Agenda Item - 2024-04-02 - Number 09.1 - Presentation - Housing Production Strategy (PP 22-0005) 9.1
COMMUNITY
c'Psa- EQ , DEVELOPMENT
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Housing Production Strategy ( PP 22-0005 )
City Council / Planning Commission Joint Study Session
April 2, 2024
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1. Summary of Critical Housing Needs `_ ` lip; �tra ;
(Erik Olson, City of LO) _
2. Recommended Strategies — Discussion
and Straw Polls (Kate Rogers, MIG) 7
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3. Strategies Needing Further Discussion — :4 i 1 ft"iM.
Discussion and Straw Polls (Kate Rogers, "�' �� `�- � _
MIG)
4. StrategyNot Recommended (Kate Ro ers Rogers,
MIG AI �r.-:.. ■■ I n�li6 +y
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5. Next Steps (Erik Olson, City of LO)
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Summary of Critical Housing
Needs
Summary of Housing Needs
CURRENT NEEDS
• While Lake Oswego is generally considered an affluent
community, not all households are wealthy. O/
— Over 40% of households in the city earn less than $100k
per year. Nearly 20% of
— Nearly 20% of households earn less than $50k per year. households earn less
• The median home sale price in Lake Oswego has more than than $50k per year
doubled over the past 10 years, from $395k to $860k
between 2012 and 2022. •
• There is very little existing housing available to those in . • i'• °
lower income segments. 2/3 of housing units are fr ffI *1111 .***.frefffrt
unaffordable to those earning less than $100k per year. Owl IOW•
gen . ty
• Nearly half of renter households in Lake Oswego are '� rt ,�� ,� ,10. e
considered housing cost burdened, meaning they pay more Nearly half of renters are
than 30% of their income for housing. cost burdened
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Summary of Housing Needs
FUTURE NEEDS
• Lake Oswego will need nearly 2,000 new housing units by 2043
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to meet projected demand. Housing will need to be produced
across the income spectrum.
• Over 60% of new needed homes are projected to be attached
housing — including middle housing and multi-family housing. 2,000 new housing
units needed
• More than 1/3 of new housing units 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 More than 1/3 of
types (low- to high-density) to meet the 20-year housing need new units needed by
in Lake Oswego (a deficit of 86 total acres). low-income
households
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Key Housing Gaps
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 and accessible units — More than
20% of the population is over 65.
• Options for more attainable homeownership (e.g., condos and
middle housing).
• Apartments with family-size units (2-3 bedrooms) — Nearly 1/3 of
current households in the city have children.
• Multi-family housing outside the Town Center.
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Recommended Strategies
All recommended strategies are supported by
the HPS Task Force
IMPLEMENTATION:
Recommended Strategies : NEAR TERM (1-3 YEARS)
MEDIUM TERM (3-5 YEARS)
CityAlready Pursuing LONGER TERM (,5 YEARS)
Strategy Housing Need Addressed Community Input
Remove or Reduce Minimum Parking
Increased housing production Ongoing
Requirements
Public-private partnerships for Subsidized low-income
affordable housing housing Support
Use Tax Increment Financing (TIF) to
support affordable housing Subsidized low-income -Split-
housing
development
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IMPLEMENTATION:
Recommended Strategies : NEAR TERM (1-3 YEARS)
MEDIUM TERM (3-5 YEARS)
Previously discussed with LONGER TERM (>5 YEARS)
Council and PC
Strategy Housing Need Addressed Council & PC Community
Input Input
Code Audit and Amendments Increased housing production Support Support
and housing choices
Increased housing production;
Rezone Land Support Mild Support
multi-family housing
Modify System Development
Smaller housing units;
Charge (SDC) fee schedule moderate-income and smaller Support Support
households
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IMPLEMENTATION:
Recommended Strategies : NEAR TERM (1-3 YEARS)
MEDIUM TERM (3-5 YEARS)
Not rev i o u s l discussed LONGER TERM (>5 YEARS)
p y
with Council and PC
Strategy Housing Need Addressed Community Input
Fair Housing Policy and Doesn't directly address needs; helps prevent
housing discrimination & supports related Support
Education
strategies
• Amend the Comprehensive Plan to explicitly make Affirmatively Furthering Fair Housing
an official City policy. Would demonstrate the City's commitment to reversing
discrimination, exclusion, and concentrations of wealth in the city.
• Fair Housing laws protect individuals in "protected classes" (race, national origin,
religion, disability, age, etc.) from housing discrimination.
• Strategy also involves educating staff and decision makers about fair housing issues, and
providing fair housing information to the community.
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IMPLEMENTATION:
Recommended Strategies : NEAR TERM (1-3 YEARS)
MEDIUM TERM (3-5 YEARS)
Not rev i o u s l discussed LONGER TERM (>5 YEARS)
p y
with Council and PC
Strategy Housing Need Addressed Community Input
Evaluate accessible design Housing opportunities for Strong Support
incentives or mandates seniors, people with disabilities
• Increase development of housing that is accessible for seniors and people with
disabilities or mobility challenges.
• Potential incentives: height or density bonuses; tax abatement (e.g., MUPTE).
• Potential mandates: require a certain number of units in a multi-unit development to
have enhanced accessibility.
• City would need to further evaluate the feasibility and trade-offs associated with these
programs before implementing a particular action.
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IMPLEMENTATION:
Recommended Strategies : NEAR TERM (1-3 YEARS)
MEDIUM TERM (3-5 YEARS)
Not rev i o u s l discussed LONGER TERM (>5 YEARS)
p y
with Council and PC
Strategy Housing Need Addressed Community Input
Affordable Housing Preservation Preservation of housing for
Inventory low-income residents Support
• Prepare an inventory of subsidized and other already existing affordable housing to
support proactive policies intended to preserve existing affordable housing.
• The inventory would be used to target potential properties for implementation of an
affordable housing preservation strategy.
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IMPLEMENTATION:
Recommended Strategies : NEAR TERM (1-3 YEARS)
MEDIUM TERM (3-5 YEARS)
Not rev i o u s l discussed LONGER TERM (>5 YEARS)
p y
with Council and PC
Strategy Housing Need Addressed Community Input
Pre-Approved Plan Sets for Housing choices in existing
neighborhoods; multigenerational Support
Accessory Dwelling Units (ADUs) living; aging in place
• Provide permit-ready plan sets for ADUs that have been reviewed in advance for
conformance with zoning and building codes
• City could make pre-approved plans available for ADUs to streamline permitting.
• Pre-approved plan sets can make ADUs easier to build and reduce costs through
reduced design fees and faster permit timelines.
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Tax Abatement Program Comparison
Multiple Unit
Nonprofit Low- Low-Income Rental Vertical Housing
Income Housing Housing Development Zone Property Tax
Exemption
Housing Type Any type Rental housing Mixed-use Multi-family or
middle housing
Primarily market
Primarily market
Income Levels Up to 60% AMI Up to 60% AMI rate (80% AMI for
rate
affordable units)
Eligible
Nonprofits only Any developer Any developer Any developer
Developers
Annual Renewal
Yes No j No No
Required?
10 years
Time Limit No limit 20 years 10 years (or longer with
affordability
agreements)
Nonprofit Low-Income Housing and/or Low-Income Rental Housing
abatements are recommended strategies.
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Straw Poll
Should this package of strategies be included in
the draft HPS?
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Strategies Needing Further
Discussion
Zoning Incentives for Affordable Housing
• Additional height, density, floor area ratio (FAR), or relaxing other
zoning standards for affordable housing.
Description • Allows affordable developers to make more efficient use of land and
potentially build additional units.
• Senate Bill 8 already allows height/density bonuses for affordable
Considerations housing that's developed by a nonprofit.
• Could consider other types of bonuses — e.g., reduced open space.
Low to Moderate
Magnitude of Might lead to a small percent increase in the number of units that are
Impact possible for affordable housing developments. Unlikely to initiate new
projects on its own.
Task Force Incorporate into the Code Audit and Amendments strategy.
Recommendation
Community Input Mild Opposition
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Straw Poll
Do you agree with the Task Force's
recommendation to consider Zoning Incentives
as part of the Code Audit and Amendments
strategy?
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Pre-approved plan sets for middle housing typologies
Description • Provide permit-ready plan sets for middle housing.
• Can reduce development costs by:
✓ Streamlining permit processes
✓ Reducing permit fees
✓ Reducing design fees
Considerations • Could help attract developers that typically develop only single-
family housing.
• Template plans won't work on all sites. Lake Oswego has
significant topography and often requires customized designs.
Magnitude of Moderate
Impact Has the potential to deliver more middle housing, but cost savings to
builders may not translate to reduced sale prices or rents.
Task Force Majority support including in the HPS. Lower priority than pre-
Recommendation approved plans for ADUs.
Community Input Mild Support
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Straw Poll
Do think Pre-Approved Plan Sets for Middle
Housing should be included as a strategy in the
HPS?
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Vertical Housing Development Zone (VHDZ) Tax Abatement
• Incentivizes multi-story mixed-use development and affordable
housing in targeted areas ("Vertical Housing Development Zones").
• 10-year partial property tax exemption for the improvement value
Description (not the land).
• Including affordable housing allows additional partial exemption of
the land value.
• Pilot VHDZ project recently approved for the North Anchor
Considerations development site.
• VHDZ has the potential to displace residents by encouraging
redevelopment in certain areas.
Low to Moderate
Magnitude of Could be beneficial in key districts where more vertical buildings and
Impact mixed-use is desired. Administratively more challenging than other
abatement programs.
Task Force
Recommendation Do not include in the HPS.
Community Input Mild Support
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Straw Poll
Do think the VHDZ abatement should be
included as a strategy in the HPS?
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Multiple Unit Property Tax Exemption ( MUPTE)
• Incentivizes multi-family or middle housing with particular features
or at particular price points.
• Partial property tax exemption for 10 years (or longer, with
Description affordability agreements).
• City has broad discretion in structuring the program. Eligibility
criteria could include requirements for affordability,
accessibility/universal design, unit size, or other desirable features.
• Could outcompete affordable housing tax incentives with for-profit
Considerations developers who would rather build market-rate housing.
Magnitude of Moderate
Impact Could encourage production of more multi-family / middle housing
units that meet needs not currently being met by the private market.
Task Force Include MUPTE as a potential mechanism for encouraging accessible
Recommendation units, but do not include as a standalone strategy.
Community Input Mild Support
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Straw Poll
Do you agree with the Task Force's
recommendation to consider MUPTE as an
incentive for accessible housing, but not as a
standalone strategy in the HPS?
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Construction Excise Tax (CET)
Description One-time tax on construction projects; potential funding source for
affordable housing.
Tax Rate:
• Residential construction: Up to 1% of permit value.
• Commercial and industrial construction: No cap on the tax rate;
typical rate is 1-3%.
Uses of CET Funds (defined by state statute):
Residential:
• 50% for developer incentives (e.g., permit fee and SDC reductions,
tax abatements)
• 35% flexible for affordable housing programs
• 15% to Oregon Housing and Community Services (OHCS) for
homeownership programs (typically spent in cities where paid)
Commercial/Industrial:
• 50% for housing-related programs (not necessarily limited to
affordable housing)
• 50% is unrestricted
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Construction Excise Tax (CET)
Considerations • One of the few available locally-controlled funding streams for
affordable housing.
• Without a new funding stream, the City could not contribute
substantially to "Contingent Strategies"
• Housing Trust Funds
• Low-Interest Loans/Revolving Loan Fund
• Community Land Trusts
• Preserving Low-Cost Rental Housing to Mitigate Displacement
• Raises costs for construction of commercial, industrial, and/or market-
rate residential housing.
• Cities have options to exempt certain types of development — such as
smaller units or multi-family housing — and affordable housing is
already exempted.
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Construction Excise Tax (CET)
Magnitude of High 0
Impact Annual revenue estimate for 1/ CET:
$750k for residential, $850k for commercial/industrial
Task Force
Recommendation Majority support including CET in the HPS.
Community Input Mild Support
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CET: Implementation in Other Cities
When Adopted Tax Ra - Exemptio
Tigard 2019 1% both residential • ADUs of 1,000 SF or less
and commercial/ • Projects valued under $50k
industrial • Residence destroyed unintentionally
• Cottage clusters, courtyard units,
quadplexes exempted from 75% of CET
Bend 2006 (res) Res: 0.33% • As required by state law
2021 (com/ind) com/ind: 0.67%
Newport 2017 1% both res and • As required by state law
com/ind
Eugene 2019 0.5% both res and • Residential units sold for $250k or less
com/ind • Projects granted MUPTE tax exemption
Milwaukie 2017 1% both res and • Projects valued $100k or less
com/ind • Initially exempted ADUs (for 5 years)
Other Cities: Grants Pass, Medford, Corvallis, Cannon Beach, Hood River, and Portland
(and likely others)
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Straw Poll
Do think CET should be included as a strategy in
the HPS ?
rStrategies
Othe
Contingent Strategies
Strategy Housing Need Addressed
Housing Trust Funds Government-subsidized low-income housing
Low-Interest Loans/Revolving Loan New or rehabilitated housing for low-income
Fund households
Community Land Trusts Homeownership opportunities for low-income
households
Preserving Low-Cost Rental Housing
Government-subsidized low-income housing
to Mitigate Displacement
Not Recommended
Homebuyer Opportunity Limited Tax Homeownership options for moderate-income
Exemption Program (HOLTE) households
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N ext Steps
• Draft Housing Production Strategy (June)
• Final meeting of the HPS Task Force (June 21)
• Planning Commission and City Council study
sessions (June-July)
• Final HPS Report and adoption hearings ( Fall
2024)
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