substandard rentals; Very Low Income 30%-60%MFI $27.5k-$55k 95 221 317 16% Government-subsidized;Voucher; Manufactured homes Aging apartments;Government- Low Income 60%-80%MFI $55k-$73k 71 120 190 10% subsidized; Plexes;Aging single- detached;Small homes Single-detached homes; Middle Income 80%-120%MFI $73k-$11ok 134 172 306 16% Townhomes;Condominiums; Newer apartments Single-detached homes; Upper Income >120%MFI >$110,000 669 282 951 48% Townhomes;Condominiums; New apartments TOTAL: 1,024 944 1,968 100% Sources: HUD,Census,Claritas,JOHNSON ECONOMICS ■ Figure 5.3 presents the net NEW housing unit need over the next 20 years. However, there is also a current need for more affordable units. For all households,current and new,to pay 30%or less of their income towards housing in 2043, more affordable rental units (subsidized and non-subsidized) would be required. This indicates that some of the current supply, while it shows up as existing available housing, would need to become less expensive to meet the needs of current households. ■ There is a finding of new need at the lowest end of the rental spectrum ($900 and less). ■ The projection of future ownership units finds that the supply at the lowest end of the spectrum will be insufficient due to the prevalence of newer homes, many of which will be detached houses. (This reflects the estimated value of the total housing stock, and not necessarily the average pricing for housing currently for sale.) Ownership options and lower and middle price points are often manufactured homes, townhomes, condos,and small detached homes,often on smaller lots. Subsidized Affordability Housing Need As alluded to in Figure 5.4,some low-income households,and particularly the lowest income households,typically need some sort of subsidized affordable housing in order to find rents affordable given their modest resources and other household spending needs. Figure 5.5 below presents estimates of need at key low-income affordability levels in 2022 and in 2043.The table uses HUD definitions of Extremely Low, Very Low, and Low Income, as well as 60% MFI which is a common affordability level for tax credit properties. ■ There is an existing and on-going need at these levels,based on income levels specified by OHCS for Clackamas County. An estimated 12%of households qualify as at least"low income"or lower on the income scale,while CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 30 PP 22-0005 ATTACHMENT 11/PAGE 31 OF 55 9% of households qualify as "extremely low income". (Again, this is based on the official state measure of Clackamas County median income for application to HUD and other subsidized affordable housing programs, which is relatively high.) FIGURE 5.5: PROJECTED NEED FOR HOUSING AFFORDABLE AT Low INCOME LEVELS,LAKE OSWEGO Current Need(2022) Future Need(2043) NEW Need(20-Year) Affordablilty Level Income Level* #of Units %of All #of Units %of All #of Units %of All Extremely Low Inc. <30%MFI < $26,800 1,492 9% 1,697 9% 205 10% Very Low Income 30%-50%MEI <_ $44,700 1,560 9% 1,771 9% 212 11% Low Income 50%-80%MFI <_ $71,600 2,075 12% 2,370 12% 295 15% TOTAL: 580%MFI _< $71,600 5,127 29% 5,839 30% 712 36% Tax Credit <_60%MFI <_ $53,700 3,962 23% 4,483 23% 521 26% Sources: OHCS,Claritas,JOHNSON ECONOMICS,HUD * Income levels are based on OHCS guidelines for avg.Lake Oswego household size of 2.4 persons. ■ Typically, only rent-subsidized affordable properties can accommodate these extremely-low-income households and many other low-income households at "affordable" housing cost levels. Often the lowest income households must be served by housing choice vouchers and public housing. Tax credit projects are more likely to serve those earning 50%to 60%of MFI. Housing Need for People Experiencing Homelessness: Given the low forecasted population growth, Lake Oswego is assumed to maintain a fairly stable number of unhoused individuals and households over this period. Unhoused individuals and families may require a mixture of shelter types depending on individual circumstances,ranging from emergency shelter to transitional housing to permanent subsidized housing. This population is a subset of the extremely-low-income population shown in prior figures. Agricultural Worker Housing:There is currently no housing dedicated to this population in Lake Oswego. Based on the assumption that this type of housing will maintain its current representation in the local housing stock, this indicates that there will likely be no new need for housing dedicated specifically for agricultural workers over the planning period. However,this population may also be served by other available affordable units. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 31 PP 22-0005 ATTACHMENT 11/PAGE 32 OF 55 VI. RECONCILIATION OF FUTURE NEED (2043) & LAND SUPPLY This section summarizes the results of the Buildable Lands Inventory (BLI). The BLI is presented in detail in an accompanying memo to this report. The BLI was conducted for land within the city limits, assessing vacant and partially vacant lands based on residential zoning, and environmental and other constraints that may impact development. The following table (Figure 6.1) presents the estimated new unit capacity of the buildable lands identified in the City of Lake Oswego and within the UGB. Residential zones, as well as mixed-use zones that can accommodate some residential uses, were included in the inventory, and are broken into broad categories based on housing density. FIGURE 6.1: ESTIMATED BUILDABLE LANDS CAPACITY BY ACREAGE AND NO.OF UNITS(2023) ACRES ACREAGE Gross Constrained Unconstrained Developable Unit Land Type Acres Area(Acres) Area(Acres) Acres Capacity Residential 3,530 802 2,784 174 705 Mixed Use 490 96 397 10 146 Non-Residential 172 21 150 - - Public/Other 3,147 1,274 1,899 - - Acres Total: 7,339 2,193 5,230 185 851 UNITS UNIT TYPE Single Family Middle Housing Multi-Family Unit Housing Type Units Units Units Capacity Residential 648 39 17 705 Mixed Use 5 23 118 146 Non-Residential - - - - Public/Other - - - - Vacant and Partially Vacant Total: 653 62 135 851 Additional Capacity Approved Developments 2 23 341 366 Additional Middle Housing Infill - 110 - 110 TOTAL HOUSING UNIT CAPACITY: 655 195 476 1,327 Source: MIG • There is a total estimated remaining capacity of 1,327 units of different types within the study area. • The estimated remaining capacity for low density housing units remains the greatest share at capacity for 655 units,or 49%of the total. • There is a total estimated capacity for 195 middle housing units, including future infill in low density zones. This is roughly 15%of the total unit capacity. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 32 PP 22-0005 ATTACHMENT 11/PAGE 33 OF 55 • There is a total estimated capacity for 476 housing units in higher density multi-dwelling properties. This is roughly 36%of the total unit capacity. • 28%of the total capacity(366 units) is found in units already approved for development as of the time of this analysis.Additional infill opportunities identified on large-lot residential and some commercial lands account for an estimated 8%of capacity. See the attached Appendix for full Buildable Land Inventory details and methodology. The following table summarizes the forecasted future unit need for Lake Oswego. These are the summarized results from Section V of this report, presented here for reference. FIGURE 6.2: SUMMARY OF FORECASTED FUTURE UNIT NEED(2043) TOTAL HOUSING UNITS Multi-Family Single Single 3 or 4- 5+Units Manuf. Boat,RV, Total %of Unit Type: Detached Attached 2-unit plex MFR home other temp Units Units Totals: 760 220 104 205 677 3 0 1,968 100% Percentage: 38.6% 11.2% 5.3% 10.4% 34.4% 0.1% 0.0% 100% New Units Needed Single Detached Homes 760 a) Townhomes 220 2 -4 Plex Units 309 oa c 3 5 or More Units 677 Manufactured Homes 3 00 OO OO 00 0`)'L O cb y0 Housing Units Sources: PSU Population Research Center,Census,Johnson Economics Comparison of Housing Need and Capacity There is a total forecasted need for nearly 2,000 units over the next 20 years based on the forecasted growth rate. This is greater than the estimated total capacity of 1,327 units. Figure 6.3 below presents a comparison of the BLI capacity for new housing units, compared to the estimate for new unit need by 2043. It breaks down need by general zoning category(LDR, MDR, HDR). • The projected demand for low-density housing types is higher than the remaining capacity by an estimated 192 units,or the equivalent of 38 acres of low density residential land. • The results find a deficit for medium-density housing of 249 units,or 31 acres. • The projected demand for high-density housing types is higher than the remaining capacity by an estimated 201 units,or the equivalent of 17 acres of high density residential land. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 33 PP 22-0005 ATTACHMENT 11/PAGE 34 OF 55 • These findings assume that under newly adopted state rules,3%of available buildable parcels in the LDR zone will be used for the various types of attached units(single-family attached townhomes,duplex—fourplex). FIGURE 6.3: COMPARISON OF FORECASTED FUTURE LAND NEED(2043)WITH AVAILABLE CAPACITY WITHIN CITY LIMITS SUPPLY DEMAND Buildable Land Growth Rate(0.05%) Zone& Plan Inventory- Surplus or(Deficit) Typical Housing Type New Unit Category Housing Unit Capacity Need(2043) Units Avg. Acres Units/ac. Low-Density Single-family detached; 655 847 (192) 5 (38) Some SF attached & plex Med-Density SF attached; Manufact. 195 444 (249) 8 (31) home; 2-4 plexes High-Density Multi-family apartments 476 677 (201) 12 (17) TOTALS: 1,327 1,968 (642) 7 (86) Sources: MIG,Johnson Economics • These findings point to a need for additional residential land in a range of zones over the 20-year planning period. Available inventory may meet an estimated 67% of total housing needs over the first half of the planning period, but a deficit is projected in the long run. • A range of potential housing policies and strategies will be considered in future development of a Housing Production Strategy by the City, including the ability of future plan areas to meet the need for different types of housing during the 20-year planning period. CITY OF LAKE OSWEGO I HOUSING CAPACITY ANALYSIS PAGE 34 PP 22-0005 ATTACHMENT 11/PAGE 35 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 APPENDIX A: LAKE OSWEGO RESIDENTIAL BUILDABLE LANDS INVENTORY Methodology and Results I July 18, 2023 Introduction This memorandum provides a Residential Buildable Lands Inventory (BLI)for the City of Lake Oswego, which will support the creation of a Housing Needs Analysis (HNA) for the City.The methodology for this BLI is based on the 2018 Metro BLI1 with further refinements through review and discussions with City staff. The BLI is conducted in the following steps: • Step 1:Study Area and Land Classification. This step identifies the land in the City that is available for residential uses. • Step 2: Constraints to Development.This step identifies constraints such as natural resources, steep slopes, and utility easements that limit development. • Step 3: Development Status.This step assigns a "Development Status" of vacant, partially vacant, or developed tax lots in the inventory. • Step 4: Net Buildable Area and Unit Capacity.This step removes land for future rights-of-way and other land needs to provide a net number of acres for each City zoning designation,then estimates number of units and mix of unit type (single detached, multi-dwelling, middle housing) expected based on the results of Step 4. Step 1 : Study Area and Land Classification Study Area The study area for this analysis is shown in Figure 1.The study area includes land within the Lake Oswego City Limits.' 1 https://www.oregonmetro.gov/sites/default/files/2018/07/03/UGRAppendix2 Buildable Lands Inventory.pdf 2 A prior version of this Buildable Lands Inventory included unannexed land outside of the Lake Oswego City Limits which has a City Comprehensive Plan designation.This land has been removed from the study area following APPENDIX A: Buildable Lands Inventory Page 35 PP 22-0005 ATTACHMENT 11/PAGE 36 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 1.Study Area Map s s SW-STEPHENSONST D F y lessF Jr RpKwY m o S�ONE �, --a O , O 0 P yy� 1 r-- MELROSE ST i s0 f i ,-4 '5, i COU/VTRy it X C1 Ug RD II \y� J J K?1 a 3 Y � %.11 PKRUSE WAY O� OS AAVE ^vMEADOWS RD �. * - SW BON 1 �y- %t c4 e % N,OUN7q,NBVp�Oi o> zZ FRp 1 \x 0 o 740 cc { O cc o om ‘ L., �z > __/` P� EB\VDV PE 'i lirr-Nir �QQ�R ° S‘{ORE 8<V cEC lea sow J0 • GREENTREE POzO 1-1 9 OS eR O : 3 Ov 0,00K 0, S BERGIS'RD -, Y ` ! y�l! ¢ cr I-- �ill9 Z C' m \�pSRD�`' O'rF O, �ile `1'G CHILDS RD �� S �O _,I n PO U AP O t . Miles OREGOd 0 0.25 0.5 1 Lake Oswego Buildable Lands Inventory I Study Area ,IF:—/i Study Area Lake Oswego City Limits Land Classification Parcels in the inventory are categorized based on their Comprehensive Plan and Zoning designations, property ownership, and other characteristics available in City/regional datasets.These classifications are described in Table 1 and shown in Figure 4. Comprehensive Plan and Zoning Districts The City of Lake Oswego's Comprehensive Plan Districts are described in Table 1.This is the primary basis for classifying lands into the categories of Residential, Mixed-Use, Nonresidential, and Publicly Owned/Other.Alignment with Zoning Districts are shown in the "Implementing Zones" column. Zoning discussion with the City's Housing Production Strategy Task Force and Oregon Department of Land Conservation and Development(DLCD)staff. APPENDIX A: Buildable Lands Inventory Page 36 PP 22-0005 ATTACHMENT 11/PAGE 37 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 and Comprehensive Plan map designations are shown in Figures 2 and 3, respectively. Overarching categories of land and how they are considered in this inventory are described on the pages following those figures. Table 1. City of Lake Oswego Comprehensive Plan and Zoning Districts Comprehensive Plan Implementing Zone Purpose Designations Zones R-15 Residential Low To provide lands for single-family residential development with R-10 densities ranging from two to five dwelling units per gross Density acre,and to provide lands for middle housing development. R-7.5 To provide lands for single-and multi-family residential development with densities ranging from seven to eight R-5 dwelling units per gross acre,and to provide lands for middle housing development. (1) The purpose of the R-DD zone is to assure that both single-family homes and middle housing are protected from noise,light,glare and reduction in privacy to the maximum extent possible during the area's transition to higher density residential use,to facilitate good architectural design and site planning which maintains residential choices of unit size,cost and other amenities and supports the economic feasibility of new construction R-DD Zone and development,and to assure protection and compatibility of all land uses,including commercial, residential,park,open space and historic sites. (2) The R-DD zone is intended for use in low density residential districts which are undergoing transition to increased densities,and which have scenic,historic, natural or residential features which should be preserved Residential and integrated with new development. Medium Density The FAN R-6 zone is intended to implement the land use policies of the First Addition Neighborhood Plan.The purpose of this zone is to ensure the design quality of proposed development in the neighborhood by: (1) Ensuring that proposed building designs are visually compatible with the character of existing structures,maintain adequate light and air between structures,and complement the neighborhood's architectural character. (2) Minimizing the visual impact of garages from the street, R-6 and to continue established alley uses and functions such as access to garages,off-street parking and trash removal. (3) Encouraging compatible and sensitive remodeling and renovation of existing residences. (4) Preserving the small-town character of the existing streetscape by allowing single-family and middle housing development that is human scale and pedestrian oriented. (5) Enhancing the natural environment of the neighborhood as one of the dominant characteristics. APPENDIX A: Buildable Lands Inventory Page 37 PP 22-0005 ATTACHMENT 11/PAGE 38 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Comprehensive Plan Implementing Zone Purpose Zones Designations (6) Preserving FAN's historical and architectural character by encouraging infill development that is compatible in design character to landmark structures on abutting lots. R-3 To provide lands for single-and multi-family residential Residential High R-2 development with densities of at least 12 dwelling units per Density R-0 gross acre,and to provide lands for middle housing development. R-W Neighborhood To provide land near residential areas for lower intensity Commercial(NC) commercial activities that primarily serve the surrounding neighborhood,smaller public facility uses,and residential uses. To provide lands for a mix of higher intensity commercial General activities supplying a broad range of goods and services to a Commercial(GC) market area approximately equal to the planning area identified in the Comprehensive Plan,as well as residential, public facilities,and cultural uses. To provide lands for commercial activities which meet the Highway needs of the traveling public as well as other highway-oriented Commercial(HC) retail uses which require access to a market area larger than the general commercial zone.This zone is not intended for regional shopping centers. To provide for a mix of uses requiring highway access and Mixed which provide a strong visual identity. Intended uses include Commerce(MC) local and regional convention type facilities,office uses and Commercial supporting retail uses. Office Campus To provide lands for major concentrations of regionally- (OC) oriented offices and employment opportunities for a market area larger than the planning area. Campus To provide a mix of clean,employee-intensive industries, Research and offices and high-density housing with associated services and Development retail commercial uses in locations supportive of mass transit (CR&D) and the regional transportation network. The purpose of the CI zone is to provide zoning regulations for Campus the Marylhurst Campus in order to provide land where Institutional(CI) permitted or conditional uses can be provided for in a unified campus setting. To implement Comprehensive Plan policies applicable to the East End General Downtown Town Center and to provide land for a mix of Commercial(EC) higher intensity commercial,residential,and cultural uses and public facilities that support a traditional downtown commercial core. Industrial Zone The purpose of the industrial zone is to provide land where (I) general industrial development can be located. Industrial To provide lands where primarily light industrial and Industrial Park employment uses can occur in a campus-like setting under Zone(IP) controls to make activities mutually compatible and also compatible with existing uses bordering the zone. West Lake Grove To provide zoning for townhome residential,commercial,and Zones mixed-use development in the West Lake Grove District that Mixed Use (Townhome accommodates lower intensity commercial,public facility and Residential- residential uses;and to provide a transition between the Lake WLG R-2.5, Grove Village Center and adjacent residential neighborhoods. APPENDIX A: Buildable Lands Inventory Page 38 PP 22-0005 ATTACHMENT 11/PAGE 39 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Comprehensive Plan Implementing Zone Purpose Zones Designations Residential These districts are intended to supply services to a market area Mixed Use-WLG that is comprised of adjacent neighborhoods. RMU,and Office- Commercial- WLG OC) To foster a mix of housing,retail and office uses in a central location proximate to downtown and along the Willamette River.Commercial uses are allowed but are not intended to dominate the character of the area. Retail uses are limited in size to complement the downtown core and facilitate the development of neighborhood-focused retail served by transit. The design and development standards are intended to create a unique Lake Oswego community.The emphasis of the zone is on residentially related uses. The Foothills Mixed Use code provisions are intended to: Foothills Mixed i. Connect the FMU area with downtown,Tryon Creek,Old Use(FMU) Town,the Willamette River and Oswego Lake; ii. Create a sustainable walkable neighborhood that possesses a thriving,active,and comfortable pedestrian environment; iii. Create visual interest through varied building heights that are urban in character,yet include detailed amenities at the ground floor that enhance the pedestrian environment; iv. Create high quality buildings,of long lasting materials,to promote the permanence of the community; v. Allow for a mix of residential uses,with urban density,and neighborhood scale retail and office development;and vi. Establish a standard of design that reinforces Lake Oswego's sense of place. The Public Functions(PF)zone is intended to specify Public Use Public Functions appropriate land uses and development standards for public (PF) uses,such as government services,education,and similar activities. The purposes of the Park and Natural Area(PNA)zone are to: i. Protect,preserve,conserve and enhance natural areas, greenways and parks; ii. Permit a wide range of passive and active recreational Park and Natural Park and Natural uses,and accessory uses,on property for the future use and Area(PNA) Area(PNA) enjoyment of the City and its residents; iii. Implement Statewide Planning Goal 8,Recreational Needs;and iv. Establish a master plan process for park planning and development. APPENDIX A: Buildable Lands Inventory Page 39 PP 22-0005 ATTACHMENT 11/PAGE 40 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 2. City of Lake Oswego Zoning Designations Portland "Co- Camurn � 4 22 c Collegme--Syl r+j.i�•• I: in Creek f ^Natural m- ® 1 5F n • f .a � R�7.5 - � -.--_' � ', � �� � �, �. :imu -—-- Milwaukie „F_ �� �; Heights Tigard �f.' °e'_ .�- 4 R_ya R-iol' ,awl 4p HC' R-5 � r M d R-6 Oak Grove PIL R-ya q �.P a i� l PNn • PEC MI. Bonita •sw eon r -�, m I[d Rd ' Wi �� r• `'S PNA J . .4, ., I, SW Durham r as R-yo . "55rII w5 ' w li Concord R.7.5 Cook Po. Trolley Trail • Durham T�N. R.1e iiR �aVJ... / PNA � tr� toy Clul, / GI R i5 t j{ Jer 1` R-'S Esri,NASA,NGR,USGS,FEMA,Oregon Metro,Oregon State Parks,State of Oregon GEO,Esri.HERE, T iia later. PNn Riverg rove Garmin,SafeGraph,Gyotechnolagies,Inc,METIINASA USES.Bureau of land Management,EPA,NPS, `f_ USDA Mary S.Young Lake Oswego- Buildable Lands Inventory-Zoning Districts Legend =Lake Oseego I ,HC ,F C R.6 LAYER 0 I aNA C R-7.5 MI CI ®IP c-0 I l R-W =Cl/-DC 0 MC _I R-Lb MN RAN =CRlao 0 NC CI R-Ls O WLG Oc ®PC =NC/P-It p R-2 =SLG R-2.5 MI EC12-0 I=oc 1=I R-3 0 WIG RMu 0 0.25 0.5 1 0 GC 0 crgs-r 0 R-s Miles APPENDIX A: Buildable Lands Inventory Page 40 PP 22-0005 ATTACHMENT 11/PAGE 41 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 3. City of Lake Oswego Comprehensive Plan Designations Portland [,,,�___...iii,,, Community • o / .224 ` V Ceilege-sylva' Tryon Creek _ Y + State Natural m ���qi � el t , SF • 14T 'p ! �i � et'.I g PNA - Milwaukle C }f}9rr `1.q., - R•�o.� ,/ Hefgh[s '7t Al,WW1 ea 1 _5 • 'F Tigard q 5 to �� ��� _ n �.. �J F q6``[J Oak Grove --. R S 1 Mc — — OCIR.3 R xo - 0EC Bonita. _•- fr. .��.. q.�a R-7.5 �'�n = SW Ronlu Rd `s'^ Cr"—i. �• R." P _.S PNA � j R_7.5 ... '. GC d L emi PNA• 1, N.7 )G — o I SW Durham cc i - • • R-7.5 Concord R•5 . �� 1 I',- ^-R"i5 Cl Trolley-Dail •,-.r. aR Durham lE Lk 4 ir Rno Aillii laiin j / ��' .� aly[lob J .R,� ,�, Iillt# I l -. jar PNA V R' ERE NASA,NGA,USGS,FE MA,Oregon Metro,Oregon State Parks.State of Oregon GEO,Esri.HERE, Tualatin Rive rg rove r I Gamin,SaleGraph,Ggorechnolagies,Inc.METVNASA,115G5,Bureau of Land Management,EPA,NPS, I USDA cMary5.Young Lake Oswego- Buildable Lands Inventory-Comprehensive Plan Designations Legend 0 Laie Os.vego 0 HE I]ONE I=q•7.5 I AYFR DIP MliR-0 iRW 1. CI U MC 0 It-AU =SA E CRS) I—I NC ©12-15 fi WLG OC L EC U NCR-0 =11-2 0 WLG R-2.5 EC/R.-0 U OC =R-3 =WLG RMFI L FMU O OCR--3 C R-s =I<alrotherverues> 0 0.25 0.5 1 =GC OPF OR-6 Miles Residential Land Residential Land is intended to meet the City's need for residential uses of various types. It includes land within the R-0, R-2, R-3, R-5, R-6, R-7.5, R-10, R-15, R-W, and WLG R-2.5 Comprehensive Plan designations, unless it meets the criteria for "Publicly Owned/Other" land. Mixed Use Land Mixed Use land can be developed to meet the City's residential and employment needs—sometimes within the same structure. It includes land within the WLG RMU, CI, CR&D, EC, FMU, GC, HC, NC, OC, and WLG OC Comprehensive Plan designations unless it meets the criteria for"Publicly Owned/Other" land. More information about the assumptions for future housing development in these areas is found later in this report. Nonresidential Land Nonresidential land includes employment land and "Publicly Owned/Other" land, as follows. This land is not included in the inventory. APPENDIX A: Buildable Lands Inventory Page 41 PP 22-0005 ATTACHMENT 11/PAGE 42 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Employment Land Employment Land is intended to meet the City's employment needs. It includes land within the MC and IP Comprehensive Plan designations unless it meets the criteria for"Public/Other" land. Publicly Owned/Other This category of land includes the SP, PF, and PNA designations, as well as land in the following categories: • Land in another Comprehensive Plan designation under City, County, State, Federal, or Special District Ownership • Land commonly held in Homeowners'Associations (HOA) common ownership, such as required open space. • Religious or fraternal properties (with the notable exception of Marylhurst University, which is accounted for in a separate line item). • Private driveways and ROW As noted above, properties in this category are generally not included in the inventory. However, some specific parcels in this category may be included in other classifications if information is available to suggest that they have development capacity for residential or employment uses. APPENDIX A: Buildable Lands Inventory Page 42 PP 22-0005 ATTACHMENT 11/PAGE 43 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 4.BLI Land Classification \ ,___Vera maw: — IVIIIYYdU I Y— 1�1 pgld lt'�,--. , I 1 rg4l U ., . \1"AV ! 1 1.�*1 1,'?"1 7m.. —, I m I /�Pti:. 1 71! \aii ?Ail 0-,irAv-fitaio E i 4y tJ-��n f0 __-' cif! wT.> II �IOakGro gt, I tL/ t 1 'ow- ,► ►►;►�,z.di,• , NU Rd Lam% .illiPert IAA Atm% „....- jite\,);2.-- —.‘7.-.;----,‘ , / 1 :punri-O*4.-. p.m dirm i Er v 111 J,::, 1 ti*i ... c...tteco t N igiL K-144„Vg 42 . In 11 ....:,..,11 li'' ,00;00morp.--00.....40,4" iiiierm*fity%.!ge" _ I ,.�gig . . 1.7f� Fi•lni"1 EM., III .d `- Car I t�lll��r �1 , _`r,' l 4111b • 1..117 ...ital IIR / / 11� �I�11 i` J' C_ ('1`P I ` I �1 ppp `1' ��I 1I 1—�j j�1 rP! ♦ ,.. // / IJ_ •I'— _L - - ♦ ,ly+ 1���1 #I1�� �I— i ill1 ' eir A EOIdvergrov. 1 — '1j I ^ I , I u !Miles �RFGO/ 0 d.25 OS 1 S: 4y Lake Oswego Buildable Lands Inventory I Land Type ® Study Area Land Type Residential = Mixed Use Non-Residential = Public/Other APPENDIX A: Buildable Lands Inventory Page 43 PP 22-0005 ATTACHMENT 11/PAGE 44 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Step 2: Constraints to Development One of the primary tasks of this BLI is to identify land that is constrained by one or more of the following physical constraints. Constraints may overlap one another spatially—in this case the more restrictive constraint applies. Assumptions for these constraints are listed below—they have been discussed with City staff but are subject to further refinement, as needed. Constraints are described in Table 2 and shown on Figure 5. Table 2. Development Constraints Constraint Description Developable Portion Steep Slopes Slopes greater than 25%. Density transfer resulting in 5% Developable the construction of 1-2 dwelling units allowed. Water Bodies Includes lakes, streams, other areas of open water 0% Developable FEMA Flood Includes Zones A, AE, and X. Density transfer resulting 5% Developable Hazard Areas in the construction of 1-2 dwelling units allowed. Greenway Protects land along the Willamette River. Permitted Management uses include single-family dwellings and accessory 25% Developable Overlay District structures associated with such dwellings. Includes Resource Protection (Streams and Wetlands; RP), Resource Conservation (Tree Groves; RC), and Habitat Benefit Areas (Tree Groves; HBA). RP and RC areas are tightly regulated,while HBAs are areas with optional resource protection incentives rather than regulations. RP—50% Developable Sensitive Lands RP—Density transfer possible. RC—0% Developable RC- Mostly applies to public land and open space HBA—95% tracts,which are not developable (PF and PNA zones, Developable OS tracts in private developments,typically). HBA- Incentives, rather than regulations, are applied to protect natural resources. Usually does not limit development beyond a modest reduction. APPENDIX A: Buildable Lands Inventory Page 44 PP 22-0005 ATTACHMENT 11/PAGE 45 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 5. Constraints to Development it s ''i '' ' —' 1 1'1 - ISW STEPHENSON ST � 1� 1 1 1 Ry�D m F x ®� <Fss�q ,�9q PKWY I 1 11 ONES FE r - - I m °° i QO• IRS t s'._1 — ♦ �O I I �° — o U,61_ :'.r-,- ,I Oil'kV,V14;1414,1 0.4: 110,7.tlit7q:1:I: "-••,--"-'---— ''' .,..2.--14 F. " ge ft) ipr eb, ; —' ', LROSE ST -.n, � Et �t`r`,r'— f� l i I� /i i.s G.ti¢g: t *..�. 1 - - -4/7 i'1 A'r • 1. ` iq, 1 rim f '54_ `7 � 'Wr�f „ �1u Ry c`06 RDA `I'�� �u1 � 1 t ,1 2j� �` ��btu',=-_. �„� i �� �" �\ , y p 6� KRUSE WAY_ O4 Imo., ems=-�.- ,�"may / A g MEADOWSRD Q �, e'� . VS�`.1Z, rz--1Ni.•...•. e� 1X.� ,dI AVEE z 1 .11 SW-BONI�TA-RD��7-�c 11 q� c..Tiv s IP h 4 .IIIIL:.n-►r'' t�cl` 8L4D .04 �—'-f .s �V4 t , , �� 7 •I/ r r, d' 1 a git. ER 0;E 1F_\ s .*�•. i. , PEE y �, vi Ji1r A Dills... I a� Q9 �O OJT j,.. H6�g�i :;_ �O! 1 rI Oki 5 a= = oqG 0 6REENTR EE(y0 e 0E- FRr i '- ♦1 Po 1 r— 1 0 -" ��� �a o� - I, I 1 — 0� y ��- � : 1 of i� �T \� 1, '• Q +,` Y 3 Ov��y�OOK - .. S BERGIS.RD ♦, %, .1 V� „ 1 1 1 �c,E 1VAY 1 r (+I w t • r y�- _ f d r , f — �O o I ,� 1 1 —o _ 1 4,- - n Q 4 J `s ` 1 f 11vos RD Ste¢ --- i �0 a .- �\ CHlLDS RDA ICI I- uriser I f pi of IJS (Miles r;". ^; - / :M►. , i REGO�� Lake Oswego Buildable Lands Inventory I Environmental Constraints ® Study Area Major Roads Taxlots Greenway Mgmt. - Overlay District Slopes>25% FEMA Floodplain Sensitive Lands Overlay Habitat Benefit Areas (HBA) Resource Conservation Areas (RC) Resource Protection Areas(RP) APPENDIX A: Buildable Lands Inventory Page 45 PP 22-0005 ATTACHMENT 11/PAGE 46 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 The BLI includes the following information for each tax lot in the study area based on the location of constraints. • Acres—Total size of the tax lot • Constrained Acres—Acreage of constrained areas, per Table 2 • Unconstrained Acres—Total acres minus Constrained Acres The following table shows gross acres of land in each primary land classification in the Study Area. Table 2. Constrained and Unconstrained Acres by Land Type Land Type Total Acres Constrained Acres Unconstrained Acres Residential 3,530 802 2,784 Mixed Use 490 96 397 Non-Residential 172 21 150 Publicly Owned/Other 3,147 1,274 1,899 Total 7,339 2,193 5,230 Step 3: Development Status Each tax lot in the study area is categorized as Vacant, Partially Vacant, or Developed.The following data is used to determine development capacity of Study Area tax lots: • Tax assessor data, including Property Land Use Code, Improvement Value, and Land Value; • City inventory of outdoor areas, used in identifying public and commonly-held open spaces such as public facilities, parks and Homeowners Association-owned open spaces; • Metro Vacant Land Inventory derived annually from aerial photo information; • Review of recent aerial imagery; and • Discussion and review with City staff and the Housing Production Strategy(HPS)Task Force. Generally,vacant tax lots are assumed to have development capacity equal to the area unconstrained by natural resources, minus additional set-asides for future Right-of-Way and infrastructure (see Step 4). Developed parcels will be subject to further screening for redevelopment potential, described in later steps. Partially Vacant properties have an existing home but are large enough to subdivide based on criteria such as parcel size and allowable lot size, as described in this section. Residential Development Status • Vacant. Land that has a building improvement value of less than $20,000, as indicated by assessor data. All land outside of constrained areas is included in the developable area for these properties. • Vacant—Platted.Vacant land that is part of a platted but unbuilt subdivision is included in this category. Platted lots are assumed to contain one unit each unless other information is available (see Step 4). "Developable Acres" is shown as "0" because they are treated separately from other acreage in the inventory. APPENDIX A: Buildable Lands Inventory Page 46 PP 22-0005 ATTACHMENT 11/PAGE 47 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 • Partially Vacant.This designation is intended for parcels with an existing single-detached home that are large enough to further subdivide or develop to provide additional residential units. While middle housing and townhomes are allowed in many zones,this analysis uses the minimum lot size required for single-detached dwellings as the basis for the Partially Vacant designation, as follows: o Parcels greater than 5 times the minimum lot size:These lots are categorized as "Partially Vacant." %acre is assumed to remain for the existing home and the remaining unconstrained acreage is assumed to be developable. o Parcels between 2 and 5 times the minimum lot size: For lots with a building value below$200,000, %acre is assumed to remain for the existing home and the remaining unconstrained acreage is assumed to be developable. o Parcels less than 2 times the minimum lot size: These lots are categorized as "Developed" if improvement value is present or aerial photo review shows development. • Developed. All other residential land is designated Developed and has no developable area. Mixed Use Development Status Mixed Use development is subject to the same criteria as Residential Land. However, an additional screen is used to determine the likelihood of redevelopment of mixed-use parcels in Step 4, and assumptions about the residential/employment mix (see Error! Reference source not found.3) are a pplied. Mixed Use Residential Proportion Mixed use designations are assumed to develop partly with residential uses and partly with non- residential uses, per the following table. Table 3. Residential Portions of Mixed Use Tax Lots Mixed Use Residential Nonresidential Notes Designation Portion Portion West Lake Grove 50% 50% Townhomes only allowed with office use in the Residential Mixed Use same building (WLG RMU) West Lake Grove 25% 75% Residential limited to Boones Ferry Staging site, Office-Commercial per LOC 50.03.003.2.d. Residential limited to (WLG OC) Boones Ferry Staging Site. Percentage based on the size of this site in relation to the total size of district(see LOC 50.03.003.2.d for geography). Campus Institutional 50% 50% Multifamily development is limited to Subarea I (CI) of the Marylhurst Campus Zone. Campus Research & 30% 70% Assumption based on trends in this area Development(CR&D) East End Commercial 80% 20% (EC) Foothills Mixed Use 80% 20% Most similar to EC in terms of residential/non- (FMU) residential mix General Commercial 30% 70% (GC) APPENDIX A: Buildable Lands Inventory Page 47 PP 22-0005 ATTACHMENT 11/PAGE 48 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Highway Commercial 10% 90% (HC) Neighborhood 50% 50% Commercial (NC) Office Campus(OC) 30% 70% Summary The following table lists the number of tax lots,total and constrained acreage, and developable area by land type. A map summarizing development status is shown in Figure 6. Table 4. Developable Area of Residential and Mixed Use Tax Lots Gross Constrained Unconstrained Developable Land Type Acres Area (Acres) Area (Acres) Acres Residential 3,530 802 2,784 175 Mixed Use 490 96 397 14 Non-Residential 172 21 150 Public/Other 3,147 1,274 1,899 _ Total 7,339 2,193 5,230 189 APPENDIX A: Buildable Lands Inventory Page 48 PP 22-0005 ATTACHMENT 11/PAGE 49 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 6. Development Status of Residential and Mixed Use Land ,��� T 1 - ' • r L */ Sr • • ci.4`-K• c\F F QP`r4rep r1. �, it wi SW STEPHENSON ST. 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Inill ■ j 0 o.zs 05 �1^ s ■E Lake Oswego Buildable Lands Inventory I Development Status Constraints Development Status Developed Partially Vacant Vacant ® Study Area APPENDIX A: Buildable Lands Inventory Page 49 PP 22-0005 ATTACHMENT 11/PAGE 50 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Step 4: Net Buildable Area and Unit Capacity This step of the BLI establishes the net buildable area of residential land in the Study Area by removing land needed for future right-of-way and other infrastructure set-asides, and by subtracting the non- residential portions of mixed-use zones. This step also accounts for platted subdivisions and other development with known approvals. Right of Way and Other Set-Asides When vacant land develops, land for roads, infrastructure, open space, and other needs reduce the gross available acres into a net developable acreage.The BLI uses the following assumptions to calculate net developable acreage for each parcel. • Residential Land: 20%of vacant properties, 0%of partially vacant properties • Mixed Use Land: 20%of vacant properties, 0%of partially vacant properties Assumed Density and Housing Mix Table 4 shows the assumed density for various zoning designations in the City of Lake Oswego.This information is based on the minimum lot sizes, likely densities, and staff assumptions based on recent projects and comparable zones, and parcel-by-parcel analysis.The proportion of units expected to be developed as Single Family Detached, Middle Housing, and Multi-Family are also shown. Table 4. Unit Density and Mix Assumptions Zoning %Single % Middle % Multi- Designation Notes Density Family Housing Family Detached Residential-Low Density Zones R-15 Min 15,000 sf lot area. 2.9 2.9 DU/AC net 95% 5% DU/AC net R-10 Min 10,000 sf lot area.4.3 4.3 du/ac net 95% 5% du/ac net. R-7.5 Min 7,500 sf lot area 5.8 5.8 du/ac 95% 5% du/ac net • Residential-Medium Density Zones • R-5 7-8 units per gross acre, 'r8 du/ac per code. 5,000 sf min lot size for 90% 5% 5% single-family. 1,500 for townhouse. • R-DD Buffer zone. 21 du/ac —8 du/ac 95% 5% theoretically possible. R-6 First Addition —7 du/ac Neighborhood (FAN) zone 6,000 sf lot area for 95% 5% Single-Family. 1,500 for townhouse. Residential-High Density Zones APPENDIX A: Buildable Lands Inventory Page 50 PP 22-0005 ATTACHMENT 11/PAGE 51 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Zoning %Single % Middle % Multi- Designation Notes Density Family Housing Family Detached R-3 At least 12 du/ac. (3,375 —12 du/ac 70% 10% 20% min per dwelling, or 12.9 du/ac).Townhomes up to 29 du/ac R-2 Min 12 du/ac 12 du/ac 60% 10% 30% R-0 Min 20 du/ac 20 du/ac 60% 10% 30% R-W ^'12 du/ac 60% 10% 30% Mixed Use Zones West Lake Table 50.03.002-2 notes "'5 du/ac Grove "R-5 density or greater" Residential - 50% 50% Mixed Use (WLG RMU) West Lake Table 50.03.002-2 notes 35 du/ac expected in Grove Office- "R-5 density or greater" BFR Staging Site, - 20% 80% Commercial nothing in other areas (WLG OC) Campus Table 50.03.002-2 notes Generally applies to Institutional "R-5 density or greater." Marylhurst University, (CI) Must have commercial on which is treated - - 100% ground floor. separately. Campus 54 du/ac for projects Research& that include residential Table 50.03.002-2 notes Development (-30%of the district, as - - 100% (CR&D) "R-5 density or greater" above) based on LU 19- 0041 East End Table 50.03.002-2 notes ^'56 du/ac Commercial "R-5 density or greater." o (EC) Must have commercial on - - 100/ ground floor. Foothills Table 50.03.002-2 notes ^'56 du/ac Mixed Use "R-5 density or greater" - - 100% (FMU) General Table 50.03.002-2 notes —27 du/ac based on Commercial "R-5 density or greater." Mercantile project (LU (GC) Must have commercial on 18-0026) ground floor. Residential o 0 not allowed "In the GC- 25/ 75/ zoned area in the vicinity of Jean Way and Boones Ferry Road." Highway Table 50.03.002-2 notes 8 du/ac(or R-5 density) Commercial "R-5 density or greater" for the 10%that may - - 100% (HC) develop as residential APPENDIX A: Buildable Lands Inventory Page 51 PP 22-0005 ATTACHMENT 11/PAGE 52 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Zoning %Single % Middle % Multi- Designation Notes Density Family Housing Family Detached Neighborhood Table 50.03.002-2 notes 67 du/ac for the 50% Commercial "R-5 density or greater." that may develop as (NC) Must have commercial on residential (based on LU - 50% 50% ground floor. _ 07-0031) Office Campus Table 50.03.002-2 notes 21 du/ac for the 50% (OC) "R-5 density or greater" that may develop as residential (based on - - 100% Galewood Commons Apartments) Summary of Vacant and Partially Vacant Land Table 5 summarizes net residential acreage for both residential and mixed-use land in the study area, and Table 6 shows the breakdown of capacity by zoning designation. Land with a known development approval has been removed and is accounted for in a later step. Table 5. Capacity of Residential and Mixed Use Land Developable Unit Capacity Land Type Acres Residential 174 705 Mixed Use 10 146 Non-Residential - - Public/Other - - Total 185 851 Table 6. Unit Capacity by Zoning Designation Land Type Unit Capacity Land Type Unit Capacity Residential Land 705 Mixed Use Land 146 EC/R-0 5 CR&D 14 R-0 2 EC 67 R-10 241 GC 12 R-10 Comp Plan 14 NC 23 R-15 131 NC/R-0 9 R-3 28 OC/R-3 5 R-5 116 R-0 8 R-7.5 149 WLG-OC 7 R-7.5 Comp Plan 3 WLG-R RMU 1 R-DD 12 R-W 1 WLG-R 2.5 3 Total Capacity: 851 Units APPENDIX A: Buildable Lands Inventory Page 52 PP 22-0005 ATTACHMENT 11/PAGE 53 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Table 7.Mix of Unit Capacity on Vacant and Partially Vacant Land Unit Capacity Single Family Middle Housing Multi-Family Land Type Units Units Units Residential 705 648 39 17 Mixed Use 146 5 23 118 Non-Residential - - - - Public/Other - - - - Total 851 653 62 136 Additional Capacity: In addition to the capacity listed above,the following categories of additional residential unit capacity have been identified.These are listed in Table 7, along with the expected mix of housing units. • Approved Development. Several parcels have land use approvals and/or are actively undergoing development. Where information about the unit capacity of these approvals is known,that information is used as future capacity(rather than an average assumption based on the zoning designation).These approvals are listed in Table 8. • Additional Middle Housing Capacity: Due to the City's middle housing legislation, most single family lots can be converted to duplexes or other middle housing types.The number of new units expected to be created through this process in the planning horizon is estimated at 1.5%of developed lots with single-detached dwellings outside of PUDs/easements.This totals 110 Units3. • Redevelopment of Commercial Land and Town Centers: An initial "strike price" analysis4 found very few properties that appear to be good candidates for redevelopment at$30/sf.Value per square foot for many properties along Kruse Way and in Town Centers is generally$50/sf or greater.There may be some opportunity to utilize parking areas for new residential uses, depending on the City's development code and many other factors,though additional commercial infill is also a possibility. For the purposes of this BLI, no redevelopment capacity is assumed. 3 A previous version of this analysis assumed 3%of all single detached units, regardless of whether they were located in a PUD. Feedback from stakeholders and DLCD was that this infill assumption seemed high and was unrealistic due to the prevalence of CC&Rs in Lake Oswego. "Strike Price" is a measure of land and building value per square foot at which a developer is assumed to be able to profitably redevelop a piece of property.The 2018 Metro BLI used a strike price of$12/sf for suburban jurisdictions—this analysis examine a more aggressive$30/sf and still found very few candidates for redevelopment. APPENDIX A: Buildable Lands Inventory Page 53 PP 22-0005 ATTACHMENT 11/PAGE 54 OF 55 Lake Oswego Housing Needs Analysis July 18, 2023 Table 8. Parcels with Approved Development and Assumed Capacity Total Unit Single Family Middle Multi- Land Type Taxlot(s) Family Capacity Units Housing Units Units 21E18AB00400 Habitat for Humanity 21E18AB00300 Townhomes 21E18AB00200 23 0 23 0 [Link] 21E18AB00100 21E18AA00400 5400 Meadows [Link] 21E07BA00900 160 0 0 160 21E08AB02100 Twin Fir Road 2 2 0 0 21E08AB02000 The Boulder 21E07DD02300 [Link] 21E07DD02500 11 0 0 11 21E14DB02900 21E14 00300 21E14 00400 21E14 00401 21E14 00402 Marylhurst University 21E14 00403 170 0 0 170 21E14 00404 21E14 90000 21E14 900A1 21E14 900B2 Total 366 2 23 341 Table 9.Summary of Unit Capacity Total Unit Single Family Middle Housing Multi-Family Land Type Capacity Units Units Units Vacant & Partially 851 653 62 136 Vacant Land Approved 366 2 23 341 Developments Additional Middle Housing Infill 110 110 Total 1,327 655 195 477 Next Steps This inventory will inform the Housing Capacity Analysis and Housing Needs Assessment to provide a picture of the availability of residential land as it compares to the need of certain types of housing units in the next 20 years. It forms part of the factual basis for City policies to address any deficiencies in unit capacity. APPENDIX A: Buildable Lands Inventory Page 54 PP 22-0005 ATTACHMENT 11/PAGE 55 OF 55