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Agenda Item - 2024-09-23 - Number 06.1 - Staff Report 07-31-24 PCPH w-Exh (LU 24-0024) STAFF REPORT CITY OF LAKE OSWEGO PLANNING AND BUILDING SERVICES DEPARTMENT APPLICANT FILE NO. City of Lake Oswego LU 24-0024, Resolution 24-36 LOCATION STAFF Citywide Erik Olson, Long Range Planning Manager DATE OF REPORT PLANNING COMMISSION HEARING DATE July 31, 2024 September 9, 2024 I. APPLICANT'S REQUEST The City of Lake Oswego is proposing to adopt a Housing Production Strategy (HPS) to meet the requirements of Oregon House Bill 2003 (2019) and OAR 660-08-0050. II. APPLICABLE REGULATIONS A. City of Lake Oswego Comprehensive Plan Complete Neighborhoods & Housing Policy B-1 Urbanization Policy A-1 Palisades Neighborhood Plan Land Use Policy 4 B. Oregon Statewide Planning Goals Goal 2: Land Use Goal 3: Economic Development Goal 10: Housing Goal 14: Urbanization Respect. txcel.erce. Trust. Service. 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY C. Interpretation of Goal 10: Housing (OAR Chapter 660, Division 8) OAR 660-008-0050 Housing Production Strategy Report Structure OAR 660-008-0050 (1) Contextualized Housing Need OAR 660-008-0050 (2) Engagement OAR 660-008-0050 (3) Strategies to Meet Future Housing Need OAR 660-008-0050 (4) Achieving Fair and Equitable Housing Outcomes OAR 660-008-0050 (5) Housing Production Strategy Report D. ORS Chapter 197 - Comprehensive Land Use Planning ORS 197.296 Analysis of housing capacity and needed housing by Metro, cities outside of Metro, and smaller cities E. City of Lake Oswego Community Development Code' LOC 50.07.003.3.c Notice of Public Hearing LOC 50.07.003.4 Hearings before a Hearings Body LOC 50.07.003.16.a Legislative Decision Defined (Quasi-judicial Comp. Plan Map, Zone Map, and CDC Amendments to be processed via Major Developments Procedures) LOC 50.07.003.16.c Required Notice to DLCD LOC 50.07.003.16.d Planning Commission Recommendation Required LOC 50.07.003.16.e City Council Review and Decision F. Metro Urban Growth Management Functional Plan [Metro Code 3.071 Title 1: Housing Capacity [Metro Code 3.07.110 - .120]] Title 7: Housing Choice [Metro Code 3.07.710- .740]] Title 8: Compliance Procedures [Metro Code 3.07.810- .870]] III. BACKGROUND AND DISCUSSION Per House Bill 2003 (HB 2003) (2019) and HB 3155 (2021), now codified as ORS 197A.100 and 197A.335(1), the City must adopt a Housing Production Strategy (HPS) that includes a list of specific actions that the City will undertake to promote development to address the housing needs identified in its Housing Needs Analysis (HNA). The City Council adopted the 2023 HNA on October 17, 2023. Per ORS 197A.100(1), the City must develop and adopt an HPS no later than one year after the deadline for completing the HNA; as such, the City is required to adopt an HPS no later than December 31, 2024. The City Council first prioritized this work as part of their 2022 goals and initiatives, which included continuing the multi-year work plan to complete work on key housing initiatives— including HB 2003 compliance. Subsequently, the City contracted with consultant MIG and subconsultant 1 These sections of the Lake Oswego Code are not technically applicable because approval by resolution of the Housing Production Strategy is not a "major development" per LOC 50.07.003.15.a.ii(3)and LOC 50.07.003.16.a.i. However,the public hearing and adoption procedure will be followed to assure that all interested parties have an opportunity to present testimony prior to formalization of the Council's decision by resolution. Planning Commission Public Hearing Page 2 of 15 LU 24-0024 September 9,2024 Johnson Economics (collectively "consultant team") to assist with this work in Fall 2022. City staff and the consultant team conducted outreach and community engagement related to the 2023 HNA from December 2022 through July 2023, with outreach for the HPS occurring directly after from October 2023 through July 2024. Engagement related to the HPS occurred through several avenues and public events, including an Online Open House survey, a "Community Forum" event, five Planning Commission meetings, two City Council study sessions, one joint meeting with both the Planning Commission and Council, and five meetings of the City-appointed Ad-Hoc Housing Production Strategy Task Force ("Task Force") per Resolution 22-30, charged with providing high-level policy guidance to the Planning Commission and City Council on their efforts to comply with HB 2003. These events helped to identify initial recommendations for strategies to include in the City's HPS, with later drafts of the HPS directly informed by direction provided by the Task Force, the Commission, and City Council. The HPS is to comply with LCDC Goal 10, Housing's goal to provide for the housing needs of citizens of the state by encouraging the availability of adequate numbers of needed housing units at price ranges and rent levels which are commensurate with the financial capabilities of Oregon households. The HPS serves the primary purpose of outlining a range of strategies the City plans to address the housing needs identified in the HNA, and outlines actionable policies, actions, and implementation steps to encourage the production of such housing. Housing Production Strategy Per ORS 197A.100, an HPS must document the specific tools, actions, and policies that the City plans to take to address the housing need identified in the 2023 HNA. This also includes the City's plan and timeline for adopting and implementing each strategy. The Oregon Department of Land Conservation and Development (DLCD) will review and approve the HPS based on (1) the adequacy of strategies to meet all identified housing needs, (2) the appropriateness of strategies to facilitate the production of needed housing, and (3) how well the strategies, taken as a whole, will achieve fair and equitable housing outcomes [OAR 660-008-0055(6,7)]. 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 low-cost rental housing. The following basic components are required by OAR 660-008-0050 (1—4 and 5(c)) and this organization is typical of those that have been adopted in other communities to date: • Contextualized Housing Needs Assessment; • Community Engagement Process, including explanation of how the process was used to identify, evaluate and prioritize strategies; • Strategies to Meet Future Housing Need, including descriptions of the timeline, responsibilities, actions, and affected households, e.g., benefits and barriers to specific underserved or vulnerable populations; • How the City will achieve Fair and Equitable Housing Outcomes; and • Process for monitoring progress in meeting identified outcomes. Planning Commission Public Hearing Page 3 of 15 LU 24-0024 September 9,2024 Going forward, the City will be required in three years to reflect and evaluate the progress and effectiveness of the HPS at a mid-term checkpoint to see what strategies worked, which ones did not, and discuss any course corrections being made to ensure all housing needs are addressed [OAR 660-008-0060(1)]. House Bill 2003 In 2019, the Oregon Legislature passed House Bill 2003, which aimed to help communities meet the housing needs of Oregonians. The law 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]. In November 2020, DLCD adopted implementing rules for HB 2003, which are contained, in part, in OAR 660-008-0045 through -0070. These rules established criteria for compliance, including the components that are required to be included within an HPS Report. The 2023 HNA was adopted by the City Council on October 17, 2023 (LU 23-0023). The City is now required by ORS 197A.100 to adopt an HPS prior to December 31, 2024. The 2023 HNA found that, despite a very low assumed growth rate over the 20-year planning horizon, the City 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. Housing Production Strategy Task Force On October 4, 2022, the City Council adopted Resolution 22-30 creating the Task Force and appointing its members.2 The Task Force is comprised of individuals from a diverse range of backgrounds, identities, income ranges, and professions, with representation from elected and appointed officials, members of City boards and commissions, a DLCD representative, housing producers, and housing consumers within Lake Oswego. The goal of the Task Force is to represent a wide range of experiences and ideas related to housing, and to develop recommendations addressing those perspectives. The role of the Task Force is to provide guidance to staff and the Planning Commission by reviewing draft materials, providing feedback related to their personal or professional experience and opinions, and informing the broader public about this process through their individual networks. The Task Force may also recommend outreach strategies, Comprehensive Plan amendments, or other actions to update the City's HNA and develop an HPS, consistent with adopted goals and initiatives related to housing. The Task Force was originally charged with meeting a minimum of five times from December 2022 through late 2024 in order to develop these policy recommendations. The Task Force ultimately 2 Subsequently, City Council adopted Resolution 23-06 on February 7,2023,to add an official liaison from the Diversity, Equity,and Inclusion Board to the Task Force,and Resolution 23-29 on June 20,2023,to add a liaison from DLCD to the Task Force. Planning Commission Public Hearing Page 4 of 15 LU 24-0024 September 9,2024 held eight meetings in total, including three meetings to develop recommendations related to the 2023 HNA, and five meetings to develop recommendations for the HPS: • On October 6, 2023, the Task Force held their fourth meeting to evaluate policies and other housing production measures already being implemented by the City, review new data related to underserved or vulnerable populations, review the highlights of stakeholder interviews on barriers to housing production, and provide input on an initial menu of housing production strategies; • On December 8, 2023, the Task Force held their fifth meeting to review recent input regarding the initial list of housing production strategies, review the major housing needs identified in the 2023 HNA, agree upon project goals, and engage in group discussions focused on identifying housing production strategies that could best address the identified housing needs; • On February 16, 2024, and on March 1, 2024, the Task Force held their sixth and seventh meetings, respectively, to review and engage in group discussions focused on the Initial Housing Production Strategy Recommendations Memo in order to develop a preferred list of strategies for the Planning Commission and City Council to consider for inclusion in the City's HPS; • On June 21, 2024, the Task Force held their eighth meeting to review the results of recent public engagement related to the initial strategy recommendations, and finalize their recommendations on the Draft HPS Report. Other Public Engagement In addition to the work of the Task Force, City staff and the consultant team offered opportunities for public engagement and comment through the following events: • On October 9, 2023, the Planning Commission hosted a tour of the Mercy Greenbrae Affordable Housing project to learn more about the development in order to inform the City's work to develop an HPS; • On November 7, 2023, a study session was held at City Council to provide initial direction to staff regarding which strategies the Task Force should analyze in more detail; • On November 13, 2023, a work session was held at the Planning Commission to review requirements related to the HPS, a summary of existing City policies, and the highlights of recent stakeholder interviews on barriers to housing production, and to provide direction to staff regarding which strategies the Task Force should analyze in more detail; • On November 16, 2023, staff presented at a Mayor's Roundtable event to provide an overview of the housing needs identified in the 2023 HNA and to provide an update on the City's work to develop an HPS; • On November 21, 2023, staff presented at a meeting of the Diversity, Equity, and Inclusion Advisory Board to provide an overview of the housing needs identified in the 2023 HNA and to provide an update on the City's work to develop an HPS; Planning Commission Public Hearing Page 5 of 15 LU 24-0024 September 9,2024 • On December 14, 2023, staff presented at a meeting of the Chamber of Commerce Government Affairs Committee to provide an overview of the housing needs identified in the 2023 HNA and to provide an update on the City's work to develop an HPS; • On January 8, 2024, an update was provided to the Planning Commission on recent Task Force meetings and other progress related to the City's work to develop an HPS; • On February 23, staff presented at a meeting of the 50+Advisory Board to provide an overview of the housing needs identified in the 2023 HNA and to provide an update on the City's work to develop an HPS; • On March 13, the City opened an Online Open House survey and allowed for public input through March 31 to receive public input on an initial set of strategies recommended for inclusion in the City's HPS; • On March 14, the City held a virtual "Community Forum" to provide information and receive public input on an initial set of strategies recommended for inclusion in the City's HPS; • On April 2, the City Council and Planning Commission conducted a joint study session to provide further direction regarding which strategies to include as a part of the City's Draft HPS; • On June 16, staff presented at a meeting of the Chamber of Commerce Government Affairs Committee to provide information and receive input on an initial set of strategies recommended for inclusion in the City's HPS; • On June 24, the Planning Commission conducted a work session to review and provide input on the Draft HPS prior to the public hearings; and • On July 16, a study session was held at City Council review and provide input on the Draft HPS prior to the public hearings. Staff and the consultant team have revised the draft HPS based on public input and the direction provided by the Commission and City Council. See Revisions to Draft HPS, below. Housing Production Strategy Report Summary The HPS Report identifies strategies and actions that the City of Lake Oswego and community partners can take to promote housing development that meets the needs of the community. The HPS Report includes information about the City's critical housing needs and summarizes public engagement activities that informed and shaped the housing strategies recommended for implementation. Additionally, the HPS Report summarizes how the strategies will help achieve fair and equitable housing outcomes for the Lake Oswego community—especially for low-income households, communities of color, people with disabilities, and other state and federal protected classes. The HPS also describes how the City of Lake Oswego will monitor the implementation and progress of the strategies recommended in the HPS. All strategies recommended in the HPS report were supported by the Task Force, City Council, and Planning Commission. The strategies are organized by the primary housing need that they address, as summarized below: Planning Commission Public Hearing Page 6 of 15 LU 24-0024 September 9,2024 • Overall Housing Production and Supply— Increase housing production to meet the City's overall long-term housing need. • Increased Housing Choices— Enable and encourage production of housing that can meet a full range of household needs and preferences. This includes a wider variety of housing types and sizes, and housing to meet particular needs such as aging in place and accessibility. • Affordable Housing for Lower-Income Households— Facilitate development of government-subsidized housing that meets the needs of low- and moderate-income households. • Other—The strategy in this category (Fair Housing policy and education) does not easily fit under the other headings, but supports equitable implementation of all recommended housing strategies. Strategies were categorized using Near Term (1-3 years), Medium Term (within 3-5 years), and Longer Term (>5 years) implementation time frames. Table 1, below, shows each recommended strategy with their associated time frames, relative cost, and level of effort: Table 1:Summary of Strategies and Implementation Implementation Time Frame Strategy Begin Complete Cost Effort Overall Housing Production and Supply 1. Code audit and amendments Near Term Medium Term $$ • • • Remove or reduce minimum parking 2. Near Term Near Term $ • requirements 3. Rezone land Near Term Medium Term $$ • • • Increased Housing Choices Evaluate accessible design incentives or 4. Longer Term Longer Term $$ • • mandates Evaluate Multiple Unit Property Tax 5. Longer Term Longer Term $$ • • Exemption 6. Pre-approved plan sets for ADUs Longer Term Longer Term $$$ • • • Modify System Development Charge fee 7. schedule Near Term Medium Term $$$ • • • Affordable Housing for Lower-Income Households 8. Nonprofit Low-Income Housing Exemption Already Complete $$$$ • o o 9. Low-Income Rental Housing Tax Exemption Near Term Near Term $$$$ • • o Public-private partnerships for affordable 10. housing Near Term Ongoing $$SS • • • Use Tax Increment Financing to support • • • 11. affordable housing development Near Term Longer Term $$$$ Planning Commission Public Hearing Page 7 of 15 LU 24-0024 September 9,2024 12. Affordable housing preservation inventory Medium Term Medium Term $ • • Other 13. Fair Housing policy and education Near Term Medium Term $ • • Table 2, below, outlines a proposed general implementation timeline for each strategy: Table 2:Implementation Timeline 2024 2025 2026 2027 2028 2029 2030 1. Code audit and amendments 2. Remove or reduce min. Parking requirements 3. Rezone land* Non-Residential Low-Density Res. 4. Evaluate accessible design incentives or mandates 5. Evaluate Multiple Unit Property Tax Exemption 6. Pre-approved plan sets for ADUs Cottage SDC Methodology 7. Modify SDC fee schedule* Cluster 8. Nonprofit Low-Income Housing Exemption 9. Low-Income Rental Housing Tax Exemption Public-private partnerships for affordable Ongoing 10. housing 11. Use TIF to support affordable housing 12. Affordable housing preservation inventory 13. Fair Housing policy and education* Policy Update Education Revisions to Draft HPS Following the release of initial draft of the HPS, and in response to the comments received during public engagement events, as well as direction from the Task Force, Commission and City Council, the current version of the draft document is revised to include changes primarily relating to the timing and implementation of the strategies in the HPS: • Moving the Rezoning strategy up from a Medium-Term strategy to a Near-Term strategy, and phasing the strategy to address residential capacity in commercial and industrial areas first (and other rezoning opportunities later); • Moving the Affordable Housing Preservation Inventory strategy back to 2027; • Moving the Modify SDC Fee Schedule strategy up from a Long-Term strategy to a Medium- Term strategy; • Moving the Pre-Approved Plan Sets for ADUs strategy back to 2029-2030; • Moving the Evaluate Accessible Design Incentives or Mandates strategy back from a Medium-Term strategy to a Long-Term strategy; and • Moving the Evaluate Multiple Unit Property Tax Exemption (MUPTE) strategy back from a Medium-Term strategy to a Long-Term strategy, and consider applying MUPTE to the preservation of existing affordable housing units. Planning Commission Public Hearing Page 8 of 15 LU 24-0024 September 9,2024 At their Study Session on July 16, the City Council also provided direction to move the Fair Housing Policy and Education strategy back from a Near-Term strategy to a Medium-Term strategy. Staff notes that the Fair Housing Policy and Education strategy is intended to be implemented continuously, and can add value to future City actions regarding housing production by serving as a policy lens for decision-makers. The City is also legally obligated to implement federal Fair Housing requirements. As an alternative, staff has proposed bringing forward amendments to add a Fair Housing policy to the Comprehensive Plan in the near-term, potentially bundled along with the 2024 annual code amendments, while pursuing educational outreach related to fair housing policy in the medium-term. IV. NOTICE OF APPLICATION A. Newspaper Notice On August 28, 2024, public notice of the proposed Comprehensive Plan amendments and Planning Commission public hearing will be published in the Lake Oswego Review. B. DLCD and Metro Notices Pursuant to ORS 197.610 and LOC 50.003.07.16.c, staff has provided notice of the proposed HPS document to the Oregon Department of Land Conservation and Development (DLCD). (Staff incorporated DLCD-suggested edits into the finalized HPS Report.) Staff notified Metro as required by Metro Code 3.07.820(a). V. COMPLIANCE WITH APPROVAL CRITERIA A. CITY OF LAKE OSWEGO COMMUNITY DEVELOPMENT CODE Notices will be published in the Lake Oswego Review in advance of both the Planning Commission and City Council hearings. Public comment may be submitted before or during the forthcoming Planning Commission hearing and City Council hearing. All those who submit comment on the proposed amendment receive a notice of decision. Notice of the Planning Commission public hearing has been given to DLCD in the manner provided by LOC 50.07.003.16.c. [Note: Per ORS 197A.103(1), the HPS will be submitted to DLCD within 20 days following adoption.] Planning Commission Public Hearing Page 9 of 15 LU 24-0024 September 9,2024 Classification of Amendments as a Legislative Decision The "legislative decision" process per LOC 50.07.003.16.a3 for adoption of Resolution 24-36 will be followed for the adoption of the HPS as a supporting document to the Comprehensive Plan: A legislative decision is generally a policy decision which is up to the discretion of the City Council, but shall: i. Comply with any applicable state law; H. Comply with any applicable statewide planning goal or administrative rule adopted pursuant to ORS Chapter 197. and iii. In the case of a legislative amendment to this Community Development Code, comply with any applicable provision of the Lake Oswego Comprehensive Plan. B. CITY OF LAKE OSWEGO COMPREHENSIVE PLAN Staff has identified the following Comprehensive Plan Policies applicable to this proposal. Following each policy or group of policies is a response: Complete Neighborhoods and Housing- Housing Choice and Affordability: Policy B-1: Provide and maintain zoning and development regulations that allow the opportunity to develop an adequate supply and variety of housing types, and that accommodate the needs of existing and future Lake Oswego residents. Findings: The proposed HPS was specifically developed to increase opportunities to develop an adequate supply and variety of housing types that accommodate the needs of existing and future Lake Oswego residents as established in the 2023 HNA. The proposed HPS establishes an action plan for the City to increase its housing supply over a 20-year time period though the development of the types of housing that meet the city's current and future housing needs. Upon implementation, the strategies in the HPS will offer more opportunities for increased housing supply and the development of a variety of housing types. This policy is met. Urbanization Policy A-1: The City will not expand the existing Urban Service Boundary* (USB) and will resist efforts to require expansion, except in those areas designated Tier 1 Urban Reserves as of February 1998, or where properties are needed for the development of public parks and recreation facilities. 3 LOC 50.07.003.16.a.i: "A'legislative decision' is an amendment to the policies, procedures,standards,criteria or map designations of the Comprehensive Plan." Although adoption of the HPS is not an amendment to the Comprehensive Plan policies, it could serve as the basis for that. In addition,the adoption of the HNA as part of the Comprehensive Plan is not a quasi-judicial decision,which is the only other type of classification of land use decisions. Planning Commission Public Hearing Page 10 of 15 LU 24-0024 September 9,2024 Findings: The proposed HPS does not include strategies that would expand the City's USB. All strategies included in the proposed HPS are intended to promote the development of the types of housing that meet the city's current and future housing needs within the City's existing USB. This policy is met. Palisades Neighborhood Plan Land Use Policy 4: Provide for residents varied housing needs while ensuring the detached single-family character and scale of the Palisades neighborhood is not diminished. a) Be sensitive to a range of households'needs including families with school-age children, working couples and singles, seniors, people caring for aging parents and spouses, and people with disabilities. /// Findings: The strategies in the proposed HPS are explicitly intended to provide for residents varied housing needs. Strategy 4: Evaluate Accessible Deign Incentives or Mandates is specifically intended to increase the development of housing for seniors and people with physical disabilities and mobility challenges. Numerous strategies in the proposed HPS would increase the likelihood of development that meets a full range of household needs and preferences, including increasing opportunities for intergenerational living. Strategies proposed in the HPS will not alter the detached single-family character and scale of the Palisades neighborhood because all dwellings will still be required to meet the same bulk and mass limitations that are imposed on single family dwellings. The strategies proposed in the HPS are intended to address housing needs throughout the city, and any increase in housing demand that occurs as a result of these strategies will have a negligible impact on the mix of housing types in Palisades. This policy is met. C. OREGON STATEWIDE PLANNING GOALS Amendments to the Lake Oswego Comprehensive Plan must comply with Oregon's Statewide Planning Goals and Guidelines (OAR Chapter 660 Division 15) when amending the Comprehensive Plan policies (which the HPS does not), and must also comply with the existing Comprehensive Plan policies. Goal 2: Land Use—The City of Lake Oswego has a state-acknowledged Comprehensive Plan. Section B of this report describes findings and conclusions that the proposed HPS is consistent with applicable procedures and applicable goals and policies of the City's Comprehensive Plan. Goal 9: Economic Development-The proposal is designed to help increase housing stability for Lake Oswego residents, including those who work within the city. Stable housing is vital to workforce staffing and retention; therefore, policies which support production and retention of housing that is affordable to a wider range of incomes will support Lake Oswego's workforce and increase business recruitment competitiveness. The policies in the proposal also foster Planning Commission Public Hearing Page 11 of 15 LU 24-0024 September 9,2024 residential development, which is a part of the local economy. Proposed policies addressing barriers to such development support that sector. Goal 10: Housing—The proposed HPS was developed in compliance with statewide planning policies that govern planning for housing and residential development, including Goal 10 (Housing), OAR 660 Division 7 (Metropolitan Housing), and OAR 660 Division 8 (Interpretation of Goal 10 Housing). The HPS is being proposed to reflect the findings of the City's 2023 HNA and community values and priorities that were heard during the HPS project outreach. Additional findings regarding Housing can be found in Section B of this report. Goal 14: Urbanization - Strategies proposed in the HPS encourage density and are expected to result in more compact forms of development, which require less infrastructure and land, reducing the pressure on urban growth boundaries. Conclusion: The proposed HPS is consistent with all applicable Oregon Statewide Planning Goals. For the reasons stated above, the proposed HPS is established on a factual basis, is consistent with existing City policies, and has been sufficiently coordinated with needed housing in the Metro region, in accordance with OAR 660-008-030(1). D. METRO CODE Metro Urban Growth Management Functional Plan, Title 1: Housing Capacity[Metro Code 3.07.110-.120] Section 3.07.110 of this section states that "The Regional Framework Plan calls for a compact urban form and a "fair-share" approach to meeting regional housing needs. It is the purpose of Title 1 to accomplish these policies by requiring each city and county to maintain or increase its housing capacity except as provided in section 3.07.120." Findings: The City of Lake Oswego currently has a deficit of residentially zoned lands. The 2023 HNA identified a need for additional residential land in a range of zones over the 20- year planning period, with a projected deficit of 642 units. The proposed HPS does not change the zoned capacity of residential lands, but it does establish an action plan for the City to increase its housing capacity over a 20-year time period. The strategies proposed in the HPS are intended to remedy this deficit, and the City will be required to monitor housing production outcomes and provide reports to DLCD on a regular basis to ensure that the proposed strategies are resulting in sufficient housing production. Metro Urban Growth Management Functional Plan, Title 7: Housing Choice[Metro Code 3.07.710-.740] Title 7 of Metro's Urban Growth Management Functional Plan is designed to ensure the production of affordable housing in the Metro UGB. Each city and county within the Metro region is encouraged to voluntarily adopt an affordable housing production goal and is Planning Commission Public Hearing Page 12 of 15 LU 24-0024 September 9,2024 required to ensure that their comprehensive plans and implementing ordinances include strategies to: • Ensure the production of a diverse range of housing types; • Maintain the existing supply of affordable housing, increase opportunities for new affordable housing dispersed throughout their boundaries; and • Increase opportunities for households of all income levels to live in affordable housing (3.07.730). Findings: These requirements are intended to ensure that Lake Oswego's implementing ordinances include strategies to ensure the production of a diverse range of housing types and increase opportunities for new affordable housing dispersed throughout the City. The HPS furthers the City's compliance with Title 7 by serving as an action plan for the implementation of strategies that promote the development of needed housing. This work will lay the foundation for future actions and implementation measures aimed at increasing opportunities for households of all income levels to live within Lake Oswego in affordable housing. Metro Urban Growth Management Functional Plan, Title 8: Compliance Procedures[Metro Code 3.07.810-.870] Section 3.07.820 of this title requires that at least 35 days prior to the first evidentiary hearing on an amendment to a comprehensive plan, or land use regulation, that the City submit the proposed amendments to Metro. Metro may review the amendments and can request that the City provide an analysis of compliance with the Functional Plan. Findings: The City submitted the proposed amendments to Metro on August 5, 2024, which was 35 days prior to the first evidentiary hearing of September 9, 2024. Conclusion: The proposed HPS does not alter current housing capacity, and will increase the likelihood that development of needed housing will occur and work towards addressing any deficiencies in land capacity necessary to meet the housing needs identified in the 2023 HNA. The proposal is consistent with Title 1 Housing Capacity. The proposal is also consistent with Title 7 Housing Choice and Title 8 Compliance Procedures as described in the findings herein. E. ORS CHAPTER 197A- LAND USE PLANNING: HOUSING AND URBANIZATION ORS 197A.335—Determination of housing capacity and accommodation of needed housing by Metro cities /// (2) The housing capacity determination and the needed housing analysis conducted under this section must be adopted as part of the city's comprehensive plan no later than one year after completion of the needed housing analysis. (3) If the housing capacity and needed housing analysis conducted under this section demonstrates a housing need, the city shall amend its comprehensive plan or land Planning Commission Public Hearing Page 13 of 15 LU 24-0024 September 9,2024 use regulations or take actions to update or implement its housing production strategy to include new measures that demonstrably increase the likelihood that development of needed housing will occur for the type, mix, affordability and densities sufficient to accommodate needed housing for the next 20 years. Conclusion: The proposed HPS includes several new measures that demonstrably increase the likelihood that development of needed housing will occur for the type, mix, affordability and densities sufficient to accommodate needed housing for the next 20 years. The HPS was prepared based upon these criteria and complies, as discussed within the HPS. VI. RECOMMENDATION Based on the information presented in this report, staff recommends approval of the HPS as a part of the Lake Oswego Comprehensive Plan. EXHIBITS A. Draft Resolution A-1 Resolution 24-36, draft July 31, 2024 Attachment 1: Reserved for City Council Findings (not included) Attachment 2: Housing Production Strategy Report, draft July 31, 2024 B. Findings, Conclusions and Order [No current exhibits; reserved for hearing use] C. Minutes [No current exhibits; reserved for hearing use] D. Staff Reports D-1 Staff Memo, dated September 27, 2023, for the Planning Commission meeting on October 9, 2023 D-2 Staff Memo, dated November 3, 2023, for the Planning Commission Work Session on November 13, 2023 D-3 Staff Memo, dated December 27, 2023, for Planning Commission meeting on January 8, 2024 D-4 Staff Memo, dated March 21, 2024, for the joint Planning Commission-City Council Study Session on April 2, 2024 D-5 Staff Memo, dated June 12, 2024, for the Planning Commission Work Session on June 24, 2024 E. Graphics/Plans [No current exhibits; reserved for hearing use] F. Written Materials [No current exhibits; reserved for hearing use] G. Letters [No current exhibits; reserved for hearing use] Planning Commission Public Hearing Page 14 of 15 LU 24-0024 September 9,2024 Staff reports and public meeting materials that were prepared for these Comprehensive Plan amendments can be found by visiting the project web page for LU 24-0024. Use the link below to visit the City's "Project" page. https://www.ci.oswego.or.us/all-projects (Under "Search" enter LU 24-0024, then press "Enter") Planning Commission Public Hearing Page 15 of 15 LU 24-0024 September 9,2024 RESOLUTION 24-36 A RESOLUTION OF THE LAKE OSWEGO CITY COUNCIL ADOPTING A HOUSING PRODUCTION STRATEGY(LU 24-0024) WHEREAS, pursuant to ORS 197A.335, cities with a population greater than 10,000 are required to prepare and adopt a Housing Capacity Analysis (HCA) that includes a housing needs projection addressing housing types and price levels, residential land needs analysis, buildable land needs analysis, and identification of measures for accommodating needed housing per Oregon Administrative Rule (OAR) Chapter 660, Divisions 7 and 8; and WHEREAS, the City Council adopted an HCA as a part of the City's Comprehensive Plan on October 17, 2023, by Ordinance 2934; and WHEREAS, pursuant to ORS 197A.100, implemented through OAR 660, Division 8, cities with a population greater than 10,000 are required, within one year of adopting an HCA, to develop a Housing Production Strategy (HPS) to promote the development of needed housing identified in the adopted HCA; and WHEREAS, the development of the HCA and the HPS was an approximately two-year process that included review and input from a twenty-member Housing Production Strategy Task Force, two online surveys, stakeholder interviews, and work sessions with the City Council and Planning Commission; and BE IT RESOLVED by the Lake Oswego City Council that that: Section 1. The City Council hereby adopts the Findings and Conclusions (LU 24-0024), attached as Attachment 1. Section 2. The Housing Production Strategy dated July 31, 2024, in Attachment 2 shall be and hereby is adopted. Section 3. Effective Date. This Resolution shall be effective immediately upon its adoption by the City Council. Considered and enacted at the regular meeting of the City Council of the City of Lake Oswego on the day of , 2024. AYES: NOES: EXCUSED: ABSTAIN: Resolution 24-36 Page 1 of 2 (LU 24-0024) Joseph M. Buck, Mayor ATTEST: Kari Linder, City Recorder APPROVED AS TO FORM: Ellen Osoinach, City Attorney Resolution 24-36 Page 2 of 2 (LU 24-0024) ...t.ri o�� � o s� c-, HOUSING PRODUCTION STRATEGY LAKE OSWEGO, OREGON DRAFT - JULY31 , 2024 f ; any �y t'r h-• ! 1. * W.1 yh'. ., :,,kl� f •,die .. -t is :y&- : 7g -� _., o Try' '... _� .a } hh i � ! r-,4i"� s S t%' ..t. ,, e•_ ., _, v F �yJ �e. - -� �_ i _ t : s at _ sit .� - Fr- k t:,. i � y tee ? t_.....„," f �~' .. • S•F`r •may `` ����6Ii[,e �` �.� -1, ..ply mil �'$..�S -10 _ `•• . ; I' i, + u r v �} BEY R^_ d._I.Ii ..,. 'a Nair.- �r 4 . LU 24-0024 ATTACHMENT 2/PAGE 1 OF 44 �— , ACKNOWLEDGMENTS CITY COUNCIL HOUSING PRODUCTION STRATEGY TASK FORCE Mayor Joseph M. Buck Mayor Joseph M. Buck, City Council Liaison (non-voting) Ali Afghan Philip Stewart, Planning Commission Liaison (non-voting) Trudy Corrigan Douglas Corder, 50+Advisory Board Representative Massene Mboup Kasey Adler,Transportation Advisory Board Aaron Rapf Representative Rachel Verdick Bruce Poinsette, Development Review Commission Representative (builder) John Wendland At-large Members: Sarah Walker(affordable housing developer) PLANNING COMMISSION David Tangvald (real estate broker) Diana Moreno Phil Bertrand (real estate broker) Don Mitchell Kyrsten Baumgart (resident) Rachel Naujock Yoko Kinoshita (resident) Miles Rigby Logan Bryck (resident) Dave Schenone Cara Kao-Young (resident) Philip Stewart Rebecca Lane (resident) James Thwing John E. Pauley(resident) Rosalie Nowalk(resident) CITY STAFF Pat Ginn (resident) Erik Olson, Long Range Planning Manager Diana Howell (resident) Jessica Numanoglu, Community Development Director John Turchi (resident) PROJECT TEAM Matt Hastie, MIG Kate Rogers, MIG Andrew Parish, MIG Katie Vickers, MIG Brendan Buckley,Johnson Economics LU 24-0024 ATTACHMENT 2/PAGE 2 OF 'Jswego Housing Production Strategy TABLE OF CONTENTS EXECUTIVE SUMMARY 1 PROJECT OVERVIEW 3 Project Purpose and Background 3 Lake Oswego's Housing Needs 4 Engagement Summary 5 STRATEGIES AND ACTIONS 7 1. Code audit and amendments 11 2. Remove or reduce minimum parking requirements 13 3. Rezone land 14 4. Evaluate accessible design incentives or mandates 16 5. Multiple Unit Property Tax Exemption (MUPTE) 20 6. Pre-approved plan sets for ADUs 22 7. Modify System Development Charge (SDC) fee schedule 23 8. Nonprofit Low-Income Housing Tax Exemption 26 9. Low-Income Rental Housing Tax Exemption 27 10. Public-private partnerships for affordable housing 29 11. Use Tax Increment Financing (TIF) to support affordable housing development 30 12. Affordable housing preservation inventory 32 13. Fair Housing policy and education 33 ACHIEVING FAIR AND EQUITABLE HOUSING OUTCOMES 35 MONITORING PROGRESS AND OUTCOMES 39 LIST OF APPENDICES 41 APPENDICE;, A. Contextualized Housing Needs Assessment B. Engagement Summary C. Pre-HPS Survey Results LU 24-0024 ATTACHMENT 2/PAGE 3 OF 44 ego Housing Production Strategy XECIJTIVE SUMMARY OVERVIEW Oregon Statewide Planning Goal 10 requires cities to plan for the housing needs of all community members. As a city within the Portland Metro area, Lake Oswego must complete a Housing Needs Analysis (HNA) every six years as well as a Housing Production Strategy(HPS)to implement specific actions that address the identified needs. Lake Oswego's Housing Production Strategy outlines a range of strategies the City plans to implement to address housing needs within the community.The HPS prioritizes current and future housing needs identified in the HNA and outlines actionable policies, actions, and implementation steps to encourage the production of housing. These include things like changes to how the City zones land and regulates development of housing, financial incentives,funding sources, partnerships, and other tools and policies. This HPS Report includes information about the City's critical housing needs and summarizes public engagement activities that informed and shaped the housing strategies recommended for implementation.The document also summarizes how the HPS will help achieve fair and equitable housing outcomes for the Lake Oswego community—especially for low-income households, communities of color, people with disabilities, and other state and federal protected classes. Lastly,this document describes how the City of Lake Oswego will monitor the implementation and progress of the strategies recommended in the HPS. RECOMMENDED STRATEGIES AND ACTIONS On the next page is a summary of the strategies and actions recommended as part of Lake Oswego's HPS.The strategies are organized by the primary housing need that they address. However, some strategies address housing needs across multiple categories. LU 24-0024 ATTACHMENT 2/PAGE 4 OF 44 • Housing Production Strategy I 1 OVERALL HOUSING Increase housing production to meet the City's overall long-term PRODUCTION AND SUPPLY housing need. Enable and encourage production of housing that can meet a full INCREASED HOUSING range of household needs and preferences.This includes a wider CHOICES variety of housing types and sizes, and housing to meet particular needs such as aging in place and accessibility. AFFORDABLE HOUSING FOR LOWER-INCOME Facilitate development of government-subsidized housing that meets the needs of low-and moderate-income households. HOUSEHOLDS The strategy in this category(Fair Housing policy and education) OTHER does not easily fit under the other headings, but supports equitable implementation of all recommended housing strategies. More details about the implementation time frames and cost/effort estimates in the table below are provided in the Strategies and Actions section of this report. IMPLEMENTATION TIME FRAME Strategy Begin Complete Cost Effort Overall Housing Production and Supply 1. Code audit and amendments Near Term Medium Term $$ • • • 2. Remove or reduce minimum parking requirements Near Term Near Term $ • 3. Rezone land Near Term Medium Term $$ • • • Increased Housing Choices 4. Evaluate accessible design incentives or mandates Longer Term Longer Term $$ • • 5. Evaluate Multiple Unit Property Tax Exemption Longer Term Longer Term $$ • • 6. Pre-approved plan sets for ADUs Longer Term Longer Term $$$$ • • • 7. Modify System Development Charge fee schedule Near Term Medium Term $$$$ • • • Affordable Housing for Lower-Income Households 8. Nonprofit Low-Income Housing Exemption Already Complete $ fiS • 9. Low-Income Rental Housing Tax Exemption Near Term Near Term $$ • • 10. Public-private partnerships for affordable housing Near Term Ongoing $$ • • • Use Tax Increment Financing to support 11. affordable housing development Near Term Longer Term $$$$ • • • 12. Affordable housing preservation inventory Medium Term Medium Term $ • • Other 13. Fair Housing policy and education Near Term Medium Term $ • • LU 24-0024 • ATTACHMENT 2/PAGE 5 OF 44 ego Housing Production Strategy PRO • OVERVIEW PROJECT PURPOSE AND BACKGROUND Oregon Statewide Planning Goal 10 requires cities to plan for the housing needs of all community members. As a city within the Portland Metro area, Lake Oswego must complete a Housing Needs Analysis (HNA) every six years as well as a Housing Production Strategy(HPS)to implement specific actions that address the identified needs. The Lake Oswego City Council adopted an updated HNA in October 2023.The HNA looks at the community's 20- year housing needs and whether there is enough residential land in the city to meet those needs. Under Goal 10, the City is required to adopt measures that will increase the likelihood that development of needed housing will occur and to work towards addressing any deficiencies in land capacity necessary to meet its housing needs.As a Metro jurisdiction, Lake Oswego is also part of a regional process that ensures there is a 20-year supply of land to accommodate future growth in the region. The Housing Production Strategy outlines a range of strategies the City of Lake Oswego plans to implement to address housing needs within the community.The HPS prioritizes current and future housing needs identified in the HNA and outlines actionable policies, actions, and implementation steps to encourage the production of needed housing.These include things like changes to how the City zones land and regulates development of housing,financial incentives,funding sources, Wr • , ,,, partnerships, and other tools and policies. The HPS process focuses on strategies related to the `1■ � production of new housing, recognizing the significant ,,. ..,l�� °y '' ` i shortfall of housing produced in Oregon during the last ' •„, •, two decades. However, it also will be important for the Yy .a. City to work with its community partners to help'.. conserve, maintain, and rehabilitate existing housing in - _• F Ariir Lake Oswego, particularly where such housing also is 4`` �':� affordable to people with low and moderate incomes. 0• a• LU 24-0024 ATTACHMENT 2/PAGE 6 OF 44_. Housing Production Strategy 13 LAKE OSWEGO'S HOUSING NEEDS The project team used the findings from the HNA, as well as additional information from the Census, other data sources, and from stakeholders involved in housing production in the city,to put Lake Oswego's housing needs into context with current demographic and development trends. Below are some key findings from the HNA and Contextualized Housing Needs Assessment (Appendix A). Current Needs • 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. 0 • Homeownership costs have 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 Nearly 20%of in 2022. households earn less # • than $50k per year • • Veit * . • There is very little existing housing available to *M !f z • & 'f t those in lower income segments.Around 2/3 of existing housing units (both rental�f i • and ownership units) are unaffordable to those earning less than $100k per year, WAN* 11�.TMM, and over 90% of existing units are unaffordable to those earning less than $50k per *f' of �r 0 year. Nearly half of renters are • Nearly half of renter households in Lake Oswego are considered housing cost cost burdened burdened, meaning they pay more than 30%of their income for housing. Future Needs • 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 2,000 new housing (townhomes and "plexes" with two to four units) and 34%as multi-family units needed 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% 27%of new needed units MFI typically requires government subsidy and partnerships with affordable are middle housing housing providers. LU 24-0024 ATTACHMENT 2/PAGE 7 OF 44 • Housing Production Strategy 14 • 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 Shortage of (a deficit of 86 total acres, or 642 total units). residential land Key Housing Gaps The following housing types have been identified by stakeholders involved in local housing production as key gaps in Lake Oswego's housing market.The HPS will work toward meeting these housing needs and filling these gaps. • 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). • 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. ENGAGEMENT SUMMARY The City of Lake Oswego is committed to reaching a broad range of community members to consider all perspectives related to housing within the city.The City values openness and transparency, recognizing that successful public engagement leads to better local decisions and outcomes. The public engagement for the Lake Oswego HPS allowed community members, stakeholders, and interested parties to share their perspectives and input.This project was developed through a collaborative process among the community, City staff and decisionmakers, stakeholders, and consultants to ensure that multiple points of view were considered and understood. Below is a summary of engagement activities and outcomes for the HPS. More detail is provided in Appendix B. Public engagement was split into three phases: Phase 1: HNA Phase 2: HPS Phase 3: HPS (Dec 2022 Oct Development (Oct 2023 -Jul Adoption 2023) 2024) (Aug - Nov 2024) LU 24-0024 ATTACHMENT 2/PAGE : , ;;svv;�go Housing Production Strategy 15 OUTREACH METHODS INCLUDED: Housing Production Strategy Task Force.This advisory group included a variety of housing �O - stakeholders, producers, and consumers.This included realtors, housing development industry members, homeowners, renters, and representatives of the City's Planning Commission, City Council, 50+Advisory Board, and Transportation Advisory Board, among others. The Task Force was instrumental in shaping the City's approach to the HPS and the strategies ultimately selected. They reviewed materials created by the project team at each step of the process and provided important information and feedback.This was especially beneficial in informing decisions by the Planning Commission and City Council. O O Stakeholder Interviews.The project team interviewed stakeholders involved in various ga-@ aspects of housing production, including affordable housing producers as well as developers or designers of market-rate multifamily, middle housing, and single-family housing. The feedback received from housing stakeholders influenced the strategies included in the HPS. For example,the code topics addressed in the Code Audit and Amendments strategy were refined to address the barriers identified by housing developers and producers. Also, incentives and other strategies that support affordable housing development(tax abatements,TIF funding, partnerships) were shaped by these interviews. Virtual Forums and Surveys.The City hosted two virtual community forums—on April 6, 0 0 2023 to discuss housing needs as part of the HNA, and on March 14, 2024 to review the r-1 strategies being considered for the HPS.The HPS forum used live polling to get feedback in I I real-time to supplement the discussion.The City also hosted two online surveys/online open houses that corresponded with the virtual forums. The HPS community forum and online survey were used to gauge community support for various strategies under consideration for the HPS. Presentations to Boards and Commissions. City staff presented to the following groups: Diversity, Equity and Inclusion Advisory Board; 50+Advisory Board; November 2023 Mayor's Roundtable event; and Fall 2023 Kruse Way Economic Forum p 0 p City Council and Planning Commission meetings.The project team held work sessions � with the City Council and Planning Commission at key points in the project.Adoption hearings with both bodies were held in fall 2024. Planning Commission and City Council provided important direction to the project team at key points in the HPS development. Work sessions with both bodies were used to review, refine, and prioritize specific strategies included in the HPS. Ultimately,the Planning Commission and City Council provided direction on which strategies to include in the draft HPS and approved the final HPS via adoption hearings. LU 24-0024 ATTACHMENT 2/PAGE 9 OF 44 TRAIEGIES AND ACTIONS The Housing Production Strategy identifies strategies and actions that the City of Lake Oswego and community partners can take to promote housing development that meets the needs of the community. All strategies recommended in this report were supported by the HPS Task Force, City Council, and Planning Commission. The strategies are organized by the primary housing need that they address. However, some strategies address housing needs across multiple categories. OVERALL HOUSING Increase housing production to meet the City's overall long-term PRODUCTION AND SUPPLY housing need. Enable and encourage production of housing that can meet a full INCREASED HOUSING range of household needs and preferences.This includes a wider CHOICES variety of housing types and sizes, and housing to meet particular needs such as aging in place and accessibility. AFFORDABLE HOUSING FOR LOWER-INCOME Facilitate development of government-subsidized housing that meets the needs of low-and moderate-income households. HOUSEHOLDS The strategy in this category(Fair Housing policy and education) OTHER does not easily fit under the other headings, but supports equitable implementation of all recommended housing strategies. -111111 4_ _ �T ... , _ - 111 !hi .:' r + i a p LU 24-0024 ATTACHMENT 2/PAGE 10 OF ,;_go Housing Production Strategy 17 The HPS report summarizes key information for each of the recommended strategies and identifies steps 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? Recommendation Identifies specific actions recommended for implementation. (Not applicable to all strategies). Anticipated What is the anticipated impact of the strategy?The following types of impacts are Impact 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: 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 or beneficial, but not sufficient on their own to produce new housing. Moderate impact=The strategy either may have a moderate impact on meeting the relevant housing need or be designed to target that need. 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 to begin implementation, and when will 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? LU 24-0024 ATTACHMENT 2/PAGE 11 OF 44 SUMMARY OF STRATEGIES AND IMPLEMENTATION Strategies are identified as Near Term (1-3 years), Key Medium Term (within 3-5 years), and Longer Term Cost Effort (>5 years) implementation time frames. A matrix $ Minimal Investment • o o Minimal Effort shows each strategy with the time frames, relative $$ Moderate Investment • • 0 Moderate Effort cost, and level of effort. $$$ Significant Investment • • • Significant Effort $$$$ Major Investment A general implementation timeline follows on the next page. IMPLEMENTATION TIME FRAME Strategy Begin Complete Cost Effort Overall Housing Production and Supply 1. Code audit and amendments Near Term Medium Term $$$$ • • • 2. Remove or reduce minimum parking requirements Near Term Near Term $$$$ • 0 0 3. Rezone land Near Term Medium Term $$$$ • • • Increased Housing Choices 4. Evaluate accessible design incentives or mandates Longer Term Longer Term $$$$ • • 5. Evaluate Multiple Unit Property Tax Exemption Longer Term Longer Term $$$$ • • 6. Pre-approved plan sets for ADUs Longer Term Longer Term $$$$ • • • 7. Modify System Development Charge fee schedule Near Term Medium Term $$$$ • • • Affordable Housing for Lower-Income Households 8. Nonprofit Low-Income Housing Exemption Already Complete $`" • 9. Low-Income Rental Housing Tax Exemption Near Term Near Term $$ • • 10. Public-private partnerships for affordable housing Near Term Ongoing $$ • • • Use Tax Increment Financing to support • • • 11. affordable housing development Near Term Longer Term $$$$ 12. Affordable housing preservation inventory Medium Term Medium Term $$$$ • • Other 13. Fair Housing policy and education Near Term Medium Term $$$$ • • o LU 24-0024 ATTACHMENT 2/PAGE 12 OF 44 Housing Production Strategy 19 IMPLEMENTATION TIMELINE 2024 2025 2026 ! 2027 2028 ? 2029 2030 1. Code audit and amendments 2. Remove or reduce min. Parking requirements , 3. Rezone land* Non-Residential Low-Density Res. 4. Evaluate accessible design incentives or mandates 5. Evaluate Multiple Unit Property Tax Exemption 6. Pre-approved plan sets for ADUs I 7. Modify SDC fee schedule* cottage SDC Methodology N Cluster 8. Nonprofit Low-Income Housing Exemption 9. Low-Income Rental Housing Tax Exemption 10. Public-private partnerships for affordable housing Ongoing 11. Use TIF to support affordable housing 12. Affordable housing preservation inventory , 13. Fair Housing policy and education* Policy Update Education *Refer to the strategy descriptions for details about phasing. A r '4 r 4 {r y . .,,, - ----mil , z 11., *-:,..., _ _.... ..st if .., ,r- -- 0'1 ''1 11 111,- - leg imer - ,4. ,,f t, �� '- �� may.:'"' jig... o 's .wyA ' - F rY. � J� �' •, °'4 ,fit '-'4'.-' '-' `. •-='; I _ _- ' ''n' _ �t 1't'"fi r iii o.. �.4'1"-"1'. --:1 1I1 II1 e S _ - x"11 . illy ..d..l - 1�'' , ° [ P P t 4 deo LU 24-0024 ATTACHMENT 2/PAGE 13 OF 44 Housing Production Strategy 110 STRATEGIES TO BOOST OVERALL HOUSING PRODUCTION AND SUPPLY The following strategies are intended to increase housing production in Lake Oswego.The HNA indicates that nearly 2,000 new housing units will be needed by 2043.This includes approximately 950 units for higher-income households and over 1,000 units for middle-and lower-income households. Increasing housing production will not only help meet these needs, it can also slow increasing housing costs by helping balance housing supply and demand. 1. Code audit and amendments Description Undertake a comprehensive audit of the Community Development Code (CDC)to identify barriers to housing production and implement code amendments to address those barriers. The CDC audit and amendments are recommended to 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 and design district overlays, restrictive siting standards, or other regulatory provisions; and • Other identified Code barriers. The CDC amendments could also incorporate recent changes to state law related to affordable housing and lower-cost housing choices.These statutory provisions apply whether or not the City adopts them locally, but amending the Code could facilitate easier interpretation by staff and applicants. Recent changes to Oregon Revised Statutes (ORS) include: • ORS 197A.445(2) (Senate Bill 8, 2021): Allows affordable housing with density and height bonuses. • ORS 197A.445(3) (House Bill 2984, 2023): Allows conversion of commercial buildings into housing. • ORS 197A.430 (House Bill 3395, Sections 16-19, 2023):Allows single room occupancies in all residential zones. Considerations • This strategy could help reduce or eliminate some of the major code and procedural barriers identified by housing stakeholders. • 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 LU 24-0024 ATTACHMENT 2/PAGE 14 OF 44 • 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 and Impact increased housing choices.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 has the potential to primarily benefit upper income households. Implementation 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. Time Frame Implementation: Begin in Near Term; Complete in Medium 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 • Potentially seek a technical assistance grant from DLCD or other sources to support a code audit project. • 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. LU 24-0024 ATTACHMENT 2/PAGE 15 OF 44 Lead & Partners Lead: Lake Oswego Community Development Partners: Developer and housing stakeholders 2. Remove or reduce minimum parking requirements Description As required by the State of Oregon's Climate-Friendly and Equitable Communities (CFEC) program,the City is currently undertaking Citywide Parking Reform efforts to develop regulations that comply with the CFEC rules.This includes requirements to remove parking mandates in certain areas (near transit, Downtown, and in the Lake Grove Village Center).The City is also required to take additional steps to reduce parking requirements. For example, the City could consider removing parking mandates citywide as a part of this work. While the CFEC-related parking reform efforts were not initiated as part of the HPS, reducing parking mandates benefits housing production in several ways. It 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. It also offers greater flexibility to site housing and reduces costs associated with providing parking.The City is choosing to recognize the value of this work in facilitating housing development by including in the HPS. More information about the Citywide Parking Reform project is available here: www.ci.oswego.or.us/planning/pp-22-0001-citywide-parking-reform. 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 • 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 LU 24-0024 ATTACHMENT 2/PAGE 16 OF 44 Housing Production Strategy 113 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: Begin and Complete in 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 3. Rezone land 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 updating zoning districts to allow housing where not currently allowed or 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, or 642 total units). 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. Recommendation Prioritize rezoning in areas with the greatest potential for higher density multifamily housing—including areas where nonresidential uses are underutilized. Potential zoning districts to consider for this strategy include the Mixed Commerce District (MC) and Industrial District (I). Consider a phased approach that first looks at nonresidential zones,then looks at upzoning lower-density areas in a later phase. Some of this work could coincide with the Code Audit and Amendments work under Strategy 1. LU 24-0024 ATTACHMENT 2/PAGE 17 OF 44 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 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: • Non-Residential Zones: Begin in Near Term, Complete in Medium Term. • Low-Density Zones: Begin and Complete in 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 LU 24-0024 ATTACHMENT 2/PAGE 18 OF 44 overcome the additional hurdle of annexation.The impact on housing development is expected to be long-term. Implementation Initial steps will include outlining the rezoning process, researching potential rezoning Actions areas, and contacting owners of large properties in those areas to gauge interest.This will take place in the first year of implementation, with remaining steps taking place in subsequent years. • Use the criteria listed above to identify and evaluate potential areas for rezoning. Prioritize 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 and Comprehensive Plan Map amendments and CDC and Comprehensive Plan text amendments. Lead & Partners Lead: Lake Oswego Community Development Partners: Property owners STRATEGIES TO INCREASE HOUSING CHOICES The following strategies are intended to meet a full range of household needs and preferences.This includes a wider variety of housing types and sizes, and housing to meet particular needs such as aging place and accessibility. 4. Evaluate accessible design incentives or mandates 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: • Bonuses for height, density, lot size, or floor area ratio. • Tax abatements, e.g., MUPTE (see Strategy 5). Potential mandates could include: • Requiring visitability in single-family and 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 LU 24-0024 ATTACHMENT 2/PAGE 19 OF 44 Housing Production Strategy 116 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: A small number of units in multifamily buildings are already required to have accessibility features under federal law and Oregon's state building code.This strategy would go beyond those minimums by either requiring or incentivizing additional units that provide accessibility features, or targeting housing not subject to these requirements (e.g., single-family homes and middle housing).1 Potential accessibility standards include: • Building Code Standards. Oregon's building code provides specifications for "Accessible Units" (with features such as wider than Type B doorways and fully accessible bathroom and kitchen facilities), "Type A units" (less accessible than "Accessible Units" and adaptable for additional accessibility), and "Type B" units (fewer accessibility features than Type A). Relying on these existing statewide code standards would be a relatively straightforward approach. • 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.' • 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. 1 Multi-family developments are subject to the Fair Housing Act;for buildings with an elevator, all units must be Type B units, per the building code; for those without an elevator, all ground floor units must be Type B.At least 2% but not less than one dwelling unit in a multi-family site with more than 20 units must be Type A units. 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. Sources: Portland Code Guide,Accessible Design. https://www.portlandoregon.gov/bds/article/514247; Disability Law Handbook, Southwest ADA Center. http://www.southwestada.org/html/publications/dlh/housing.html. 2 Universal Design Standards, West Virginia Housing Development Fund. https://tinyurl.com/yx63h792 ■ LU 24-0024 ATTACHMENT 2/PAGE 20 OF 44 Housing Production Strategy 117 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. • A more general strategy to utilize zoning bonuses was not recommended for inclusion in the HPS due to concerns expressed during project outreach that additional floor area, height, or lot coverage could conflict with existing neighborhood character. Zoning bonuses to incent accessible units may be met with similar opposition. 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. Also, housing stakeholders identified this as a notable gap in the local housing market. • 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 • 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 LU 24-0024 ATTACHMENT 2/PAGE 21 OF 44 new multi-family development. New elevator requirements may significantly deter new development, due to high cost. Time Frame Implementation: Begin and Complete in Longer 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 • Potentially seek a technical assistance grant from AARP or other sources to Actions support implementation efforts. • Code bonus. o Evaluate a potential new height/FAR bonus with input from housing stakeholders and community members to determine whether—and how—it should be implemented. o A potential accessibility bonus should be carefully considered in conjunction with any other potential incentives for accessible housing (see Strategy 5). o Consult with developers and housing providers to determine their level of interest. o Work with Lake Oswego's Planning Commission and City Council to consider potential code approaches, and if directed,to adopt code amendments. o City Council Action (if directed): Legislative CDC text amendments. • 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, if directed. • Financial incentive. o Evaluate an incentive program (e.g., MUPTE, Strategy 5)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, if directed. Lead & Partners Lead: Lake Oswego Community Development Partners: Home Building Association of Greater Portland; Fair Housing Council of Oregon; AARP; non-profit and for-profit housing developers. LU 24-0024 ATTACHMENT 2/PAGE 22 OF 44 Housing Production Strategy 1 19 5. Multiple Unit Property Tax Exemption (MUPTE) Description This tax 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) Recommendation Evaluate adoption of the MUPTE program with criteria that would make it available to housing with either accessible design (see Strategy 4) or moderate- income units affordable at 80-120%AMI.Also consider using this strategy to preserve affordability for existing lower-cost housing—i.e.,focus the incentive on rehabilitation projects. As such, this strategy could follow implementation of Strategy 12:Affordable housing preservation inventory. Considerations Applicable to all tax exemption programs: • 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. Applicable to the MUPTE under consideration: • The City should consider what income criteria would best fill the gaps in the local housing market. If the program targets rent levels for households earning up to 120%AMI, developers may be able to charge market-rate rents,which may not be more affordable than they would otherwise charge. A lower income target such as 100%AMI may be more effective at achieving lower-cost units.The local rental market and household income levels should be carefully evaluated as part of the City's analysis of this program. Anticipated • Housing Need Addressed:This strategy has the potential to increase Impact development of multi-family housing in targeted areas of the city. LU 24-0024 ATTACHMENT 2/PAGE 23 OF 44 Stakeholders in the HPS process identified a particular need for more multi- family housing outside the Town Center.Targeting the program to accessible units would help meet the needs of seniors and people with disabilities (see Strategy 4 for estimates of total need).Targeting the program to households earning 80-120%AMI would help meet the needs of moderate-income 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-income households, seniors, and people with disabilities. • 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, moderate-cost 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. As noted above,to make this program effective at encouraging lower-cost units, the City should carefully consider what income criteria would best fill the gaps in the local housing market. Time Frame Implementation: Begin and Complete in Longer Term 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. • 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 LU 24-0024 ATTACHMENT 2/PAGE 24 OF 44 6. Pre-approved plan sets for ADUs 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). 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. • 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. For example,the City of Eugene has partnered with several design firms to offer low-cost ADU plans, each of which is available for only$500. Eugene also offers a free ADU plan developed in-house.' • ADUs are a good candidate for this type of program due to their small size and relative simplicity. Also, homeowners wanting to build an ADU may be especially interested in pre-made designs, as compared to 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. Many of these were mentioned by stakeholders in the HPS process as a gap in the local market. 3 City of Eugene. Pre-Approved Accessory Dwelling Unit Program. https://www.eugene-or.gov/4707/Pre- Approved-Accessory-Dwelling-Unit-Pro LU 24-0024 ATTACHMENT 2/PAGE 25 OF 44 Housing Production Strategy 122 • 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. Time Frame Implementation: Begin and Complete in Longer Term. Could potentially be implemented sooner if the City can use pre-approved plans that are already developed. 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 7. Modify System Development Charge (SDC) fee schedule 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 (affordable housing meeting certain criteria is eligible for an exemption to SDCs).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 LU 24-0024 ATTACHMENT 2/PAGE 26 OF 44 single-family fee. Multi-family housing (3 or more units) is charged a lesser fee per unit.4 While cottage clusters are currently charged the single-family rate for each unit, the City is planning to update the SDC fee schedule in the near term so that cottage clusters are charged a lower rate 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. • 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 Impact smaller, 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 • 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 Lake Oswego Master Fees and Charges, 2024. https://www.ci.oswego.or.us/finance/master-fees-and-charges ' For example,the City of Newport, Oregon charges SDCs on a per-square-foot basis for single-unit dwellings. https://newportoregon.gov/dept/cdd/documents/FYE24SDCRates.pdf.The City of Albany, Oregon scales its sewer and streets SDCs for single-unit dwellings by dwelling size, with thresholds at 1,000 sq ft, 1,250 sq ft, and 3,000 sq ft. https://albanyoregon.gov/images/stories/cd/devicenter/fee guide city of albany oregon.pdf. LU 24-0024 ATTACHMENT 2/PAGE 27 OF 44 Housing Production Strategy 124 units,the cost of which would be passed onto homebuyers. It is anticipated that homebuyers that can afford larger units would be less impacted by the increased cost than moderate to lower income homebuyers. • 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: • Cottage cluster SDCs: Complete in Near Term. • Overall SDC methodology: Begin and Complete in Medium 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 • Adopt SDC rates adjustments for cottage clusters, working with City Council Actions and other City departments. • Work with City Council, other departments (Public Works, Finance, Parks, etc.), and development stakeholders on policy discussions around modifying the 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 id ��. C 1,1 Rendering of proposed Hacienda CDC affordable housing development in Lake Oswego LU 24-0024 ATTACHMENT 2/PAGE 28 OF 44 Housing Production Strategy 125 STRATEGIES TO SUPPORT AFFORDABLE HOUSING FOR LOWER-INCOME HOUSEHOLDS The strategies below are intended to facilitate development of regulated affordable housing(i.e.,government- subsidized housing)that meets the needs of low-and moderate-income households.The HPS indicates that over a quarter of new housing units needed by 2043 will be needed by lower-income households earning 80%or less of the area median income. 8. Nonprofit Low-Income 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. In particular,this strategy reduces ongoing operations costs and supports long- term stability for affordable housing developments. Eligible properties must be offered to low-income persons (at or below 60%AMI for the initial year, and at or below 80%AMI for subsequent years), 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 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. (Authorized by ORS 307.540-548) Lake Oswego City Council chose to fast-track adoption of this strategy to make it available to affordable housing projects being developed in 2024 (including the Mercy Greenbrae development at Marylhurst Commons).The tax exemption was approved by City Council as Ordinance 2945 in May 2024.6 Considerations • 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. • See Strategy 5, MUPTE,for considerations related to all tax exemption programs. 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) 6 https://www.ci.oswego.or.us/planning/pp-24-0003-nonprofit-corporation-low-income-housing-tax-exemption LU 24-0024 ATTACHMENT 2/PAGE 29 OF 44 Housing Production Strategy 126 • 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—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:Already Complete 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 City Council action: Adopt tax exemption program by ordinance. (Already Actions completed.) Lead & Partners Lead: Lake Oswego Community Development Partners: Lake Oswego Finance Department; overlapping taxing jurisdictions 9. 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 Housing Type Rental housing Rental housing Income Levels Up to 60%AMI Up to 60%AMI Eligible Developers Nonprofits only Nonprofit or for-profit LU 24-0024 ATTACHMENT 2/PAGE 30 OF 44 Housing Production Strategy 127 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 Recommendation Consider supplementing the adopted Nonprofit Low-Income Housing Tax Exemption with this additional exemption program to offer more options and flexibility. 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 cannot be used for acquisition of existing housing and is limited to 20 years. • See Strategy 5, MUPTE,for considerations related to all tax exemption programs. Anticipated • Housing need addressed: Government-subsidized affordable housing for low- Impact 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: Begin and Complete in 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 LU 24-0024 ATTACHMENT 2/PAGE 31 OF 44 10. Public-private partnerships for affordable housing 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. • 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. Recommendations The following specific partnership actions are recommended for implementation: • Consider donating surplus city-owned land for affordable housing as it becomes available. • Work with faith organizations to utilize excess or underutilized land for affordable housing. Assist with favorable zoning, permitting, and financial incentives. • Continue to leverage federal, state, and regional resources—such as the Metro Affordable Housing Bond—to fund affordable housing in Lake Oswego. • If a new TIF district is established (Strategy 11), use TIF funds to support affordable housing partnerships.This could include addressing infrastructure deficiencies or contributing funding to affordable housing more directly. 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 Mercy Greenbrae at 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. Anticipated • Housing Need Addressed: Government-subsidized affordable housing for low- Impact income households. LU 24-0024 ATTACHMENT 2/PAGE 32 OF 44 • 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: Begin in Near Term; Ongoing implementation 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 • Work with nonprofit,faith-based, or other organizations to discuss opportunities Actions 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. 11. Use Tax Increment Financing (TIF) to support affordable housing development 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 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 LU 24-0024 ATTACHMENT 2/PAGE 33 OF 44 Housing Production Strategy 130 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. Recommendation Incorporate affordable housing into the Urban Renewal Plan for the Foothills Neighborhood.The Lake Oswego Redevelopment Agency(LORA) is currently planning to update the Foothills Refinement Plan, after which a new urban renewal district will be established.The City must include affordable housing as an approved "project" in the Urban Renewal Plan in order for it to be eligible for TIF funding. Considerations • 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. • Once a new TIF district is established, it will likely be several years before there will be sufficient revenue in the district to make significant investment in housing. • Coordination and agreement with other taxing districts is also important. 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 LU 24-0024 ATTACHMENT 2/PAGE 34 OF 44 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: Begin in Near Term; Complete in Longer 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 • Incorporate affordable housing policies in the update to the Foothills Refinement Actions Plan. • Incorporate affordable housing into the Foothills Urban Renewal Plan. Include affordable housing as an approved "project" in the plan and consider a dedicated set-aside to use TIF funds for affordable housing. • City Council to adopt URA boundaries and plan via ordinance. • Use TIF funds to support partnerships with affordable housing producers (Strategy 10). Lead & Partners Lead: Lake Oswego Redevelopment Agency Partners: Community Development Department, Development stakeholders 12. Affordable housing preservation inventory Description This strategy involves preparing 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 if the City were to consider future strategies to preserve affordable housing. 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 LU 24-0024 ATTACHMENT 2/PAGE 35 OF 44 Housing Production Strategy 132 • 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: Begin and Complete in 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 OTHER The strategy in this category does not fit easily under the other headings, but supports equitable implementation of all recommended housing strategies. 13. Fair Housing policy and education 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. The City could also pursue the following types of actions to affirmatively further fair housing and work to reverse historical patterns of discrimination and exclusion 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. LU 24-0024 ATTACHMENT 2/PAGE 36 OF 44 Housing Production Strategy 133 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: • Fair Housing Policy: Begin and Complete in Near Term. • Education and Other Actions: Begin and Complete in Medium Term. 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. • Develop informational materials. • Provide training to current staff and new hires. Lead & Partners Lead: Lake Oswego Community Development Partners: Fair Housing Council of Oregon LU 24-0024 ATTACHMENT 2/PAGE 37 OF 44 Housing Production Strategy 134 ' cHipfiNG FAIR AND QUITABLE HOUSING UTCO M ES This section summarizes how the housing strategies detailed in this report will help achieve fair and equitable housing outcomes.As required by OAR 660-008, all the strategies have been evaluated for achieving the different outcomes identified below. In addition, the City of Lake Oswego is already carrying out a range of housing measures that support fair and equitable outcomes, as summarized in the Contextualized Housing Needs Assessment (Appendix A).Those existing measures are also identified below. Affordable Homeownership and Affordable Rental Housing Many of the strategies included in the HPS support production of affordable rental housing and the opportunity for wealth creation via homeownership—especially for low-and moderate-income households that have been disproportionately impacted by past housing policies. As described in the Contextualized Housing Needs Assessment(Appendix A), many racial and ethnic minorities statewide are less likely to own the homes they occupy—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).The legacy of these barriers continues to hamper home ownership for many minority households. Prioritizing affordable home ownership can begin to address these patterns of exclusion. Also, by benefiting low-income households more broadly,these strategies are anticipated to benefit populations with lower median household incomes — including certain racial and ethnic groups. Strategies that address these needs include: 5. Multiple Unit Property Tax Exemption—Provided the City includes income as an eligibility criterion. 8. Nonprofit Low-Income Housing Tax Exemption 9. Low-Income Housing Tax Exemption 10. Public-private partnerships for affordable housing 11. Use Tax Increment Financing(TIF) to support affordable housing development 12. Affordable housing preservation inventory Existing Measures: • Height/density bonus for affordable developments: Such bonuses are allowed within limited areas. LU 24-0024 ATTACHMENT 2/PAGE 3 Osiveo.) Housing Production Strategy 135 • Mandatory affordable housing in limited areas. • Expedited permitting for affordable housing. • Waived SDC fees for affordable housing. • Surplus City-owned land/land banking for affordable housing. • Utilizing surplus or underutilized land owned by faith-based organization for housing. By implementing these affordable housing strategies, Lake Oswego can work to ensure equitable outcomes for people with lower incomes.To further prioritize benefits for communities of color,the City can: ✓ Partner with culturally specific organizations or other organizations that often work with certain groups (e.g.,faith-based organizations). ✓ Target programs to certain city areas with higher proportions of people of color(e.g., tax abatements within certain neighborhoods). ✓ Use equitable engagement strategies to reach diverse communities. Gentrification, Displacement, and Housing Stability Many of the actions included in this HPS increase housing stability for residents and mitigate the impacts of gentrification and displacement.The strategies listed above promote the development of affordable rental and ownership housing and when targeted to areas that are experiencing—or may experience—gentrification, can help to counteract displacement. Strategy 1, Code Audit and Amendments, can also help by identifying the housing types most needed, removing code and procedural barriers, and incorporating new state laws intended to enable local housing development. Strategies that work toward preservation of existing low-cost housing, such as Strategy 12 Affordable Housing Preservation Inventory, can also help prevent displacement. However,the City would also need to focus other efforts—such as public-private partnerships—towards preservation of existing housing. It should be noted that some strategies have the potential to increase risks of displacement by enabling denser or more intensive development in existing residential areas, which could increase redevelopment pressures and in turn may drive up the value and cost of existing housing to some degree.This could include Strategy 1 Code Audit and Amendments, Strategy 3 Rezone Land, and Strategy 11 Tax Increment Financing.These strategies can benefit lower-income populations by supporting development of affordable housing, or more attainable housing types, in areas of higher opportunity and access to services. However, as part of implementing strategies that rezone properties or increase allowed development intensity,the City will need to assess potential displacement risks and ensure that these strategies are paired with the anti-displacement strategies listed above, which should be specifically targeted at the residents affected by zoning or code changes or increased investments. Housing Choice The following strategies will facilitate access to housing choice for communities of color, low-income communities, people with disabilities, and other state and federal protected classes: 1. Code audit and amendments— Remove barriers to development of needed housing types, such as multifamily housing, smaller units, ADUs, and middle housing. 2. Remove or reduce minimum parking requirements—Reduce parking mandates as a barrier to housing development, especially multifamily housing. LU 24-0024 ATTACHMENT 2/PAGE 39 OF 44 4. Evaluate accessible design incentives or mandates—Use requirements or incentives to encourage housing that is accessible to people with disabilities. 5. Multiple Unit Property Tax Exemption (MUPTE)—Target tax abatements to encourage accessible units and/or moderate-cost units. 6. Pre-approved plan sets for ADUs—Facilitate ADU development through faster and less costly permitting. 7. Modify System Development(SDC)fee schedule—Encourage smaller housing units by scaling SDCs by unit size. Existing measures: • Increased code flexibility for accessory dwelling units. • Short-term rental regulations. • Waived SDC fees for ADUs. • Lot coverage bonus for housing within limited areas. A potential trade-off of potential accessibility mandates in Strategy 4—especially for subsidized housing—is that it could limit the number of units produced or prevent some projects from being developed.This is an important consideration for implementation. Strategy 5, MUPTE, could help offset these concerns by offering a tax incentive for projects that include accessible units. The strategies listed above that promote more attainable homeownership opportunities (smaller units, middle housing, condos) have the potential to benefit communities that have been disproportionately impacted by past housing policies, especially communities of color.These strategies encourage a broader range of housing choices that are more attainable for moderate-income households than typical single-detached housing. Location of Housing The strategies listed below can encourage housing in compact, mixed-use neighborhoods, helping to reduce greenhouse gas emissions and increasing opportunities to live in neighborhoods near needed services and amenities. 1. Code audit and amendments—Remove barriers to multifamily housing and residential development within mixed-use districts. 2. Remove or reduce minimum parking requirements— Reduce parking mandates as a barrier to denser housing. 3. Rezone land—Rezone land in areas that are near existing higher-density or commercial areas, or other amenities, such as parks and schools, and that have good access to transit and services. 5. Multiple Unit Property Exemption (MUPTE)—Incentivize multi-unit housing in targeted areas. 11. Use TIF to support affordable housing—Support housing development in a new urban renewal district for the Foothills Neighborhood,just east of Downtown Lake Oswego. Existing Measures: • Increased density near transit stations. • Use of urban renewal funds to support housing near Downtown. • Conversion of underperforming commercial assets in Downtown. LU 24-0024 ATTACHMENT 2/PAGE 40 OF 44 These strategies can increase allowances for higher density housing in residential and mixed-use areas that are located near transit and that are within walking distance of a variety of businesses, services, public facilities, and other amenities.This is a particular benefit to low-income households and people with disabilities,who are less likely to own a car and may rely on transit and other modes to get around.The MUPTE program (Strategy 5) can also be targeted to amenity-and service-rich parts of the city where residents would most benefit from proximity. Housing Options for Residents Experiencing Homelessness The HPS does not include strategies that are specifically aimed at addressing homelessness or reducing the risk of households becoming homeless. However, several of the HPS strategies that support affordable housing development could be targeted to benefit extremely low-income households. For example, Strategy 10, Public- private partnerships for affordable housing, could be targeted to housing that benefits those with incomes below 30%AMI.This could be supported by regional or state funding sources. Also,the Nonprofit Low-Income Housing Tax Exemption recently approved by City Council would benefit deeply affordable housing. In addition, the City could work with Metro and Clackamas County to target some of the regional supportive housing services funding (via Ballot Measure 26-210)to support services and housing within Lake Oswego. Fair Housing This section identifies how the City will use the HPS to affirmatively further fair housing for all state and federal protected classes.This includes addressing disproportionate housing needs, patterns of integration and segregation, and disparities in access to housing opportunity. Lake Oswego is committed to furthering fair housing outcomes by including a fair housing strategy in the HPS (Strategy 13).Adopting a comprehensive plan policy to Affirmatively Further Fair Housing would demonstrate the City's commitment to working towards fair housing outcomes in the city and could also bolster the City's focus on prioritizing housing equity and affordability in its housing programs and investments. Other actions identified in Strategy 13, including fair housing training for City staff and policymakers and providing information to those involved with real estate transactions, would also help ensure fair housing outcomes for the local housing market. In addition, strategies that encourage affordable rental and homeownership housing, increase housing stability, and increase housing choice are all part of supporting Fair Housing (see above). LU 24-0024 ATTACHMENT 2/PAGE 41 OF 44 MONITORING ILTORI PROGRESS AND OUTCOMES The City of Lake Oswego is required to monitor the implementation and progress of the strategies recommended in the HPS and to report on progress to DLCD three (3)years after adoption. That progress report must include: • A summary of the actions already taken by the city to implement the strategies adopted in the HPS Report. If the city has not implemented housing strategies per the schedule adopted in the HPS report, the city must provide an explanation of the circumstances or factors that posed a barrier to implementation and a plan for addressing the identified need that the strategy addressed; • A reflection of the relative efficacy of implemented housing strategies adopted in the HPS; and • A reflection of the efficiency of the actions taken in response to the Fair and Equitable Housing Outcomes described previously in this report. In addition, the City will provide a yearly summary as part of the overall report that details the above listed items.This is expected to be a simplified version of the required three-year report that includes a more limited set of key metrics. PROPOSED MEASURES Lake Oswego proposes the following measures to monitor the progress and impact of the HPS implementation: Permitted/Constructed Housing Units • Monitor and track housing development applications and building permits by housing type, location/zone, density/lot size, and number of bedrooms. Use this information to estimate the potential change in the mix and range of different types of housing developed over time. • Specific tracked housing types should include single-detached,townhouse, duplex,triplex, quadplex, cottage cluster, multi-dwelling, manufactured housing, accessory dwelling units, and mixed-use residential developments/units. • Track the number of new regulated affordable housing units and loss of regulated affordable housing units. o If affordable housing developments take advantage of any regulatory or financial incentives, those should be noted. LU 24-0024 ATTACHMENT 2/PAGE 42 OF 44 Housing Production Strategy 139 • Track the number of regulated affordable housing units that Lake Oswego contributed funding to, including the sources of funding or tax exemption. • Track the number of accessible housing units constructed and/or rehabilitated to enhance accessibility. Note when those units are built pursuant to adopted City requirements or incentives. • If MUPTE is adopted, track: o Number of projects and units that qualify for the program. o How many units are affordable (if this is a criterion that the City adopts) and at what level. o Market rents (if possible), and any other features/ public benefits they provide as part of qualifying for the abatement (e.g., accessibility features). • Identify successful partnership projects that resulted in housing production or housing stability for identified groups in the HPS; include number of units built, preserved, or rehabilitated and the number of people served by the partnership(s). Economic and Demographic Data • Track changes in the characteristics of Lake Oswego's population including changes in: o Median household income o Percent of population of color o Percent of renters o Percent of renter and owner households that are cost burdened and severely cost burdened • Monitor changes in housing prices, median rents and median sales prices Programs and Adoption Actions Document the following: • Successful adoption of Code Amendments related to the strategies identified in the HPS. • City Council Ordinances related to the HPS strategies (e.g.,tax abatement, etc.). • Achievement of annual city work plan items related to strategies in the HPS. Outreach Summarize the following: • Documented coordination with property owners in efforts to produce needed housing identified in the HPS. • Documented consultation with non-profit and market-rate housing developers, and other community stakeholders to seek input on how implemented HPS strategies are working. • Summary of continued housing engagement efforts and resulting actions. The ability to report the progress described above will depend on the City's ability to obtain and evaluate readily available data and information.Availability or lack thereof may necessitate refinements to monitoring approaches. LU 24-0024 ATTACHMENT 2/PAGE 43 OF 44 Housing Production Strategy 140 LIST OF APPENDICES Appendix A: Contextualized Housing Needs Memorandum Appendix B: Engagement Summary Appendix C: Pre-HPS Survey Results LU 24-0024 ATTACHMENT 2/PAGE 44 OF 44 Housing Production Strategy 141 p� E 5 MEMORANDUM V O OREGOC� TO: Planning Commission FROM: Erik Olson, Long Range Planning Manager SUBJECT: Marylhurst Affordable Housing Tour [Housing Needs + Production (PP 22-0005)] DATE: September 27, 2023 MEETING DATE: October 9, 2023 EXECUTIVE SUMMARY&ACTION REQUESTED This memo provides background for the Commission's tour of the Mercy Greenbrae affordable housing development at Marylhurst Commons scheduled for October 9, 2023 at 4:00 PM. The purpose of the tour is for the Planning Commission and staff to learn more about the development in order to inform the City's work to develop a Housing Production Strategy (HPS) in compliance with state House Bill 2003 (2019) (PP 22-0005). A map depicting the meeting location and development site is included as Attachment A. BACKGROUND Mercy Greenbrae is located on the Marylhurst Commons site, which is approximately 50 acres in size and located at 17600 Pacific Highway—also known as Highway 43. Marylhurst University was founded on the site in 1905, with the first buildings constructed in the 1930s. Prior to the Mercy Greenbrae proposal, the site was developed with 16 buildings that were previously used by the University. Marylhurst University ceased operations in 2018 and ownership of the campus reverted to the Society of the Sisters of the Holy Names of Jesus and Mary (SNJM). The buildings on the site were vacant or being used as offices for small non-profits. In 2019, SNJM began to conduct outreach to neighbors to understand community priorities for the campus. Based on this initial input, the Sisters identified a serious shortage of affordable housing in Lake Oswego and contacted the City's Planning Department to explore options for providing affordable housing at the former University site.They subsequently began to work with Mercy Housing Northwest on a feasibility study to add housing to the southeast corner of their property. Respect. Excellence. Trust. Service. 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY LU 24-0024 EXHIBIT D-1/PAGE 1 OF 20 Page 2 of 6 In 2020, SJNM and Mercy Housing Northwest conducted outreach and a survey of Mary's Woods staff prior to applying for a code amendment to allow affordable housing at the former campus. Code and Comprehensive Plan amendments were then adopted in November 2020 to add multifamily residential meeting minimum affordability requirements as a permitted use in the Campus Institutional (CI) zone (see LU 20-0016). In effect, this allowed a future affordable workforce housing development to be sited on the Marylhurst property. The following year, in 2021, Mercy Housing Northwest established a Design Focus Group consisting of neighbors, community members, and service partners to collect feedback on their design prior to submitting a land use application for a development review permit for their proposal. Mercy Housing Northwest then conducted an additional survey and voluntary community meeting related to the development review portion of their application. On February 23, 2022, the Development Review Commission (DRC) approved a development review permit, lot line adjustment, and associated tree removal for the 100-unit multifamily building on the site. Figure 1: Mercy Greenbrae Site Plan I __ i liti __ ..1 .... .„.,,, ,,_ , -- . , fT •.�_ -. __-- . -taws. , ,V 1 , I , i 1 1 t 1:.1 }V i :4 1 1 1 n < < g / / . .1 . ---.-- k 010.044 ' / I j 1011111°11r-04 1:0- - ,_J __ r - r LU 24-0024 EXHIBIT D-1/PAGE 2 OF 20 Page 3 of 6 Per the new requirements within the CI zone established under the code amendment, a condition of approval was imposed that at least 10% of the units be made available to residents earning 60% of the area median income (AMI) or less, with the rent plus utilities to be set at a level that does not exceed 30%of the income level that is 80% of AMI, according to the Clackamas County Housing Authority's income limits for affordable housing (adjusted for household size). Regardless, SNJM and Mercy Housing intend to make 100% of the dwelling units affordable to households earning less than 60% of Area Median Income, exceeding the affordability requirements for the CI Zone. As part of the development, the O'Hara, Baxter and Thompson (former dormitories and eating hall) buildings were demolished. The new building is now sited in that location, as shown in Figure 1, above. RELATIONSHIP TO HOUSING PRODUCTION STRATEGY Existing City Policies to Promote Affordable Housing Development The City Council currently has a goal to, "Conserve the community's quality of life by planning for growth and change," and an initiative to, "Continue work on key housing initiatives, the housing production strategy, guiding the HACC/Metro project on Boones Ferry Road, and support for other non-profit led housing projects." Pursuant to this initiative, the City has permitted or is assisting with the development of approximately 180 affordable housing units over the last four years, including both for-sale and rental units for those earning<30% - 80%AMI. This support was helpful in facilitating an affordable housing development at Mercy Greenbrae, with the City employing the following strategies to ensure the project's success: • Waiver of systems development charges (SDCs)for multifamily affordable housing developments (Ordinance 2810); • Waiver of all City land use application fees, tree removal and protection fees, and Fire Department fees (Total fees waived = $28,563) for developments where the proposed dwelling units are affordable to those earning 80% or less of Area Median Income and spending not more than 30% of household income on housing; • Expedient review for land use application with approval in 201 days (6.5 months) from first pre-application conference (two were held), includes neighborhood meeting and Development Review Commission public hearing (approved 50 days from completeness); and • Processed and waived the fee ($6,079) for a code amendment to allow multifamily development with affordable housing under a voluntary inclusionary housing policy. These actions represent some of the ways in which the City has already been employing some of the strategies that will need to be analyzed in the forthcoming work to develop an HPS, as required pursuant to state House Bill 2003 (2019) (see PP 22-0005). The state Department of LU 24-0024 EXHIBIT D-1/PAGE 3 OF 20 Page 4 of 6 Land Conservation and Development (DLCD) has provided a list of approximately 100 potential tools, actions, and policies intended to serve as a starting point for HPS discussions, including regulatory and land supply changes, incentives, funding sources, programs, and partnerships (see Attachment B). This list includes the following strategies that were employed for the Mercy Greenbrae project, as explained above: • Strategy A10:Inclusionary Zoning- Requiring that a portion of the units within a market rate development be set aside as affordable housing. This tool will often be combined with property tax exemptions,fee waivers, or development bonuses to offset the cost of affordable housing units. • Strategy C01:Reduce or Exempt SDCs for Needed Housing- Reducing, deferring, and/or financing System Development Charges (SDCs) at a low interest rate for needed housing types. This strategy reduces development costs. Housing Production Strategies for Future Consideration Though the City has already used the above strategies to promote affordable housing at Mercy Greenbrae, there are other strategies that could provide additional ongoing support for this and other similar non-profit-led affordable housing developments. In particular, property taxes can be a significant operating expense for housing, and property tax exemptions have been utilized in several cities in the Portland Metro area to allow developers of affordable housing to lower their rents. Without these exemptions, some affordable housing projects may not be feasible, or could need either higher rents or more public subsidy in order to meet affordability targets over time. Attachment B includes several tax exemption and abatement strategies to consider for inclusion in the HPS, with the following strategy targeted directly towards nonprofit affordable housing developments: • Strategy E10:Nonprofit Low-Income Rental Housing Exemption - This tool can provide a simplified way for affordable housing owned and operated by a nonprofit(as well as land held by a nonprofit for future affordable housing development) or Community Land Trusts (at least in land value) to qualify for a property tax exemption. Work should be done to make it easier for projects/land to qualify; minimizing the number of taxing authorities needed to grant an approval. Tax exemptions to facilitate non-profit low-income housing development are authorized under ORS 307.5401—370.5482, with applicable language in ORS 307.5413: ORS 307.541 —Nonprofit corporation low income housing 1 Available at https://oregon.public.law/statutes/ors_307.540. 2 Available at https://oregon.public.law/statutes/ors_307.548. 3 Available at https://oregon.public.law/statutes/ors_307.541. LU 24-0024 EXHIBIT D-1/PAGE 4 OF 20 Page 5 of 6 (1) Property is exempt from taxation as provided under ORS 307.540 (Definitions for ORS 307.540 to 307.548) to 307.548(Termination of exemption) if. (a) The property is owned or being purchased by a corporation described in section 501(c)(3) or(4) of the Internal Revenue Code that is exempt from income taxation under section 501(a) of the Internal Revenue Code; (b) Upon liquidation, the assets of the corporation are required to be applied first in payment of all outstanding obligations, and the balance remaining, in cash and in kind, to be distributed to corporations exempt from taxation and operated exclusively for religious, charitable, scientific, literary or educational purposes or to the State of Oregon; (c) The property is: (A) Occupied by low income persons; or (8) Held for the purpose of developing low income housing,for a period not exceeding a reasonable maximum period, if any, adopted by the governing body; (d) The property or portion of the property receiving the exemption, if occupied, is actually and exclusively used for the purposes described in section 501(c)(3) or(4) of the Internal Revenue Code; (e) The exemption has been approved as provided in ORS 307.547(Determination of eligibility); and (f) The information disclosed on the application filed pursuant to ORS 307.545 (Application for exemption) meets any other criteria adopted by the governing body. (2)A governing body that adopts the provisions of ORS 307.540 (Definitions for ORS 307.540 to 307.548) to 307.548(Termination of exemption) may adopt additional criteria for exemption that do not conflict with the criteria described in subsection (1)(a) to (e) of this section. (3) For the purposes of subsection (1) of this section, a corporation that has only a leasehold interest in property is deemed to be a purchaser of that property if:: (a) The corporation is obligated under the terms of the lease to pay the ad valorem taxes on the real and personal property used in this activity on that property; or (b) The rent payable by the corporation has been established to reflect the savings resulting from the exemption from taxation. (4)A partnership shall be treated the same as a corporation to which this section applies if the corporation is: (a)A general partner of the partnership; and LU 24-0024 EXHIBIT D-1/PAGE 5 OF 20 Page 6of6 (b) Responsible for the day-to-day operation of the property that is the subject of the exemption. [1985 c.660§2; 1995 c.702 §2; 1997 c.752 §11; 2005 c.94 §40; 2015 c.310§7] ATTACHMENTS A. Marylhurst Tour Map and Information, 09/29/2023 B. DLCD Handout— HPS Program List of Tools, Actions, and Policies, 07/21/2022 LU 24-0024 EXHIBIT D-1/PAGE 6 OF 20 Mercy Greenbrae Affordable Housing Lake Oswego Planning Commission Site Tour Monday, October 9,4pm Directions and Parking: • The tour will start from the construction office in the ground floor of Davignon Hall • Enter Marylhurst Commons from Pacific Highway (OR-43) by turning onto Furman Drive • At the stop sign,turn left,following signs towards Davignon Hall and Clark Commons; proceed through the Commons and down the hill for about.2 miles • Parking is located just east of Clark Commons. Please use the parking areas labeled "Contractor Parking" in the diagram below • The Construction office is located on the ground floor of Davignon Hall. Enter through the main gate, also shown in the diagram below,then the entrance to the construction office is located about 30' down the driveway, on the left. Pr 'F y ` liX J. WCc Construction ''': 1 • ' IA,as- ,. 14. Office-ground floor •: f•. • * k ' I. _ . 1 r �'_ 3-' 4/141,7 a _j' �Ga o office .kr—' f , .2 `; :rid ; if l =. _ °'`X Cnnstn,c[ion Fence r t' Main gate - � ' , %5.,, . . . .. ILA � k ...- ...,, p ,,, . ., , .. , _L- - I,. : ., k li..... , . • ,., •: , . . •,.. r' r! La dowVfit Storage Area )a . , - _ . F ' _ �y — .,- _ ,( , < i .� : . ;. 0,,_ ti � Googlet` ..•-.* .-.. \. _.., L • •. - L .; ,-..4„,:g.c, x_x---x x _ Construction Fence Safety While the construction site will be closed for the evening during the tour, keep in mind that the site is actively under construction. Please be mindful and cautious as you move through the site and building. The tour will be focused on the ground floor; however, please note that entering the building requires navigating some uneven surfaces and steps. • Participants are required to wear rugged, closed toed shoes(no exceptions!) • Safety vests, hard hats, and safety glasses will be provided for all PP 22-0005 ATTACHMENT A/PAGE 1 OF 1 LU 24-0024 EXHIBIT D-1/PAGE 7 OF 20 Housing Production Strategy Program - List of Tools, Actions, and Policies OREGON ADMINISTRATIVE RULE CHAPTER 660, DIVISION 8, ATTACHMENT B Revised -February 2022 Housing Production Strategy Guidance Document: To assist cities in the creation and drafting of their Housing Production Strategy Report in compliance to HB 2003, the Department of Land Conservation and Development (DLCD) provided a guidance document of housing production strategies a jurisdiction could employ to facilitate housing production in their community. The document contains a list of strategies assigned by categories. Each strategy includes a brief overview of its intent and purpose as well as a projection of its expected impact by housing tenure and by income bracket. As the jurisdiction prepares a housing production strategy report, the jurisdiction would review the guidance document to select specific strategies that work best for their community and that address their identified Housing Needs. The jurisdiction would simply reference the strategy number when describing the adoption, implementation, and expected magnitude of impact of each strategy in their report. If the jurisdiction has a strategy that is not listed they would propose this under Category Z. Categories of Tools, Actions, and Policies The proposed categories contain tools, strategies, or policies that are intended to: 1. Reduce financial and regulatory impediments to develop Needed Housing; 2. Create financial and regulatory incentives for development of Needed Housing; 3. Provide access to local, state, and federal resources; and 4. Allow for local innovation. These are strategies that a jurisdiction can take to proactively encourage Category A Zoning and Code Changes needed housing production through zoning and code modifications. These strategies may also include regulations to ensure housing goals are met. These strategies address known impediments to providing needed housing. Category B X Reduce Regulatory Impediments These include but are not limited to zoning, permitting, and infrastructure impediments. Category C Financial Incentives These are a list of financial incentives that jurisdictions can give to developers to encourage them to produce needed housing. These are a list of resources or programs at the local, state and federal level Category D Financial Resources that can provide money for housing projects. The majority of these resources are intended to provide money for affordable housing projects. TAX These are a list of tax exemption and abatement programs that are intended Category E Tax Exemption and Abatement $= to encourage developers to produce housing. These are strategies that secure land for needed housing, unlock the value of Category F Land, Acquisition, Lease, and Partnerships land for housing, and/or create partnerships that will catalyze housing developments. Any other Housing Production Strategy not listed in Categories A through F Category Z `� Custom Options that the jurisdiction wishes to implement will be outlined in this section and • numbered accordingly. Equitable Outcomes Note: Some of the strategies may not create an overall housing production increase however, they do increase or maintain housing for a specific affordability target or population. Caution Note: Jurisdictions should be careful when picking strategies to ensure that housing strategies together in their aggregate do not work to suppress the overall supply of housing of stiffle housing production. PP 22-0005 ATTACHMENT B/PAGE 1 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 8 OF 20 Anti-Displacement and Gentrification Toolkit: In the Spring of 2021 DLCD partnered with Portland State University to create an anti-displacement and gentrification toolkit.Though not mandatory to use,the toolkit was designed 1) help jurisdictions better measure the pressures of anti-displacement and gentrification in their communities, and 2) direct HPS strategies towards mitigating these pressures as more housing is produced. In the process several additional columns were created to better understand the impact of each strategy when it comes to anti-displacement work. These additional columns are defined as follows: Housing Equity Impact: DIRECT, (DIRECT), INDIRECT,AND (INDIRECT) DIRECT strategies for meeting housing equity needs are focused on the supply. They are needed immediately and persistently by groups that are vulnerable in the housing market.These strategies directly produce or protect affordable housing, especially for communities of color and other protected class communities.They have strong impacts for anti-displacement that can be seen in the short-term. A(DIRECT) strategy is one that is specific to affordable housing and/or protected classes and vulnerable populations, but does not actually create housing. Strategies that allow for more housing overall are INDIRECT; strategies that are oriented towards smaller units or diverse housing types are (INDIRECT)-they are more likely to address equity needs, but may also require additional tools to focus on adffordability,tenure, or accessibility. Likewise,strategies for housing preservation can be important for anti-displacement planning, if they are focused on maintaining affordability along with quality. Neighborhood Typology: The toolkit establishes a methodology for cities to categorize census tracts based on where gentrification and displacement pressures have already occurred or may occur in the future.These six Neighborhood Typologies (Affordable and Vulnerable, Early Gentrification,Active Gentrification, Late Gentrification, Becoming Exclusive, and Advance Exclusive)reflect the spatial distribution of housing inequity. Cities should take special consideration of these spatial inequities in the development of their Housing Production Strategies. Some Housing Production Strategies when applied flatly across an entire city result in negative or inequitable outcomes for communities members most at risk of displacement. The This section is intended to highlight which strategies may have unintended negative impacts on particular neighborhood typologies.This is not to imply that all Housing Production Strategies will have negative impacts on housing equity- many strategies work without particular concern across any kind of neighborhood. However,some housing production strategies are better suited for particular neighborhood types, and some strategies need special nuance or policy refinement to add special mitigation protections against further potential displacement impacts. Green: GO use and implement, especially if a tool is useful in this neighborhood type Yellow: PROCEED CAUTIOUSLY and carefully.This means that a strategy needs to be monitored for impacts and possibly paired with more direct mitigating strategies in this neighborhood type. Red: STOP AND PLAN. This strategy is highly likely to create displacement pressures and must be paired with mitigation measures in this neighborhood type. PP 22-0005 ATTACHMENT B/PAGE 2 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 9 OF 20 Category A: Zoning and Code Changes These are strategies that a city can take to proactively encourage needed housing production through zoning and code modifications. These Strategies may also include regulations to ensure housing goals are met. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Ensure Land Zoned for Publicly-Subsidized (< 30% AMI) This strategy will work on establishing minimum density standards, updating development codes to prohibit new single-family ° Higher Density is not Affordable (30-80% AMI) For Rent Planning and continued monitoring with attention to displacement in gentrifying A01 detached housing in high density zones, and allow single-family detached homes in medium density zones only if they meet ° Morrow County HNA, 2017 INDIRECT All Developed at Lower minimum density or maximum lot size requirements. Workforce (80-120 AMI) For Sale areas; add incentives for direct production of equity needs Densities Market Rate (> 120/° AMI) In many cities, towns, and counties, changes to local zoning policies can help to facilitate the development of lower-cost housing Zoning Changes to types, such as Accessory Dwelling Units (ADU's), manufactured homes, multifamily housing, micro-units, or single-room -ublicly-Subsidized (< 30% AM., Facilitate the Use of occupancy developments. Changes to local zoning policies can also help to facilitate the development of safe overnight sheltering For Rent A02 Lower-Cost Housing options for unhoused residents, such as Safe Park programs, Conestoga Hut Micro-shelters, sleeping pod micro-shelters, and Workforce (80-120% AMI) For Sale Local Housing Solutions DIRECT All Planning and continued monitoring of production vs. needs Types others.To increase the likelihood the market can produce lower-cost housing types, it is important to make them allowable as of Market Rate (> 120% AMI) right in all locations and neighborhoods. If not, still provide flexibility in zoning code to still issue variance or conditional use permits that allow deviations from existing regulations on a case-by-case basis. FAR, Density, or Height ° Early Gentrification A03 Bonuses for Affordable FAR, density, and height bonuses for affordable housing developments. Note: FAR/density bonuses do not work if there is not Affordable (30-80/° AMI) For Rent -- DIRECT Active Gentrication These tools work best in strongmarkets; have a medium impact on displacement adequate height to make additional development feasible. Workforce (80-120% AMI) JAIL p p Housing Late Gentrification Publicly-Subsidized (< 30% AMI) Housing rehabilitation codes (or rehab codes) are building codes designed to reduce the costs of renovating and rehabilitating ° Early Gentrification Housing Rehabilitation Affordable (30-80% AMI) For Rent Where naturally occurring affordable housing is being lost to rehab; add incentives A04 existing buildings, thereby facilitating the continued availability and habitability of older rental housing and owner-occupied homes. ° Local Housing Solutions INDIRECT A- " "'hntrification Codes This is especially helpful to facilitate conversation into multiplex housing. Workforce (80-120 AMI) For Sale Late Gentrification to maintain affordability to increase anti-displacement impacts Market Rate (> 120/° AMI) ADUs are smaller, ancillary dwelling units located on the same lot as a primary residence. They are typically complete dwellings with their own kitchen, bathroom and sleeping area. Given that ADUs are usually built by individual homeowners with limited ADUs, cottage, and middle housing have a medium impact on preventing Code Provisions for experience or financial resources, code provisions can have a significant influence on the feasibility of their development and For Rent City of the Dalles Housing A05 ADUs enable more widespreadproduction. For example, easingoccupancy requirements, allowingmore ADUs on a lot, and expanding Workforce (80-120% AMI) For Sale Strategy Report (2017) (INDIRECT) All displacement, with planning and continued monitoring of production; add incentives p p p y q p g and programs to target affordability and increase impact maximum size requirements. Certain building and development code regulations can inadvertently drive up ADU construction Market Rate (> 120% AMI) costs. More flexibility in siting, design, construction and lower fees are also needed to achieve feasibility in many cases. Affordable & Vulnerable Publicly-Subsidized (< 30% AMI) Broaden the definition of "housing unit" to allow for more flexibility across use types. For example, SROs are not always allowed in ° Early Gentrification Broaden the Definition Affordable (30-80% AMI) For Rent Planning and continued monitoring of production and locations; add incentives and A06 of Housing Type certain residential zones. Including them in the definition of housing unit, or broadening the set of uses allowed across all Workforce (80-120% AMI) For Sale -- (INDIRECT) Active Gentrification programs to increase impact and avoid clustering residential districts, would allow for greater flexibility of housing type. Market Rate (> 120% AMI) Late Gentrification Exclusive Affordable & Vulnerable Publicly-Subsidized (< 30% AMI) Allow for Single Room Allow for SRO, Adult Dorms, and Cohousing in all residential zones. Note: SROs may be favored due to their ability to serve more Early Gentrification Affordable (30-80% AMI) For Rent Planning and continued monitoring of production and locations; add incentives and A07 Occupancy in people for less cost; it is not always a better housing type for all populations. Considerations should be given to ADA accessibility -- DIRECT Active Gentrfication(80-120% AMI) =or Sale cation programs to increase impact and avoid clustering Residential Zones when planning SROs. Market Rate (> 120% AMI) Late Gentrification Exclusive Cottage clusters are groups of relatively small homes typically oriented around shared common grounds with 4-14 homes typically between 1,000-1200 square feet in size. By further defining cottage cluster design and development standards, housing code can effectively address a predictable process for developers, and potentially encourage greater production for this housing type. Some examples may include: allowing for a wide range of sizes and attached/detached options for housing; not specifying ownership Publicly-Subsidized (< 30% AMI) ADUs, cottage, and middle housing have a medium impact on preventing Promote Cottage structure so that both renters/owners can live on the same cluster; ensuring that minimum site size, setbacks and building Affordable (30-80% AMI) For Rent City of the Dalles Housing A08 Cluster Housingcoverage requirements do notprohibit cottage cluster development on smaller lots; draft design requirements that ensure Workforce 80-120% AMI) For Sale StrategyReport, April 2017 (INDIRECT) All displacement, with planning and continued monitoring of production; add incentives g q g p g q ( p p and programs to target affordability and increase impact neighborhood compatibility, and efficient use of land, but are not so specific as to restrict the ability to adapt to varying Market Rate (> 120% AMI) neighborhood contexts. Other ideas include: uniformed codes, form-based codes, and allowing shared underground infrastructure when practical (e.g. sewer lines from each cottage can connect to one main that runs out to street, rather than 8 parallel lines out to street). Short-term rentals can be seen as an investment strategy for small investors, but can also remove rental housing supply from the Short-Term Rentals market, in effect driving up rent from the local housing market. To avoid this effect, regulations can include definitions for various Affordable (30-80% AMI) For Rent A09 forms of short-term rentals, defining use, and occupancy standards, and even adding limits to the number of days that a short term ° Morrow County HNA, 2017 DIRECT All High impact on displacement especially in hot neighborhoods Regulations rental can be in operation in order to mitigate their impact on the local housing market. Short Term Rental Regulation should begin Workforce (80-120% AMI) with/include registration requirements for all short term rentals. Market Rate (> 120/° AMI) Requiring that a portion of the units within a market rate development be set aside as affordable housing. This tool will often be combined with property tax exemptions, fee waivers, or development bonuses to offset the cost of affordable housing units. Publicly-Subsidized (0 30% AMI) These tools work best in strong markets; have a medium impact on displacement; Careful consideration should be employed when enacting inclusionary zoning. Note: A number of studies, including those Affordable (30-80% AMI) For Rent Active Gentification A10 Inclusionary Zoning analyzing the IZ Ordinance in Portland, have shown that IZ suppresses, rather than increases, the creation of new housing. Given Workforce (80-120% AMI) -u, oaie -- DIRECT Late Gentrification they pair with incentives that can be customized to context for maximum overall that, if IZ is proposed, the financial components need to be calculated right to ensure that the inclusionary rate is not too high for Nicli KUL rtdLC k-- FLU/° t\IVII) impact the offsets provided and that overall housing production increases as a result. PP 22-0005 ATTACHMENT B/PAGE 3 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 10 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Add Restrictive Adding restrictive covenants to ensure affordability over time at a certain income level for affordable housing developments. Publicly-Subsidized (< 30% AMI) A11 Covenants to Ensure Restrictive covenants are usually placed on a property in exchange for a local or state government providing financial contribution Affordable (30-80% AMI) For Rent -- DIRECT All Strong tool for subsidized housing preservation in all markets Affordability to the project. These covenants work best over the short-term (up to 30 years); after that they become unable to accommodate vvorKtorce (i IMI U-1LU"/o AI) For Sale changed circumstances. 1 Market Rate (> 120% AMI) Align Lot Division Sometimes there are conflicting regulations between the density that is allowed by the zoning code versus the density that is allowed when lot division (for fee-simple lots) is considered. This can cause unintentional reductions in density, only caused by the Affordable (30-80% AMI) For Rent Planning and continued monitoring of production; add incentives and programs to Al2 Density with Zoning fact that the developer would like to create for-sale housingon fee-simple lots. Ideal) the densities would be aligned, so there is Workforce (80-120% AMI) For Sale -- INDIRECT All target affordabilityand increase impact Density p P y' ° g p not a density reduction between - condominium versus fee-simple developments. Market Rate (> 120/o AMI) i Enable and encourage Transfer of Development Rights (TDR) to maximize available Floor Area Ratio (FAR) provided public ° Early Gentrification FAR & Density Transfer Affordable (30-80% AMI) For Rent These tools work best in strong markets; have a medium impact on displacement A13 benefit (e.g. historic preservation & affordable housing) are attained and covenants ensure long term benefit. This strategy ° -- DIRECT Active Gentrification Provisions assumes that there are adequate, realistic, and relatively easy receiving areas for TRDs. Workforce (80-120 0o AMI) Late Gentrification when pained with affordability tools Market Rate (> 120% AMI) Re-examine Critically re-assess requirements for ground floor retail; lively streetscape is a worthy goal, but not for every street. Jurisdictions Publicly-Subsidized (< 30% AMI) Requirements for can inadvertently impose massive costs on developers by requiring ground floor retail and commercial space even when it's Affordable (30-80% AMI) For Rent A14 -- Ground-floor unlikelyto be fullyoccupied orgenerate nearlyenough revenue topayfor itself. Ground floor uses should be driven bymarket Workforce 80-120% AMI) =or Sale City of Bend INDIRECT All P g ( Retail/Commercial demand; with residential use more beneficial to meet needed housing in some cases (eg. affordable housing). Market Rate (> 120% AMI) Enable developments that support multiple unit sizes, types, and tenure options to promote diverse housing options in Encourage Diverse high- opportunity neighborhoods. With a goal of reversing historical patterns of racial, ethnic, cultural and socio-economic exclusion. Publicly-Subsidized (< 30% AMI) Use an analysis of "Access to Opportunity" to decide which zones or locations (via zoning overlay) to determine where this is Housing Types in High- Affordable (30-80% AMI) For Rent Late Gentrification Planning and continued monitoring of production; add incentives and programs to A15 appropriate. Goal is to promote access to opportunity (e.g., high performing schools, multiple transportation options, services, o -- (INDIRECT) Opportunity etc.) to households with a range of backgrounds and incomes. The jurisdiction could pare this strategy with a robust program of Workforce (80-120% AMI) For Sale Exclusive target affordability and increase impact Neighborhoods Market Rate (> 120/o AMI) incentives (e.g, deeper financial incentives, greater range of housing types, more regulatory waivers, etc.) to be made available in these areas than in other areas of the city. Publicly-Subsidized (< 30% AMI) Manufactured Housing Change the zoning of existing manufactured housing communities to be preserved to a single-use zone that only allows Affordable & Vulnerable Affordable (30-80°/o AMI) For Rent City of Portland Mfd Dwelling Planning and monitoring for potential displacement; may need additional incentives A16 Community manufactured housing communities. Consider lifting restrictions of stick-built homes in cooperatively-owned and other Workforce (80-120% AMI) For Sale Park Amendment DIRECT Early Gentrification and programs in active gentrification for higher impact Preservation Zone manufactured homes. Market Rate (> 120% AMI) Active Gentrification 1 Allow a land division where small lots or parcels are created below the standard lot/parcel size for dwelling units that are limited in Publicly-Subsidized (< 30% AMI) size. Calculate density differently for the dwelling units due to their limited size. Density example: ADUs, cottage, and middle housing have a medium impact on preventing A17 Small Dwelling Unit Affordable (30-80°/o AMI) For Rent City (INDIRECT) displacement,of Bend All with planningand continued monitoringof production; add incentives Developments a. Dwelling units 600 square feet or smaller: 0.25 of a dwelling unit. Workforce (80-120% AMI) For Saleand programs to target affordability and increase impact b. Dwelling units 601 to 1,200 square feet: 0.50 of a dwelling unit. Adopt increased density codes by right near transit stations, with higher levels of density near high capacity/high frequency ° Affordable & Vulnerable Increase Density near Publicly-Subsidized (< 30% AMI) stations, then stepping back into residential areas. Automatically upzone based on transportation corridor classifications; meaning Early Gentrification Planning for transit extensions, especially in areas of early gentrification, is Transit Stations and Affordable (30-80% AMI) For Rent A18 wider ROWs get more flexibility in land use by right. This will add some flexibility for new transit stops, including bus stops. Be o -- (INDIRECT) Active Gentrification important; add incentives and programs to target affordability and increase impact Regional Multi-use careful not to word the language so that people incorrectly assume that the density can only come after the transit has been put in Workforce (80-120% AMI) or aie� Late Gentrification for anti-displacement of transit-riding populations Trails 0 place. Market Rate (> 12 /o AMI) Exclusive High Density Requiring a certainportion of to-be-annexed land to include a percentage of high density. Be careful that this strategyis not used Affordable 30-80°/ AMI) For Rent Planningand continued monitoringfor housing add incentives for direct A19 Requirements for to-be- q g p g g ( o City of Newberg INDIRECT All needs; Annexed Land as a way for low density areas in high-infrastructure locations to shirk responsibility to upzone. Workforce (80-120% AMI) production of equity needs Market Rate (> 120% AMI) Providing a pre-approved set of plans for middle housing typologies (ex. Cottage clusters, townhomes, and SROs). The plans Publicly-Subsidized (< 30% AMI) Pre-Approved Plan Sets ADUs, cottage, and middle housing have a medium impact on preventing would be highly-efficient, designed for constrained lots and low cost solutions, and would allow for streamlined permitting. This Affordable (30-80°/o AMI) For Rent A20 for Middle Housing would helpattract developers that typically developonlysingle-family housingtoget into the missingmiddle housingproduction. Workforce 80-120% AMI) For Sale -- (INDIRECT) All displacement, with planning and continued monitoring of production; add incentives Typologies p Yp Y g Y ( and programs to target affordability and increase impact Consider partnering with a university, design institution, or developing a competition to produce plans. Market Rate (> 120% AMI) Provide a pre-approved set of plans for ADU designs (6-10 sizes/configurations) that, if chosen by a developer/owner, would lead ADUs have a medium impact on preventing displacement, with planning and A21 Pre-Approved Plan to automatic approvals and reduced permitting schedule. Plans would reduce the need for architectural costs and reduce barriers Affordable (30-80°0o AMI) For Rent __ (INDIRECT) All continued monitoring of production; add incentives and programs to target Sets for ADUs 0 to entry. Workforce (80-12 /o AMI) For Sale affordability and increase impact Market Rate (> 120/o AMI) Publicly-Subsidized (< 30% AMI) Mixed Housing Types in Affordable (30-80% AMI) For Rent Cottage and middle housing have a medium impact on preventing displacement, A22 Planned Unit Require or incentive a mix of housing types within Residential Planned Unit Developments (PUD). Workforce (80-120% AMI) For Sale City of Forest Grove INDIRECT All with planning and continued monitoring of production; add incentives and programs Developments Market Rate (> 120% AMI) to target affordability and increase impact PP 22-0005 ATTACHMENT B/PAGE 4 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 11 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Provide incentives in the development code to increase the number of units designed to meet Universal Design, Lifelong Housing Publicly-Subsidized (< 30% AMI) A23 Accessible Design Certification, and other similar standards. Examples of incentives include: expedited review and permittingprocessing, planningAffordable (30-80/° AMI) For Rent -- DIRECT All Directlyaddresses equitable housingneed g p p Workforce (80-120% AMI) For Sale q and building fee reductions, system development charge deferrals, density or building height bonuses. Market Rate (> 120% AMI) Many smaller housing formats are built on wheels, including tiny homes on wheels (THOWs), park model homes, and recreational vehicles (RVs). providing occupants significant flexibility in where they site their homes, yet many local codes prohibit the siting of Pubii-i—c11keirli o,i to 'VIOL AMI) Legalize Alternative these housingtypes outside of manufactured homeparks and RVparks. Permittingthese housingtypes, with appropriate Affordable (30-80% AMI) For Rent Tiny House on Wheels (THOWS) A24 Housing Types on yp yp siting o (INDIRECT) All -- Wheels and in Parks standards to ensure adequate public facilities access and life/safety, can provide additional permanent or interim housing options Workforce (80-120/° AMI) For Sale City of Portland outside of parks. Allowing broader siting of RV parks and amending standards to allow THOWs, park model homes, and other Market Rate (> 120% AMI) housing types on wheels can also provide additional siting opportunities. The Oregon Reach Code, Part II, defines a "tiny house" as a dwelling that is 400 square feet or less in floor area, excluding lofts. Legalize and Encourage While many (though not all)jurisdictions allow tiny homes to be sited as a primary or accessory dwelling, few encourage their I Publicly-Subsidized (< 3n°/ AMI) A25 Tiny Homes and development through regulatory incentives. Legalizing the siting of tiny homes as primary or accessory dwellings through the Affordable (30-80% AMI) For Rent __ (INDIRECT) All -- Villages removal of minimum unit size requirements can enable the development of this housing type. Jurisdictions can encourage the Workforce (80-120/° AMI) For Sale development of tiny houses and tiny house villages by providing regulatory incentives - such as reductions in required off-street iviarket Kate (> -1zu i° i- ivii) parking or open space - for units less than 400 SF in floor area Category B : Reduce Regulatory Impediments These strategies address known impediments to providing needed housing. These include but are not limited to process, permitting, and infrastructure impediments. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Remove or Reduce Removing parking requirements for residential uses provides the opportunity to reduce the amount of lot area used for pavement Publicly-Subsidized (< 30% AMI) and provides more space for housing and open space. This strategy offers greater flexibility to site housing and reduces costs Affordable (30-80% AMI) For Rent B01 Minimum Parking associated with providing parking. Allow developers to respond to market demands and transit access without having the burden Workforce (80-120% AMI) For Sale City of Tigard INDIRECT All -- Requirements of parking minimums. Consider removing parking requirements near transit or for affordable housing. Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) Remove Development Streamlining the conversion of larger single-family homes into multi-unit dwellings (e.g. duplex or triplex). This should be aligned ° Converstions that upgrade and upscale may displace through broader B02 Code Impediments for with reduced off-street parkingrequirements, so that conversion doesn't trigger the need to add additional driveways (or isn't Affordable (30-80/° AMI) For Rent Cityof Tigard (INDIRECT) Early Gentrification neighborhood changes; conversions that create more rental and moderate cost p q gg y Workforce (80-120% AMI) �aua g Active Gentrification g g ' Conversions halted by inability to add additional driveways). Market Rate (> 120% AMI) housing may stabilize Expedited permitting will help to reduce costs of development of Needed Housing as identified by the City. Consider projects with direct or indirect funding from local government as essential and projects with long term affordability covenants through tax Publicly-Subsidized (< 30% AMI) abatement or inclusionary requirements as high priority and/or only expedite housing according to the jurisdictions identified ° Expedite Permitting for Affordable (30-80% AMI) For Rent City of Portland (direct funding B03 Needed Housing Types needed housing types. Workforce (80-120% AMI) For Sale only) (INDIRECT) All -- Localgovernments might also consider assigning a designating staff to shepherd projects through the construction process in Market Rate (> 120% AMI) g g g g g p g order to expedite process. Publicly-Subsidized (< 30% AMI) B04 Expedite Lot Division for Expedite lot divisions and subdivisions for affordable housing projects Affordable (30-80% AMI) For Rent -- (DIRECT) All -- Affordable Housing =or Sale Publicly-Subsidized (< 30% AMI) Reduce Regulatory Remove barriers such as minimum street frontage, driveway requirements, etc., that impact minimum lot size/density during lot Affordable (30-80% AMI) For Rent Increased dendsity in gentrifying neighborhoods may not serve to stabilize; add B05 Barriers to Lot Division division. Preferablyallow by-right lot division upto max number of units allowed. Workforce 80-120% AMI) For Sale -- (INDIRECT) All incentives and programs to target affordabilityand increase impact ( p g g p Market Rate (> 120% AMI) In some cities, towns, and counties, the process associated with obtaining approval for new construction is so time-consuming or costly that it dampens the amount of new development and adds significantly to its costs. To help streamline the process, cities, Publicly-Subsidized (< 30% AMI) Streamline Permitting towns and counties can initiate a comprehensive review of all steps in the development approval process to identify the factors Affordable (30-80% AMI) For Rent Planning and continued monitoring of production; add incentives and programs to B06 Process that most significantly suppress new residential construction and redevelopment. With a clearerpicture of the obstacles, local Workforce (80-120% AMI) For Sale Local Housing Solutions INDIRECT All target affordabilityand increase impact g Y pp p g p leaders can then begin to assess whether they can be reduced or eliminated to stimulate development activity. In doing the Market Rate (> 120% AMI) comprehensive review, it is critical that actual timeline performance be evaluated not just the planned timeline. Flexible Regulatory Often, nonprofit housing developers and housing agencies face regulatory impediments to building affordable housing, which can Publicly-Subsidized (< 30% AMI) often derail projects. This strategy provides a flexible framework for delivery of affordable housing including but not limited to Affordable (30-80% AMI) For Rent Planning and continued monitoring of production and locations; add incentives and B07 Concessions for reduced minimum setbacks, height bonuses, and/or allowing for flexibility in how units are delivered. This strategy is not intended For Sale Morrow County HNA, 2017 (DIRECT) All programs to increase impact and avoid clustering Affordable Housing to allow for a lower quality for affordable housing buildings. PP 22-0005 ATTACHMENT B/PAGE 5 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 12 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Waive Off-Site Waive infrastructure build-out requirements for infill affordable or needed housing projects constructed in neighborhoods without a Publicly-Subsidized (< 30% AMI) Infrastructure network of those amenities currently. Example: Waive requirements for curb, gutter and sidewalk build-out on the lot if it is Affordable (30-80% AMI) For Rent Clackamas CountyHousingPlanningand continued monitoringofproduction; add incentives and programs to B08 Requirements for p q o (INDIRECT) All p g Needed or Affordable located in an area without either connecting curb, gutter, and sidewalk currently or viable plans for funding infrastructure Workforce (80-120% AMI) For Sale Report target affordability and increase impact Housing construction within the next decade. This is especially relevant in smaller, more rural locations. Market Rate (> 120% AMI) Programming work in a Capital Improvements Programming (CIP) so that projects are constructed sooner to support development Publicly-Subsidized (< 30% AMI) Capital Improvements of middle housing or to open up more land in an Urban Growth Boundary (UGB) for development of middle housing. Coordinate Affordable (30-80% AMI) For Rent B09 Pro rammin (CIP) housingplanningwith CIP work toprioritize those projects that would support development (e.g. new water line, sewer pumping Workforce (80-120% AMI) For Sale -- INDIRECT All -- Programming p 1 pp p p p g station). If the UGB is amended or the premises on which the CIP were based changed substantially, the CIP should be revised. Market Rate (> 120% AMI) sewer, and transportation PFPs and gettingcapital improvement projects (CIP) built so that costs to developon Publicly-Subsidized (< 30% AMI) Completing water, p p p p J Affordable (30-80% AMI) For Rent City of Tigard B10 Public Facility Planning land zoned for needed housing can be further anticipated and supported. In addition, public utilities planning also allows for more INDIRECT All -- unit capacity, especially in areas that are upzoned for denser housing. Workforce (80-120% AMI) For Sale City of Bend Market Rate (> 120% AMI) Change the culture of Planning / Development Services departments to have a pro-housing agenda for both rental and homeownership. Supplement with fair housing education and education on the supply and demand impact on housing prices. The Publicly-Subsidized (< 30% AMI) State could support jurisdictions in this effort by providing an incentive (e.g. funding set-aside) for jurisdictions that adopt Affordable (30-80% AMI) For Rent A more focused agenda on afffordable housing will address NIMBY and stigma B11 Pro-Housing Agenda aggressive pro-housingpolicies. In the State of California housingfunds areprioritized for cities that adopt pro-housingpolicies. Workforce (80-120% AMI) For Sale -- INDIRECT All issues with rental housing, affordable housing, and protected classes gg p g, g� Though it may be counterintuitive, since this allows anti-housing cities to avoid housing altogether. Alternatively, the State of Market Rate (> 120% AMI) Oregon could consider a stick rather than carrot approach (e.g. withholding highway funds). Change the culture of Planning / Development Services departments to have a pro Affordable Housing agenda for both rental and homeownership. Supplement with fair housing education and education on the supply and demand impact on housing prices. The Publicly-Subsidized (< 30% AMI) A pro-affordable housing agenda does not create housing directly; but it is an Pro Affordable Housing State could support jurisdictions in this effort by providing an incentive (e.g. funding set-aside) for jurisdictions that adopt Affordable (30-80% AMI) For Rent important component of planning to ensure that equity is achieved. Including Fair B12 Agenda aggressivepro Affordable Housingpolicies. This agenda should include aplan to ensure that affordable housingis not For Sale -- (DIRECT) All Housingand addressingprotected classes such as race/ethnicityand national 9 9g 9 � suppressed in single-family zones or in wealthier communities. As part of this, encourage departments to look closely at how origin will further target this strategy to equitable outcomes existing approaches may inadvertently favor one type of tenure over another. Align Bike Parking Affordable (30-80% AMI) For Rent B13 Requirements with Require bicycle parking requirements more in line with actual use. Example: No more than 1-1.5 bike parking stalls per unit. -- INDIRECT All -- Workforce (80-120% AMI) Actual Use Market Rate (> 120% AMI) Amend the comprehensive plan to explicitly make Affirmatively Furthering Fair Housing a Housing Policy. Example below, based on federal guidance on affirmatively furthering fair housing and current state protected classes. Jurisdictions may add additional protected classes, such as ancestry, ethnicity, or occupation. Additionally, a jurisdiction could create an Analyis of Impediments to Fair Housing (Al), even when not required, and conduct fair housing training for Council, Planning Commission, and other relevant Adopt Affirmatively policymakers. Jurisdictions would work to make known evidence and best practices in planning, to reverse discrimination and Publicly-Subsidized (< 30% AMI) addressing affordability and equitable access for all people; as well as considering B14 Furthering Fair Housing exclusion as well as concentrations of wealth, a required aspect of the comprehensive plan process. Affordable (30-80% AMI) For Rent -- (DIRECT) All neighborhood clustering and neighborhood change as part of access to as a Housing Policy in Workforce (80-120% AMI) For Sale opportunity. It is an important undergirding for housing planning and directing Comprehensive Plan Housing Policy x: Affirmatively Furthering Fair Housing Market Rate (> 120% AMI) resources; but does not create housing [Jurisdiction] affirmatively furthers access to decent, affordable housing with convenient access to the services and destinations Oregonians need to thrive without regard to their race, color, religion, national origin, sex, familial status, mental or physical disability, source of legally-derived income, marital status, sexual orientation or gender identity. Reduce the Power of Many jurisdictions give communities/neighborhoods too much veto power on both zoning policy, and particular project proposals Publicly-Subsidized (< 30% AMI) to keep others who they don't approve of from moving in. Dedicate funds to educate citizens on poverty, exclusion, and racial AMI) For Rent removingpolicies ais a stronger and more direct impact than educating NIMBYism to stop, Affordable (30-80% g p B15 slow, change, or reduce dynamics. Remove policies that allow neighborhood opposition to evidence based zoning proposals and individual projects. Workforce (80-120% AMI) For Sale -- (DIRECT) All communities. affordable housing Decisions about what kind and how much housing goes where it needs to be data-driven and focused on equitable outcomes Market Rate (> 120% AMI) instead of the best outcomes for those with the most money and/or privilege. Holistic Planning to Geography is often at odds with social equity; natural beauty is often in wealthy neighborhoods, as are historic buildings, allowing Publicly-Subsidized (< 30% AMI) them to exclude new development and affordable housing. Develop a targeted plan to distribute density within the jurisdiction Affordable (30-80% AMI) For Rent Planning and continued monitoring of production; add incentives and programs to B16 Distribute New Density more equitably to areas with quality schools, access to natural resources etc. Additionally, work to distribute transit equitably to Workforce (80-120% AMI) For Sale -- (INDIRECT) All target affordability and increase impact More Equitably ensure that exclusionary neighborhoods don't remain that way because they don't offer transit for higher density housing. Market Rate (> 120% AMI) Reduce on-site Publicly-Subsidized (< 30% AMI) Remove or reduce requirements for on-site common/active open space. Instead, ensure that adopted Parks plans fully consider Affordable (30-80% AMI) For Rent 'affordable & Vulnerable Take care with neighborhoods that are seeking more holistic revitalization to B17 Common/Active Open the needs of everyneighborhood, and that the jurisdiction is activelyworkingtoward satisfying those needs. Workforce 80-120% AMI) For Sale -- INDIRECT EarlyGentrification balance non-housingneeds with housingproduction Space Requirements g J y g ( ° Market Rate (> 120/° AMI) Jurisdictions would develop a comprehensive review of the impediments to the development of homeownership opportunities and actionable steps to remove those impediments. ° To ensure access to homeownership to under-represented groups, pair Prioritize Home Affordable (30-80% AMI) 'or Rent B18 ° -- (INDIRECT) All development of owner-occupied housing types with homebuyer education, financial Ownership Note:An important impediment to condominium development is the risk associated with the current condominium law in Oregon. A Workforce (80-120% AMI) For Sale revamp of this law is needed to increase homeownership opportunities that are smaller in size. This would require action at the Market Rate (> 120% AMI) assistance like downpayments and low-cost loans, and affirmative marketing state level. PP 22-0005 ATTACHMENT B/PAGE 6 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 13 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Add a section to the city's development application asking developers how they decided on their development program and which Survey Applicants on public incentives were part of the consideration. This would lead to better information about how to tailor city strategies toward Publicly-Subsidized (< 30% AMI) B19 Development Program production. An alternative to requiring cities to collect this info, is to consider this approach as part of a production strategy. To be Affordable (30-80% AMI) For Rent Housing Production Strategy (INDIRECT) All -- Decision-Making a strategy it needs additional action like logging and making publicly available the aggregated survey information on the city's Workforce (80-120% AMI) For Sale Technical Advisory Committee housing/development/planning webpage or similar. The information could be collected on a form separate from the development Market Rate (> 120% AMI) application, so it is clear that the additional information is not part of the permit decision. Category C : Financial Incentives These are a list of financial incentives that cities can offer to developers to encourage them to produce needed housing. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Reduce or Exempt Publicly-Subsidized (< 30% AMI) C01 SDCs for Needed Reducing, deferring, and/or financing System Development Charges (SDCs) at a low interest rate for needed housing types. This Affordable (30-80% AMI) For Rent Cit of Ti and INDIRECT All Increase impacts by focusing SDC incentives on needed housing types from the Housing strategy reduces development costs. Workforce (80-120% AMI) For Sale y g ( ) equity housing needs analysis Market Rate (> 120/° AMI) r Updating SDC fee schedule so that is tied to dwelling size. This strategy ensures that smaller dwelling sizes in single and multi- Publirly-Si ih¢irli7Prl o fin% qMl) CO2 Modify SDC fee family housing are not disproportionately burdened by fees and therefore encouraged. Consider per square foot fees rather than Affordable (30-80/°° AMI) For Rent City of Florence (INDIRECT) All Increase impacts by focusing SDC incentives on needed housing types from the schedules per dwelling. Workforce (80-120% AMI) For Sale equity housing needs analysis Market Rate (> 120% AMI) Reduce or Exempt Waivers/reductions of SDCS for ADU production in order to improve the feasibility of the development. Create a model ordinance For Rent In strong market, this can produce more housing units; ADUs have medium anti- 0O3 City of Portland (INDIRECT) displacement impact, can be increased with programs to target affordability and SDCs for ADUs for the waiver, or deferment, of SDCs. Scale SDCs based on size, resource efficiency, and access to alternative transportation. For Sale equity Incentivize Publicly-Subsidized (< 30% AMI) Give Bonus Density Incentives for manufactured and factory built housing. Consider tying bonus to modular housing that Affordable (30-80% AMI) For Rent C04 Manufactured and Metro KingRMHP (DIRECT) All -- Modular Housing demonstrates if housing meets affordability targets of below 120% AMI. Workforce (80-120% AMI) For Sale County Market Rate (> 120% AMI) Waive or Finance Park A policy providing for the exemption (preferred) or financing park impact fees (helpful) for affordable housing ensures a mix of For Rent Tualatin Hills Park & C05 Impact Fees for affordable housing. Financing the fee while still collecting can mitigate the cost of the fee to coincide with the available cash flow Recreation District (DIRECT) All Reduced fees have medium impacts on displacement Affordable Housing of the affordable housing. Market Rate (> 120% AMI) Publicly Funded Publicly-Subsidized (< 30% AMI) C06 Infrastructure Fund off-site improvements for workforce or affordable housing; e.g. street intersection improvements triggered bydevelopment. Affordable (30-80% AMI) For Rent p p gg p __ (DIRECT) All Reduced fees have medium impacts on displacement Workforce (80-120% AMI) ---or Sale Improvements ° Market Rate (> 120/° AMI) Publicly-Subsidized (< 30% AMI) C07 Reconsider Applying If there are appropriate levels of parks and open space near the project, these impact fees should not be charged or should be Affordable (30-80% AMI) For Rent -- (INDIRECT) Reduced fees have medium impacts on displacement in strong markets; make more impact by Park SDCs assessed at a much lower rate. They are not general funds to be allocated without a nexus to the development. Workforce (80-120% AMI) For Sale targeting to affordable development Market Rate (> 120% AMI) Tie transportation SDCs to the number of parking spaces, as the number of parking spaces is a more accurate predictor of the Publicly-Subsidized (0 30% AMI) C08 Transportation SDCs number of trips that will start or end at everydevelopment. Bytransportation costs directlyto vehicle storage, the system will Affordable (30-80% AMI) For Rent -- Early Gentrification Reduced fees have medium impacts on displacement in strong markets; make more impact by Tied to Parking p ptying p g y Workforce (80-120% AMI) For Sale (INDIRECT) Active Gentrification targeting to affordable development both be assessing transportation impacts fairly and encouraging alternate modes of transportation. Market Rate (> 120% AMI) Category D : Financial Resources These are a list of resources or programs at the local, state, and federal level that can provide funding for housing projects, primarily subsidized affordable housing projects. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact CDBG Grants are federal funds set aside in the form of grants to be used to meet national objectives: direct benefit for low and City of Tigard City of Eugene moderate income households; benefit to predominantly low income areas; elimination of slums and blight. Eligible activities City of Beaverton include public works infrastructure, community facilities, new housing development, housing rehabilitation, and public services Publicly-Subsidized (< 30% AMI) Community ° City of Hillsboro D01 Development Block (counselling, social services & microenterprise training, including short-term emergency rent assistance). Eligibility is based upon Affordable (30-80/° AMI) For Rent City of Gresham DIRECT Affordable & Vulnerable -- Grant (CDBG) the levels of low- and moderate-income families that may benefit from services provided by the eligible projects. While Cities can City of Portland rhnnca not to annlw fnr (`r1R(, rnntrnl of‘n,hathar nr not thaw raraiwa lr1R(, is I iltimatalw at tha rarlaral lawal and !ilea tha Ctata of PP 22-0005 ATTACHMENT B/PAGE 7 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 14 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact V I IV V J V I IVl lV LI VV'y IVI V LJ LJ V, VV I III VI VI ""I IV LI IVI VI I IV l LI IVy I V VV I V V V LJ LJV I lA I LII I ILl.VIy Ul LI IV I VVA VI LII IV V VI CAI IV III.V LI IV V LLV.l' VI City of Bend Oregon, these funds can be used for things that have little to do with housing, so may have limited impact. A better gauge may be City of Redmond HOW cities use their CDBG; for housing benefit or other. State of Oregon Publicly-Subsidized (< 30(% AMI)Federal tax provision that encourages private investment in affordable rental housing by providing qualified investors with a dollar- Early Gentrification In strong markets, LIHTC can be used to create mixed-income housing that provides D02 Low Income Housing for-dollar reduction in federal income tax liability in exchange for investment in qualifying new construction and rehabilitation Affordable (30-80% AMI) For Rent Local Housing Solutions DIRECT Active Gentrification cross-subsidy to affordable units; LIHTC can also be combined with additional Tax Credit (LIHTC) LIHTCs mayalso be paired with Tax Exempt Revenue Bonds. vvorKtorce (�u- �Lu�° AIVII) -or Sale Late Gentrification programs to extend the affordabilityperiod for the housing projects. p Market Rate (> 120% AMI) p g Housing Trust Funds are a flexible source of funding that can be used to support a variety of affordable housing activities. Because they are created and administered at the city, county, region, or state level, housing trust funds are not subject to the Publicly-Subsidized (< 30% AMI) restrictions of federal subsidy programs and therefore can be designed specifically to address local priorities and needs. The Affordable (30-80% AMI) For Rent D03 Housing Trust Funds entity administering the fund determines eligible activities, which can include anything from emergency rent assistance for families Local Housing Solutions DIRECT All -- facing the threat of eviction or homelessness to gap financing for new construction of affordable housing to repairs for older homeowners. Operating Subsidies for Publicly-Subsidized (0 30% AMI) D04 Affordable Housing Operating subsidies are payments made annually (or more frequently) to owners of affordable housing developments that make Affordable (30-80% AMI) For Rent Local Housing Solutions DIRECT All -- Developments the housing more affordable by covering a portion of the ongoing costs of operating the development. vvUlK Ul :C IOU- ILu o° r-ivn) -or Sale I Market Rate (> 120/o AMI) • Employer-assisted housing programs provide a channel through which employers can help their employees with the cost of Publicly-Subsidized (< 30% AMI) Employer - Assisted owning or renting a home, typically in neighborhoods close to the workplace. Assistance may be provided in a variety of ways, Affordable (30-80% AMI) For Rent Early Gentrification Employer-assisted housing in areas near transit or near workplaces can support D05 HousingPrograms includingthrough down paymentgrants or loans that are forgiven over aperiod of employment, homeownershipcounselingand Workforce (80-120% AMI) For Sale Local Housing Solutions (INDIRECT) Active Gentriciation stabilityand equity, and contribute to a 'pro-housing agenda'. g g p Y g� p g g education, rental subsidies and, less commonly, direct investment in the construction of rental housing. HOME is a federal program established by Congress in 1990 that is designed to increase affordable housing for low- and very low- Publicly-Subsidized (< 30% AMI) income families and individuals. All States and participating jurisdictions receive HOME funds from HUD each year, and may Affordable (30-80% AMI) For Rent D06 HOME Program spend HOME on rental assistance, assistance to homebuyers, new construction, rehabilitation, improvements, demolition, y y V,,,,U,VV d0-120�°° �,v„ -i -or Sale -- DIRECT All -- relocation, and limited administrative costs. Market Rate (> 120% AMI) Local Housing Solutions Dedicated Revenue A dedicated revenue source for affordable housing provides an ongoing committed stream of revenue for affordable housing, often Publicly-Subsidized (< 30% AMI) D07 Sources for Affordable deposited into a Housing Trust Fund. This can be helpful in increasing the total funding available for affordable housing. The fund Affordable (30-80% AMI) For Rent DIRECT All -- can receive its sources from: Transient Lodging Taxes collected from Short Term Rentals, developer fee and real estate transfer For Sale City of Portland Housing Housing taxes (not constitutional in Oregon). Investment Fund Cities, towns, and counties establish demolition taxes and condo conversion fees as a way to generate revenue and replace Publicly-Subsidized (< 30% AMI) affordable housing lost to these activities. The proceeds from both demolition taxes and condo conversion fees are typically ° Active Gentrification Medium impacts to prevent displacement in strong market with lots of demolition D08 Demolition Taxes deposited in a Housing Trust Fund to support affordable housing activities. To ensure that a demolition tax on residential Affordable (30-80/°° AMI) For Rent Local Housing Solutions INDIRECT Late Gentrification and conversion, with impacts in the short term and potential to fund housing. Plan development does not deter needed redevelopment - this strategy should only be applied if the housing replacement is 1:1. If the Workforce (80-120% AMI) For Sale Exclusive and monitor production vs. needs proposed development is more dense than the original structure, there should not be a demolition tax. Market Rate (> 120/° AMI) Publicly-Subsidized (< 30% AMI) Construction Excise Tax A Construction Excise Tax (CET) is a tax on construction projects that can be used to fund affordable housing. According to state Affordable (30-80% AMI) For Rent City of Portland D09 (CET) statutes, the tax may be imposed on improvements to real property that result in a new structure or additional square footage in an For Sale City of Eugene DIRECT All Plan and monitor production vs. needs existing structure. City of Sisters The TIF set-aside can fund housing; but it is a financing mechanism that relies on Create a TIF set-aside for affordable housing development programs within designated Urban Renewal Areas (URAs). Target Publicly-Subsidized (< 30% AMI) overall property values increasing to create the increment. TIF is associated with Tax Increment Affordable & Vulnerable could be to begin setting aside funds for affordable housing projects as a medium-term action, over the next 5 years or so. For Affordable (30-80% AMI) For Rent gentrification and displacement, especially for people of color. This may be D10 Financing (TIF) Set- example: Portland CityCouncil designates 45% of thegross amount of TIF for designated housingpurposes (rental housingfor I .,Vorkforce (80-120% AMI, For Sale City of Portland DIRECT Early Gentrification exacerbated byOregon's restriction of TIF funds to physical development; add Aside p g g p p Active Gentrification g p y p ' households under 60% of Area Median Income (AMI) and homeownership for households under 80% of AMI. Market Rate (> 120% AMI) community and economic development activities for low-income and POC to support their staying in place as neighborhoods improve Public Housing Authorities have the ability to attach up to 20% of their voucher assistance to specific housing units for each low income housing project, up to 25% of any single project. Project-Based Rental Assistance (PBRA) vouchers provide rental Publicly-Subsidized (< 30% AMI) Flexible Use of Housing assistance for eligible individuals and families who occupy specific housing units managed by private owners who have entered Affordable (30-80% AMI) For Rent D11 Choice Vouchers into agreements with a housingagency. The household pays an established amount to the owner each month (typicallyLocal Housing Solutions DIRECT All -- g g Y� p Y approximately 30% of monthly income) and the housing agency pays the balance of the rent due. If public housing authorities include homeownership in their administrative plan, housing vouchers may also be used to facilitate low income homeownership. Vouchers that target renters at the 60-80% AMI who are often left out of the housing funded by bond funds and other public sources that are focused on lower income levels. Housing Authorities use affordable housing dollars and issue vouchers that are Affordable (30-80% AMI) For Rent D12 Targeted Vouchers good for one year and pay any landlord the difference between what the tenant can afford and market rent. This takes the -- DIRECT All -- reporting burden off the landlord and essentially allows any existing unit to be affordable. Each year the tenant would have to o� For Sale prove to the Housing Authority if they were still income qualified and if not. Market Rate (> 120/o AMI) PP 22-0005 ATTACHMENT B/PAGE 8 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 15 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Publicly-Subsidized (< 30% AMI) Low-Interest Loans / Housing Repair and Weatherization Assistance for low and moderate income households may be capitalized by Tax Increment Affordable (30-80% AMI) For Rent D13 Revolving Loan Fund Financing (TIF), Community Development Block Grant (CBDG) Funds, or local Housing Trust Funds. For Sale City of Portland DIRECT All -- Eviction Prevention Programs provide financial assistance to help renters facing eviction stay in their homes. These programs are Publicly-Subsidized (< 30% AMI) Affordable & Vulnerable generally designed for families who are being evicted due to nonpayment of rent during or following an unforeseen crisis, such as Eviction prevention programs have high anti-displacement impacts, in the short- Eviction Prevention job loss or serious illness, rather than those who face more persistent affordability challenges. Jurisdictions may be interested in Affordable (30-80% AMI) For Rent Local Housing Solutions DIRECT Early Gentrification term, and across all markets. They are especially useful in strong markets where Programs investingin eviction prevention to address concerns about displacement of low-income renters and also to avoid or reduce use of vvorKrorce �tsu- i�v i° Hivii� -or aie5 Active Gentrification there are economic incentives to evict. other more costly local services, like homeless shelters. p I Market Rate (> 120% AMI) Late Gentrification Bond - for Resident Publicly-Subsidized (< 30% AMI) Limited Tax General Obligation Bond that creates a funding source for supportive housing services, such as access to health care, D15 Support Services and mental health, and other social services that better support and stabilize residents who face complex challenges and will benefit Affordable (30-80% AMI) For Rent Oregon Metro DIRECT All -- Permanent Supportive from affordable housing programs. City of Portland Housing Services Following the passage of Measure 102 Oregon local governments, including cities and counties, can now issue voter-approved general obligation bonds to provide direct funding for construction and other capital costs associated with the development and Publicly-Subsidized (< 30% AMI) Oregon Metro General Obligation construction of affordable housing. These funds can be loaned or granted to both public and privately owned affordable housing Affordable (30-80% AMI) For Rent City of Portland D16 Bonds — for Affordable projects. "Affordability" is required to be determined by voters and each jurisdiction, and can be above or below minimum DIRECT All -- Housing affordability levels established for the federal LIHTC program and other established federal and State affordable housing finance I V V"'"""`'C ko"- 'L"'° ~'V") or Sale programs, defining affordability by reference to Area Median Income (AMI) as established by HUD. The bonds could be paired Market Rate (> 120% AMI) with other financing such as Low Income Housing Tax Credits, or could be used for homeownership opportunities. I Oregon Measure 102 Use IHBG funds for Publicly-Subsidized (< 30% AMI) Mixing of Indian Housing Block Grants (IHBG), typically used for housing for Native Americans on reservation land, with other Affordable (30-80% AMI) For Rent NAYA and CDP and Confederate'' D17 Urban Native DIRECT All -- traditional affordable housing funding sources allows preference for Native members in urban affordable housing projects. Tribes of the Siletz Americans Publicly-Subsidized (< 30% AMI) Weatherization Funds Affordable &Vulnerable Weatherization funds can address displacement by improving habitability in low-income Use weatherization funds administered by statewide network of Community Action Agencies to preserve aging housing stock Affordable (30-80% AMI) For Rent D18 through Community ° OHCS Weatherization Assistance DIRECT Early Gentrification neighborhoods; and by reducing energy costs and needs for expensive repairs that may displace occupied by income-qualified residents. Workforce (80-120% AMI, :or Sale Action Agencies Market Rate (> 120% AMI) Active Gentrification owners in gentrifying neighborhoods. Publicly-Subsidized (< 30% AMI) Planning ahead for affordability in TOD is important for not displacing households who are most Transit-Oriented Provide financial incentives to developers to create transit-oriented communities. Funding can be used for site acquisition, Affordable (30-80% AMI) For Rent D19 Development Grants infrastructure projects and residential/mixed-use projects. Workforce (80-120% AMI) Oregon Metro TOD Program (INDIRECT) All likely to use transit (low-mod income, renters, POC, and immigrants); making it an effective Market Rate (> 120% AMI) strategy for equity and to support multi-modal transportation. Local Innovation and The Local Innovation and Fast Track (LIFT) Housing Program's objective is to build new affordable housing for low income Publicly-Subsidized (< 30% AMI) Fast Track (LIFT) households, especially families. Funds are available for Serving Historically Underserved Communities, Rural and Urban Set- Affordable (30-80% AMI) For Rent OHCS Housing Development D20 Program for Affordable DIRECT All -- asides, Urban Communities, Service to Communities of Color, and Rural Communities. Available for affordable homeownership Jorkforce (80-120% AMI, For Sale Program Rental Housing units (below 80% AMI). Market Rate (> 120% AMI) Development Publicly-Subsidized (< 30% AMI) D21 Mental Health Trust Administered by the Oregon Health Authority for capital construction costs. Affordable (30-80% AMI) For Rent -- DIRECT All -- Fund Awards Publicly-Subsidized (< 30% AMI) Examples: Meyer Memorial D22 Foundations Awards Local, regional, and national foundations provide both capital funding and program funding for a wide variety of innovative housing Affordable (30-80% AMI) For Rent Trust and Oregon Community DIRECT All -- models and programs. Workforce (80-120% AMI) For Sale Foundation (OCF) Market Rate (> 120% AMI) State of Oregon to offer non-recourse low-interest debt that can be used to fund workforce or affordable housing. This could be provided through an existing relationship like Network for Oregon Affordable Housing (NOAH). This would be a valuable tool for D23 State of Oregon Debt providing housing in rural communities, where conventional debt funding may not be readily available. Affordable (30-80% AMI) For Rent __ DIRECT All -- Workforce (80-120% AMI) For Sale Note: This strategy has been suggested by the housing development community, but programs are not yet in place in the State of Oregon. r State of Oregon to provide some form of collateralization to support private debt placement for a workforce or affordable housing project. For example, the State could provide Letters of Credit and/or Guarantee on behalf of the developer to the private lender. State of Oregon Debt This would be a valuable tool for providing housing in rural communities, where conventional debt funding may be hesitant to Affordable (30-80% AMI) For Rent D24 -- DIRECT All -- Support invest without substantial backing that the State could provide. Workforce (80-120% AMI) For Sale Note: This strategy has been suggested by the housing development community, but programs are not yet in place in the State of Oregon. PP 22-0005 ATTACHMENT B/PAGE 9 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 16 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact I Oregon State sales tax on luxury items, 2nd homes, etc. dedicated to providing funds for affordable housing funds. Publicly-Subsidized (< 30% AMI) D25 Luxury Tax for Equitable Affordable (30-80% AMI) For Rent __ DIRECT All -- Housing Note: This strategy has been suggested by the housing development community, but programs are not yet in place in the State of Workforce (80-120% AMI) For Sale Oregon. Publicly-Subsidized (< 30% AMI) Reallocate Health and Because healthy housing makes a huge difference in health care, public safety, and other costs, identify paths to redirect budgets Affordable (30-80% AMI) For Rent D26 Public Safety from those sectors toward housing construction funds and supporting services. Use advanced modeling projections and adjust as -- DIRECT All -- workforce (80-120% AMI, :or Sale Resources to Housing needed over time. Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) A land tax promotes equity among homeowners, if properly calibrated and incentives more D27 Georgist Land Tax Generate tax revenue for affordable housing by reducing the gains accrued from public investments that are capitalized into Affordable (30-80% AMI) For Rent -- DIRECT All development of housing supply. This requires state law changes. private value. https://www.pdx.edu/news/psu-study-portland-land-value-tax-would-improve-equity- homeowners-incentivize-development Category E : Tax Exemption and Abatement These are a list of tax exemption and abatement programs that are intended to encourage developers to produce housing. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (If available) Equity Typology Mitigating Measures Impact Nonprofit Low-Income This tool can provide a simplified way for affordable housing owned and operated by a nonprofit (as well as land held by a Publicly-Subsidized (0 30% AMI) nonprofit for future affordable housing development) or Community Land Trusts (at least in land value) to qualify for a property tax Affordable (30-80% AMI) For Rent See Oregon Revised Statute E01 Rental Housing DIRECT Affordable & Vulnerable -- exemption. Work should be done to make it easier for projects/land to qualify; minimizing the number of taxing authorities needed Chapter 307.540 Exemption to grant an approval. Property Tax Exemption Create a Property Tax Exemption for affordable housing that is tied to level of affordability instead of the ownership structure. For Publicly-Subsidized (< 30% AMI) example, grant a property tax exemption for affordable housing that serves households making less than 60/° of AMI at initial Take care to include homebuyer and post-purchase financial education to avoid loss for Affordable Housing Affordable (30-80°/° AMI) For Rent Early Gentrificatior E02 Tied to Level of lease up. Don't tie the property tax exemption to ownership (LLC, non-profit, housing authority) and only require income Workforce (80-120% AMI) :or Sale -- (DIRECT) Active Gentrificatio of assets in gentrifying neighborhoods, where owners can be pressured to sell or to Affordability verification at the beginning of a residents tenancy. The property should still get the exemption even if the household increases Market Rate (> 120% AMI) take out refinance loans. income after their initial lease up so they can build assets in place. Authorized by Oregon Revised Statute, 307.841. Partial property tax exemption program on improvements for new mixed use development. To qualify, a project must have City of Hillsboro Vertical Housing improved, leasable, non-residential development on the ground floor and residential development on the floors above. A partial City of Beaverton For Rent Active Gentrificatio Calibrate incentives to needed housing types, e.g., affordability levels. Incentives for E03 Development Zone Tax abatement on land value is allowed for each equalized floor of affordable housing. This abatement could be made better by an ° City of Milwaukie DIRECT Abatement adjustment to the floor equalization formula - right now, there is a 20% abatementper equalized floor, but if theproject ends upWorkforce (80-120/o AMI) Oregon CityLate Gentrificatior inclusion of affordable units work best in strong markets. q g q Market Rate (> 120% AMI) g being 3.8 equalized floors it only gets 3 floors worth of the abatement rather than an apportioned abatement. City of Gresham City of Tigard City of Wood Village City of Forest Grove Multiple Unit Propert ublicly-Subsidized (< 30% /-.. , y This strategy can be used to incentivize production of multifamily housing with particular features or at particular price points by For Rent See Oregon Revised Statute, Active Gentrification Calibrate incentives to needed housing types, e.g., affordability levels. Incentives for inclusion of E04 Tax Exemption offerin qualifying developments apartial property tax exemption over the course of severalyears. Workforce (80-120% AMI) :or Sale Chapter 307.600 (INDIRECT) Late Gentrification affordable units work best in strongmarkets. (MUPTE) g q Y g p p p Y p I Market Rate (> 120% AMI) Authorized by Oregon Revised Statute, Chapter 307.600 Multiple Unit Limited Under the Multiple-Unit Limited Tax Exemption (MULTE) Program, multiple-unit projects receive a ten-year property tax For Rent Active Gentrification Calibrate incentives to needed housingtypes, e.g., affordabilitylevels. Incentives for inclusion of E05 Tax Exemption p p g p p Y p p Y (INDIRECT) yp g' p exemption on structural improvements to the property as long as program requirements are met. Workforce (80-120% AMI) Multiple Unit Limited Tax Late Gentrification affordable units work best in strong markets. (MULTE) Market Rate (> 120% AMI) Exemption (MULTE) - City of Portland Authorized by Oregon Revised Homebuyer Opportunity ° Statute, 307.651. E06 Limited Tax Exemption Under the HOLTE Program, single-unit homes receive a ten-year property tax exemption on structural improvements to the home Affordable (30-80% AMI) (INDIRECT) Affordable & Vulnerable Calibrate incentives to needed housing types, e.g., affordability levels. Incentives for inclusion of Program (HOLTE) as long as the property and owner remain eligible per program requirements. Workforce (80-120% AMI) For Sale Homebuyer Opportunity Limited affordable units work best in strong markets. Market Rate (> 120% AMI) Tax Exemption (HOLTE) - City of Portland Publicly-Subsidized (< 30% AMI) E07 Homestead Tax Consider allowing Homestead Tax on second homes to support development of affordable housing. Affordable (30-80% AMI) For Rent -- (DIRECT) Affordable & Vulnerable -- Property taxes are based on property values and so can go up regardless of the taxpayers' ability to pay. In the case of PP 22-0005 ATTACHMENT B/PAGE 10 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 17 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact I lull IGUVVI!GI J, I IJII Iy NI UpGI Ly LClAGJ I...QI I LIG QII UUJLCIL.IG LU I IUUJII IY CIIIUIUCIAJIIILy Qllu J LQLJIIILy. 1% LIJUI UJGU III Cl I IUI I ILJGI UI JUI IJUIL.UUI IJ Publicly-Subsidized (< 30% AMI) Property Tax Relief for for mitigating these effects on those with limited incomes is by capping the amount of property tax that homeowners have to pay ° Active Gentrification Affordable (30-80% AMI) For Rent Supporiting owners to stay in place as housing markets heat up is an important preservation E08 Income-Qualified as a share of their income. Some jurisdictions also provide relief to lower-income renters by treating some portion of their rent as Local Housing Solutions (DIRECT) Late Gentrification Homeowners attributable to property taxes and then providing an income tax credit to offset the increase in taxes. In addition to basing the VVorktorce (8U-12U"/o HMI) For Sale Exclusive strategy; it does not maintain the affordability of the unit at stake. benefit on income, eligibility for caps can also be restricted to specific populations such as seniors, disabled persons, and/or Market Rate (> 120% AMI) veterans. Qualified Opportunity Zones (QOZ) were created by the 2017 Tax Cuts and Jobs Act. These zones are designed to spur economic Affordable &Vulnerable The OZ program has been found to be generally poorly targeted and monitored; as with any E09 Investing into Federal development and job creation in distressed communities throughout the country and U.S. possessions by providing tax benefits to Affordable (30-80% AMI) For Rent Opportunity Zones FAQ(IRS) INDIRECT EarlyGentrification investment incentive it is important to include stronganti-displacement protections for Opportunity Zones (OZ) investors who invest eligible capital into these communities. Taxpayers may defer tax on eligible capital gains by making an Workforce (80-120% AMI) p p appropriate investment in a Qualified Opportunity Fund and meeting other requirements. Market Rate (> 120% AMI) Active Gentrification vulnerable residents and ensure their inclusion in economic opportunities. I Allow housing to be built and operated at market rate while allowing developers to choose a path that maintains or reduces rents Publicly-Subsidized (0 30% AMI) Delayed Tax ° Affordable (30-80% AMI) For Rent El Exemptions over time. Once the property falls below 80%AMI (but maintains HUD quality standards), tax exemptions would kick in. This Workforce (80-120% AMI) =or Sale -- (INDIRECT) All -- could be an alternative to upfront incentive dollars, SDC reductions, etc for providing affordable housing. Market Rate (> 120% AMI) I Category F : Land, Acquisition, Lease, and Partnerships These are strategies that secure land for needed housing, unlock the value of land for housing, and/or create partnerships that will catalyze housing developments. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Public purchasing of vacant/under-utilized sites of land in order to save for future affordable housing development. House Bill 2003, section 15 supports land banking: Publicly-Subsidized (< 30% AMI) Affordable (30-80% AMI) For Rent Active Gentrification Planning ahead for areas of public investment wth land banking can support affordable housing F01 Land Banking Workforce (80-120% AMI) For Sale Metro TOD Program (DIRECT) Late Gentrification development without needing to purchase lots. In already developed, exclusive areas, using Exclusive public land may be the only cost effective strategy for building new affordable units. SECTION 15. (1) As used in this section, "public property" means all real property of the state, counties, cities, incorporated towns or villages, school districts, irrigation districts, drainage districts, ports, water districts, service districts, metropolitan service districts, housing authorities, public universities listed in ORS 352.002 or all other public or municipal corporations in this state. The Federal Transit Administration (FTA) enables local transit agencies to enter into Joint Development Agreements (JDAs) with Publicly-Subsidized (< 30% AMI) private or non-profit developers of low income housing, market-rate housing, and/or commercial development. Joint Development Joint Development Affordable (30-80% AMI) For Rent Important foundation with focus on housing for transit dependent people (Low income, renters, F02 Agreements is a process by which public transit or other local or state agencies agree to make land available at donated or reduced prices for Workforce (80-120% AMI) or Sale -- (INDIRECT) All POC and immigrants) private development, which may include affordable housing. Projects must demonstrate benefit to transit operations (ridership) IVIdI KUL I\dhG k-- I LU 70 /-\IVI I) and infrastructure and are subject to FTA approval. Land acquired by nonprofits or community-based organizations that maintain permanent ownership of land. Prospective Publicly-Subsidized (< 30% AMI) homeowners are able to enter long-term (i.e., 99-year), renewable leases at an affordable rate. Upon selling, homeowners only Affordable (30-80% AMI) Land trusts area very strong anti-displacement measure in all neighborhood types, with F03 Community Land Trusts earn aportion of the increased property value, while the trust keeps the remainder, therebypreservingaffordabilityfor future low- Workforce (80-120% AMI) For Sale -- DIRECT All immediate and long-term impacts. p p Y p g p to moderate-income families Market Rate (> 120% AMI) Affordable & Vulnerable Publicly-Subsidized (< 30% AMI) Partnerships between government and the private sector and/or nonprofits have the capacity to bring resources to the table that ° Early Gentrification Setting clear public goals; including monitoring of provision of public benefits; and including Public/Private Affordable (30-80% AMI) For Rent F04 would otherwise not be available if each institution were able to help communities provide housing on its own. This can come in ° -- (INDIRECT) Active Gentrification financial penalties for not meeting goals are important for strengthening community benefits Partnerships (P3) the form of coalitions, affordable housing task forces, and collaboratives. Workforce (80-120/o AMI) For Sale Late Gentrification agreements in public-private partnerships. Market Rate (> 120% AMI) g p p p p Exclusive Preventing displacement and preserving "naturally occurring" affordable housing through acquisition, low-interest loans/revolving Publicly-Subsidized (< 30% AMI) Preserving Low-Cost Early Gentrification loan fund for preservation, and/or code enforcement. Example: The Oregon Legislature committed $15 million in lottery bonds to Affordable (30-80% AMI) For Rent Preservation is cost-effective compared to new construction and can prevent displacement in F05 Rental Housing to NOAH Impact Fund DIRECT Active Gentrification Mitigate Displacement Oregon Housing and Community Services (OHCS) in 2019 to create a naturally occurring affordable housing loan fund. Modeled Late Gentrification the immediate term for households in place. after the Greater Minnesota Housing Fund. Manufactured home parks often provide a form of affordable housing stock, but are particularly vulnerable to redevelopment City of Portland pressures since lots are temporarily leased out. In order to preserve safe, affordable options into the future, manufactured home Publicly-Subsidized (< 30% AMI) Preserving Safe, parks may be protected through assistance that allows community purchase of the underlying land, manufactured homes and ° Affordable & Vulnerable Affordable (30-80% AMI) For Rent F06 Affordable provide funds used to maintain upkeep of these dwelling units. This strategy is often implemented through use of Land Trusts, DIRECT Early Gentrification�d0-120% AMI) For Sale Manufactured Homes Resident-Owned Cooperatives, Public Ownership of Land, or Condominium Conversion of the real estate assets to preserve the °""""'"" ° Active Gentrification communit ies . Oregon Housingand CommunityServices (OHCS) has regularly received lotterybonds orgeneral funds from the Market Rate (> 120/o AMI) OHCS Mfd Dwelling Parks y( ) g g y Program Oregon Legislature to preserve manufactured home parks through either Resident Owned Cooperatives or Non-profit ownership. Providing Information Providing information to small, local developers that will help them understand land use permitting processes and give them a For Rent F07 and Fdlinatinn to Small -- INDIRECT All -- PP 22-0005 ATTACHMENT B/PAGE 11 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 18 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact _. _.._ _______ __ _.. - sense of clarity and certainty about requirements so they can better provide smaller scale housing at an affordable level. Workforce (80-120% AMI) For Sale ""-"--- ' Developers ° Market Rate (> 120/o AMI) Conversion of Publicly-Subsidized (< 30% AMI) Affordable & Vulnerable Underperforming or Acquisition of underperforming or distressed commercial assets (commercial, retail, industrial, or hotel) or partnerships with Affordable (30-80% AMI) For Rent F08 Distressed Commercial owners of the assets for conversion into needed housing. Workforce (80-120% AMI) -- DIRECT Early Gentrification Most likely to be cost effective in some neighborhood market types. VI JQIG Assets Market Rate (> 120% AMI) Active Gentrification The US Department of Veterans Affairs (VA) maylease land for upto 85years to developers of projects whichprovide the VA Publicly-Subsidized (< 30% AMI) Enhanced Use Lease of p p p Affordable (30-80% AMI) For Rent Housing Authority of Douglas F09 Federal Land with compensation. Such enhanced use leases have been used to provide land for permanent affordable housing for people County (DIRECT) All -- experiencing homelessness including veterans in Oregon, Minnesota and Washington States. Prioritize Housing on Publicly-Subsidized (< 30% AMI) Affordable (30-80% AMI) For Rent F10 City/County Owned Surplus property suitable for housing is offered up for affordable development. Workforce (80-120% AMI) Sale City of Eugene (DIRECT) All -- Land Market R-' Combine Community Publicly-Subsidized (< 30% AMI) F11 Land Trust with Limited Combine a Community Land Trust (CLT) with a Limited Equity Cooperative for a lower barrier entry to homeownership of a share Affordable (30-80% AMI) SquareOne Villages DIRECT All -- Equity Cooperative of a permanent small/tiny home community. Workforce (80-120% AMI) For Sale Model Sell land at the State or City's cost (below market) to developers of affordable housing. Long-term lease at very minimal cost to Publicly-Subsidized (< 30% AMI) Surplus Land for Affordable (30-80% AMI) For Rent F12 Affordable Housing developers for land the City is not yet ready to surplus. County surplus of foreclosed land to affordable housing developers and/or VVorktorce (dU-1�U"/o AMI) =or Sale City of Bend (DIRECT) All -- housing authority. ° Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) F13 McKinney-Vento For Rent Cities may partner with the Federal Government to surplus Federal land for homeless housing or services under McKinney Vento. City of Bend (DIRECT) All -- Federal Surplus Affordable housing providers could be offered a Right of First Refusal for city, county, or state owned land when the land would be Publicly-Subsidized (0 30% AMI) Right of First Refusal forAffordable (30-80% AMI) For Rent CASA of Oregon - Mfd Housing C F14 Land Purchase used for affordable housing. Examples include a manufactured home program where residents can buy out the manufactured workforce (80-120% AMI, For Sale Op Dev (DIRECT) All -- home park when the owner is ready to sell. Market Rate (> 120% AMI) Ordinances that Publicly-Subsidized (< 30% AMI) F15 Address Zombie More assertive tax foreclosures to enable zombie housingto be rehabbed into occupied housing. Affordable (30-80% AMI) For Rent -- INDIRECT Affordable & Vulnerable -- p -- Workforce (80-120% AMI) For Sale Housing Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) Regulatory Agreement, between the jurisdiction and developer, in place with the land sale that keeps the units affordable for 20 Affordable (30-80% AMI) For Rent Active Gentrification F16 Regulatory Agreement years in exchange for SDC waivers. This is straightforward without going through a difficult or costly process. Workforce (80-120% AMI) =or Sale City of Beaverton (DIRECT) Late Gentrification Prepare for agreement expiration with preservation plans •v I I —IL, I-- 120% AMI) A jurisdiction would establish designated sites with a completely different set of regulations than apply to the balance of the public Publicly-Subsidized (< 30% AMI) Designated Affordable and private building sites. The sites would be overseen by an Affordable Housing Commission, that is empowered to prioritize, Affordable (30-80% AMI) For Rent F17 Housing Sites fast track, and approve affordable housing projects (with designated and required affordability objectives) and bypass the majority Workforce (80-120% AMI) -- (DIRECT) All -- of the city's fees and regulations. The Commission would have its own set of requirements (structural approval, zoning allowance, etc.), but they would be streamlined, and tailored to facilitate a quicker and much less expensive process. Over the past few decades, faith institutions across the country have been declining. This has prompted conversations within Utilize Surplus Land different faith communities about how to refocus their mission of social change. The housing affordability crisis in many cities Publicly-Subsidized (< 30% AMI) Expanding Opportunities for Owned by Faith-Based around the country has brought these institutions into the work of creating affordable housing in their communities. This strategy Affordable (30-80% AMI) For Rent F18 Organizations for would: 1) Identify faith and community-based organizations that are interested in offering their available land for development of Workforce (80-120% AMI) For Sale Affordable Housing, Metro and (DIRECT) All -- Affordable Housing affordable housing, 2) Provide design and finance consultation for three organizations to prepare them for future affordable Market Rate (> 120% AMI) City of Portland housing development projects, and 3) Determine barriers to development and how those can be addressed and/or streamlined. The Center for Housing Policy, Publicly-Subsidized (< 30% AMI) Washington DC Affordable Housing Prepare an inventory of subsidized and naturally occurring affordable housing to support proactive policies intended to preserve Affordable (30-80% AMI) For Rent F19 Preservation Inventory the affordable housing stock. This strategy is intended to help offset some of the need for costly new construction. For Sale Opportunity Zone Toolkit, US (DIRECT) All -- Department of Housing and Urban Development PP 22-0005 ATTACHMENT B/PAGE 12 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 19 OF 20 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Provide residents, property owners, property managers, realtors, lenders and others involved with real estate transactions with Publicly-Subsidized (< 30% AMI) Fair Housing Education, access to Fair Housing information and referrals. Ensure that city staff know how to identify potential Fair Housing violations and Affordable (30-80% AMI) For Rent F20 Referral, and Other make referrals to the Fair Housing Council of Oregon and state and local enforcement agencies. Partner with and fund Fair Workforce (80-120% AMI) -- (DIRECT) All -- Services Housing Council of Oregon to provide periodic Fair Housing Audit Testing, customized outreach and education and other Market Rate (> 120% AMI) specialized services. Most public subsidies and tax incentive programs are complex due to the need for regulation and corruption prevention, imposing many impediments to developing affordable housing. Jurisdictions would participate in a public REIT that buys turn-key projects for set costs. This would motivate mission-minded developers to drive down cost knowing that risk is minimal by having a buyer at Publicly-Subsidized (< 30% AMI) Public or Mission-Driven the end. If the developer doesn't deliver the required specs, quality, and competitive construction cost, then they have to sell or Affordable (30-80% AMI) For Rent F21 REITs and Turn-Key rent on the open market or find other incentives in current, standard fashion. The jurisdiction could invest state pension funds in Workforce (80-120% AMI) For Sale -- (DIRECT) All -- Delivery these REITs. Note: Though this strategy has been suggested by the housing development community, it is not clear if this program is currently available to jurisdictions in the State of Oregon Category Z: Custom Options Any other Housing Production Strategy not listed in Categories A through F that the jurisdiction wishes to implement will be outlined in this section and numbered accordingly. Tenure Housing # Strategy Description Affordability Target Target Source (if available) Equity Impact Neighborhood Typology Mitigating Measures Z01 TBD Any other Housing Production Strategy not listed above in Categories A through F that the jurisdiction wishes to implement should -- -- -- -- -- be filled in here and numbered accordingly. PP 22-0005 ATTACHMENT B/PAGE 13 OF 13 LU 24-0024 EXHIBIT D-1/PAGE 20 OF 20 p s� MEMORANDUM trk O OREGO\--‘ TO: Planning Commission FROM: Erik Olson, Long Range Planning Manager SUBJECT: Housing Production Strategy (PP 22-0005) DATE: November 3, 2023 MEETING DATE: November 13, 2023 EXECUTIVE SUMMARY &ACTION REQUESTED Following the recent adoption of the 2023 Housing Needs Analysis (HNA) to analyze what housing is needed for current and future residents (Attachment 1), the City is now required to develop a Housing Production Strategy (HPS) that outlines what actions the City will take to address those needs. This work is a part of the City Council goal to, "Conserve the community's character, sense of place, and quality of life by planning for change and growth," and the associated Council initiative to, "Continue work on... the housing production strategy." The 2023 HNA was adopted on October 17, 2023 (LU 23-0023), in compliance with the Department of Land Conservation and Development (DLCD) timeline that requires the City to adopt an updated HNA by December 31, 2023. The City is now required by ORS 197.2901 to adopt an HPS prior to December 31, 2024. Per ORS 197.290, an HPS must document the specific tools, actions, and policies that the City plans to take to address the housing need identified in the HNA. This memo provides background for the Commission's November 13 work session, which will include a presentation with a summary of state requirements for developing an HPS, as well as a summary of the following information from the draft Contextualized Housing Needs Assessment (CHNA): • New data related to underserved or vulnerable populations; • A summary of existing or previous programs the City has implemented to address housing needs; and • Initial takeaways from recent stakeholder interviews on barriers to developing needed housing in Lake Oswego. Available at https://oregon.public.law/statutes/ors 197.290. Respect. Excellence. Trust. Service. 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO OR 97034 WWW.LAKEOSWEGO.CITY LU 24-0024 EXHIBIT D-2/PAGE 1 OF'90 Page 2 of 9 Staff is also seeking initial direction from the Commission regarding which strategies the HPS Task Force should analyze in more detail. BACKGROUND In 2019, the Oregon Legislature passed House Bill 2003, which aimed to help communities meet the housing needs of Oregonians. The law required all Oregon cities of more than 10,000 residents to study the future housing needs of their residents (through an HNA) [ORS 197.297 and OAR 660-008-0045] and to develop strategies that encourage the production of the identified housing needs (through an HPS) [ORS 197.290]. The 2023 HNA found that, despite a very low assumed growth rate over the 20-year planning horizon, the City 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 (see Attachment 1). City Council formally adopted the 2023 HNA on October 17, 2023. The Commission must now develop recommendations for 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. HOUSING PRODUCTION STRATEGY REQUIREMENTS Per ORS 197.290, an HPS must document the specific tools, actions, and policies that the City plans to take to address the housing need identified in the HNA. This also includes the City's plan and timeline for adopting and implementing each strategy. DLCD will review and approve the HPS based on (1) the adequacy of strategies to meet all identified housing needs, (2) the appropriateness of strategies to facilitate the production of needed housing, and (3) how well the strategies, taken as a whole, will achieve fair and equitable housing outcomes [OAR 660- 008-0055(6,7)]. 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 low-cost rental housing. The following basic components are required by OAR 660-008-0050 (1—4 and 5(c)) and this organization is typical of those that have been adopted in other communities to date: • Contextualized Housing Needs Assessment; • Community engagement process, including explanation of how the process was used to identify, evaluate and prioritize strategies; • Strategies to Meet Future Housing Need, including descriptions of the timeline, responsibilities, actions, and affected households, e.g., benefits and barriers to specific underserved or vulnerable populations; • How the City will achieve Fair and Equitable Housing Outcomes; and Respect. Excellence. Trust. Service. LU 24-UU14 LAI-1I13I I U-L/I'ALIt L UI- JU Page 3 of 9 • Process for monitoring progress in meeting identified outcomes. Going forward, the City will be required in three years to reflect and evaluate the progress and effectiveness of the HPS at a mid-term checkpoint to see what strategies worked, which ones did not, and discuss any course corrections being made to ensure all housing needs are addressed [OAR 660-008-0060(1)]. Contextualized Housing Needs Assessment A key step in the HPS process is developing a Contextualized Housing Needs Assessment (CHNA) [OAR 660-008-0050(1)], which builds upon previous work conducted for the HNA, to describe the following: • Demographic, housing, and market conditions; • Housing affordability issues; • Barriers to meeting identified housing needs, including needs of traditionally underserved and disadvantaged populations; and • Existing or previous programs the City has implemented to address housing needs. A draft executive summary of the Lake Oswego CHNA can be found in Attachment 2. Housing Production Strategies for Commission Discussion City staff and the consultant team have begun to analyze potential housing policies, strategies, and tools that the City may consider as part of its HPS. Staff and the consultant team reviewed a master list of Housing Tools, Actions, and Policies assembled by DLCD (see Attachment 3), and have proposed a shortened list of high-impact strategies for initial Commission consideration. This shortened list bundles strategies together in groups based on similar concepts or overlapping programmatic elements to facilitate meaningful Commission dialogue. For example, while there are 6 different tax abatement strategies listed as options in Attachment 3, they have all been grouped together under the category of"tax abatement" for the purposes of the work session. Additionally, the list is focused on strategies that are expected to make a significant impact on housing production in the City, as well as strategies that require the creation of a new tax, bond, or other revenue source to promote housing development. Low-barrier strategies have been grouped into separate categories for discussion at future meetings. Additionally, some strategies have been omitted because they were either: • Already being implemented by the City; • Not applicable to Lake Oswego; • Not authorized by state law or not available in Oregon; or Respect. Excellence. Trust. Service. LU 14-UU14 LAI-1I13I I U-L/I'AUt S UI- JU Page 4 of 9 • Unlikely to have a meaningful impact on housing production or retention in the city based on the team's initial high-level assessment. The omission of a particular strategy from this list does not mean that it will be omitted from the HPS discussion altogether; this list is not intended to be exhaustive, but merely a starting point to guide future discussions. Strategies for initial Commission consideration include: 1. Floor Area Ratio (FAR), Density, Height, or Other Bonuses for Affordable Housing The City currently allows a limited height or density bonus for affordable developments in the WLG-OC and R-DD zones, as well as a limited lot coverage bonus within the Lake Grove Village Center Overlay (LGVCO) for developments where housing is provided. Pursuing this strategy would entail increasing the applicability of these bonuses or expanding them to more zones. The City could also consider other types of zoning bonuses, such as reduced open space requirements for affordable housing. 2. Code Audit and Amendments The Council currently has a goal to, "Conduct a comprehensive review of the City's development codes and processes to make our processes more efficient and predictable and less expensive to reduce the cost of housing and commercial development." This strategy would advance this goal by eliminating barriers specific to housing production in the development code, potentially addressing: • Siting and design standards that limit the feasibility of Accessory Dwelling Units (ADUs) and middle housing; • Procedural requirements that add cost and delay to land use approvals; • Open space requirements in high-density zones; • The impact of neighborhood overlays or other regulatory provisions on housing production; • Exclusion of single-room occupancy dwellings (SROs); and • Regulatory barriers to lot divisions. 3. Minimum Density Requirements for to-be-Annexed Land This strategy involves requiring that a certain portion of to-be-annexed land includes a percentage of land zoned for high-density residential use. This strategy could be especially relevant considering the opportunity presented by the large portions of unannexed areas within the City's Urban Services Boundary, as well as the deficit of land identified in the HNA for all housing types in the city. Respect. Excellence. Trust. Service. LU 24-UU14 LAI-1I13I I U-L/I'AUt 4 UI- JU Page 5 of 9 4. Rezone Land This strategy would involve rezoning mixed-use or commercially-zoned properties to better facilitate multifamily residential development. Given the deficit of residential land identified in the HNA, there may be a need to review existing residential densities or consider rezoning nonresidential land for housing to meet the City's housing need. However, it will nonetheless be important to ensure there is still adequate land available for employment and commercial/industrial needs. 5. Infrastructure Planning to Support Housing Infrastructure can be a significant challenge to developing housing in unannexed areas or other areas with limited existing infrastructure. This strategy would involve programming work via Capital Improvements Programming (CIP) so that projects to support development of middle housing or to open up more land in an Urban Services Boundary (USB) for the development of middle housing are constructed sooner. This strategy would coordinate housing planning with CIP work to prioritize projects that would support housing (e.g. a new water line, sewer pumping station). This strategy could also involve amending existing water, sewer, and transportation Public Facility Plans so that costs to develop on land zoned for needed housing can be further anticipated and supported. Additionally, public utilities planning could also be used to allow for more unit capacity, especially in areas that are up-zoned for denser housing. 6. System Development Charges (SDCs) This strategy involves updating the City's Systems Development Charge (SDC) fee schedule to be tied more directly to dwelling size. The intent is to ensure that smaller dwellings in middle- and multifamily housing are not disproportionately burdened by fees, and therefore encouraged. The City could consider applying SDC fees based on square footage rather than a set fee per dwelling. Additionally, if there are appropriate levels of parks and open space near the project, the City could opt to charge reduced Parks SDC fees in those locations in order to encourage housing development. Additionally, the City is in the process of updating the Parks Master Plan, so the impact of this strategy would need to be evaluated and addressed as part of that plan as well. 7. Construction Excise Tax(CET) A Construction Excise Tax (CET) is a tax on construction projects that can be imposed and used to fund affordable housing. The tax may be imposed on improvements to real property that result in a new structure or additional square footage in an existing structure [ORS 197.309]. Staff notes that this strategy was supported by the Middle Housing Code Advisory Committee as a tool to produce affordable middle housing during our previous efforts to develop code amendments to comply with the middle housing requirements of House Bill 2001. Respect. Excellence. Trust. Service. LU 14-UU14 LAI-1I13I I U-L/I'AUt 0 UI- JU Page 6 of 9 8. General Obligation (GO) Bonds Following the passage of Measure 102 (2018), amending Art. XI, Sec. 9 of the Oregon Constitution, Oregon cities can now issue voter-approved general obligation (GO) bonds to provide direct funding for construction and other capital costs associated with the development and construction of affordable housing. These funds can be loaned or granted to both public and privately-owned affordable housing projects. "Affordability" is required to be determined by voters in each jurisdiction, and can be either above or below minimum affordability levels established for other state and federal programs. The bonds could be paired with other financing such as Low-Income Housing Tax Credits, or could be used for homeownership opportunities. GO bonds are one of the few potential revenue sources for affordable housing. This strategy would also need to be evaluated in the context of other City and Community capital projects. 9. Tax Exemption/Abatement There are a number of tax exemption and abatement programs the City could consider that are intended to encourage developers to produce housing: • Nonprofit Low-Income Rental Housing Exemptions are a tool that can provide a simplified way for affordable housing owned and operated by a nonprofit or Community Land Trust to qualify for a property tax exemption. This is a common tax exemption for affordable housing used by many cities in Oregon, though work should be done to make it easier for projects/land to qualify and to minimize the number of taxing authorities needed to grant an approval [ORS 307.540 - .548.]. • Low-Income Rental Housing tax exemptions are a 20-year tax exemption for any entity that provides regulated affordable housing, including nonprofits and for- profit developers. Eligible properties must be offered for rent to low-income persons (at or below 60%AMI) or held for the purpose of developing low-income rental housing. This program does not require annual renewal and would be available to more developers than the non-profit low-income rental housing tax exemption program [ORS 307.515 - .537]. • Vertical Housing Development Zone (VHDZ) Tax Abatement is a partial property tax exemption program on improvements for new mixed-use development. To qualify, a project must have improved, leasable, non-residential development on the ground floor and residential development on the floors above. A partial abatement on land value is allowed for each equalized floor of affordable housing. City Council conducted a study session on September 19 regarding a potential VHDZ pilot program to be established at the City-owned North Anchor properties (PP 23-0006). The Council will hold a public hearing to determine - Respect. Excellence. Trust. Service. LU 24-UU14 LAI-1I13I I U-L/I'AUt b UI- JU Page 7 of 9 whether to establish the proposed VHDZ pilot program on December 19, 2023 [ORS 307.841—867]. • Multiple Unit Property Tax Exemption (MUPTE) can be used to incentivize production of multifamily housing with particular features or at particular price points by offering qualifying developments a partial property tax exemption over the course of several years [ORS 307.600 - .637]. • The Homebuyer Opportunity Limited Tax Exemption (HOLTE) program provides single-unit homes with a ten-year property tax exemption on structural improvements to the home as long as the property and owner remain eligible per program requirements [ORS 307.651 - .687]. As mentioned above, this list will be a starting point for Commission discussion and further analysis, as well as recommendations by the consultant team, HPS Task Force, and City Council in subsequent tasks. It is expected that the list will be refined or consolidated further with assistance from the HPS Task Force; then, a refined list of strategies will be evaluated in more detail in the next phase of the project. Please keep in mind that the City will be held accountable by measures stated in OAR 660-008-0070 (e.g., compliance IGA, loss of DLCD technical assistance or financial source awards, and enforcement orders) for implementing any strategies that are eventually adopted as part of the HPS, and will have to document annual progress towards implementing the strategies and achieving outcomes. HPS Task Force Update The HPS Task Force convened for its fourth meeting on October 6, 2023. At this meeting, the HPS Task Force: • Evaluated existing City housing production measures and policies; • Reviewed new data from the CHNA related to underserved or vulnerable populations; • Received an initial summary of the highlights of stakeholder interviews on the topic of barriers to housing production conducted to date (also from the CHNA); and • Reviewed an initial menu of housing production strategies for consideration as part of the City's HPS. Due to the large amount of content that needed to be covered at the meeting, some HPS Task Force members stated that they felt they did not have the opportunity to provide adequate input on the initial menu of strategies. As a follow-up, staff sent an online form to all HPS Task Force members via email that allows them to rate the strategies and provide their thoughts about which ones to pursue in more detail. The results of this engagement are not yet available but will be summarized at a future meeting. Project Schedule A summary of the proposed project schedule and scope of consultant deliverables is included in Attachment 4, with the project schedule summarized in Table 1 below. Respect. Excellence. Trust. Service. LU 14-UU14 LAI-1I13I I U-L/I'ALIt 1 Ur JU Page 8 of 9 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 [Task 3.1] 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 [Task 3.2] PC Work Session #5 Jan 8, 2024 Council Study Session #5 Jan 16 Refine housing strategy HPS Task Force Meeting#6 Feb 9 recommendations HPS Task Force Meeting#7 Mar 22 [Task 3.3] Community Forum/ Public Workshop Apr 4 Council Study Session #6 May 7 PC Work Session#6 May 13 Initial HPS Report Draft Initial Draft HPS Report May 27 [Task 3.4] HPS Task Force Meeting#8 Jun 14 Council Study Session#7 Jul 16 PC Work Session#7 Jul 22 Finalize HPS for adoption Final HPS Report Aug 2 [Task 3.5] PC Public Hearing Sep 9 Council Public Hearing Oct 15/Nov 5 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. City of Lake Oswego 2023 Housing Needs Analysis, 09/21/2023 2. Contextualized Housing Needs Assessment Draft Summary, 10/24/2023 Respect. Excellence. Trust. Service. LU 14-UU14 to I1IUI I U-1/F'Atat ZS UI- JU Page 9 of 9 3. HPS Program - List of Tools, Actions, and Policies, 02/01/2022 4. HPS Project Schedule and Scope of Work, 09/06/2023 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 Respect. Excellence. Trust. Service. LU 14-UU14 LAI.1I13I I U-L/I'ALIt J Ur JU , A I - ;4.- _ - • 11 4k I 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 it I JOH NSON ECONOMICS PP 22-0005 ATTACHMENT-1/PAGE 1 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 10 OF 90 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-1/PAGE 2 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 11 OF 90 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-1/PAGE 3 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 12 OF 90 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-1/PAGE 4 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 13 OF 90 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-1/PAGE 5 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 14 OF 90 • 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-1/PAGE 6 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 15 OF 90 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-1/PAGE 7 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 16 OF 90 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 N N c-I 0% 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-1/PAGE 8 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 17 OF 90 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 coLE o c > coc m O c 47, 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-1/PAGE 9 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 18 OF 90 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-1/PAGE 10 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 19 OF 90 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 EIM 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-1/PAGE 11 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 20 OF 90 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-1/PAGE 12 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 21 OF 90 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-1/PAGE 13 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 22 OF 90 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 • .' Milwaukie Hospi C A.I-T ]L HILL • 11511 Tryon Cre=elc State - Q 1 IIwaukie Et M Natural Area 1 r��., I A L �i� L ' 3�'. - . � ._ . . + r �} E,". ----.------ \ 4' ijard '0 sl..ve o 20,900 2,250 15,800 'I' Live and work Work in Lake Oswego, Live in Lake Oswego, live elsewhere •\ in Lake Oswego work elsewhere :ryanI - , .../, ri-s. anrd in9 . Durham ,[ 1 x .t ritage Center / 10% 12% / 88% Jena ii v MARYLF1URNI •, 1 •River Grove- ualifi1 Stafford 1 Legacy Meridian. ` m I, I L■ I' I , .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-1/PAGE 14 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 23 OF 90 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-1/PAGE 15 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 24 OF 90 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-1/PAGE 16 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 25 OF 90 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-1/PAGE 17 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 26 OF 90 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-1/PAGE 18 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 27 OF 90 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-1/PAGE 19 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 28 OF 90 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-1/PAGE 20 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 29 OF 90 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-1/PAGE 21 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 30 OF 90 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-1/PAGE 22 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 31 OF 90 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-1/PAGE 23 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 32 OF 90 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-1/PAGE 24 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 33 OF 90 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-1/PAGE 25 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 34 OF 90 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-1/PAGE 26 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 35 OF 90 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-1/PAGE 27 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 36 OF 90 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-1/PAGE 28 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 37 OF 90 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-1/PAGE 29 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 38 OF 90 ■ 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-1/PAGE 30 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 39 OF 90 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-1/PAGE 31 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 40 OF 90 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-1/PAGE 32 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 41 OF 90 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-1/PAGE 33 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 42 OF 90 • 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-1/PAGE 34 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 43 OF 90 • 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-1/PAGE 35 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 44 OF 90 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-1/PAGE 36 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 45 OF 90 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 1.Study Area Map s - s SW-STEPHENSONST , y D lessF Jr RpKwY m o S�ONE �, --a O , O 0 P yy� 1 r-- MELROSE ST i \o f i44 '5, i COU/VTRy it X C1 Ug RD II \y� J J 21 a �4 KRUSE WAY O� SO P AAVE '~^ MEADOWS RD Q A. * 111 v i� ,, �r fie- -a OUN7q� SW BON ..R1 p y-�. %t c4 Q' % N, N BiVp > z Z Prim Rp 1 \�O o 71 0 0 740 cc { O cc z o ‘ u_i `� o m > 3 i' �QQ�R P�F�\E`�B\VD S�{ORE 8<V cvEV PEE -_._/` ' �fi tIlirr-Nir x ILO �T o 1- cc sow J o o! w OR 0 GREENTREE PO z� OS `eR Y 2 �.27 N3 Ov 0,00K 0R S BRGISn (FL...._Y ¢ cr I-- �ill9 Z C' m \�pSRD�`' O'rF O, �ile `1'G CHILDS RD �� S 41O _,1 F n PO U 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-1/PAGE 37 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 46 OF 90 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-1/PAGE 38 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 47 OF 90 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-1/PAGE 39 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 48 OF 90 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-1/PAGE 40 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 49 OF 90 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 2. City of Lake Oswego Zoning Designations I Portland u 1 Cammurnr f 224 c College--Syl�.,�•• I:+ , �,i Creek ^`:a tural 3. m • ® 1 5F n '< R 75 r- .• : b CM ` [ Jar ' I'.c,:. � , R_5 ' PNA _____. _ Milwaukin „F ■� c, �. Heights Tigard _f.' °°- �a t_yi, �HC' R-5 � �� �� R-6 � Oak Grove R-ya 4 -/is ,..t - e i� l PNA /111% PEC Pxr: v., Bonita sw eon r �iliii. o I[d Rd '�V 9,� n)NA J. • • %.,, L .,,W •.,..,41, S as W Dorgan"�.�. � R-Lc. . '� R'7 5 � MI OF' Concord R-7.5 NW Cook Pp. Trolley Trail Durham r" + R,1e 76.'rrf ,... T�N / PNA � r� Ivy Club P O p I ? R-i5 j Jer Tualatin .pNn{,. 1Rr9 Esn.NASA,NGA,USGS,FEAR,Oregon Metro,Oregon State Parks,State of Oregon GEO,Esri.HERE, 1 Rivergrove __ - Germin,SafeGraph,GgoTechnelagies,Inc,METIINASA,USES,Bureau of land Management,EPA,tIPS, _ tf. USDA Mary S.Young Lake Oswego- Buildable Lands Inventory-Zoning Districts Legend 0 Lake Okeega I ,HC 1F C R.e LAYER 0 I '1',P. C R-7.5 MI CI ®IP P 0 M R-W =Cl/OC 0 MC _i R-iN ME R•W fi CRao 0 NC CI R-Ls O WLG oc ®PC =NC/R-C O R-2 M INLG R-2.5 =I EC/R-0 C CC M R-3 0 WIG RMu 0 0.25 0.5 1 0 GC 0 OC/R-E 0 R-5 I = M rles APPENDIX A: Buildable Lands Inventory Page 40 PP 22-0005 ATTACHMENT-1/PAGE 41 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 50 OF 90 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 3. City of Lake Oswego Comprehensive Plan Designations Portland [,,,�___...iii,,, Community � I o / .224 ` V CuI/ar Sylva' Tryon Creek _ + State Natural • 14T 'p ! 41.11 � et'.I g PNA - Milwaukle C }f}9rr T,•R.� — R•io.� ./ Heights '7t °°WW1 _5 • 'F Tigard R 5 to ea 1�� ��.Lip _ �.. �J F R-6``[JJ Oak Grove --. R S 1 ML — — OCIR-3 Rxo - 0EC Bonita. _•- 'r-rRa[,.��.. R.�a R-7.5 �'�n = SW Bonit�Rd `s'^ Cr" CP R."_. PNA j R_7.5 ... Pw '. d L emi PNA• Ilk R7 )G.( — I1, - R • R-7.5 „pp,'Durham Ad i z.�- 4,1 � / Concord in I''- ^-R"i5 Cl Trolley Trail Durham iu Ik 4 • ir Rno laiin j / ��' . r,a[lob J •R is ,,,ice V I C l -. ler INC V R'L Esri,NASA,NGA,USGS,FEMA,Oregon Metro,Oregon State Parks.State of Oregon GEO,Esri.HERE, Tualatin Rive rg rove r r Gamin,SaleGraph,Ggorecnnolagies,Inc.METVNASA,LISGS,Bureau of Land Management,EPA,NPS, USNA cMary 5.'Young Lake Oswego- Buildable Lands Inventory-Comprehensive Plan Designations Legend 0 Lake Osrvego 0 HC I]PNR Q R•7.5 I AYFR DIP MIR-0 I R-W I. CI =MC 0 12-10 =51, CRS) I—I NC ©R-15 11 WLG OC L EC I___)NCR-0 11-2 0 WLG R-2,5 Ed it-0 ILI OC I=R-3 =WLG RMFI L FMU O OC.R-3 C R-s =I.calr other values> 0 0.25 0.5 1 CGC 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-1/PAGE 42 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 51 OF 90 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-1/PAGE 43 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 52 OF 90 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 4.BLI Land Classification •n.e maw: — rvniwau _ I r .. b 1 '��� + t rg4 +. 1 1,1�1 l 71m� 1."1/ - -1 E li0 :y tJ���n __- o ,I1.11i.I'I I1.. 4vl'e4F'l il&..o-1,.,waaPv,l_l,l.1 I ith9-alr1i.I4-.,4:&1a fi..-.„itrkCr.a0.o1...4.ei'ak-1'-i"-..1.1,.".mA-A'p.1A-,1v1O-W-Ing:.N'..••-'k•1i.-nn 0grt4ill Ai'''rk'.,I1J-P'.iI. Iillt -: - ty "' rm II Vr �lii jIIL�%Ilt1/Ij:ir111�'li OakGro�� f - 1+ IlUllll raw Rd :... .1��+t16. T__ �_ �J `�J1�� /^r C t 14. ,- II- NWirk m-b7 44,1%-;jgb. Lu 41 44FiliV=11-Trarllisill%,, , 7vit,r.- -ir IT-- 4.'1 i ill i rti---`000 0 ge/i&l._. .,=,. 12:11.4V III Iiiropirrr � ' f :cam pis , , 4 Car t�lll��r git 1 —`r,' 1 .4X\s' i .1 /4"- 11 f A_•- t�1 1 It7.�i j`yl i pLa.4pi/ •_-••1a1E.,' �.. I E.11 r1i 1 •- y t O�--A EOs Itivergrov. ��=`J'AFL ,t U O I , I u !Miles �RFG On/ 0 1 O S 1 S: �y 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-1/PAGE 44 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 53 OF 90 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-1/PAGE 45 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 54 OF 90 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 5. Constraints to Development ,4 1 1'1 - isw STEPHENSON ST 9� 1, 1 1 i Ry cD m F x ®i <Fss6q ,I 9R PKWY I 1 11 oNs C- — — I m °° i QO• IRS s' 1 — ♦ CO I 1 ° — o b, ; ' ',1 MELROSE ST - ,L1 €[ �t`r`,r'— r� // /i ':.s G.ti¢g: :: *�ib. 1 f c0(JNr i'1 Al • ` iq" 1 rim `f '''_ I'`7 4��fa� Flu R' CHUB RDA `I'PIZ �u� � 4 4 ,1 y p t. 6� KRUSE WAY_ O4 Imo., Q�1-�.- 7,s"may AVE/ A g MEADOWsRD Q 2-ill , V'.,�Unna i.Int11Ni.,-.•. e� • to. ,n E z 1 ^ — c ce * ? �11t�ry�y►?y y° t >UNTq�N� I x 1 SW-BONI�TA-RD�� 4� q� QG R.1- h 4 .I0111.-.n-1Y� tc1` 8L4D .4a.� ,,0 i y r+ �VD , , ,,, , �� 7 •I r ' 1 a K. j ERp�E 1t� s 6��•. i. PEE gni 1, ► o v \,PK SNORE g<Vp 1,t�LS �C' , Ji1r A jl.- 1 ., Q9 nO OJT j,.. H pm. ��I�ti :;_ �O! 1 it `+y 5 a�= = �qG • 0 6REENTR EE(y0 e 0E- FRr '- ♦1 Po r- I o -" <,- �a o- - 1, I I — 0� y OA � : 1 of i� �T \� 1, '� Q +,` Y 3 Ov�ROOK - .. S BERGIS.RD ♦, %, ,1 V� 1 1 1 �c,E 1VAY 1 r (+1 w/ • r y�- _ f d r f r — �O o I �� 1 1 —L .1 11 r 1 — ♦.. i o _ 1 4,- - n Q 4 J `s f r11 RD SQ i �� u F 6\ CHILDS RDA - I- I f . 1U :� O pi of IJS (Miles r;". ^;i.-. / :�►. , 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 {NBA) Resource Conservation Areas {RC) Resource Protection Areas(RP) APPENDIX A: Buildable Lands Inventory Page 45 PP 22-0005 ATTACHMENT-1/PAGE 46 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 55 OF 90 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-1/PAGE 47 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 56 OF 90 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-1/PAGE 48 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 57 OF 90 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-1/PAGE 49 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 58 OF 90 Lake Oswego Housing Needs Analysis July 18, 2023 Figure 6. Development Status of Residential and Mixed Use Land c\F . F , cv., r i -J!! 1P r-SW STEPHENSON ST. Phi •,4` �P�. t y • _ram 4 'Li f , n \ �` 1 -:Mi. ELROSE ST I - ! r �( " , k l COVNrRY ' � "10 l '''yyyy • _ t, z>1 . ..... , ,, -- � - ..KR- �U SSE WAYS 1 c- _ A AVE eQ { --j 1 MEADOWS RD e Y)• '�">; _ `.' '�0 SW'BONITA RD -7. (- EA�P� 4� kk' — ,,0pUNTAI/y 81VD— 1 skIs i-'w �'4( A z Fl A \�O ! �'t^ o 'N o a r �QY� EJ`� MGv-- f %. 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' °R E c o� j 0 o.zs o.s �1^ s ■� { �� "i J mintio: .go- 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-1/PAGE 50 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 59 OF 90 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-1/PAGE 51 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 60 OF 90 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-1/PAGE 52 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 61 OF 90 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-1/PAGE 53 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 62 OF 90 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-1/PAGE 54 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 63 OF 90 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-1/PAGE 55 OF 55 LU 24-0024 EXHIBIT D-2/PAGE 64 OF 90 Lake Oswego Contextualized Housing Needs Assessment EXECUTIVE SUMMARY (WORKING DRAFT) 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.The median square footage was 2,300 sq.ft. Attached units and condominiums 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. MIG, Inc. I Lake Oswego Housing Production Strategy 1 PP 22-0005 ATTACHMENT 2/PAGE 1 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 65 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 • 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. 50% of renter households are considered cost burdened. • Publicly Assisted Housing.The state tracks three current subsidized affordable housing properties in Lake Oswego,with a total of 76 units. 75 of these units are offered for elderly residents.The Marylhurst Commons will offer 100 affordable units for families. 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. No agricultural worker housing exists currently in Lake Oswego. Figure EX-1. Lake Oswego Home Sales(12 months,July 2022 to July 2023) 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 I $200,000-$299,000 ■ 43 $100,000-$199,000 13 I Detached Home Manuf. Home <$100,000 0 Attached Home Condo I 0 100 200 300 400 Source: RMLS,Johnson Economics MIG, Inc. I Lake Oswego Housing Production Strategy 2 PP 22-0005 ATTACHMENT 2/PAGE 2 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 66 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 Figure EX-2. Median Home Sale Price(2010-2022) Median Sale Price $900,000 $s0o,000 $7oo,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 ti� titi titi ti'I, ti� tih ti� ti1 ti� ti� ti� titi ti'V 0 LO , ', 10 ,\, ,lo ,1, 0 Source: RMLS,Johnson Economics Figure EX-3. Effective Rent Per Unit, 2001 to 2023. Effective Rent Per Unit $2,500 $2,000 $1,500 $1,000 $500 $0 0-• 0- 0 0- 0- 0- 0 0- 0- 0- 0 0- oli 0- 0- 0- 0- D- ytiy1, y °` 0 A cb ot 07 � 0t9 � ti ' a o o 0000000 ooti ti o oti oti oti tio� ,yy 'Vy ,y ,y 'V 'Vd ,y ,yy 'V Source: CoStar,Johnson Economics MIG, Inc. I Lake Oswego Housing Production Strategy 3 PP 22-0005 ATTACHMENT 2/PAGE 3 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 67 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 Figure EX-4. Vacancy Rate, 2001 to 2023 Vacancy Rate 12% 10% 8% 6% 4% 2% — 0% yy � t y \ � y ) oo ,00\,oc) o>. 'A, ti� titi 6 1, �a ��o yo Source: CoStar,Johnson Economics Figure EX-5. Housing Affordability. 35% 30% 29% 25% - 25% 22% 0 20% 0 15°/ 14% 6 10% 7% s 5% 3% 0% ti0\0 o\a ��o\o ��o\o ��o\o ono 1- �o co �ot oa % of Income to Gross Rent Sources: US Census,Johnson Economics Census Table: B25070 (2021 ACS 5-yr Estimates) MIG, Inc. I Lake Oswego Housing Production Strategy 4 PP 22-0005 ATTACHMENT 2/PAGE 4 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 68 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 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. • Disability.There are roughly 3,140 disabled individuals in Lake Oswego. • Veterans. Veterans are 6%of the adult population. 63%are 65 and older. Veterans have lower than average poverty level, and 21% have some sort of disability. Figure EX-6. Population by Race Share of Population by Race NO% Lake Oswego R2010) SO ■Lake Oswego (2020) 50g Clackamas Co. 40 Oregon 2096 , 8Q 0% • • Cl) £ -o as C 0 as o o c 0 10 +, L rq Z 0_ iCC J CU 0 p L D c rq O O 2 CS .,3 -E c +A < rq 1 Cl) 6 ro +o 7 -,q E d i- L i _ +o I SOURCE: US Census,Johnson Economics LLC Census Tables: P1, P2 (2010, 2020) MIG, Inc. I Lake Oswego Housing Production Strategy 5 PP 22-0005 ATTACHMENT 2/PAGE 5 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 69 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 Figure EX-7. Disabled Population 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) 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.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. MIG, Inc. I Lake Oswego Housing Production Strategy 6 PP 22-0005 ATTACHMENT 2/PAGE 6 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 70 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 • 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. 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 MIG, Inc. I Lake Oswego Housing Production Strategy 7 PP 22-0005 ATTACHMENT 2/PAGE 7 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 71 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 into an agreement with Mercy Housing NW for construction of 100 units of affordable family housing. 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.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 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. MIG, Inc. I Lake Oswego Housing Production Strategy 8 PP 22-0005 ATTACHMENT 2/PAGE 8 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 72 OF 90 CHNA Executive Summary (Working Draft) 10/24/2023 o Tree protection and tree planting and landscaping standards are also very prescriptive and can be difficult to meet on constrained sites. o Open space standards for multi-family housing are excessive, limit the available space on a site for housing units, and don't necessarily lead to great outcomes. 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. A focus of the Housing Production Strategy will be to identify tools and strategies to remove, reduce, or help housing producers overcome these barriers. MIG, Inc. I Lake Oswego Housing Production Strategy 9 PP 22-0005 ATTACHMENT 2/PAGE 9 OF 9 LU 24-0024 EXHIBIT D-2/PAGE 73 OF 90 Housing Production Strategy Program - List of Tools, Actions, and Policies OREGON ADMINISTRATIVE RULE CHAPTER 660, DIVISION 8, ATTACHMENT B Revised -February 2022 Housing Production Strategy Guidance Document: To assist cities in the creation and drafting of their Housing Production Strategy Report in compliance to HB 2003, the Department of Land Conservation and Development (DLCD) provided a guidance document of housing production strategies a jurisdiction could employ to facilitate housing production in their community. The document contains a list of strategies assigned by categories. Each strategy includes a brief overview of its intent and purpose as well as a projection of its expected impact by housing tenure and by income bracket. As the jurisdiction prepares a housing production strategy report, the jurisdiction would review the guidance document to select specific strategies that work best for their community and that address their identified Housing Needs. The jurisdiction would simply reference the strategy number when describing the adoption, implementation, and expected magnitude of impact of each strategy in their report. If the jurisdiction has a strategy that is not listed they would propose this under Category Z. Categories of Tools, Actions, and Policies The proposed categories contain tools, strategies, or policies that are intended to: 1. Reduce financial and regulatory impediments to develop Needed Housing; 2. Create financial and regulatory incentives for development of Needed Housing; 3. Provide access to local, state, and federal resources; and 4. Allow for local innovation. These are strategies that a jurisdiction can take to proactively encourage Category A Zoning and Code Changes needed housing production through zoning and code modifications. These strategies may also include regulations to ensure housing goals are met. These strategies address known impediments to providing needed housing. Category B X Reduce Regulatory Impediments These include but are not limited to zoning, permitting, and infrastructure impediments. Category C Financial Incentives These are a list of financial incentives that jurisdictions can give to developers to encourage them to produce needed housing. These are a list of resources or programs at the local, state and federal level Category D Financial Resources that can provide money for housing projects. The majority of these resources are intended to provide money for affordable housing projects. TAX These are a list of tax exemption and abatement programs that are intended Category E Tax Exemption and Abatement $= to encourage developers to produce housing. These are strategies that secure land for needed housing, unlock the value of Category F Land, Acquisition, Lease, and Partnerships land for housing, and/or create partnerships that will catalyze housing developments. Any other Housing Production Strategy not listed in Categories A through F Category Z `� Custom Options that the jurisdiction wishes to implement will be outlined in this section and • numbered accordingly. Equitable Outcomes Note: Some of the strategies may not create an overall housing production increase however, they do increase or maintain housing for a specific affordability target or population. Caution Note: Jurisdictions should be careful when picking strategies to ensure that housing strategies together in their aggregate do not work to suppress the overall supply of housing of stiffle housing production. PP 22-0005 ATTACHMENT 3/PAGE 1 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 74 OF 90 Anti-Displacement and Gentrification Toolkit: In the Spring of 2021 DLCD partnered with Portland State University to create an anti-displacement and gentrification toolkit.Though not mandatory to use,the toolkit was designed 1) help jurisdictions better measure the pressures of anti-displacement and gentrification in their communities, and 2) direct HPS strategies towards mitigating these pressures as more housing is produced. In the process several additional columns were created to better understand the impact of each strategy when it comes to anti-displacement work. These additional columns are defined as follows: Housing Equity Impact: DIRECT, (DIRECT), INDIRECT,AND (INDIRECT) DIRECT strategies for meeting housing equity needs are focused on the supply. They are needed immediately and persistently by groups that are vulnerable in the housing market.These strategies directly produce or protect affordable housing, especially for communities of color and other protected class communities.They have strong impacts for anti-displacement that can be seen in the short-term. A(DIRECT) strategy is one that is specific to affordable housing and/or protected classes and vulnerable populations, but does not actually create housing. Strategies that allow for more housing overall are INDIRECT; strategies that are oriented towards smaller units or diverse housing types are (INDIRECT)-they are more likely to address equity needs, but may also require additional tools to focus on adffordability,tenure, or accessibility. Likewise,strategies for housing preservation can be important for anti-displacement planning, if they are focused on maintaining affordability along with quality. Neighborhood Typology: The toolkit establishes a methodology for cities to categorize census tracts based on where gentrification and displacement pressures have already occurred or may occur in the future.These six Neighborhood Typologies (Affordable and Vulnerable, Early Gentrification,Active Gentrification, Late Gentrification, Becoming Exclusive, and Advance Exclusive)reflect the spatial distribution of housing inequity. Cities should take special consideration of these spatial inequities in the development of their Housing Production Strategies. Some Housing Production Strategies when applied flatly across an entire city result in negative or inequitable outcomes for communities members most at risk of displacement. The This section is intended to highlight which strategies may have unintended negative impacts on particular neighborhood typologies.This is not to imply that all Housing Production Strategies will have negative impacts on housing equity- many strategies work without particular concern across any kind of neighborhood. However,some housing production strategies are better suited for particular neighborhood types, and some strategies need special nuance or policy refinement to add special mitigation protections against further potential displacement impacts. Green: GO use and implement, especially if a tool is useful in this neighborhood type Yellow: PROCEED CAUTIOUSLY and carefully.This means that a strategy needs to be monitored for impacts and possibly paired with more direct mitigating strategies in this neighborhood type. Red: STOP AND PLAN. This strategy is highly likely to create displacement pressures and must be paired with mitigation measures in this neighborhood type. PP 22-0005 ATTACHMENT 3/PAGE 2 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 75 OF 90 Category A: Zoning and Code Changes These are strategies that a city can take to proactively encourage needed housing production through zoning and code modifications. These Strategies may also include regulations to ensure housing goals are met. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Ensure Land Zoned for Publicly-Subsidized (< 30% AMI) This strategy will work on establishing minimum density standards, updating development codes to prohibit new single-family ° Higher Density is not Affordable (30-80% AMI) For Rent Planning and continued monitoring with attention to displacement in gentrifying A01 detached housing in high density zones, and allow single-family detached homes in medium density zones only if they meet ° Morrow County HNA, 2017 INDIRECT All Developed at Lower minimum density or maximum lot size requirements. Workforce (80-120 AMI) For Sale areas; add incentives for direct production of equity needs Densities Market Rate (> 120/° AMI) In many cities, towns, and counties, changes to local zoning policies can help to facilitate the development of lower-cost housing Zoning Changes to types, such as Accessory Dwelling Units (ADU's), manufactured homes, multifamily housing, micro-units, or single-room -ublicly-Subsidized (< 30% AM., Facilitate the Use of occupancy developments. Changes to local zoning policies can also help to facilitate the development of safe overnight sheltering For Rent A02 Lower-Cost Housing options for unhoused residents, such as Safe Park programs, Conestoga Hut Micro-shelters, sleeping pod micro-shelters, and Workforce (80-120% AMI) For Sale Local Housing Solutions DIRECT All Planning and continued monitoring of production vs. needs Types others.To increase the likelihood the market can produce lower-cost housing types, it is important to make them allowable as of Market Rate (> 120% AMI) right in all locations and neighborhoods. If not, still provide flexibility in zoning code to still issue variance or conditional use permits that allow deviations from existing regulations on a case-by-case basis. FAR, Density, or Height ° Early Gentrification A03 Bonuses for Affordable FAR, density, and height bonuses for affordable housing developments. Note: FAR/density bonuses do not work if there is not Affordable (30-80/° AMI) For Rent -- DIRECT Active Gentrication These tools work best in strongmarkets; have a medium impact on displacement adequate height to make additional development feasible. Workforce (80-120% AMI) JAIL p p Housing Late Gentrification Publicly-Subsidized (< 30% AMI) Housing rehabilitation codes (or rehab codes) are building codes designed to reduce the costs of renovating and rehabilitating ° Early Gentrification Housing Rehabilitation Affordable (30-80% AMI) For Rent Where naturally occurring affordable housing is being lost to rehab; add incentives A04 existing buildings, thereby facilitating the continued availability and habitability of older rental housing and owner-occupied homes. ° Local Housing Solutions INDIRECT A- " "'hntrification Codes This is especially helpful to facilitate conversation into multiplex housing. Workforce (80-120 AMI) For Sale Late Gentrification to maintain affordability to increase anti-displacement impacts Market Rate (> 120/° AMI) ADUs are smaller, ancillary dwelling units located on the same lot as a primary residence. They are typically complete dwellings with their own kitchen, bathroom and sleeping area. Given that ADUs are usually built by individual homeowners with limited ADUs, cottage, and middle housing have a medium impact on preventing Code Provisions for experience or financial resources, code provisions can have a significant influence on the feasibility of their development and For Rent City of the Dalles Housing A05 ADUs enable more widespreadproduction. For example, easingoccupancy requirements, allowingmore ADUs on a lot, and expanding Workforce (80-120% AMI) For Sale Strategy Report (2017) (INDIRECT) All displacement, with planning and continued monitoring of production; add incentives p p p y q p g and programs to target affordability and increase impact maximum size requirements. Certain building and development code regulations can inadvertently drive up ADU construction Market Rate (> 120% AMI) costs. More flexibility in siting, design, construction and lower fees are also needed to achieve feasibility in many cases. Affordable & Vulnerable Publicly-Subsidized (< 30% AMI) Broaden the definition of "housing unit" to allow for more flexibility across use types. For example, SROs are not always allowed in ° Early Gentrification Broaden the Definition Affordable (30-80% AMI) For Rent Planning and continued monitoring of production and locations; add incentives and A06 of Housing Type certain residential zones. Including them in the definition of housing unit, or broadening the set of uses allowed across all Workforce (80-120% AMI) For Sale -- (INDIRECT) Active Gentrification programs to increase impact and avoid clustering residential districts, would allow for greater flexibility of housing type. Market Rate (> 120% AMI) Late Gentrification Exclusive Affordable & Vulnerable Publicly-Subsidized (< 30% AMI) Allow for Single Room Allow for SRO, Adult Dorms, and Cohousing in all residential zones. Note: SROs may be favored due to their ability to serve more Early Gentrification Affordable (30-80% AMI) For Rent Planning and continued monitoring of production and locations; add incentives and A07 Occupancy in people for less cost; it is not always a better housing type for all populations. Considerations should be given to ADA accessibility -- DIRECT Active Gentrfication(80-120% AMI) =or Sale cation programs to increase impact and avoid clustering Residential Zones when planning SROs. Market Rate (> 120% AMI) Late Gentrification Exclusive Cottage clusters are groups of relatively small homes typically oriented around shared common grounds with 4-14 homes typically between 1,000-1200 square feet in size. By further defining cottage cluster design and development standards, housing code can effectively address a predictable process for developers, and potentially encourage greater production for this housing type. Some examples may include: allowing for a wide range of sizes and attached/detached options for housing; not specifying ownership Publicly-Subsidized (< 30% AMI) ADUs, cottage, and middle housing have a medium impact on preventing Promote Cottage structure so that both renters/owners can live on the same cluster; ensuring that minimum site size, setbacks and building Affordable (30-80% AMI) For Rent City of the Dalles Housing A08 Cluster Housingcoverage requirements do notprohibit cottage cluster development on smaller lots; draft design requirements that ensure Workforce 80-120% AMI) For Sale StrategyReport, April 2017 (INDIRECT) All displacement, with planning and continued monitoring of production; add incentives g q g p g q ( p p and programs to target affordability and increase impact neighborhood compatibility, and efficient use of land, but are not so specific as to restrict the ability to adapt to varying Market Rate (> 120% AMI) neighborhood contexts. Other ideas include: uniformed codes, form-based codes, and allowing shared underground infrastructure when practical (e.g. sewer lines from each cottage can connect to one main that runs out to street, rather than 8 parallel lines out to street). Short-term rentals can be seen as an investment strategy for small investors, but can also remove rental housing supply from the Short-Term Rentals market, in effect driving up rent from the local housing market. To avoid this effect, regulations can include definitions for various Affordable (30-80% AMI) For Rent A09 forms of short-term rentals, defining use, and occupancy standards, and even adding limits to the number of days that a short term ° Morrow County HNA, 2017 DIRECT All High impact on displacement especially in hot neighborhoods Regulations rental can be in operation in order to mitigate their impact on the local housing market. Short Term Rental Regulation should begin Workforce (80-120% AMI) with/include registration requirements for all short term rentals. Market Rate (> 120/° AMI) Requiring that a portion of the units within a market rate development be set aside as affordable housing. This tool will often be combined with property tax exemptions, fee waivers, or development bonuses to offset the cost of affordable housing units. Publicly-Subsidized (0 30% AMI) These tools work best in strong markets; have a medium impact on displacement; Careful consideration should be employed when enacting inclusionary zoning. Note: A number of studies, including those Affordable (30-80% AMI) For Rent Active Gentification A10 Inclusionary Zoning analyzing the IZ Ordinance in Portland, have shown that IZ suppresses, rather than increases, the creation of new housing. Given Workforce (80-120% AMI) -u, oaie -- DIRECT Late Gentrification they pair with incentives that can be customized to context for maximum overall that, if IZ is proposed, the financial components need to be calculated right to ensure that the inclusionary rate is not too high for Nicli KUL rtdLC k-- FLU/° t\IVII) impact the offsets provided and that overall housing production increases as a result. PP 22-0005 ATTACHMENT 3/PAGE 3 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 76 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Add Restrictive Adding restrictive covenants to ensure affordability over time at a certain income level for affordable housing developments. Publicly-Subsidized (< 30% AMI) A11 Covenants to Ensure Restrictive covenants are usually placed on a property in exchange for a local or state government providing financial contribution Affordable (30-80% AMI) For Rent -- DIRECT All Strong tool for subsidized housing preservation in all markets Affordability to the project. These covenants work best over the short-term (up to 30 years); after that they become unable to accommodate vvorKtorce (i IMI U-1LU"/o AI) For Sale changed circumstances. 1 Market Rate (> 120% AMI) Align Lot Division Sometimes there are conflicting regulations between the density that is allowed by the zoning code versus the density that is allowed when lot division (for fee-simple lots) is considered. This can cause unintentional reductions in density, only caused by the Affordable (30-80% AMI) For Rent Planning and continued monitoring of production; add incentives and programs to Al2 Density with Zoning fact that the developer would like to create for-sale housingon fee-simple lots. Ideal) the densities would be aligned, so there is Workforce (80-120% AMI) For Sale -- INDIRECT All target affordabilityand increase impact Density p P y' ° g p not a density reduction between - condominium versus fee-simple developments. Market Rate (> 120/o AMI) i Enable and encourage Transfer of Development Rights (TDR) to maximize available Floor Area Ratio (FAR) provided public ° Early Gentrification FAR & Density Transfer Affordable (30-80% AMI) For Rent These tools work best in strong markets; have a medium impact on displacement A13 benefit (e.g. historic preservation & affordable housing) are attained and covenants ensure long term benefit. This strategy ° -- DIRECT Active Gentrification Provisions assumes that there are adequate, realistic, and relatively easy receiving areas for TRDs. Workforce (80-120 0o AMI) Late Gentrification when pained with affordability tools Market Rate (> 120% AMI) Re-examine Critically re-assess requirements for ground floor retail; lively streetscape is a worthy goal, but not for every street. Jurisdictions Publicly-Subsidized (< 30% AMI) Requirements for can inadvertently impose massive costs on developers by requiring ground floor retail and commercial space even when it's Affordable (30-80% AMI) For Rent A14 -- Ground-floor unlikelyto be fullyoccupied orgenerate nearlyenough revenue topayfor itself. Ground floor uses should be driven bymarket Workforce 80-120% AMI) =or Sale City of Bend INDIRECT All P g ( Retail/Commercial demand; with residential use more beneficial to meet needed housing in some cases (eg. affordable housing). Market Rate (> 120% AMI) Enable developments that support multiple unit sizes, types, and tenure options to promote diverse housing options in Encourage Diverse high- opportunity neighborhoods. With a goal of reversing historical patterns of racial, ethnic, cultural and socio-economic exclusion. Publicly-Subsidized (< 30% AMI) Use an analysis of "Access to Opportunity" to decide which zones or locations (via zoning overlay) to determine where this is Housing Types in High- Affordable (30-80% AMI) For Rent Late Gentrification Planning and continued monitoring of production; add incentives and programs to A15 appropriate. Goal is to promote access to opportunity (e.g., high performing schools, multiple transportation options, services, o -- (INDIRECT) Opportunity etc.) to households with a range of backgrounds and incomes. The jurisdiction could pare this strategy with a robust program of Workforce (80-120% AMI) For Sale Exclusive target affordability and increase impact Neighborhoods Market Rate (> 120/o AMI) incentives (e.g, deeper financial incentives, greater range of housing types, more regulatory waivers, etc.) to be made available in these areas than in other areas of the city. Publicly-Subsidized (< 30% AMI) Manufactured Housing Change the zoning of existing manufactured housing communities to be preserved to a single-use zone that only allows Affordable & Vulnerable Affordable (30-80°/o AMI) For Rent City of Portland Mfd Dwelling Planning and monitoring for potential displacement; may need additional incentives A16 Community manufactured housing communities. Consider lifting restrictions of stick-built homes in cooperatively-owned and other Workforce (80-120% AMI) For Sale Park Amendment DIRECT Early Gentrification and programs in active gentrification for higher impact Preservation Zone manufactured homes. Market Rate (> 120% AMI) Active Gentrification 1 Allow a land division where small lots or parcels are created below the standard lot/parcel size for dwelling units that are limited in Publicly-Subsidized (< 30% AMI) size. Calculate density differently for the dwelling units due to their limited size. Density example: ADUs, cottage, and middle housing have a medium impact on preventing A17 Small Dwelling Unit Affordable (30-80°/o AMI) For Rent City (INDIRECT) displacement,of Bend All with planningand continued monitoringof production; add incentives Developments a. Dwelling units 600 square feet or smaller: 0.25 of a dwelling unit. Workforce (80-120% AMI) For Saleand programs to target affordability and increase impact b. Dwelling units 601 to 1,200 square feet: 0.50 of a dwelling unit. Adopt increased density codes by right near transit stations, with higher levels of density near high capacity/high frequency ° Affordable & Vulnerable Increase Density near Publicly-Subsidized (< 30% AMI) stations, then stepping back into residential areas. Automatically upzone based on transportation corridor classifications; meaning Early Gentrification Planning for transit extensions, especially in areas of early gentrification, is Transit Stations and Affordable (30-80% AMI) For Rent A18 wider ROWs get more flexibility in land use by right. This will add some flexibility for new transit stops, including bus stops. Be o -- (INDIRECT) Active Gentrification important; add incentives and programs to target affordability and increase impact Regional Multi-use careful not to word the language so that people incorrectly assume that the density can only come after the transit has been put in Workforce (80-120% AMI) or aie� Late Gentrification for anti-displacement of transit-riding populations Trails 0 place. Market Rate (> 12 /o AMI) Exclusive High Density Requiring a certainportion of to-be-annexed land to include a percentage of high density. Be careful that this strategyis not used Affordable 30-80°/ AMI) For Rent Planningand continued monitoringfor housing add incentives for direct A19 Requirements for to-be- q g p g g ( o City of Newberg INDIRECT All needs; Annexed Land as a way for low density areas in high-infrastructure locations to shirk responsibility to upzone. Workforce (80-120% AMI) production of equity needs Market Rate (> 120% AMI) Providing a pre-approved set of plans for middle housing typologies (ex. Cottage clusters, townhomes, and SROs). The plans Publicly-Subsidized (< 30% AMI) Pre-Approved Plan Sets ADUs, cottage, and middle housing have a medium impact on preventing would be highly-efficient, designed for constrained lots and low cost solutions, and would allow for streamlined permitting. This Affordable (30-80°/o AMI) For Rent A20 for Middle Housing would helpattract developers that typically developonlysingle-family housingtoget into the missingmiddle housingproduction. Workforce 80-120% AMI) For Sale -- (INDIRECT) All displacement, with planning and continued monitoring of production; add incentives Typologies p Yp Y g Y ( and programs to target affordability and increase impact Consider partnering with a university, design institution, or developing a competition to produce plans. Market Rate (> 120% AMI) Provide a pre-approved set of plans for ADU designs (6-10 sizes/configurations) that, if chosen by a developer/owner, would lead ADUs have a medium impact on preventing displacement, with planning and A21 Pre-Approved Plan to automatic approvals and reduced permitting schedule. Plans would reduce the need for architectural costs and reduce barriers Affordable (30-80°0o AMI) For Rent __ (INDIRECT) All continued monitoring of production; add incentives and programs to target Sets for ADUs 0 to entry. Workforce (80-12 /o AMI) For Sale affordability and increase impact Market Rate (> 120/o AMI) Publicly-Subsidized (< 30% AMI) Mixed Housing Types in Affordable (30-80% AMI) For Rent Cottage and middle housing have a medium impact on preventing displacement, A22 Planned Unit Require or incentive a mix of housing types within Residential Planned Unit Developments (PUD). Workforce (80-120% AMI) For Sale City of Forest Grove INDIRECT All with planning and continued monitoring of production; add incentives and programs Developments Market Rate (> 120% AMI) to target affordability and increase impact PP 22-0005 ATTACHMENT 3/PAGE 4 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 77 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Provide incentives in the development code to increase the number of units designed to meet Universal Design, Lifelong Housing Publicly-Subsidized (< 30% AMI) A23 Accessible Design Certification, and other similar standards. Examples of incentives include: expedited review and permittingprocessing, planningAffordable (30-80/° AMI) For Rent -- DIRECT All Directlyaddresses equitable housingneed g p p Workforce (80-120% AMI) For Sale q and building fee reductions, system development charge deferrals, density or building height bonuses. Market Rate (> 120% AMI) Many smaller housing formats are built on wheels, including tiny homes on wheels (THOWs), park model homes, and recreational vehicles (RVs). providing occupants significant flexibility in where they site their homes, yet many local codes prohibit the siting of Pubii-i—c11keirli o,i to 'VIOL AMI) Legalize Alternative these housingtypes outside of manufactured homeparks and RVparks. Permittingthese housingtypes, with appropriate Affordable (30-80% AMI) For Rent Tiny House on Wheels (THOWS) A24 Housing Types on yp yp siting o (INDIRECT) All -- Wheels and in Parks standards to ensure adequate public facilities access and life/safety, can provide additional permanent or interim housing options Workforce (80-120/° AMI) For Sale City of Portland outside of parks. Allowing broader siting of RV parks and amending standards to allow THOWs, park model homes, and other Market Rate (> 120% AMI) housing types on wheels can also provide additional siting opportunities. The Oregon Reach Code, Part II, defines a "tiny house" as a dwelling that is 400 square feet or less in floor area, excluding lofts. Legalize and Encourage While many (though not all)jurisdictions allow tiny homes to be sited as a primary or accessory dwelling, few encourage their I Publicly-Subsidized (< 3n°/ AMI) A25 Tiny Homes and development through regulatory incentives. Legalizing the siting of tiny homes as primary or accessory dwellings through the Affordable (30-80% AMI) For Rent __ (INDIRECT) All -- Villages removal of minimum unit size requirements can enable the development of this housing type. Jurisdictions can encourage the Workforce (80-120/° AMI) For Sale development of tiny houses and tiny house villages by providing regulatory incentives - such as reductions in required off-street iviarket Kate (> -1zu i° i- ivii) parking or open space - for units less than 400 SF in floor area Category B : Reduce Regulatory Impediments These strategies address known impediments to providing needed housing. These include but are not limited to process, permitting, and infrastructure impediments. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Remove or Reduce Removing parking requirements for residential uses provides the opportunity to reduce the amount of lot area used for pavement Publicly-Subsidized (< 30% AMI) and provides more space for housing and open space. This strategy offers greater flexibility to site housing and reduces costs Affordable (30-80% AMI) For Rent B01 Minimum Parking associated with providing parking. Allow developers to respond to market demands and transit access without having the burden Workforce (80-120% AMI) For Sale City of Tigard INDIRECT All -- Requirements of parking minimums. Consider removing parking requirements near transit or for affordable housing. Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) Remove Development Streamlining the conversion of larger single-family homes into multi-unit dwellings (e.g. duplex or triplex). This should be aligned ° Converstions that upgrade and upscale may displace through broader B02 Code Impediments for with reduced off-street parkingrequirements, so that conversion doesn't trigger the need to add additional driveways (or isn't Affordable (30-80/° AMI) For Rent Cityof Tigard (INDIRECT) Early Gentrification neighborhood changes; conversions that create more rental and moderate cost p q gg y Workforce (80-120% AMI) �aua g Active Gentrification g g ' Conversions halted by inability to add additional driveways). Market Rate (> 120% AMI) housing may stabilize Expedited permitting will help to reduce costs of development of Needed Housing as identified by the City. Consider projects with direct or indirect funding from local government as essential and projects with long term affordability covenants through tax Publicly-Subsidized (< 30% AMI) abatement or inclusionary requirements as high priority and/or only expedite housing according to the jurisdictions identified ° Expedite Permitting for Affordable (30-80% AMI) For Rent City of Portland (direct funding B03 Needed Housing Types needed housing types. Workforce (80-120% AMI) For Sale only) (INDIRECT) All -- Localgovernments might also consider assigning a designating staff to shepherd projects through the construction process in Market Rate (> 120% AMI) g g g g g p g order to expedite process. Publicly-Subsidized (< 30% AMI) B04 Expedite Lot Division for Expedite lot divisions and subdivisions for affordable housing projects Affordable (30-80% AMI) For Rent -- (DIRECT) All -- Affordable Housing =or Sale Publicly-Subsidized (< 30% AMI) Reduce Regulatory Remove barriers such as minimum street frontage, driveway requirements, etc., that impact minimum lot size/density during lot Affordable (30-80% AMI) For Rent Increased dendsity in gentrifying neighborhoods may not serve to stabilize; add B05 Barriers to Lot Division division. Preferablyallow by-right lot division upto max number of units allowed. Workforce 80-120% AMI) For Sale -- (INDIRECT) All incentives and programs to target affordabilityand increase impact ( p g g p Market Rate (> 120% AMI) In some cities, towns, and counties, the process associated with obtaining approval for new construction is so time-consuming or costly that it dampens the amount of new development and adds significantly to its costs. To help streamline the process, cities, Publicly-Subsidized (< 30% AMI) Streamline Permitting towns and counties can initiate a comprehensive review of all steps in the development approval process to identify the factors Affordable (30-80% AMI) For Rent Planning and continued monitoring of production; add incentives and programs to B06 Process that most significantly suppress new residential construction and redevelopment. With a clearerpicture of the obstacles, local Workforce (80-120% AMI) For Sale Local Housing Solutions INDIRECT All target affordabilityand increase impact g Y pp p g p leaders can then begin to assess whether they can be reduced or eliminated to stimulate development activity. In doing the Market Rate (> 120% AMI) comprehensive review, it is critical that actual timeline performance be evaluated not just the planned timeline. Flexible Regulatory Often, nonprofit housing developers and housing agencies face regulatory impediments to building affordable housing, which can Publicly-Subsidized (< 30% AMI) often derail projects. This strategy provides a flexible framework for delivery of affordable housing including but not limited to Affordable (30-80% AMI) For Rent Planning and continued monitoring of production and locations; add incentives and B07 Concessions for reduced minimum setbacks, height bonuses, and/or allowing for flexibility in how units are delivered. This strategy is not intended For Sale Morrow County HNA, 2017 (DIRECT) All programs to increase impact and avoid clustering Affordable Housing to allow for a lower quality for affordable housing buildings. PP 22-0005 ATTACHMENT 3/PAGE 5 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 78 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Waive Off-Site Waive infrastructure build-out requirements for infill affordable or needed housing projects constructed in neighborhoods without a Publicly-Subsidized (< 30% AMI) Infrastructure network of those amenities currently. Example: Waive requirements for curb, gutter and sidewalk build-out on the lot if it is Affordable (30-80% AMI) For Rent Clackamas CountyHousingPlanningand continued monitoringofproduction; add incentives and programs to B08 Requirements for p q o (INDIRECT) All p g Needed or Affordable located in an area without either connecting curb, gutter, and sidewalk currently or viable plans for funding infrastructure Workforce (80-120% AMI) For Sale Report target affordability and increase impact Housing construction within the next decade. This is especially relevant in smaller, more rural locations. Market Rate (> 120% AMI) Programming work in a Capital Improvements Programming (CIP) so that projects are constructed sooner to support development Publicly-Subsidized (< 30% AMI) Capital Improvements of middle housing or to open up more land in an Urban Growth Boundary (UGB) for development of middle housing. Coordinate Affordable (30-80% AMI) For Rent B09 Pro rammin (CIP) housingplanningwith CIP work toprioritize those projects that would support development (e.g. new water line, sewer pumping Workforce (80-120% AMI) For Sale -- INDIRECT All -- Programming p 1 pp p p p g station). If the UGB is amended or the premises on which the CIP were based changed substantially, the CIP should be revised. Market Rate (> 120% AMI) sewer, and transportation PFPs and gettingcapital improvement projects (CIP) built so that costs to developon Publicly-Subsidized (< 30% AMI) Completing water, p p p p J Affordable (30-80% AMI) For Rent City of Tigard B10 Public Facility Planning land zoned for needed housing can be further anticipated and supported. In addition, public utilities planning also allows for more INDIRECT All -- unit capacity, especially in areas that are upzoned for denser housing. Workforce (80-120% AMI) For Sale City of Bend Market Rate (> 120% AMI) Change the culture of Planning / Development Services departments to have a pro-housing agenda for both rental and homeownership. Supplement with fair housing education and education on the supply and demand impact on housing prices. The Publicly-Subsidized (< 30% AMI) State could support jurisdictions in this effort by providing an incentive (e.g. funding set-aside) for jurisdictions that adopt Affordable (30-80% AMI) For Rent A more focused agenda on afffordable housing will address NIMBY and stigma B11 Pro-Housing Agenda aggressive pro-housingpolicies. In the State of California housingfunds areprioritized for cities that adopt pro-housingpolicies. Workforce (80-120% AMI) For Sale -- INDIRECT All issues with rental housing, affordable housing, and protected classes gg p g, g� Though it may be counterintuitive, since this allows anti-housing cities to avoid housing altogether. Alternatively, the State of Market Rate (> 120% AMI) Oregon could consider a stick rather than carrot approach (e.g. withholding highway funds). Change the culture of Planning / Development Services departments to have a pro Affordable Housing agenda for both rental and homeownership. Supplement with fair housing education and education on the supply and demand impact on housing prices. The Publicly-Subsidized (< 30% AMI) A pro-affordable housing agenda does not create housing directly; but it is an Pro Affordable Housing State could support jurisdictions in this effort by providing an incentive (e.g. funding set-aside) for jurisdictions that adopt Affordable (30-80% AMI) For Rent important component of planning to ensure that equity is achieved. Including Fair B12 Agenda aggressivepro Affordable Housingpolicies. This agenda should include aplan to ensure that affordable housingis not For Sale -- (DIRECT) All Housingand addressingprotected classes such as race/ethnicityand national 9 9g 9 � suppressed in single-family zones or in wealthier communities. As part of this, encourage departments to look closely at how origin will further target this strategy to equitable outcomes existing approaches may inadvertently favor one type of tenure over another. Align Bike Parking Affordable (30-80% AMI) For Rent B13 Requirements with Require bicycle parking requirements more in line with actual use. Example: No more than 1-1.5 bike parking stalls per unit. -- INDIRECT All -- Workforce (80-120% AMI) Actual Use Market Rate (> 120% AMI) Amend the comprehensive plan to explicitly make Affirmatively Furthering Fair Housing a Housing Policy. Example below, based on federal guidance on affirmatively furthering fair housing and current state protected classes. Jurisdictions may add additional protected classes, such as ancestry, ethnicity, or occupation. Additionally, a jurisdiction could create an Analyis of Impediments to Fair Housing (Al), even when not required, and conduct fair housing training for Council, Planning Commission, and other relevant Adopt Affirmatively policymakers. Jurisdictions would work to make known evidence and best practices in planning, to reverse discrimination and Publicly-Subsidized (< 30% AMI) addressing affordability and equitable access for all people; as well as considering B14 Furthering Fair Housing exclusion as well as concentrations of wealth, a required aspect of the comprehensive plan process. Affordable (30-80% AMI) For Rent -- (DIRECT) All neighborhood clustering and neighborhood change as part of access to as a Housing Policy in Workforce (80-120% AMI) For Sale opportunity. It is an important undergirding for housing planning and directing Comprehensive Plan Housing Policy x: Affirmatively Furthering Fair Housing Market Rate (> 120% AMI) resources; but does not create housing [Jurisdiction] affirmatively furthers access to decent, affordable housing with convenient access to the services and destinations Oregonians need to thrive without regard to their race, color, religion, national origin, sex, familial status, mental or physical disability, source of legally-derived income, marital status, sexual orientation or gender identity. Reduce the Power of Many jurisdictions give communities/neighborhoods too much veto power on both zoning policy, and particular project proposals Publicly-Subsidized (< 30% AMI) to keep others who they don't approve of from moving in. Dedicate funds to educate citizens on poverty, exclusion, and racial AMI) For Rent removingpolicies ais a stronger and more direct impact than educating NIMBYism to stop, Affordable (30-80% g p B15 slow, change, or reduce dynamics. Remove policies that allow neighborhood opposition to evidence based zoning proposals and individual projects. Workforce (80-120% AMI) For Sale -- (DIRECT) All communities. affordable housing Decisions about what kind and how much housing goes where it needs to be data-driven and focused on equitable outcomes Market Rate (> 120% AMI) instead of the best outcomes for those with the most money and/or privilege. Holistic Planning to Geography is often at odds with social equity; natural beauty is often in wealthy neighborhoods, as are historic buildings, allowing Publicly-Subsidized (< 30% AMI) them to exclude new development and affordable housing. Develop a targeted plan to distribute density within the jurisdiction Affordable (30-80% AMI) For Rent Planning and continued monitoring of production; add incentives and programs to B16 Distribute New Density more equitably to areas with quality schools, access to natural resources etc. Additionally, work to distribute transit equitably to Workforce (80-120% AMI) For Sale -- (INDIRECT) All target affordability and increase impact More Equitably ensure that exclusionary neighborhoods don't remain that way because they don't offer transit for higher density housing. Market Rate (> 120% AMI) Reduce on-site Publicly-Subsidized (< 30% AMI) Remove or reduce requirements for on-site common/active open space. Instead, ensure that adopted Parks plans fully consider Affordable (30-80% AMI) For Rent 'affordable & Vulnerable Take care with neighborhoods that are seeking more holistic revitalization to B17 Common/Active Open the needs of everyneighborhood, and that the jurisdiction is activelyworkingtoward satisfying those needs. Workforce 80-120% AMI) For Sale -- INDIRECT EarlyGentrification balance non-housingneeds with housingproduction Space Requirements g J y g ( ° Market Rate (> 120/° AMI) Jurisdictions would develop a comprehensive review of the impediments to the development of homeownership opportunities and actionable steps to remove those impediments. ° To ensure access to homeownership to under-represented groups, pair Prioritize Home Affordable (30-80% AMI) 'or Rent B18 ° -- (INDIRECT) All development of owner-occupied housing types with homebuyer education, financial Ownership Note:An important impediment to condominium development is the risk associated with the current condominium law in Oregon. A Workforce (80-120% AMI) For Sale revamp of this law is needed to increase homeownership opportunities that are smaller in size. This would require action at the Market Rate (> 120% AMI) assistance like downpayments and low-cost loans, and affirmative marketing state level. PP 22-0005 ATTACHMENT 3/PAGE 6 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 79 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Add a section to the city's development application asking developers how they decided on their development program and which Survey Applicants on public incentives were part of the consideration. This would lead to better information about how to tailor city strategies toward Publicly-Subsidized (< 30% AMI) B19 Development Program production. An alternative to requiring cities to collect this info, is to consider this approach as part of a production strategy. To be Affordable (30-80% AMI) For Rent Housing Production Strategy (INDIRECT) All -- Decision-Making a strategy it needs additional action like logging and making publicly available the aggregated survey information on the city's Workforce (80-120% AMI) For Sale Technical Advisory Committee housing/development/planning webpage or similar. The information could be collected on a form separate from the development Market Rate (> 120% AMI) application, so it is clear that the additional information is not part of the permit decision. Category C : Financial Incentives These are a list of financial incentives that cities can offer to developers to encourage them to produce needed housing. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Reduce or Exempt Publicly-Subsidized (< 30% AMI) C01 SDCs for Needed Reducing, deferring, and/or financing System Development Charges (SDCs) at a low interest rate for needed housing types. This Affordable (30-80% AMI) For Rent Cit of Ti and INDIRECT All Increase impacts by focusing SDC incentives on needed housing types from the Housing strategy reduces development costs. Workforce (80-120% AMI) For Sale y g ( ) equity housing needs analysis Market Rate (> 120/° AMI) r Updating SDC fee schedule so that is tied to dwelling size. This strategy ensures that smaller dwelling sizes in single and multi- Publirly-Si ih¢irli7Prl o fin% qMl) CO2 Modify SDC fee family housing are not disproportionately burdened by fees and therefore encouraged. Consider per square foot fees rather than Affordable (30-80/°° AMI) For Rent City of Florence (INDIRECT) All Increase impacts by focusing SDC incentives on needed housing types from the schedules per dwelling. Workforce (80-120% AMI) For Sale equity housing needs analysis Market Rate (> 120% AMI) Reduce or Exempt Waivers/reductions of SDCS for ADU production in order to improve the feasibility of the development. Create a model ordinance For Rent In strong market, this can produce more housing units; ADUs have medium anti- 0O3 City of Portland (INDIRECT) displacement impact, can be increased with programs to target affordability and SDCs for ADUs for the waiver, or deferment, of SDCs. Scale SDCs based on size, resource efficiency, and access to alternative transportation. For Sale equity Incentivize Publicly-Subsidized (< 30% AMI) Give Bonus Density Incentives for manufactured and factory built housing. Consider tying bonus to modular housing that Affordable (30-80% AMI) For Rent C04 Manufactured and Metro KingRMHP (DIRECT) All -- Modular Housing demonstrates if housing meets affordability targets of below 120% AMI. Workforce (80-120% AMI) For Sale County Market Rate (> 120% AMI) Waive or Finance Park A policy providing for the exemption (preferred) or financing park impact fees (helpful) for affordable housing ensures a mix of For Rent Tualatin Hills Park & C05 Impact Fees for affordable housing. Financing the fee while still collecting can mitigate the cost of the fee to coincide with the available cash flow Recreation District (DIRECT) All Reduced fees have medium impacts on displacement Affordable Housing of the affordable housing. Market Rate (> 120% AMI) Publicly Funded Publicly-Subsidized (< 30% AMI) C06 Infrastructure Fund off-site improvements for workforce or affordable housing; e.g. street intersection improvements triggered bydevelopment. Affordable (30-80% AMI) For Rent p p gg p __ (DIRECT) All Reduced fees have medium impacts on displacement Workforce (80-120% AMI) ---or Sale Improvements ° Market Rate (> 120/° AMI) Publicly-Subsidized (< 30% AMI) C07 Reconsider Applying If there are appropriate levels of parks and open space near the project, these impact fees should not be charged or should be Affordable (30-80% AMI) For Rent -- (INDIRECT) Reduced fees have medium impacts on displacement in strong markets; make more impact by Park SDCs assessed at a much lower rate. They are not general funds to be allocated without a nexus to the development. Workforce (80-120% AMI) For Sale targeting to affordable development Market Rate (> 120% AMI) Tie transportation SDCs to the number of parking spaces, as the number of parking spaces is a more accurate predictor of the Publicly-Subsidized (< 30% AMI) C08 Transportation SDCs number of trips that will start or end at ever development. B tin transportation costs direct) to vehicle storage, the system will Affordable (30-80% AMI) For Rent __ Early Gentrification Reduced fees have medium impacts on displacement in strong markets; make more impact by Tied to Parking p y p y y g p y g y Workforce (80-120% AMI) For Sale (INDIRECT) Active Gentrification targeting to affordable development both be assessing transportation impacts fairly and encouraging alternate modes of transportation. Market Rate (> 120% AMI) Category D : Financial Resources These are a list of resources or programs at the local, state, and federal level that can provide funding for housing projects, primarily subsidized affordable housing projects. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact CDBG Grants are federal funds set aside in the form of grants to be used to meet national objectives: direct benefit for low and City of Tigard City of Eugene moderate income households; benefit to predominantly low income areas; elimination of slums and blight. Eligible activities City of Beaverton include public works infrastructure, community facilities, new housing development, housing rehabilitation, and public services Publicly-Subsidized (< 30% AMI) Community ° City of Hillsboro D01 Development Block (counselling, social services & microenterprise training, including short-term emergency rent assistance). Eligibility is based upon Affordable (30-80/° AMI) For Rent City of Gresham DIRECT Affordable & Vulnerable -- Grant (CDBG) the levels of low- and moderate-income families that may benefit from services provided by the eligible projects. While Cities can City of Portland rhnnca not to annlw fnr (`r1R(, rnntrnl of‘n,hathar nr not thaw raraiwa lr1R(, is I iltimatalw at tha rarlaral lawal and !ilea tha Ctata of PP 22-0005 ATTACHMENT 3/PAGE 7 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 80 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact V I IV V J V I IVl lV LI VV'y IVI V LJ LJ V, VV I III VI VI ""I IV LI IVI VI I IV l LI IVy I V VV I V V V LJ LJV I lA I LII I ILl.VIy Ul LI IV I VVA VI LII IV V VI CAI IV III.V LI IV V LLV.l' VI City of Bend Oregon, these funds can be used for things that have little to do with housing, so may have limited impact. A better gauge may be City of Redmond HOW cities use their CDBG; for housing benefit or other. State of Oregon Publicly-Subsidized (< 30(% AMI)Federal tax provision that encourages private investment in affordable rental housing by providing qualified investors with a dollar- Early Gentrification In strong markets, LIHTC can be used to create mixed-income housing that provides D02 Low Income Housing for-dollar reduction in federal income tax liability in exchange for investment in qualifying new construction and rehabilitation Affordable (30-80% AMI) For Rent Local Housing Solutions DIRECT Active Gentrification cross-subsidy to affordable units; LIHTC can also be combined with additional Tax Credit (LIHTC) LIHTCs mayalso be paired with Tax Exempt Revenue Bonds. vvorKtorce (�u- �Lu�° AIVII) -or Sale Late Gentrification programs to extend the affordabilityperiod for the housing projects. p Market Rate (> 120% AMI) p g Housing Trust Funds are a flexible source of funding that can be used to support a variety of affordable housing activities. Because they are created and administered at the city, county, region, or state level, housing trust funds are not subject to the Publicly-Subsidized (< 30% AMI) restrictions of federal subsidy programs and therefore can be designed specifically to address local priorities and needs. The Affordable (30-80% AMI) For Rent D03 Housing Trust Funds entity administering the fund determines eligible activities, which can include anything from emergency rent assistance for families Local Housing Solutions DIRECT All -- facing the threat of eviction or homelessness to gap financing for new construction of affordable housing to repairs for older homeowners. Operating Subsidies for Publicly-Subsidized (0 30% AMI) D04 Affordable Housing Operating subsidies are payments made annually (or more frequently) to owners of affordable housing developments that make Affordable (30-80% AMI) For Rent Local Housing Solutions DIRECT All -- Developments the housing more affordable by covering a portion of the ongoing costs of operating the development. vvUlK Ul :C IOU- ILu o° r-ivn) -or Sale I Market Rate (> 120/o AMI) • Employer-assisted housing programs provide a channel through which employers can help their employees with the cost of Publicly-Subsidized (< 30% AMI) Employer - Assisted owning or renting a home, typically in neighborhoods close to the workplace. Assistance may be provided in a variety of ways, Affordable (30-80% AMI) For Rent Early Gentrification Employer-assisted housing in areas near transit or near workplaces can support D05 HousingPrograms includingthrough down paymentgrants or loans that are forgiven over aperiod of employment, homeownershipcounselingand Workforce (80-120% AMI) For Sale Local Housing Solutions (INDIRECT) Active Gentriciation stabilityand equity, and contribute to a 'pro-housing agenda'. g g p Y g� p g g education, rental subsidies and, less commonly, direct investment in the construction of rental housing. HOME is a federal program established by Congress in 1990 that is designed to increase affordable housing for low- and very low- Publicly-Subsidized (< 30% AMI) income families and individuals. All States and participating jurisdictions receive HOME funds from HUD each year, and may Affordable (30-80% AMI) For Rent D06 HOME Program spend HOME on rental assistance, assistance to homebuyers, new construction, rehabilitation, improvements, demolition, y y V,,,,U,VV d0-120�°° �,v„ -i -or Sale -- DIRECT All -- relocation, and limited administrative costs. Market Rate (> 120% AMI) Local Housing Solutions Dedicated Revenue A dedicated revenue source for affordable housing provides an ongoing committed stream of revenue for affordable housing, often Publicly-Subsidized (< 30% AMI) D07 Sources for Affordable deposited into a Housing Trust Fund. This can be helpful in increasing the total funding available for affordable housing. The fund Affordable (30-80% AMI) For Rent DIRECT All -- can receive its sources from: Transient Lodging Taxes collected from Short Term Rentals, developer fee and real estate transfer For Sale City of Portland Housing Housing taxes (not constitutional in Oregon). Investment Fund Cities, towns, and counties establish demolition taxes and condo conversion fees as a way to generate revenue and replace Publicly-Subsidized (< 30% AMI) affordable housing lost to these activities. The proceeds from both demolition taxes and condo conversion fees are typically ° Active Gentrification Medium impacts to prevent displacement in strong market with lots of demolition D08 Demolition Taxes deposited in a Housing Trust Fund to support affordable housing activities. To ensure that a demolition tax on residential Affordable (30-80/°° AMI) For Rent Local Housing Solutions INDIRECT Late Gentrification and conversion, with impacts in the short term and potential to fund housing. Plan development does not deter needed redevelopment - this strategy should only be applied if the housing replacement is 1:1. If the Workforce (80-120% AMI) For Sale Exclusive and monitor production vs. needs proposed development is more dense than the original structure, there should not be a demolition tax. Market Rate (> 120/° AMI) Publicly-Subsidized (< 30% AMI) Construction Excise Tax A Construction Excise Tax (CET) is a tax on construction projects that can be used to fund affordable housing. According to state Affordable (30-80% AMI) For Rent City of Portland D09 (CET) statutes, the tax may be imposed on improvements to real property that result in a new structure or additional square footage in an For Sale City of Eugene DIRECT All Plan and monitor production vs. needs existing structure. City of Sisters The TIF set-aside can fund housing; but it is a financing mechanism that relies on Create a TIF set-aside for affordable housing development programs within designated Urban Renewal Areas (URAs). Target Publicly-Subsidized (< 30% AMI) overall property values increasing to create the increment. TIF is associated with Tax Increment Affordable & Vulnerable could be to begin setting aside funds for affordable housing projects as a medium-term action, over the next 5 years or so. For Affordable (30-80% AMI) For Rent gentrification and displacement, especially for people of color. This may be D10 Financing (TIF) Set- example: Portland CityCouncil designates 45% of thegross amount of TIF for designated housingpurposes (rental housingfor I .,Vorkforce (80-120% AMI, For Sale City of Portland DIRECT Early Gentrification exacerbated byOregon's restriction of TIF funds to physical development; add Aside p g g p p Active Gentrification g p y p ' households under 60% of Area Median Income (AMI) and homeownership for households under 80% of AMI. Market Rate (> 120% AMI) community and economic development activities for low-income and POC to support their staying in place as neighborhoods improve Public Housing Authorities have the ability to attach up to 20% of their voucher assistance to specific housing units for each low income housing project, up to 25% of any single project. Project-Based Rental Assistance (PBRA) vouchers provide rental Publicly-Subsidized (< 30% AMI) Flexible Use of Housing assistance for eligible individuals and families who occupy specific housing units managed by private owners who have entered Affordable (30-80% AMI) For Rent D11 Choice Vouchers into agreements with a housingagency. The household pays an established amount to the owner each month (typicallyLocal Housing Solutions DIRECT All -- g g Y� p Y approximately 30% of monthly income) and the housing agency pays the balance of the rent due. If public housing authorities include homeownership in their administrative plan, housing vouchers may also be used to facilitate low income homeownership. Vouchers that target renters at the 60-80% AMI who are often left out of the housing funded by bond funds and other public sources that are focused on lower income levels. Housing Authorities use affordable housing dollars and issue vouchers that are Affordable (30-80% AMI) For Rent D12 Targeted Vouchers good for one year and pay any landlord the difference between what the tenant can afford and market rent. This takes the -- DIRECT All -- reporting burden off the landlord and essentially allows any existing unit to be affordable. Each year the tenant would have to o� For Sale prove to the Housing Authority if they were still income qualified and if not. Market Rate (> 120/o AMI) PP 22-0005 ATTACHMENT 3/PAGE 8 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 81 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Publicly-Subsidized (< 30% AMI) Low-Interest Loans / Housing Repair and Weatherization Assistance for low and moderate income households may be capitalized by Tax Increment Affordable (30-80% AMI) For Rent D13 Revolving Loan Fund Financing (TIF), Community Development Block Grant (CBDG) Funds, or local Housing Trust Funds. For Sale City of Portland DIRECT All -- Eviction Prevention Programs provide financial assistance to help renters facing eviction stay in their homes. These programs are Publicly-Subsidized (< 30% AMI) Affordable & Vulnerable generally designed for families who are being evicted due to nonpayment of rent during or following an unforeseen crisis, such as Eviction prevention programs have high anti-displacement impacts, in the short- Eviction Prevention job loss or serious illness, rather than those who face more persistent affordability challenges. Jurisdictions may be interested in Affordable (30-80% AMI) For Rent Local Housing Solutions DIRECT Early Gentrification term, and across all markets. They are especially useful in strong markets where Programs investingin eviction prevention to address concerns about displacement of low-income renters and also to avoid or reduce use of vvorKrorce �tsu- i�v i° Hivii� -or aie5 Active Gentrification there are economic incentives to evict. other more costly local services, like homeless shelters. p I Market Rate (> 120% AMI) Late Gentrification Bond - for Resident Publicly-Subsidized (< 30% AMI) Limited Tax General Obligation Bond that creates a funding source for supportive housing services, such as access to health care, D15 Support Services and mental health, and other social services that better support and stabilize residents who face complex challenges and will benefit Affordable (30-80% AMI) For Rent Oregon Metro DIRECT All -- Permanent Supportive from affordable housing programs. City of Portland Housing Services Following the passage of Measure 102 Oregon local governments, including cities and counties, can now issue voter-approved general obligation bonds to provide direct funding for construction and other capital costs associated with the development and Publicly-Subsidized (< 30% AMI) Oregon Metro General Obligation construction of affordable housing. These funds can be loaned or granted to both public and privately owned affordable housing Affordable (30-80% AMI) For Rent City of Portland D16 Bonds — for Affordable projects. "Affordability" is required to be determined by voters and each jurisdiction, and can be above or below minimum DIRECT All -- Housing affordability levels established for the federal LIHTC program and other established federal and State affordable housing finance I V V"'"""`'C ko"- 'L"'° ~'V") or Sale programs, defining affordability by reference to Area Median Income (AMI) as established by HUD. The bonds could be paired Market Rate (> 120% AMI) with other financing such as Low Income Housing Tax Credits, or could be used for homeownership opportunities. I Oregon Measure 102 Use IHBG funds for Publicly-Subsidized (< 30% AMI) Mixing of Indian Housing Block Grants (IHBG), typically used for housing for Native Americans on reservation land, with other Affordable (30-80% AMI) For Rent NAYA and CDP and Confederate'' D17 Urban Native DIRECT All -- traditional affordable housing funding sources allows preference for Native members in urban affordable housing projects. Tribes of the Siletz Americans Publicly-Subsidized (< 30% AMI) Weatherization Funds Affordable &Vulnerable Weatherization funds can address displacement by improving habitability in low-income Use weatherization funds administered by statewide network of Community Action Agencies to preserve aging housing stock Affordable (30-80% AMI) For Rent D18 through Community ° OHCS Weatherization Assistance DIRECT Early Gentrification neighborhoods; and by reducing energy costs and needs for expensive repairs that may displace occupied by income-qualified residents. Workforce (80-120% AMI, :or Sale Action Agencies Market Rate (> 120% AMI) Active Gentrification owners in gentrifying neighborhoods. Publicly-Subsidized (< 30% AMI) Planning ahead for affordability in TOD is important for not displacing households who are most Transit-Oriented Provide financial incentives to developers to create transit-oriented communities. Funding can be used for site acquisition, Affordable (30-80% AMI) For Rent D19 Development Grants infrastructure projects and residential/mixed-use projects. Workforce (80-120% AMI) Oregon Metro TOD Program (INDIRECT) All likely to use transit (low-mod income, renters, POC, and immigrants); making it an effective Market Rate (> 120% AMI) strategy for equity and to support multi-modal transportation. Local Innovation and The Local Innovation and Fast Track (LIFT) Housing Program's objective is to build new affordable housing for low income Publicly-Subsidized (< 30% AMI) Fast Track (LIFT) households, especially families. Funds are available for Serving Historically Underserved Communities, Rural and Urban Set- Affordable (30-80% AMI) For Rent OHCS Housing Development D20 Program for Affordable DIRECT All -- asides, Urban Communities, Service to Communities of Color, and Rural Communities. Available for affordable homeownership Jorkforce (80-120% AMI, For Sale Program Rental Housing units (below 80% AMI). Market Rate (> 120% AMI) Development Publicly-Subsidized (< 30% AMI) D21 Mental Health Trust Administered by the Oregon Health Authority for capital construction costs. Affordable (30-80% AMI) For Rent -- DIRECT All -- Fund Awards Publicly-Subsidized (< 30% AMI) Examples: Meyer Memorial D22 Foundations Awards Local, regional, and national foundations provide both capital funding and program funding for a wide variety of innovative housing Affordable (30-80% AMI) For Rent Trust and Oregon Community DIRECT All -- models and programs. Workforce (80-120% AMI) For Sale Foundation (OCF) Market Rate (> 120% AMI) State of Oregon to offer non-recourse low-interest debt that can be used to fund workforce or affordable housing. This could be provided through an existing relationship like Network for Oregon Affordable Housing (NOAH). This would be a valuable tool for D23 State of Oregon Debt providing housing in rural communities, where conventional debt funding may not be readily available. Affordable (30-80% AMI) For Rent __ DIRECT All -- Workforce (80-120% AMI) For Sale Note: This strategy has been suggested by the housing development community, but programs are not yet in place in the State of Oregon. r State of Oregon to provide some form of collateralization to support private debt placement for a workforce or affordable housing project. For example, the State could provide Letters of Credit and/or Guarantee on behalf of the developer to the private lender. State of Oregon Debt This would be a valuable tool for providing housing in rural communities, where conventional debt funding may be hesitant to Affordable (30-80% AMI) For Rent D24 -- DIRECT All -- Support invest without substantial backing that the State could provide. Workforce (80-120% AMI) For Sale Note: This strategy has been suggested by the housing development community, but programs are not yet in place in the State of Oregon. PP 22-0005 ATTACHMENT 3/PAGE 9 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 82 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact I Oregon State sales tax on luxury items, 2nd homes, etc. dedicated to providing funds for affordable housing funds. Publicly-Subsidized (< 30% AMI) D25 Luxury Tax for Equitable Affordable (30-80% AMI) For Rent __ DIRECT All -- Housing Note: This strategy has been suggested by the housing development community, but programs are not yet in place in the State of Workforce (80-120% AMI) For Sale Oregon. Publicly-Subsidized (< 30% AMI) Reallocate Health and Because healthy housing makes a huge difference in health care, public safety, and other costs, identify paths to redirect budgets Affordable (30-80% AMI) For Rent D26 Public Safety from those sectors toward housing construction funds and supporting services. Use advanced modeling projections and adjust as -- DIRECT All -- workforce (80-120% AMI, :or Sale Resources to Housing needed over time. Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) A land tax promotes equity among homeowners, if properly calibrated and incentives more D27 Georgist Land Tax Generate tax revenue for affordable housing by reducing the gains accrued from public investments that are capitalized into Affordable (30-80% AMI) For Rent -- DIRECT All development of housing supply. This requires state law changes. private value. https://www.pdx.edu/news/psu-study-portland-land-value-tax-would-improve-equity- homeowners-incentivize-development Category E : Tax Exemption and Abatement These are a list of tax exemption and abatement programs that are intended to encourage developers to produce housing. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (If available) Equity Typology Mitigating Measures Impact Nonprofit Low-Income This tool can provide a simplified way for affordable housing owned and operated by a nonprofit (as well as land held by a Publicly-Subsidized (0 30% AMI) nonprofit for future affordable housing development) or Community Land Trusts (at least in land value) to qualify for a property tax Affordable (30-80% AMI) For Rent See Oregon Revised Statute E01 Rental Housing DIRECT Affordable & Vulnerable -- exemption. Work should be done to make it easier for projects/land to qualify; minimizing the number of taxing authorities needed Chapter 307.540 Exemption to grant an approval. Property Tax Exemption Create a Property Tax Exemption for affordable housing that is tied to level of affordability instead of the ownership structure. For Publicly-Subsidized (< 30% AMI) example, grant a property tax exemption for affordable housing that serves households making less than 60/° of AMI at initial Take care to include homebuyer and post-purchase financial education to avoid loss for Affordable Housing Affordable (30-80°/° AMI) For Rent Early Gentrificatior E02 Tied to Level of lease up. Don't tie the property tax exemption to ownership (LLC, non-profit, housing authority) and only require income Workforce (80-120% AMI) :or Sale -- (DIRECT) Active Gentrificatio of assets in gentrifying neighborhoods, where owners can be pressured to sell or to Affordability verification at the beginning of a residents tenancy. The property should still get the exemption even if the household increases Market Rate (> 120% AMI) take out refinance loans. income after their initial lease up so they can build assets in place. Authorized by Oregon Revised Statute, 307.841. Partial property tax exemption program on improvements for new mixed use development. To qualify, a project must have City of Hillsboro Vertical Housing improved, leasable, non-residential development on the ground floor and residential development on the floors above. A partial City of Beaverton For Rent Active Gentrificatio Calibrate incentives to needed housing types, e.g., affordability levels. Incentives for E03 Development Zone Tax abatement on land value is allowed for each equalized floor of affordable housing. This abatement could be made better by an ° City of Milwaukie DIRECT Abatement adjustment to the floor equalization formula - right now, there is a 20% abatementper equalized floor, but if theproject ends upWorkforce (80-120/o AMI) Oregon CityLate Gentrificatior inclusion of affordable units work best in strong markets. q g q Market Rate (> 120% AMI) g being 3.8 equalized floors it only gets 3 floors worth of the abatement rather than an apportioned abatement. City of Gresham City of Tigard City of Wood Village City of Forest Grove Multiple Unit Propert ublicly-Subsidized (< 30% /-.. , y This strategy can be used to incentivize production of multifamily housing with particular features or at particular price points by For Rent See Oregon Revised Statute, Active Gentrification Calibrate incentives to needed housing types, e.g., affordability levels. Incentives for inclusion of E04 Tax Exemption offerin qualifying developments apartial property tax exemption over the course of severalyears. Workforce (80-120% AMI) :or Sale Chapter 307.600 (INDIRECT) Late Gentrification affordable units work best in strongmarkets. (MUPTE) g q Y g p p p Y p I Market Rate (> 120% AMI) Authorized by Oregon Revised Statute, Chapter 307.600 Multiple Unit Limited Under the Multiple-Unit Limited Tax Exemption (MULTE) Program, multiple-unit projects receive a ten-year property tax For Rent Active Gentrification Calibrate incentives to needed housingtypes, e.g., affordabilitylevels. Incentives for inclusion of E05 Tax Exemption p p g p p Y p p Y (INDIRECT) yp g' p exemption on structural improvements to the property as long as program requirements are met. Workforce (80-120% AMI) Multiple Unit Limited Tax Late Gentrification affordable units work best in strong markets. (MULTE) Market Rate (> 120% AMI) Exemption (MULTE) - City of Portland Authorized by Oregon Revised Homebuyer Opportunity ° Statute, 307.651. E06 Limited Tax Exemption Under the HOLTE Program, single-unit homes receive a ten-year property tax exemption on structural improvements to the home Affordable (30-80% AMI) (INDIRECT) Affordable & Vulnerable Calibrate incentives to needed housing types, e.g., affordability levels. Incentives for inclusion of Program (HOLTE) as long as the property and owner remain eligible per program requirements. Workforce (80-120% AMI) For Sale Homebuyer Opportunity Limited affordable units work best in strong markets. Market Rate (> 120% AMI) Tax Exemption (HOLTE) - City of Portland Publicly-Subsidized (< 30% AMI) E07 Homestead Tax Consider allowing Homestead Tax on second homes to support development of affordable housing. Affordable (30-80% AMI) For Rent -- (DIRECT) Affordable & Vulnerable -- Property taxes are based on property values and so can go up regardless of the taxpayers' ability to pay. In the case of PP 22-0005 ATTACHMENT 3/PAGE 10 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 83 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact I lull IGUVVI!GI J, I IJII Iy NI UpGI Ly LClAGJ I...QI I LIG QII UUJLCIL.IG LU I IUUJII IY CIIIUIUCIAJIIILy Qllu J LQLJIIILy. 1% LIJUI UJGU III Cl I IUI I ILJGI UI JUI IJUIL.UUI IJ Publicly-Subsidized (< 30% AMI) Property Tax Relief for for mitigating these effects on those with limited incomes is by capping the amount of property tax that homeowners have to pay ° Active Gentrification Affordable (30-80% AMI) For Rent Supporiting owners to stay in place as housing markets heat up is an important preservation E08 Income-Qualified as a share of their income. Some jurisdictions also provide relief to lower-income renters by treating some portion of their rent as Local Housing Solutions (DIRECT) Late Gentrification Homeowners attributable to property taxes and then providing an income tax credit to offset the increase in taxes. In addition to basing the VVorktorce (8U-12U"/o HMI) For Sale Exclusive strategy; it does not maintain the affordability of the unit at stake. benefit on income, eligibility for caps can also be restricted to specific populations such as seniors, disabled persons, and/or Market Rate (> 120% AMI) veterans. Qualified Opportunity Zones (QOZ) were created by the 2017 Tax Cuts and Jobs Act. These zones are designed to spur economic Affordable &Vulnerable The OZ program has been found to be generally poorly targeted and monitored; as with any E09 Investing into Federal development and job creation in distressed communities throughout the country and U.S. possessions by providing tax benefits to Affordable (30-80% AMI) For Rent Opportunity Zones FAQ(IRS) INDIRECT EarlyGentrification investment incentive it is important to include stronganti-displacement protections for Opportunity Zones (OZ) investors who invest eligible capital into these communities. Taxpayers may defer tax on eligible capital gains by making an Workforce (80-120% AMI) p p appropriate investment in a Qualified Opportunity Fund and meeting other requirements. Market Rate (> 120% AMI) Active Gentrification vulnerable residents and ensure their inclusion in economic opportunities. I Allow housing to be built and operated at market rate while allowing developers to choose a path that maintains or reduces rents Publicly-Subsidized (0 30% AMI) Delayed Tax ° Affordable (30-80% AMI) For Rent El Exemptions over time. Once the property falls below 80%AMI (but maintains HUD quality standards), tax exemptions would kick in. This Workforce (80-120% AMI) =or Sale -- (INDIRECT) All -- could be an alternative to upfront incentive dollars, SDC reductions, etc for providing affordable housing. Market Rate (> 120% AMI) I Category F : Land, Acquisition, Lease, and Partnerships These are strategies that secure land for needed housing, unlock the value of land for housing, and/or create partnerships that will catalyze housing developments. Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Public purchasing of vacant/under-utilized sites of land in order to save for future affordable housing development. House Bill 2003, section 15 supports land banking: Publicly-Subsidized (< 30% AMI) Affordable (30-80% AMI) For Rent Active Gentrification Planning ahead for areas of public investment wth land banking can support affordable housing F01 Land Banking Workforce (80-120% AMI) For Sale Metro TOD Program (DIRECT) Late Gentrification development without needing to purchase lots. In already developed, exclusive areas, using Exclusive public land may be the only cost effective strategy for building new affordable units. SECTION 15. (1) As used in this section, "public property" means all real property of the state, counties, cities, incorporated towns or villages, school districts, irrigation districts, drainage districts, ports, water districts, service districts, metropolitan service districts, housing authorities, public universities listed in ORS 352.002 or all other public or municipal corporations in this state. The Federal Transit Administration (FTA) enables local transit agencies to enter into Joint Development Agreements (JDAs) with Publicly-Subsidized (< 30% AMI) private or non-profit developers of low income housing, market-rate housing, and/or commercial development. Joint Development Joint Development Affordable (30-80% AMI) For Rent Important foundation with focus on housing for transit dependent people (Low income, renters, F02 Agreements is a process by which public transit or other local or state agencies agree to make land available at donated or reduced prices for Workforce (80-120% AMI) or Sale -- (INDIRECT) All POC and immigrants) private development, which may include affordable housing. Projects must demonstrate benefit to transit operations (ridership) IVIdI KUL I\dhG k-- I LU 70 /-\IVI I) and infrastructure and are subject to FTA approval. Land acquired by nonprofits or community-based organizations that maintain permanent ownership of land. Prospective Publicly-Subsidized (< 30% AMI) homeowners are able to enter long-term (i.e., 99-year), renewable leases at an affordable rate. Upon selling, homeowners only Affordable (30-80% AMI) Land trusts area very strong anti-displacement measure in all neighborhood types, with F03 Community Land Trusts earn aportion of the increased property value, while the trust keeps the remainder, therebypreservingaffordabilityfor future low- Workforce (80-120% AMI) For Sale -- DIRECT All immediate and long-term impacts. p p Y p g p to moderate-income families Market Rate (> 120% AMI) Affordable & Vulnerable Publicly-Subsidized (< 30% AMI) Partnerships between government and the private sector and/or nonprofits have the capacity to bring resources to the table that ° Early Gentrification Setting clear public goals; including monitoring of provision of public benefits; and including Public/Private Affordable (30-80% AMI) For Rent F04 would otherwise not be available if each institution were able to help communities provide housing on its own. This can come in ° -- (INDIRECT) Active Gentrification financial penalties for not meeting goals are important for strengthening community benefits Partnerships (P3) the form of coalitions, affordable housing task forces, and collaboratives. Workforce (80-120/o AMI) For Sale Late Gentrification agreements in public-private partnerships. Market Rate (> 120% AMI) g p p p p Exclusive Preventing displacement and preserving "naturally occurring" affordable housing through acquisition, low-interest loans/revolving Publicly-Subsidized (< 30% AMI) Preserving Low-Cost Early Gentrification loan fund for preservation, and/or code enforcement. Example: The Oregon Legislature committed $15 million in lottery bonds to Affordable (30-80% AMI) For Rent Preservation is cost-effective compared to new construction and can prevent displacement in F05 Rental Housing to NOAH Impact Fund DIRECT Active Gentrification Mitigate Displacement Oregon Housing and Community Services (OHCS) in 2019 to create a naturally occurring affordable housing loan fund. Modeled Late Gentrification the immediate term for households in place. after the Greater Minnesota Housing Fund. Manufactured home parks often provide a form of affordable housing stock, but are particularly vulnerable to redevelopment City of Portland pressures since lots are temporarily leased out. In order to preserve safe, affordable options into the future, manufactured home Publicly-Subsidized (< 30% AMI) Preserving Safe, parks may be protected through assistance that allows community purchase of the underlying land, manufactured homes and ° Affordable & Vulnerable Affordable (30-80% AMI) For Rent F06 Affordable provide funds used to maintain upkeep of these dwelling units. This strategy is often implemented through use of Land Trusts, DIRECT Early Gentrification�d0-120% AMI) For Sale Manufactured Homes Resident-Owned Cooperatives, Public Ownership of Land, or Condominium Conversion of the real estate assets to preserve the °""""'"" ° Active Gentrification communit ies . Oregon Housingand CommunityServices (OHCS) has regularly received lotterybonds orgeneral funds from the Market Rate (> 120/o AMI) OHCS Mfd Dwelling Parks y( ) g g y Program Oregon Legislature to preserve manufactured home parks through either Resident Owned Cooperatives or Non-profit ownership. Providing Information Providing information to small, local developers that will help them understand land use permitting processes and give them a For Rent F07 and Fdlinatinn to Small -- INDIRECT All -- PP 22-0005 ATTACHMENT 3/PAGE 11 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 84 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact _. _.._ ________ __ _.. - sense of clarity and certainty about requirements so they can better provide smaller scale housing at an affordable level. Workforce (80-120% AMI) For Sale ""-"--- ' Developers ° Market Rate (> 120/o AMI) Conversion of Publicly-Subsidized (< 30% AMI) Affordable & Vulnerable Underperforming or Acquisition of underperforming or distressed commercial assets (commercial, retail, industrial, or hotel) or partnerships with Affordable (30-80% AMI) For Rent F08 Distressed Commercial owners of the assets for conversion into needed housing. Workforce (80-120% AMI) -- DIRECT Early Gentrification Most likely to be cost effective in some neighborhood market types. VI JQIG Assets Market Rate (> 120% AMI) Active Gentrification The US Department of Veterans Affairs (VA) maylease land for upto 85years to developers of projects whichprovide the VA Publicly-Subsidized (< 30% AMI) Enhanced Use Lease of p p p Affordable (30-80% AMI) For Rent Housing Authority of Douglas F09 Federal Land with compensation. Such enhanced use leases have been used to provide land for permanent affordable housing for people County (DIRECT) All -- experiencing homelessness including veterans in Oregon, Minnesota and Washington States. Prioritize Housing on Publicly-Subsidized (< 30% AMI) Affordable (30-80% AMI) For Rent F10 City/County Owned Surplus property suitable for housing is offered up for affordable development. Workforce (80-120% AMI) Sale City of Eugene (DIRECT) All -- Land Market R-' Combine Community Publicly-Subsidized (< 30% AMI) F11 Land Trust with Limited Combine a Community Land Trust (CLT) with a Limited Equity Cooperative for a lower barrier entry to homeownership of a share Affordable (30-80% AMI) SquareOne Villages DIRECT All -- Equity Cooperative of a permanent small/tiny home community. Workforce (80-120% AMI) For Sale Model Sell land at the State or City's cost (below market) to developers of affordable housing. Long-term lease at very minimal cost to Publicly-Subsidized (< 30% AMI) Surplus Land for Affordable (30-80% AMI) For Rent F12 Affordable Housing developers for land the City is not yet ready to surplus. County surplus of foreclosed land to affordable housing developers and/or VVorktorce (dU-1�U"/o AMI) =or Sale City of Bend (DIRECT) All -- housing authority. ° Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) F13 McKinney-Vento For Rent Cities may partner with the Federal Government to surplus Federal land for homeless housing or services under McKinney Vento. City of Bend (DIRECT) All -- Federal Surplus Affordable housing providers could be offered a Right of First Refusal for city, county, or state owned land when the land would be Publicly-Subsidized (0 30% AMI) Right of First Refusal forAffordable (30-80% AMI) For Rent CASA of Oregon - Mfd Housing C F14 Land Purchase used for affordable housing. Examples include a manufactured home program where residents can buy out the manufactured workforce (80-120% AMI, For Sale Op Dev (DIRECT) All -- home park when the owner is ready to sell. Market Rate (> 120% AMI) Ordinances that Publicly-Subsidized (< 30% AMI) F15 Address Zombie More assertive tax foreclosures to enable zombie housingto be rehabbed into occupied housing. Affordable (30-80% AMI) For Rent -- INDIRECT Affordable & Vulnerable -- p -- Workforce (80-120% AMI) For Sale Housing Market Rate (> 120% AMI) Publicly-Subsidized (< 30% AMI) Regulatory Agreement, between the jurisdiction and developer, in place with the land sale that keeps the units affordable for 20 Affordable (30-80% AMI) For Rent Active Gentrification F16 Regulatory Agreement years in exchange for SDC waivers. This is straightforward without going through a difficult or costly process. Workforce (80-120% AMI) =or Sale City of Beaverton (DIRECT) Late Gentrification Prepare for agreement expiration with preservation plans •v I I —IL, I-- 120% AMI) A jurisdiction would establish designated sites with a completely different set of regulations than apply to the balance of the public Publicly-Subsidized (< 30% AMI) Designated Affordable and private building sites. The sites would be overseen by an Affordable Housing Commission, that is empowered to prioritize, Affordable (30-80% AMI) For Rent F17 Housing Sites fast track, and approve affordable housing projects (with designated and required affordability objectives) and bypass the majority Workforce (80-120% AMI) -- (DIRECT) All -- of the city's fees and regulations. The Commission would have its own set of requirements (structural approval, zoning allowance, etc.), but they would be streamlined, and tailored to facilitate a quicker and much less expensive process. Over the past few decades, faith institutions across the country have been declining. This has prompted conversations within Utilize Surplus Land different faith communities about how to refocus their mission of social change. The housing affordability crisis in many cities Publicly-Subsidized (< 30% AMI) Expanding Opportunities for Owned by Faith-Based around the country has brought these institutions into the work of creating affordable housing in their communities. This strategy Affordable (30-80% AMI) For Rent F18 Organizations for would: 1) Identify faith and community-based organizations that are interested in offering their available land for development of Workforce (80-120% AMI) For Sale Affordable Housing, Metro and (DIRECT) All -- Affordable Housing affordable housing, 2) Provide design and finance consultation for three organizations to prepare them for future affordable Market Rate (> 120% AMI) City of Portland housing development projects, and 3) Determine barriers to development and how those can be addressed and/or streamlined. The Center for Housing Policy, Publicly-Subsidized (< 30% AMI) Washington DC Affordable Housing Prepare an inventory of subsidized and naturally occurring affordable housing to support proactive policies intended to preserve Affordable (30-80% AMI) For Rent F19 Preservation Inventory the affordable housing stock. This strategy is intended to help offset some of the need for costly new construction. For Sale Opportunity Zone Toolkit, US (DIRECT) All -- Department of Housing and Urban Development PP 22-0005 ATTACHMENT 3/PAGE 12 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 85 OF 90 Tenure Housing Neighborhood # Strategy Description Affordability Target Target Source (if available) Equity Typology Mitigating Measures Impact Provide residents, property owners, property managers, realtors, lenders and others involved with real estate transactions with Publicly-Subsidized (< 30% AMI) Fair Housing Education, access to Fair Housing information and referrals. Ensure that city staff know how to identify potential Fair Housing violations and Affordable (30-80% AMI) For Rent F20 Referral, and Other make referrals to the Fair Housing Council of Oregon and state and local enforcement agencies. Partner with and fund Fair Workforce (80-120% AMI) -- (DIRECT) All -- Services Housing Council of Oregon to provide periodic Fair Housing Audit Testing, customized outreach and education and other Market Rate (> 120% AMI) specialized services. Most public subsidies and tax incentive programs are complex due to the need for regulation and corruption prevention, imposing many impediments to developing affordable housing. Jurisdictions would participate in a public REIT that buys turn-key projects for set costs. This would motivate mission-minded developers to drive down cost knowing that risk is minimal by having a buyer at Publicly-Subsidized (< 30% AMI) Public or Mission-Driven the end. If the developer doesn't deliver the required specs, quality, and competitive construction cost, then they have to sell or Affordable (30-80% AMI) For Rent F21 REITs and Turn-Key rent on the open market or find other incentives in current, standard fashion. The jurisdiction could invest state pension funds in Workforce (80-120% AMI) For Sale -- (DIRECT) All -- Delivery these REITs. Note: Though this strategy has been suggested by the housing development community, it is not clear if this program is currently available to jurisdictions in the State of Oregon Category Z: Custom Options Any other Housing Production Strategy not listed in Categories A through F that the jurisdiction wishes to implement will be outlined in this section and numbered accordingly. # StrategyDescription AffordabilityTarget Tenure Source (if available) Housing Neighborhood Typology Mitigating Measures p g Target Equity Impact g yp gy g g Z01 TBD Any other Housing Production Strategy not listed above in Categories A through F that the jurisdiction wishes to implement should -- -- -- -- -- be filled in here and numbered accordingly. PP 22-0005 ATTACHMENT 3/PAGE 13 OF 13 LU 24-0024 EXHIBIT D-2/PAGE 86 OF 90 09/06/2023 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 PP 22-0005 ATTACHMENT 4/PAGE 1 OF 4 LU 24-0024 EXHIBIT D-2/PAGE 87 OF 90 09/06/2023 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-WS#5: Housing Strategy Alternatives Jan 8 CC-SS#5: Housing Strategy Alternatives Jan 16 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. PP 22-0005 ATTACHMENT 4/PAGE 2 OF 4 LU 24-0024 EXHIBIT D-2/PAGE 88 OF 90 09/06/2023 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 February and late-March; conduct community meeting in early April Draft Initial Housing Strategy Recommendations Memo Jan 29 HPS Task Force Meeting#6: Initial HPS Recommendations#1 Feb 9 HPS Task Force Meeting#7: Initial HPS Recommendations#2 Mar 22 Community Forum/Public Workshop Event Apr 4 Refine Memo based on Task Force+ public input Apr 5—19 CC-SS#6: Initial Recommendations May 7 PC-WS#6: Initial Recommendations May 13 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: 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; PP 22-0005 ATTACHMENT 4/PAGE 3 OF 4 LU 24-0024 EXHIBIT D-2/PAGE 89 OF 90 09/06/2023 • 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 May 27 HPS Task Force Meeting#8: Review Draft HPS Report Jun 14 Revise Draft HPS Report based on Task Force input Jun 17—28 CC-SS#7: Review Draft HPS Report Jul 16 PC-WS#7: Review Draft HPS Report Jul 22 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 Aug 2 DLCD Notice Aug 5 Planning Commission Public Hearing(PC-PH) Sep 9 +Adoption of Findings Sep 23 City Council Public Hearing(CC-PH) Oct 15+Nov 5 +Adoption of Findings Nov 5 or 19 PP 22-0005 ATTACHMENT 4/PAGE 4 OF 4 LU 24-0024 EXHIBIT D-2/PAGE 90 OF 90 p s� MEMORANDUM trk V O GREGON'‘ TO: Planning Commission FROM: Erik Olson, Long Range Planning Manager SUBJECT: Housing Production Strategy (PP 22-0005) DATE: December 27, 2023 MEETING DATE: January 8, 2024 EXECUTIVE SUMMARY This memo provides background for the Commission's forthcoming update on the Lake Oswego Housing Production Strategy (HPS), scheduled for January 8, 2024. During this meeting, the Commission will receive information regarding: • The recently-drafted Housing Production Strategy Alternatives Memo—see Housing Production Strategy Alternatives, below; • A summary of HPS Task Force input on the initial list of housing production strategies— see HPS Task Force Input, below; • Follow-up information requested by the Commission regarding the use of a Construction Excise Tax (CET) as a funding source for affordable housing—see Construction Excise Tax, below; and • A revised project schedule—see Project Schedule, below. DISCUSSION Contextualized Housing Need As discussed at previous work sessions, the project team has developed a Contextualized Housing Needs Assessment (CHNA) that builds upon previous work conducted for the Housing Needs Analysis (HNA) and connects it to the forthcoming analysis of HPS alternatives. The CHNA is intended 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 that the City has implemented to address housing needs. While the Commission has previously reviewed a summary of the major findings of the CHNA, the complete document is now included as Attachment 1. Respect. Excellence. Trust. Service. LU 24-0024 EXHIBIT D-3/PAGE 1 OF 129 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 2 of 4 Housing Production Strategy Alternatives At their fourth meeting on October 6, 2023, the HPS Task Force reviewed an initial list of potential housing production strategies that the City may consider as part of its HPS. Task Force members then had the opportunity to provide feedback on each strategy via an online poll, rating each strategy on a scale from low to high, or "exclude from list". Attachment 2 includes a summary of this input. A subset of higher-priority strategies was also reviewed with the City Council at a Study Session on November 7, 2023, and with the Planning Commission at a work session on November 13, 2023. Input from each of these activities assisted the project team in refining the strategies list into the set of alternatives included in the HPS Alternatives Memo, which is included as Attachment 3. HPS Task Force Input The list of housing production strategy alternatives in Attachment 3 was subsequently discussed in more detail by the HPS Task Force at their fifth meeting on December 8, 2023. At this meeting, staff and the consultant team asked the Task Force targeted questions regarding which strategies would best meet the highest-priority housing needs identified in the HNA. HPS Task Force members then provided input during breakout group discussions related to the following categories of housing need: • Government-subsidized 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 opportunities for seniors, people with disabilities, and aging in place. In particular, Task Force members were asked to consider the following questions for each identified housing need: • What strategy or strategies would be most effective in meeting this need? o Do you have any concerns about the strategy or its implementation? o What opportunities does this strategy present? • Which organizations or community groups could the City partner with to better address this need? Notes taken during each of these individual breakout sessions are included in Attachment 4. Respect. Excellence. Trust. Service. LU 24-0024 EXHIBIT D-3/PAGE 2 OF 129 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 3 of 4 Construction Excise Tax At their work session on November 13, 2023, the Commission requested additional information about using CET as a funding source for affordable housing. Attachment 3 includes information regarding how a CET works, what the options are for structuring and tailoring a CET to suit local needs, and various other considerations. The project team has also drafted a supplemental memo on the topic of CET that provides further information about how a handful of other cities in Oregon are implementing CET programs to support affordable housing (Attachment 6). Project Schedule Staff has proposed minor tweaks and changes to the project schedule and scope of consultant deliverables, which are detailed in Attachment 5. Major project milestones are 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 [Task 3.1] 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 [Task 3.2] PC Update Jan 8, 2024 Refine housing strategy HPS Task Force Meeting#6 Feb 16 recommendations HPS Task Force Meeting#7 Mar 1 [Task 3.3] Community Forum/Public Workshop Mar 14 Council—PC Joint Work Session Apr 2 Initial HPS Report Draft Initial Draft HPS Report June 2024 [Task 3.4] HPS Task Force Meeting#8 Jun 21 PC Work Session Jun 24 Council Study Session Jul 2 Finalize HPS for adoption Final HPS Report Jul 22 [Task 3.5] PC Public Hearing Sep 9 Council Public Hearing Oct 15/Nov 5 Respect. Excellence. Trust. Service. LU 24-0024 EXHIBIT D-3/PAGE 3 OF 129 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY Page 4 of 4 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. Contextualized Housing Needs Assessment, 11/16/2023 2. Summary of HPS Task Force Feedback on Initial Housing Strategies, 11/27/2023 3. Lake Oswego Housing Production Strategy Alternatives Memo, 12/01/2023 4. HPS Task Force Meeting#5 Breakout Rooms— Notes, 12/08/2023 5. HPS Project Schedule and Scope of Work, 12/19/2023 6. Construction Excise Tax Supplemental Memo, 12/22/2023 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 Respect. Excellence. Trust. Service. LU 24-0024 EXHIBIT D-3/PAGE 4 OF 129 503-635-0290 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY 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 LU 24-0024 EXHIBIT D-3/PAGE 5 OF 129 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). LU 24-0024 EXHIBIT D-3/PAGE 6 OF 129 • 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. LU 24-0024 EXHIBIT D-3/PAGE 7 OF 129 Figure EX 6.Population by Race Share of Population by Race 100-0 Lake Oswego (2010) as 8046 ■Lake Oswego PUG) 50% CIackamas Co. 40° Oregon 20% 0% — i — — J f aJ c -o w C u aW o ro c > .-o U 41 C IE 0 C r° +_, -LT) -0 +A al L m =� o o i- 3 in 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) LU 24-0024 EXHIBIT D-3/PAGE 8 OF 129 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: LU 24-0024 EXHIBIT D-3/PAGE 9 OF 129 • 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. LU 24-0024 EXHIBIT D-3/PAGE 10 OF 129 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 lila/rr,5,.- ob, „A ;...-%,-,-„:, _____,,,, ,,,- i ., ._, ,,, .:: 44 ,..,.,„, . ..,.,,,,, 0...MIAs, • .00 dig 1 'It"Por , k . ---- lip. .i.. ------\ ....-4-$ e ',13,7nTs'4'. ' iilii IiAN � - j _ , 1...111, , , . 41 le \ -4hin -.- 1 1 iczY10117,c -:i \IVY l!F..,,:gillit \\\,_ 1.. > £uiLLJJJk.. �II LU 24-0024 EXHIBIT D-3/PAGE 11 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 12 OF 129 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 y0 N. 1, '� yR yh ti( tiA yRD ti� y0 LN LL ,10 �o do ,yo ,yo ,yo ,Vo ,�o 'V do ,yo ,yo ,yo Sources: RMLS,JOHNSON ECONOMICS LU 24-0024 EXHIBIT D-3/PAGE 13 OF 129 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 ti '� R ti ti •c) N. �o- �a �a oo- Ao- �a 0a N. , ") �o- °o- ,AO 0 Do- tio- �a o- o° ° o° o° o° o° o° o° oti oti oti oti oti oti oti oti oti oti�a� ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti ti A, ti ,yo Source:CoStar,Johnson Economics LU 24-0024 EXHIBIT D-3/PAGE 14 OF 129 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 00 oti oti o� o° o� o° 01 ow o° d 0o titi titi ti� ti° ti`' ti 0 0° tit ti° ti yo 0y ti 61,ti �o- 0 0 0 0 0 ti ti ti 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 ati61' a"2a°` o-ti61' 6? d? o-tio-� 62a°` o-ti61' 62o-°` atia� s° °L °3 °R OHO o1 0% o� tiN yti y'' yR ti� ti1 y9, ti' �ti LL �° ,yo Source:CoStar,Johnson Economics LU 24-0024 EXHIBIT D-3/PAGE 15 OF 129 Figure 6.Annual Rent Growth Rate,Lake Oswego(2000-2023) Effective Rent % Growth/Yr 16% 12% 8% 4% 0% -4% — -8% 0.0) 00, a'' o-') o-. o-0) o-50'5O' o-') o-. o-� o-50'50' o-) o-. o-� o-50'50' �° 61' 63 °R o4' 6o 01 6b °' y0 yy yL ,y) y0, yh y<° y'\ ON' y0) to L7 �ti �O yo yo yo yo yo yo yo ,yo yo yo yo yo yo ,' ,yo yo yo yo yo ,' y � o ti a '19 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 �oo\a ti�\o ��\o �oo\° ore t- ,o �o o �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. LU 24-0024 EXHIBIT D-3/PAGE 16 OF 129 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 LU 24-0024 EXHIBIT D-3/PAGE 17 OF 129 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 LU 24-0024 EXHIBIT D-3/PAGE 18 OF 129 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) cti 20% o 0 —1 ^ o o Clack.Co.(2021) 15% o m v '1 ti c N NIN -I o `-1 `-i e - '� 0 o `-I 0 ." —IO ,-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. LU 24-0024 EXHIBIT D-3/PAGE 19 OF 129 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 oo o o Lil o o 0% �� ME _■ — J N C -0 N C C a) 4O ti O m C > co N C f6 QwU z Q -6 Co m N ce N °1 J (I)O O La v pH v O Ii Q Q E 1— 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. LU 24-0024 EXHIBIT D-3/PAGE 20 OF 129 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 LU 24-0024 EXHIBIT D-3/PAGE 21 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 22 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 23 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 24 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 25 OF 129 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 County3 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. LU 24-0024 EXHIBIT D-3/PAGE 26 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 27 OF 129 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 LU 24-0024 EXHIBIT D-3/PAGE 28 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 29 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 30 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 31 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 32 OF 129 Summary Report: HPS Task Force Feedback on Initial Housing Strategies Lake Oswego Housing Production Strategy I November 27, 2023 This report summarizes results from the online poll offered to Task Force members following the October 6, 2023 HPS Task Force meeting. The poll asked participants to indicate their level of support for each strategy included in the "Initial List of Potential Housing Strategies." Response options included High, Medium, Low, and "Exclude from list."The poll was available from October- 29, 2023 and a total of 11 Task Force members responded. 1 LU 24-0024 EXHIBIT D-3/PAGE 33 OF 129 The following chart summarizes the scores for all strategies. The table to the right identifies the number of respondents that rated each strategy medium or high. Note: The number of responses for each strategy varied from 8 to 11. Total Med + 0% 10% 20% 30% 40% 50% 60% 70% 8O% 90% 100% High A03:FAR,Density,Height,or Other Bonuses for Affordable Housing Mg 4 3 7 A15:Encourage Diverse Housing Types in High-Opportunity Neighborhoods i 3 4 2 6 A17:Small Dwelling Unit Developments 3 4 7 A19:High Density Requirements for to-be-Annexed Land 2 5 7 A20:Pre-Approved Plan Sets for Middle Housing Typologies i 2 4 6 A21:Pre-Approved Plan Sets for ADUs i 4 6 10 A23:Accessible Design 5 3 8 A25:Legalize and Encourage Tiny Homes and Villages 0 4 B01:Remove or Reduce Minimum Parking Requirements 2 5 B09:Capital Improvements Programming(CIP) 4 2 6 B10:Public Facility Planning 6 2 8 B14:Adopt Affirmatively Furthering Fair Housing as a Housing Policy in... 3 5 8 B18:Prioritize Home Ownership 4 1 5 CO2:Modify SDC fee schedules 5 4 9 C07:Reconsider Applying Park SDCs 4 D03:Housing Trust Funds 2 5 7 D04:Operating Subsidies for Affordable Housing Developments 3 3 6 D09:Construction Excise Tax(CET) 5 1 6 D10:Tax Increment Financing(TIE)Set-Aside 5 3 8 D13:Low-Interest Loans/Revolving Loan Fund 3 3 6 D15:Bond-for Resident Support Services and Permanent Supportive Housing... 5 D16:General Obligation Bonds—for Affordable Housing 0 4 E01:Nonprofit Low-Income Rental Housing Exemption 1 5 6 E02:Low-Income Rental Housing 3 4 7 E03:Vertical Housing Development Zone Tax Abatement 3 3 6 E04:Multiple Unit Property Tax Exemption(MUPTE) 5 5 E06:Homebuyer Opportunity Limited Tax Exemption Program(HOLTE) 3 4 7 F03:Community Land Trusts 3 2 5 F04:Public/Private Partnerships I 3 4 7 FOS:Preserving Low-Cost Rental Housing to Mitigate Displacement 1 7 F0B:Conversion of Underperforming or Distressed Commercial Assets 4 4 8 F18:Utilize Surplus Land Owned by Faith-Based Organizations for Affordable.., 3 6 9 F19:Affordable Housing Preservation Inventory I 6 3 9 F20:Fair Housing Education,Referral,and Other Services I 4 4 8 Z01:Code Audit and Amendments i 5 3 8 Z02:Rezone Land 2 11. © 6 Exclude from List •Low ■Medium •High 2 LU 24-0024 EXHIBIT D-3/PAGE 34 OF 129 3.A03: FAR, Density, Height, or Other Bonuses for Affordable Housing FAR, density, height, and other bonuses for affordable housing developments. Note: FAR/density bonuses do not work if there is not adequate height to make additional development feasible. Exclude from List 9% High 27% Medium 37% Value Percent Count Low 27.3% 3 Medium 36.4% 4 High 27.3% 3 Exclude from List 9.1% 1 Totals 11 3 LU 24-0024 EXHIBIT D-3/PAGE 35 OF 129 Comments ResponselD Response Maybe look at California density bonus law as an example- allowing for up to specific number of incentives/concessions as well as waivers for committing to a percentage of deed-restricted affordable units. Would require major code restructuring to enact this strategy but the effects would be minimal. How extensive would the allowed modifications be here? I can imagine serious concerns if massive, bulky buildings suddenly dominated a neighborhood. What kind of restrictions would remain? The "reduced open space"worries me, though. 4 LU 24-0024 EXHIBIT D-3/PAGE 36 OF 129 5. A15: Encourage Diverse Housing Types in High- Opportunity Neighborhoods Enable developments that support multiple unit sizes, types, and tenure options to promote diverse housing options in high- opportunity neighborhoods. With a goal of reversing historical patterns of racial, ethnic, cultural and socio-economic exclusion. Use an analysis of "Access to Opportunity" to decide which zones or locations (via zoning overlay) to determine where this is appropriate. Goal is to promote access to opportunity (e.g., high performing schools, multiple transportation options, services, etc.) to households with a range of backgrounds and incomes. The jurisdiction could pair this strategy with a robust program of incentives (e.g, deeper financial incentives, greater range of housing types, more regulatory waivers, etc.) to be made available in these areas than in other areas of the city. B16: Holistic Planning to Distribute New Density More Equitably Develop a targeted plan to distribute density within the jurisdiction more equitably to areas with quality schools, access to natural resources etc. Additionally, work to distribute transit equitably to ensure that exclusionary neighborhoods don't remain that way because they don't offer transit for higher density housing. Exclude from List 27% High Medium 18% 37% Value Percent Count Low 18.2% 2 5 LU 24-0024 EXHIBIT D-3/PAGE 37 OF 129 Medium 36.4% 4 High 18.2% 2 Exclude from List 27.3% 3 Totals 11 6 LU 24-0024 EXHIBIT D-3/PAGE 38 OF 129 Comments ResponselD Response This is a good policy and goal but not really a strategy. Almost all of LO is high resource but lower income housing should not be concentrated within the city. Tough to imagine a neighborhood in Lake Oswego that doesn't offer excellent schools and other"access to opportunity" given we're the highest performing district in the state. Also would cause considerable controversy both within neighborhoods suddenly infused with these developments and deemed "ideal", vs those exempted and deemed "poor."Again, I don't think this strategy is a good fit for a city with the characteristics of Lake Oswego. Portland, for example, would be a better fit for this strategy. VERY important to make sure you're not segregating folks. Diversity is a very good thing. As the note says, all of LO could be considered high opportunity. This policy seems more germane to larger cities with varying degrees of poverty and housing segregation throughout their boundaries. Our location focus should relate more to access to transportation and the transportation system itself and access and services. N/A to Lake Oswego - all our neighborhoods offer"quality schools and access to natural resources". This strategy would be better deployed to larger cities - like Portland. Would like more information on this 7 LU 24-0024 EXHIBIT D-3/PAGE 39 OF 129 7.A17: Small Dwelling Unit Developments Allow a land division where small lots or parcels are created below the standard lot/parcel size for dwelling units that are limited in size. Calculate density differently for the dwelling units due to their limited size. Density example: Dwelling units 600 square feet or smaller: 0.25 of a dwelling unit. Dwelling units 601 to 1,200 square feet: 0.50 of a dwelling unit. Exclude from List 20% Medium 30% High 40% Value Percent Count Low 10.0% 1 Medium 30.0% 3 High 40.0% 4 Exclude from List 20.0% 2 Totals 10 8 LU 24-0024 EXHIBIT D-3/PAGE 40 OF 129 Comments ResponselD Response I have questions about this that I would like clarified before I can provide input. AND these smaller places should actually BE LESS EXPENSIVE. This could also allow aging in place for current residents while opening up resources for families to buy in Lake Oswego. I'm not sure if this is meaning splitting larger lots into smaller ones to add multiple units of housing on what once was one lot. If so, that's not something I would support. 9 LU 24-0024 EXHIBIT D-3/PAGE 41 OF 129 9.A19: High Density Requirements for to-be- Annexed Land Requiring a certain portion of to-be-annexed land to include a percentage of high density. Be careful that this strategy is not used as a way for low density areas in high-infrastructure locations to shirk responsibility to upzone. Exclude from List 10% 10 Medium 20% High 50% i Value Percent Count Low 20.0% 2 Medium 20.0% 2 High 50.0% 5 Exclude from List 10.0% 1 Totals 10 10 LU 24-0024 EXHIBIT D-3/PAGE 42 OF 129 Comments ResponselD Response I have questions about this that I would like clarified before I can provide input. I am putting high priority- but need more information on what this means for LO. Makes total sense. 11 LU 24-0024 EXHIBIT D-3/PAGE 43 OF 129 11.A20: Pre-Approved Plan Sets for Middle Housing Typologies Providing a pre-approved set of plans for middle housing typologies (ex. Cottage clusters, townhomes, and SROs). The plans would be highly-efficient, designed for constrained lots and low cost solutions, and would allow for streamlined permitting. This would help attract developers that typically develop only single-family housing to get into the missing middle housing production. Consider partnering with a university, design institution, or developing a competition to produce plans. Medium V 20% Value Percent Count Low 40.0% 4 Medium 20.0% 2 High 40.0% 4 Totals 10 12 LU 24-0024 EXHIBIT D-3/PAGE 44 OF 129 Comments ResponselD Response This seems like it would be difficult given how site specific this type of development is going to be. Again I would like to know from Staff information on recent applications and what barriers the City is seeing. Building type is too complex to rely on 'plan sets' especially given the City's varied topography. Sounds like a way to make things not only more affordable but making things simpler and inviting for people to actually DO. I LOVE the idea for a competition, too. Lots of fresh ideas, hopefully. One of my concerns with this is housing that ends up resembling California style high density housing complex's like we are seeing in high density areas such as Beaverton and Sunnyside 13 LU 24-0024 EXHIBIT D-3/PAGE 45 OF 129 13.A21: Pre-Approved Plan Sets for ADUs Provide a pre-approved set of plans for ADU designs (6-10 sizes/configurations) that, if chosen by a developer/owner, would lead to automatic approvals and reduced permitting schedule. Plans would reduce the need for architectural costs and reduce barriers to entry. 111* Medium 40% w High 60% Value Percent Count Medium 40.0% 4 High 60.0% 6 Totals 10 14 LU 24-0024 EXHIBIT D-3/PAGE 46 OF 129 Comments ResponselD Response More attainable because the building type would be relatively simple, could be designed to redevelop attic space in a garage, etc. YES! I would hope, though, that whoever decides to put an ADU on their property to RENT out will have to keep the rents affordable. I mean truly AFFORDABLE. Perhaps there could be some incentive here to do so. I am in favor of ADU housing, but unsure about pre approved plans. Lake Oswego is unique and I don't want the community to start resembling every other community with pre-approved cookie cutter type housing. 15 LU 24-0024 EXHIBIT D-3/PAGE 47 OF 129 15.A23: Accessible Design Provide incentives in the development code to increase the number of units designed to meet Universal Design, Lifelong Housing Certification, and other similar standards. Examples of incentives include: expedited review and permitting processing, planning and building fee reductions, system development charge deferrals, density or building height bonuses. High 1111111111111111 30% Medium 50% Value Percent Count Low 20.0% 2 Medium 50.0% 5 High 30.0% 3 Totals 10 16 LU 24-0024 EXHIBIT D-3/PAGE 48 OF 129 Comments ResponselD Response This seems like something the City should be doing any way. Are there code requirements for ADA in Oregon? Tax credits for affordable housing typically have a requirement for a percentage of ADA units. Anything that is newly built should already employ universal design, in my opinion. Does it really cost much more to incorporate such things? Hmm ... anyway, YES to the incentives. If the demand for such units is high -and we have constrained supply within the community, I'm not certain a need exists for the city to further incentivize this development. 17 LU 24-0024 EXHIBIT D-3/PAGE 49 OF 129 17.A25: Legalize and Encourage Tiny Homes and Villages The Oregon Reach Code, Part II, defines a "tiny house" as a dwelling that is 400 square feet or less in floor area, excluding lofts. While many (though not all) jurisdictions allow tiny homes to be sited as a primary or accessory dwelling, few encourage their development through regulatory incentives. Legalizing the siting of tiny homes as primary or accessory dwellings through the removal of minimum unit size requirements can enable the development of this housing type. Jurisdictions can encourage the development of tiny houses and tiny house villages by providing regulatory incentives — such as reductions in required off-street parking or open space —for units less than 400 SF in floor area. Exclude from List 30% High 10% Medium 30% Value Percent Count Low 30.0% 3 Medium 30.0% 3 High 10.0% 1 Exclude from List 30.0% 3 Totals 10 18 LU 24-0024 EXHIBIT D-3/PAGE 50 OF 129 Comments ResponselD Response I do not think this is a good fit for Lake Oswego. After speaking to the PSH specialist at my company she expressed that tiny homes are difficult to regulate and are not ideal for the residents. Tiny homes are not an obvious fit for Lake Oswego. Would highly recommend running by voters first before legalizing and/or encouraging. I marked this "low" only for the "VILLAGES" aspect which could lend to an, oh, okay, we'll "let the poor folks be with their own"type of thing. Eh. 19 LU 24-0024 EXHIBIT D-3/PAGE 51 OF 129 19.B01: Remove or Reduce Minimum Parking Requirements Removing parking requirements for residential uses provides the opportunity to reduce the amount of lot area used for pavement and provides more space for housing and open space. This strategy offers greater flexibility to site housing and reduces costs associated with providing parking. Allow developers to respond to market demands and transit access without having the burden of parking minimums. Consider removing parking requirements near transit or for affordable housing. Exclude from List 30% IIIII Medium 30% High 20% Value Percent Count Low 20.0% 2 Medium 30.0% 3 High 20.0% 2 Exclude from List 30.0% 3 Totals 10 20 LU 24-0024 EXHIBIT D-3/PAGE 52 OF 129 Comments ResponselD Response A major consideration in scaling our density should be the effect it has on traffic and parking availability. These have profound effects on livability, and should remain a priority for the city. Makes sense. However, we must ensure that the transit system is what the people need. I know some folks seem to be against bettering the transit system because they say it will "bring more crime"to where they live. Oh, come on. The impacts on traffic congestion II quality of life for such a small community to eliminate parking requirements should be studied further before implementing. Adding high density developments without commensurate parking minimums? Sounds like a recipe for resident frustration... Most homes have two if not more vehicles. Reducing parking seems counterintuitive 21 LU 24-0024 EXHIBIT D-3/PAGE 53 OF 129 21.B09: Capital Improvements Programming (CIP) Programming work in a Capital Improvements Programming (CIP) so that projects are constructed sooner to support development of middle housing or to open up more land in an Urban Growth Boundary (UGB) for development of middle housing. Coordinate housing planning with CIP work to prioritize those projects that would support development (e.g. new water line, sewer pumping station). If the UGB is amended or the premises on which the CIP were based changed substantially, the CIP should be revised. 4 Exclude from List 11% AP' High Medium 45% Value Percent Count Low 22.2% 2 Medium 44.4% 4 High 22.2% 2 Exclude from List 11.1% 1 Totals 9 22 LU 24-0024 EXHIBIT D-3/PAGE 54 OF 129 Comments ResponselD Response I imagine this would be outside of Planning's purview- could foresee this being a heavy coordination lift for the city. This would be outside of planning's control, as stated, and changes to the UGB would be a considerable lift... 23 LU 24-0024 EXHIBIT D-3/PAGE 55 OF 129 23.B10: Public Facility Planning Completing water, sewer, and transportation PFPs and getting capital improvement projects (CIP) built so that costs to develop on land zoned for needed housing can be further anticipated and supported. In addition, public utilities planning also allows for more unit capacity, especially in areas that are upzoned for denser housing. Exclude from List 10% High 20% Medium 60% Value Percent Count Low 10.0% 1 Medium 60.0% 6 High 20.0% 2 Exclude from List 10.0% 1 Totals 10 24 LU 24-0024 EXHIBIT D-3/PAGE 56 OF 129 Comments ResponselD Response Prioritizing infrastructure in areas zoned for higher density residential is a good idea. !bid 25 LU 24-0024 EXHIBIT D-3/PAGE 57 OF 129 25.B14: Adopt Affirmatively Furthering Fair Housing as a Housing Policy in Comprehensive Plan Amend the comprehensive plan to explicitly make Affirmatively Furthering Fair Housing a Housing Policy. Example below, based on federal guidance on affirmatively furthering fair housing and current state protected classes. Jurisdictions may add additional protected classes, such as ancestry, ethnicity, or occupation. Additionally, a jurisdiction could create an Analysis of Impediments to Fair Housing (Al), even when not required, and conduct fair housing training for Council, Planning Commission, and other relevant policymakers. Jurisdictions would work to make known evidence and best practices in planning, to reverse discrimination and exclusion as well as concentrations of wealth, a required aspect of the comprehensive plan process. Housing Policy x: Affirmatively Furthering Fair Housing [Jurisdiction] affirmatively furthers access to decent, affordable housing with convenient access to the services and destinations Oregonians need to thrive without regard to their race, color, religion, national origin, sex, familial status, mental or physical disability, source of legally-derived income, marital status, sexual orientation or gender identity. NW Exclude from List Medium 20% 30% Hight 50% Value Percent Count Medium 30.0% 3 Hight 50.0% 5 26 LU 24-0024 EXHIBIT D-3/PAGE 58 OF 129 Exclude from List 20.0% 2 Totals 10 Comments ResponselD Response Good idea - easy to implement and should be a goal. There are lots of landlords who actively discriminate against families, for instance. I also have had one landlord state (to me)that she had to keep her rent"high" because the only folks who would rent an affordable place were the "undesirables," and she, of course, did not want that sort of folk in HER rental house. There are plenty of ways that people who just want a place to live are discriminated against. It is amazing to me how much control and power a landlord exerts. How we, as a society, allow this imbalance is beyond (at least my) comprehension. How would our"jurisdiction work"to prevent "exclusion and concentrations of wealth" in Lake Oswego, the most affluent community in the state?What would be the practical application here? 27 LU 24-0024 EXHIBIT D-3/PAGE 59 OF 129 27.B18: Prioritize Home Ownership Jurisdictions would develop a comprehensive review of the impediments to the development of homeownership opportunities and actionable steps to remove those impediments. Note: An important impediment to condominium development is the risk associated with the current condominium law in Oregon. A revamp of this law is needed to increase homeownership opportunities that are smaller in size. This would require action at the state level. Exclude from List 20% High 10% Value Percent Count Low 30.0% 3 Medium 40.0% 4 High 10.0% 1 Exclude from List 20.0% 2 Totals 10 28 LU 24-0024 EXHIBIT D-3/PAGE 60 OF 129 Comments ResponselD Response This one is near and dear to my heart-- but maybe I would actually like renting more (and not feel the burning desire to buy a place) if I felt safe renting. It's scary being a renter. You have no privacy. You can be "rent increase" evicted easily. (A 10% rent increase year after year is not sustainable for me and many others). And, like my sister in Taos, NM is finding out, you can pay and pay and pay rent and actually have paid the entire mortgage for the landlord, and yet have your housing yanked out from under you (she's 74!) because the landlord wants to sell. Unfortunately, in Taos, their LL- tenants laws are even worse than Oregon's. She'll get 30 days to move and not one penny in relocation money. AND there's nowhere for her to go because she was already at a place with low rents. I worry about her, especially when she said in a recent email that she "would go quietly." WTH?! Where?? Winter is coming and at her age it's not that easy to just pick up and go. 29 LU 24-0024 EXHIBIT D-3/PAGE 61 OF 129 29.0O2: Modify SDC fee schedules Updating SDC fee schedule so that is tied to dwelling size. This strategy ensures that smaller dwelling sizes in single and multi- family housing are not disproportionately burdened by fees and therefore encouraged. Consider per square foot fees rather than per dwelling. Exclude from List Al 10% Ai IMF Medium 50% High 40% VI ME Value Percent Count Medium 50.0% 5 High 40.0% 4 Exclude from List 10.0% 1 Totals 10 30 LU 24-0024 EXHIBIT D-3/PAGE 62 OF 129 Comments ResponselD Response This is a great idea - maybe it would help reduce the number of large homes being developed. Should help, right? 31 LU 24-0024 EXHIBIT D-3/PAGE 63 OF 129 31.007: Reconsider Applying Park SDCs If there are appropriate levels of parks and open space near the project, it may be more equitable or fair to charge reduced fees in those locations. At the same time, parks SDCs also are used to develop facilities that benefit the entire community. Exclude from List 30% I Medium 40% Value Percent Count Low 30.0% 3 Medium 40.0% 4 Exclude from List 30.0% 3 Totals 10 32 LU 24-0024 EXHIBIT D-3/PAGE 64 OF 129 Comments ResponselD Response It can help affordable developments if the park fees are reduced or deferred for affordable housing. I don't think it should be tied to being close to an existing park. Existing parks also need to be maintained. Greenery and a place to walk about in nature is very important, though. This is a hard one. 33 LU 24-0024 EXHIBIT D-3/PAGE 65 OF 129 33.D03: Housing Trust Funds Housing Trust Funds are a flexible source of funding that can be used to support a variety of affordable housing activities. Because they are created and administered at the city, county, regional, or state level, housing trust funds are not subject to the restrictions of federal subsidy programs and therefore can be designed specifically to address local priorities and needs. The entity administering the fund determines eligible activities, which can include anything from emergency rent assistance for families facing the threat of eviction or homelessness to gap financing for new construction of affordable housing to repairs for older homeowners. ri. Medium 20% Exclude from List 30% High 50% Value Percent Count Medium 20.0% 2 High 50.0% 5 Exclude from List 30.0% 3 Totals 10 34 LU 24-0024 EXHIBIT D-3/PAGE 66 OF 129 Comments ResponselD Response I have questions - has a regional or county trust fund been considered. This seems like its going to be hard for the City to accumulate enough funds to contribute annually. I'm not a financial person, but this seems like a good idea. But not having a funding source makes it harder to achieve. A tax on construction to help fund construction, albeit, affordable, seems contradictory somehow. 35 LU 24-0024 EXHIBIT D-3/PAGE 67 OF 129 35.D04: Operating Subsidies for Affordable Housing Developments Operating subsidies are payments made annually (or more frequently) to owners of affordable housing developments that make the housing more affordable by covering a portion of the ongoing costs of operating the development. Exclude from List 20% High Medium 30% 30% Value Percent Count Low 20.0% 2 Medium 30.0% 3 High 30.0% 3 Exclude from List 20.0% 2 Totals 10 36 LU 24-0024 EXHIBIT D-3/PAGE 68 OF 129 Comments ResponselD Response I am assuming vouchers are already available through the County? Since operating subsidies are needed usually for the life of the project (i.e. 55 years)this seems like it might be difficult to achieve? This is another strategy I have questions about. Much more information needed. 37 LU 24-0024 EXHIBIT D-3/PAGE 69 OF 129 37.D09: Construction Excise Tax (CET) A Construction Excise Tax (CET) is a tax on construction projects that can be used to fund affordable housing. According to state statutes, the tax may be imposed on improvements to real property that result in a new structure or additional square footage in an existing structure. Exclude from List 20% High 10% Irr Medium IIlr 50% Value Percent Count Low 20.0% 2 Medium 50.0% 5 High 10.0% 1 Exclude from List 20.0% 2 Totals 10 38 LU 24-0024 EXHIBIT D-3/PAGE 70 OF 129 Comments ResponselD Response This could prevent development of other housing which hurts the demand/supply ratio. Of the cities that have enacted this what is the return looked like? I dont think this is a good strategy in a builtout city like LO -this is great in cities that have large vacant areas and/or significant industrial development. 39 LU 24-0024 EXHIBIT D-3/PAGE 71 OF 129 39.D10: Tax Increment Financing (TIF) Set- Aside Create a TIF set-aside for affordable housing development programs within designated Urban Renewal Areas (URAs). Target could be to begin setting aside funds for affordable housing projects as a medium-term action, over the next 5 years or so. For example: Portland City Council designates 45% of the gross amount of TIF for designated housing purposes (rental housing for households under 60% of Area Median Income (AMI) and homeownership for households under 80% of AMI.006: TIF can also be used to fund off-site improvements for workforce or affordable housing; e.g. street intersection improvements triggered by development. High 111 30% Medium 50% Value Percent Count Low 20.0% 2 Medium 50.0% 5 High 30.0% 3 Totals 10 40 LU 24-0024 EXHIBIT D-3/PAGE 72 OF 129 Comments ResponselD Response 41 LU 24-0024 EXHIBIT D-3/PAGE 73 OF 129 41.D13: Low-Interest Loans/Revolving Loan Fund Housing Repair and Weatherization Assistance for low and moderate income households may be capitalized by Tax Increment Financing (TIF), Community Development Block Grant (CBDG) Funds, or local Housing Trust Funds. Exclude from List 10% a High. 30% Value Percent Count Low 30.0% 3 Medium 30.0% 3 High 30.0% 3 Exclude from List 10.0% 1 Totals 10 42 LU 24-0024 EXHIBIT D-3/PAGE 74 OF 129 Comments ResponselD Response Easy way to help maintain the housing stock in the city and could be very valuable for aging seniors on a limited income. 43 LU 24-0024 EXHIBIT D-3/PAGE 75 OF 129 43.D15: Bond - for Resident Support Services and Permanent Supportive Housing Services Limited Tax General Obligation Bond that creates a funding source for supportive housing services, such as access to health care, mental health, and other social services that better support and stabilize residents who face complex challenges and will benefit from affordable housing programs. Exclude from List 22% IIII High 22% lir Medium 34% Value Percent Count Low 22.2% 2 Medium 33.3% 3 High 22.2% 2 Exclude from List 22.2% 2 Totals 9 44 LU 24-0024 EXHIBIT D-3/PAGE 76 OF 129 Comments ResponselD Response I have questions on this to better understand how this would be structured and spent. Makes sense. 45 LU 24-0024 EXHIBIT D-3/PAGE 77 OF 129 45.D16: General Obligation Bonds — for Affordable Housing Following the passage of Measure 102 Oregon local governments, including cities and counties, can now issue voter-approved general obligation bonds to provide direct funding for construction and other capital costs associated with the development and construction of affordable housing. These funds can be loaned or granted to both public and privately owned affordable housing projects. "Affordability" is required to be determined by voters and each jurisdiction, and can be above or below minimum affordability levels established for the federal LIHTC program and other established federal and State affordable housing finance programs, defining affordability by reference to Area Median Income (AMI) as established by HUD. The bonds could be paired with other financing such as Low Income Housing Tax Credits, or could be used for homeownership opportunities. Exclude from List 22% High 11% Medium 33% Value Percent Count Low 33.3% 3 Medium 33.3% 3 High 11.1% 1 Exclude from List 22.2% 2 46 LU 24-0024 EXHIBIT D-3/PAGE 78 OF 129 Totals 9 Comments ResponselD Response I don't particularly like the part where affordability is determined by each jurisdiction. Something to discuss, for sure. 47 LU 24-0024 EXHIBIT D-3/PAGE 79 OF 129 47.E01: Nonprofit Low-Income Rental Housing Exemption This tool can provide a simplified way for affordable housing owned and operated by a nonprofit (as well as land held by a nonprofit for future affordable housing development) or Community Land Trusts (at least in land value) to qualify for a property tax exemption. Work should be done to make it easier for projects/land to qualify; minimizing the number of taxing authorities needed to grant an approval. (ORS 307.540 - .548) Exclude from List 13% AI Hight 63% Value Percent Count Low 12.5% 1 Medium 12.5% 1 Hight 62.5% 5 Exclude from List 12.5% 1 Totals 8 48 LU 24-0024 EXHIBIT D-3/PAGE 80 OF 129 Comments ResponselD Response It would be nice to be able to discuss E01 and E02 as a group. 49 LU 24-0024 EXHIBIT D-3/PAGE 81 OF 129 49.E02: Low-Income Rental Housing 20-year tax exemption for any entity that provides regulated affordable housing, including nonprofits and for-profit developers. Eligible properties must be offered for rent to low-income persons (at or below 60% AMI) or held for the purpose of developing low-income rental housing. Does not require annual renewal. (ORS 307.515 - .537). Note: This abatement isn't in the DLCD list, but it is authorized by state statute. 4 Exclude from List 11% Medium 33% High 45% 1 1111 Value Percent Count Low 11.1% 1 Medium 33.3% 3 High 44.4% 4 Exclude from List 11.1% 1 Totals 9 50 LU 24-0024 EXHIBIT D-3/PAGE 82 OF 129 Comments ResponselD Response It would be nice to be able to discuss E01 and E02 as a group. 51 LU 24-0024 EXHIBIT D-3/PAGE 83 OF 129 51.E03: Vertical Housing Development Zone Tax Abatement Partial property tax exemption program on improvements for new mixed use development. To qualify, a project must have improved, leasable, non-residential development on the ground floor and residential development on the floors above. A partial abatement on land value is allowed for each equalized floor of affordable housing. This abatement could be made better by an adjustment to the floor equalization formula - right now, there is a 20% abatement per equalized floor, but if the project ends up being 3.8 equalized floors it only gets 3 floors worth of the abatement rather than an apportioned abatement. Exclude from List 13% III MI MI *High 38% 11 Value Percent Count Low 12.5% 1 Medium 37.5% 3 High 37.5% 3 Exclude from List 12.5% 1 Totals 8 52 LU 24-0024 EXHIBIT D-3/PAGE 84 OF 129 Comments ResponselD Response This seems like a more nuanced form of E02? Would like to discuss this more. This has already been initiated by the City and should continue. Make it better then. (abatement) Additional businesses in Lake Oswego is a positive. However, the community already has this type of business/dwelling combination, and adding more of the same type of dwelling makes it look like every other community out there. 53 LU 24-0024 EXHIBIT D-3/PAGE 85 OF 129 53.E04: Multiple Unit Property Tax Exemption (MUPTE) This strategy can be used to incentivize production of multifamily housing with particular features or at particular price points by offering qualifying developments a partial property tax exemption over the course of several years. ill° Exclude from List 13% Low 25% 1 Medium 11 62% Value Percent Count Low 25.0% 2 Medium 62.5% 5 Exclude from List 12.5% 1 Totals 8 54 LU 24-0024 EXHIBIT D-3/PAGE 86 OF 129 Comments ResponselD Response How does this compare to E02? Just targeted to a specific housing type? As long as you keep the big out-of-state investment vultures out of the mix. And what are the "particular features"? 55 LU 24-0024 EXHIBIT D-3/PAGE 87 OF 129 55.E06: Homebuyer Opportunity Limited Tax Exemption Program (HOLTE) Under the HOLTE Program, single-unit homes receive a ten-year property tax exemption on structural improvements to the home as long as the property and owner remain eligible per program requirements. Exclude from List 22% Medium 33% High 45% Value Percent Count Medium 33.3% 3 High 44.4% 4 Exclude from List 22.2% 2 Totals 9 56 LU 24-0024 EXHIBIT D-3/PAGE 88 OF 129 Comments ResponselD Response This would be a challenging program to manage. 57 LU 24-0024 EXHIBIT D-3/PAGE 89 OF 129 57.F03: Community Land Trusts Land acquired by nonprofits or community-based organizations that maintain permanent ownership of land. Prospective homeowners are able to enter long-term (i.e., 99-year), renewable leases at an affordable rate. Upon selling, homeowners only earn a portion of the increased property value, while the trust keeps the remainder, thereby preserving affordability for future low- to moderate-income families. F11: Limited Equity Cooperatives Combine a Community Land Trust (CLT) with a Limited Equity Cooperative for a lower barrier entry to homeownership of a share of a permanent small/tiny home community. Exclude from List 11% High 22% Medium 33% Value Percent Count Low 33.3% 3 Medium 33.3% 3 High 22.2% 2 Exclude from List 11.1% 1 58 LU 24-0024 EXHIBIT D-3/PAGE 90 OF 129 Totals 9 Comments ResponselD Response I think promoting condos, apartments and other more affordable types of traditional housing is preferable to tiny homes. Not sure about this one 59 LU 24-0024 EXHIBIT D-3/PAGE 91 OF 129 59.F04: Public/Private Partnerships Partnerships between government and the private sector and/or nonprofits have the capacity to bring resources to the table that would otherwise not be available if each institution were able to help communities provide housing on its own. This can come in the form of coalitions, affordable housing task forces, and collaboratives. High 11111 45% Medium 33% Value Percent Count Low 22.2% 2 Medium 33.3% 3 High 44.4% 4 Totals 9 60 LU 24-0024 EXHIBIT D-3/PAGE 92 OF 129 Comments ResponselD Response Hopefully, Lake Oswego will TRULY WORK ON THIS because there seems to be a lot of pushback for creating housing for people to live in and raise a family in and create memories in and not just as a place to dock your boat after a night of dining across the lake, etc. I've had someone tell me how HARD it was to get the very few affordable housing developments that LO has now. Please don't wait for a nun or Jimmy Carter to come to you. You have to conjure up the magic yourselves (the city and the populace thereof) if you truly want to have places for people of all kinds to live. 61 LU 24-0024 EXHIBIT D-3/PAGE 93 OF 129 61.F05: Preserving Low-Cost Rental Housing to Mitigate Displacement Preventing displacement and preserving "naturally occurring" affordable housing through acquisition, low-interest loans/revolving loan fund for preservation, and/or code enforcement. Example: The Oregon Legislature committed $15 million in lottery bonds to Oregon Housing and Community Services (OHCS) in 2019 to create a naturally occurring affordable housing loan fund. Modeled after the Greater Minnesota Housing Fund. Exclude from List 11% High 33% Medium 45% Value Percent Count Low 11.1% 1 Medium 44.4% 4 High 33.3% 3 Exclude from List 11.1% 1 Totals 9 62 LU 24-0024 EXHIBIT D-3/PAGE 94 OF 129 Comments ResponselD Response Not sure what the "and/or code enforcement" part means. Hopefully, it's not an opportunity to let rentals become unsafe to live in as long as they are "affordable." 63 LU 24-0024 EXHIBIT D-3/PAGE 95 OF 129 63.F08: Conversion of Underperforming or Distressed Commercial Assets Acquisition of underperforming or distressed commercial assets (commercial, retail, industrial, or hotel) or partnerships with owners of the assets for conversion into needed housing. 1111 High 44% Value Percent Count Low 11.1% 1 Medium 44.4% 4 High 44.4% 4 Totals 9 64 LU 24-0024 EXHIBIT D-3/PAGE 96 OF 129 Comments ResponselD Response There is NO REASON IN THE WORLD why there are empty offices and apartments and homes, etc., when there are folks living on the street. These places need to be utilized or be fined heavily. Hey, the fines could fund some of the housing affordability programs on the menu, right? Would like to know more about this 65 LU 24-0024 EXHIBIT D-3/PAGE 97 OF 129 65.F18: Utilize Surplus Land Owned by Faith-Based Organizations for Affordable Housing Over the past few decades, faith institutions across the country have been declining. This has prompted conversations within different faith communities about how to refocus their mission of social change. The housing affordability crisis in many cities around the country has brought these institutions into the work of creating affordable housing in their communities. This strategy would: 1) Identify faith and community- based organizations that are interested in offering their available land for development of affordable housing, 2) Provide design and finance consultation for three organizations to prepare them for future affordable housing development projects, and 3) Determine barriers to development and how those can be addressed and/or streamlined. IIIIIIIII Medium 33% High 67% Value Percent Count Medium 33.3% 3 High 66.7% 6 Totals 9 66 LU 24-0024 EXHIBIT D-3/PAGE 98 OF 129 Comments ResponselD Response SB4 in California is likely to pass and could be a model for this. This is a good opportunity for LO to promote infill development on underutilized church sites. There is a lot of potential underutilized land in this scenario. Yes! Yes! Mixed feeling on this 67 LU 24-0024 EXHIBIT D-3/PAGE 99 OF 129 67.F19: Affordable Housing Preservation Inventory Prepare an inventory of subsidized and naturally occurring affordable housing to support proactive policies intended to preserve the affordable housing stock. This strategy is intended to help offset some of the need for costly new construction. High 33% I Value Percent Count Medium 66.7% 6 High 33.3% 3 Totals 9 68 LU 24-0024 EXHIBIT D-3/PAGE 100 OF 129 Comments ResponselD Response Data data data. Can't make decisions without it, so yes! Also, why not keep a list of all the landlords who have a history of raising rents at an unsustainable clip? Make it publicly accessible. It could put pressure on them to not be so greedy and help to keep some places affordable. 69 LU 24-0024 EXHIBIT D-3/PAGE 101 OF 129 69.F20: Fair Housing Education, Referral, and Other Services 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. Partner with and fund Fair Housing Council of Oregon to provide periodic Fair Housing Audit Testing, customized outreach and education and other specialized services. High 44% Medium 45% Value Percent Count Low 11.1% 1 Medium 44.4% 4 High 44.4% 4 Totals 9 70 LU 24-0024 EXHIBIT D-3/PAGE 102 OF 129 Comments ResponselD Response Does the City do this already? Low hanging fruit. Education is VERY important because some people don't realize it when they are being unfairly kept out of housing that they qualify for. Landlords should KNOW BETTER, but apparently they don't ... or maybe just don't care and they'll do what they want. And realtors ... wow. Do we really even need them? Of course they want a house or condo or whatever to sell at a high price. They make more money on the deal. (I could say a lot about the realty biz, but that's for another time, perhaps). I especially think it's important to do the periodic Fair Housing Audit Testing. 71 LU 24-0024 EXHIBIT D-3/PAGE 103 OF 129 71.Z01: Code Audit and Amendments Identify barriers in the Community Development Code (CDC) to housing development. This could incorporate other strategies from the DLCD list (below) as well as other code barriers such as lot coverage and floor area ratio (FAR) limitations. • Minimum density standards (A01) • ADU siting and design standards (A05) • Barriers SROs (A07) • Cottage housing regulations (A08) • Barriers to lot division (B05) • Onerous regulations that contribute to lengthy permit review timelines (B06) • Public hearings in design districts for clear and objective applications (B15) • Open space requirements (B17)A High 11111 33% Medium 56% Value Percent Count Low 11.1% 1 Medium 55.6% 5 High 33.3% 3 Totals 9 72 LU 24-0024 EXHIBIT D-3/PAGE 104 OF 129 Comments ResponselD Response Lots to discuss here. Some degree of this will happen due to the enactment of many of the strategies we are discussing. Hopefully, the "further analysis" is not used as a delaying tactic to getting things done. 73 LU 24-0024 EXHIBIT D-3/PAGE 105 OF 129 73.Z02: Rezone Land Given the deficit of residential land identified in the HCA, the City could consider rezoning nonresidential land for housing. It will be important to ensure there is still adequate land for employment needs. Exclude from List 22% High 22% Value Percent Count Low 11.1% 1 Medium 44.4% 4 High 22.2% 2 Exclude from List 22.2% 2 Totals 9 74 LU 24-0024 EXHIBIT D-3/PAGE 106 OF 129 Comments ResponselD Response There is not currently enough vacant land that is appropriately-zoned available to accommodate the City's need for higher density housing. The City has the opportunity to guide development with this strategy. We already have a low amount of commercially zoned land. The largest opportunity areas for housing is in the mixed use and high-density residential zones. Once these fill out with needed housing, then rezoning can be explored if there is still a need for housing. 75 LU 24-0024 EXHIBIT D-3/PAGE 107 OF 129 LAKE OSWEGO HOUSING PRODUCTION STRATEGY Strategy Alternatives Memo December 1 , 2023 Introduction The purpose of this memorandum is to identify housing strategy alternatives 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 Capacity Analysis. This memo builds on prior work by City staff, consultants, and the HPS Task Force.The Task Force reviewed the "Initial List of Potential Housing Strategies" at their October 6 meeting.Task Force members then had the opportunity to provide feedback on each strategy via an online poll (rating each strategy on a scale from low to high, or"exclude from list"). A subset of higher-priority strategies was also reviewed with the City Council and Planning Commission at work sessions in November. Input from each of these activities assisted the project team in refining the strategies list into the set of alternatives included in this memo. Format In order to focus the Task Force's review and discussion, this memo organizes the strategy alternatives into the following categories: • High Priority for Discussion: o Strategies Requiring Council Action—These have the potential for a higher impact on housing production, but require City Council action to implement. o Strategies with Existing Support—These have the potential for a moderate impact on housing production and have already received some degree of support from City Council, the HPS Task Force, or other advisory bodies. • Lower Priority for Discussion: o Strategies to Allocate Funds for Affordable Housing—Various ways that the City could allocate funds to support affordable housing production or preservation. Each of these strategies would depend on adoption of a new funding source. o Low-Barrier Strategies—These have a lower barrier to implementation than some of the others, but also are expected to have less impact on housing production. The tables in this memo provide the following information about each strategy: • Strategy number(from DLCD's master list) • Strategy description MIG, Inc. I Lake Oswego Housing Production Strategy 1 of 10 LU 24-0024 EXHIBIT D-3/PAGE 108 OF 129 Strategy Alternatives Memo December 1, 2023 • Housing need fulfilled (populations served,target income levels, and tenure) • Actions needed to implement • Opportunities, constraints, or consequences • Task Force support(and Council and Planning Commission (PC) support,where applicable). (Task Force support is based on results from the online poll that some participants completed in October.) Each of these strategies discussed here can be refined or tailored to be more effective in promoting the production and/or preservation of needed housing to better suit the needs of Lake Oswego. Based on further feedback from the HPS Task Force, Planning Commission, and City Council, the project team will identify "Initial Housing Strategy Recommendations" in the next step of the project.Those recommendations will include a further refined set of strategies that will be evaluated and prioritized for their feasibility and potential to impact housing production in the city. DLCD HPS Strategy Categories The strategies in this memo have been gleaned from the Housing Production Strategy Guidance Document provided by DLCD.The strategy numbers in the tables' lefthand column correspond to DLCD's list and the following categories: These are strategies that a jurisdiction can take to proactively encourage Category A needed housing production through zoning and code modifications.These Zoning and Code Changes strategies may also include regulations to ensure housing goals are met. Category B These strategies address known impediments to providing needed Reduce Regulatory housing.These include but are not limited to zoning, permitting, and Impediments infrastructure impediments. Category C These are a list of financial incentives that jurisdictions can give to Financial Incentives developers to encourage them to produce needed housing. These are a list of resources or programs at the local, state and federal level Category D that can provide money for housing projects.The majority of these Financial Resources resources are intended to provide money for affordable housing projects. Category E These are a list of tax exemption and abatement programs that are Tax Exemption and Abatement intended to encourage developers to produce housing. Category F These are strategies that secure land for needed housing, unlock the value Land Acquisition, Lease,and of land for housing, and/or create partnerships that will catalyze housing Partnerships developments. Any other Housing Production Strategy not listed in Categories A through Category Z F that the jurisdiction wishes to implement will be outlined in this section Custom Options and numbered accordingly. MIG, Inc. I Lake Oswego Housing Production Strategy 2 of 10 LU 24-0024 EXHIBIT D-3/PAGE 109 OF 129 Strategy Alternatives Memo December 1, 2023 High Priority for Discussion: Strategies Requiring Council Action The project team identified the following strategies as having the potential for a higher impact on housing production, but each would require City Council action to implement.These strategies include Development Code amendments, rezoning, modified development fees,tax abatements, and new revenue sources.These strategies were reviewed by the City Council and Planning Commission (PC) at work sessions in November—most of them received at least a moderate amount of support from both groups. # Strategy Purpose Housing Need Fulfilled Actions Needed to Opportunities, Constraints,and Other Considerations Task Force,Council, Implement & PC Support A03 Zoning Incentives for Affordable Housing • Populations Served: • City Council action: • Zoning incentives likely would not incentivize private developers to include affordable Task Force: Medium This strategy involves allowing additional height, density, bonus floor Low-income Legislative units in their projects. Incentives would more likely be a way to allow affordable City Council: area ratio (FAR), or relaxing other zoning standards, for affordable households Development Code developers to make more efficient use of land and potentially better compete for land Medium housing. • Income Level: Text Amendment. with market-rate developers. Non-profit housing providers have indicated that such PC: General support The City currently allows a limited height or density bonus for affordable 0-80%AMI bonuses can be very effective. developments in the WLG-OC and R-DD zones.The City could consider • Tenure: • Senate Bill 8 (2021 session) requires cities to allow affordable housing that meets specific modifying the bonus, expanding it to apply in more zones, or adopting For rent or sale criteria on a wide range of sites and provides height and density bonuses. If the new bonuses, such as reduced open space for affordable housing. 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. ZO1 Code Audit and Amendments • Populations Served: • City Council action: • This strategy could help reduce or eliminate some of the major code and procedural Task Force: Medium Undertake a comprehensive audit of the Community Development Code Low to higher Legislative barriers identified by housing stakeholders. City Council: High (CDC)to identify and eliminate barriers to housing production. income households Development Code • The strategy could be shaped to prioritize housing types identified as most needed in the PC: General support The CDC audit could potentially address: • Income Level: Text Amendment. city, based on the City's recently adopted Housing Needs Analysis and stakeholder input, • Barriers to ADUs and middle housing; All income levels such as: • Ways to facilitate smaller units; • Tenure: o Middle housing (e.g.,townhomes, duplexes, and cottage clusters) • Procedural requirements that add cost and delay to land use For rent or sale o Apartments with family-size units (2-3 bedrooms) approvals; o Multi-family housing • Open space requirements in high-density zones; o Smaller homes • The impact of neighborhood overlays or other regulatory • Simply removing code barriers will not lead to housing development.This strategy should provisions; and be paired with others that directly influence housing production. • Other identified Code barriers. • 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. Z02 Rezone Land • Populations Served: • City Council action: • If nonresidential land is considered for rezoning, it would be important to ensure there is Task Force: Rezone commercial, mixed-use, or other non-residentially zoned Low to higher Legislative Zoning still adequate land available for employment and commercial/industrial needs in the city. Medium-Low properties for residential uses, especially multi-family housing. income households Map and • In considering the most appropriate locations for City-initiated rezoning of land,the City Council: High Given the deficit of residential land identified in the HNA,there may be a • Income Level: Comprehensive Plan following criteria or factors should be considered: PC: General support need to add to the City's capacity of residential land to meet the housing All income levels Map amendment. o Proximity to existing residential and higher-density areas. need. • Tenure: o Proximity to services (e.g.,transit, schools, parks, etc.). The City could also look at rezoning unincorporated land outside of City For rent or sale o Size and ownership—larger properties will be more attractive for development. limits, including to increase permitted densities, so that when land is • There may be neighborhood resistance to rezoning, especially "upzoning" residential annexed to the city, it has more capacity for housing development. areas outside of City limits.This strategy would need significant community engagement. MIG, Inc. I Lake Oswego Housing Production Strategy 3 of 10 LU 24-0024 EXHIBIT D-3/PAGE 110 OF 129 Strategy Alternatives Memo December 1, 2023 # Strategy Purpose Housing Need Fulfilled Actions Needed to Opportunities, Constraints,and Other Considerations Task Force, Council, Implement & PC Support Modify System Development Charge (SDC) Fee Schedule • Populations Served: • Work with City • This strategy would reduce barriers to construction of more affordable, smaller-scale Task Force: Update the City's SDC fee schedule so that is tied more directly to Moderate to higher Council, other homes, including small single-family homes and middle housing. High dwelling size.This would better match a development's charges to its income households departments (Public • The City sets its SDC fee schedule based on projected needs for system construction and City Council: High actual cost or impact on the system. Smaller housing units, including • Income Level: Works, Finance, improvements. Modifying the SDC methodology would likely increase fees for larger PC: General support some middle housing types,typically have less impact on water, sewer, or 80%AMI and above Parks, etc.), and homes to make up for the reduced fees for smaller units. transportation facilities,given the reduced average size and occupancy of • Tenure: development • Notes on current SDC strategies: these units.This is not fully reflected in Lake Oswego's current SDC For rent or sale stakeholders on CO2 schedule. policy discussions o The City has already adopted regulations to waive SDCs for income-restricted around modifying affordable housing (80%or less of AMI) and for accessory dwelling units. The City could consider charging fees on a per-square-foot basis, rather o The City also charges lower fees per-unit for multi-family dwellings as compared to than per-unit. SDCs. single-family homes. • City Council action: o As part of the current Parks Plan 2040 update project,the City will consider Adopt modified SDC modifying its Parks SDCs to be scaled by housing unit size.That could provide a schedule by jumping off point and a model for a larger discussion about SDC schedules and resolution or potential future refinements to SDCs for other services. ordinance. D09 Construction Excise Tax (CET) • Populations Served: • City Council action: • Opportunity to create a dedicated funding source for affordable housing. Task Force: CET is a one-time tax on construction projects and is a potential funding Low-income Adopt CET by • Several other strategies under consideration for the HPS (see the "Strategies to Allocate Medium-Low source for affordable housing. Cities and counties may levy a CET on households resolution or Funding" section, below)would depend on adoption of a new funding source. Despite City Council: Low residential construction for up to 1%of the project's permit value; or on • Income Level: ordinance. low support from the Council and PC, CET remains on this list because it is one of the few PC: Did not support, commercial and industrial construction with no cap on the rate of the 0-80%AMI available locally-controlled funding streams for affordable housing. but requested more CET. • Tenure: • CET is a tax on development, meaning that it raises costs for construction of commercial, information. The allowed uses for CET funding are defined by state statute'and can For rent or sale industrial, and/or market rate residential housing.The statute exempts regulated include support for a variety of housing-related projects and programs. A affordable housing, public buildings, hospitals, and certain other types of facilities. The portion of revenues must be used for developer incentives (e.g., fee and City could also choose to exempt other types of development (e.g., multi-family housing, SDC waivers,tax abatements, etc.). Commercial/industrial CET has fewer smaller units, etc.) or exclude residential development altogether. restrictions than residential CET. • Alternatively, by structuring a policy with offsetting incentives or tools for housing to Some cities have used CET to pay for gap financing of new affordable reduce development barriers,the City could potentially limit the impact on feasibility for development, backfilling SDC waivers, acquisition of properties for certain housing projects. affordable housing preservation, and down payment assistance for first • Because CET revenue is development-derived, it will fluctuate with market cycles. time homebuyers. Tax Abatements and Exemptions E01 Nonprofit Low-Income Housing Exemption • Populations Served: • Work with other Applicable to all tax exemptions: Task Force: This tax exemption benefits low-income residents by alleviating the Low-income taxing jurisdictions to . Tax exemptions apply only to the tax levy of a governing body that adopts the Medium-High property tax burden on those agencies that provide this housing households gain approval. exemptions. In order for the full property tax to be exempted,the City must seek City Council: High opportunity. While non-profit agencies can apply for tax exempt status • Income Level: • Develop application approval from partner jurisdictions that,together with the City, make up at least 51%of (tax abatements through the state,that process is cumbersome and is not always 0-80%AMI standards and the overall tax levy. Lake Oswego would need to secure agreement from either the generally) successful.This strategy would provide a simplified and consistent • Tenure: guidelines. School District or County or both. PC: General support method for eligible organizations to apply and qualify by adopting it as For rent or sale • City Council action: • The City and participating taxing districts will lose property tax income for the duration of for tax abatements City policy and gaining participation from other taxing districts. Adopt tax exemption any tax exemption, reducing revenue for City services and revenue for participating Applicants must renew their tax exemption applications annually. As long policy by resolution taxing districts. Such taxing districts may express resistance to new tax abatement or as the housing remains affordable to low-income residents, there is no or ordinance. time limit to the tax exemption. 1 Oregon Revised Statutes 320.192-195. MIG, Inc. I Lake Oswego Housing Production Strategy 4 of 10 LU 24-0024 EXHIBIT D-3/PAGE 111 OF 129 Strategy Alternatives Memo December 1, 2023 # Strategy Purpose Housing Need Fulfilled Actions Needed to Opportunities, Constraints,and Other Considerations Task Force, Council, Implement & PC Support (Authorized by ORS 307.540-548) 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. E02 Low-Income Rental Housing • Populations Served: • Work with other • Key advantages of this abatement are that it is available to more than just non-profits Task Force: This is a 20-year tax exemption for any entity that provides regulated Low-income taxing jurisdictions to and it does not require annual renewal.This can significantly reduce an organization's Medium affordable housing, including nonprofits and for-profit developers. households gain approval. administrative burden in implementing the exemption. City Council: High Eligible properties must be offered to low-income persons or held for the • Income Level: • City Council action: (tax abatements purpose of developing low-income rental housing.This exemption does 0-80%AMI Adopt tax exemption generally) not require annual renewal. • Tenure: program by PC: General support (Authorized by ORS 307.515-537) For rent or sale resolution or for tax abatements ordinance. E03 Vertical Housing Development Zone Tax Abatement • Populations Served: • Define VHDZ • A pilot VHDZ project is currently being considered for the North Anchor development Task Force: This abatement is intended to incentivize multi-story mixed-use Low-income to geography. site.The City could consider a more broadly-applicable program in an area (or areas) Medium development and affordable housing in targeted areas. To qualify, a higher-income • Work with other where it wants to encourage mixed-use development. City Council: High project must have improved, leasable, non-residential development on households taxing jurisdictions to • VHDZ has the potential to displace residents by encouraging redevelopment in certain (tax abatements the ground floor and residential development on the floors above.The • Income Level: gain approval. areas. Per state law, a city must consider the potential for displacement of households generally) program allows a 10-year partial property tax exemption of 20% per floor All incomes . City Council action: within a proposed VHDZ before designating the zone. PC: General support (and up to 80%total) for mixed-use developments within the designated • Tenure: Adopt tax exemption for tax abatements Vertical Housing Development Zone (VHDZ), and provides an additional For rent or sale program by 20%exemption for each floor of low-income housing. resolution or (Authorized by ORS 307.841-867) ordinance. E04 Multiple Unit Property Tax Exemption (MUPTE) • Populations Served: • Define eligibility • Could incentivize multi-family developers to incorporate desirable features in their Task Force: This is an abatement for multiple-unit housing in corridors and centers Depends on how the criteria. projects, such as accessible units or family-size units. Affordability to lower-income Medium-Low that support transit. Eligible development must be located in transit- program is • Work with other households could also be an eligibility criterion, if desired. City Council: High oriented areas (as designated by the City) and have multiple units but structured taxing jurisdictions to • If included as a criterion, affordability would be limited to the tax exemption (10 years). (tax abatements may include ground floor commercial space.The exemption can be • Income Level: gain approval. generally) provided for up to 10 years. Depends on how the • City Council action: PC: General support This incentive may encourage development downtown and along Lake program is Adopt tax exemption structured for tax abatements Oswego's transit corridors, including future mixed-use areas.The City has program by broad discretion as to how to structure the program. Eligibility criteria • Tenure: resolution or could include requirements for affordability, accessibility/universal Typically for rent ordinance. design, unit size, or other desirable features. (Authorized by ORS 307.600-637) MIG, Inc. I Lake Oswego Housing Production Strategy 5 of 10 LU 24-0024 EXHIBIT D-3/PAGE 112 OF 129 Strategy Alternatives Memo December 1, 2023 # Strategy Purpose Housing Need Fulfilled Actions Needed to Opportunities, Constraints,and Other Considerations Task Force,Council, Implement & PC Support E06 Homebuyer Opportunity Limited Tax Exemption Program (HOLTE) • Populations Served: • Define eligibility and • Strategy to facilitate homeownership among low-and moderate-income households. Task Force: The purpose of this program is to encourage homeownership among low- Low-to moderate- design criteria. Medium and moderate-income households and to stimulate the purchase, income households • Work with other City Council: High rehabilitation, and construction of residences in certain areas as a form • Income Level: taxing jurisdictions to (tax abatements of infill development.The tax exemption can be granted for up to 10 0-120%AMI gain approval. generally) successive years, and only applies to the value associated with property • Tenure: • City Council action: PC: General support improvements, not the land value. For sale for tax abatements Adopt tax exemption Single-family housing units,townhomes, multi-family homeownership program by units (i.e., condos), and manufactured housing are eligible for the resolution or exemption.The housing must be in an area defined and designated by ordinance. the City.The City also would create criteria and required design elements or public benefits that would be applied to properties using the exemption. (Authorized by ORS 307.651-687) High Priority for Discussion: Strategies with Existing Support The following strategies could have a moderate impact on housing production and have already received some degree of support from City Council,the HPS Task Force or other advisory bodies. These strategies have not yet been reviewed in detail by the City Council or Planning Commission as part of this process, but several of the strategies have already been utilized to some extent by the City. # Strategy Purpose Housing Need Fulfilled Actions Needed to Opportunities, Constraints,and Other Considerations Task Force Implement Support A23 Accessible Design Incentives or Mandates • Populations Served: • Regulatory incentives • This strategy would help address housing disparities for people with Medium This strategy involves incentives or mandates to increase development of housing that is Seniors; people with and/or requirements disabilities and provide more options for aging in place. accessible for seniors and people with disabilities or mobility challenges. disabilities would require • Strategies to promote accessible housing received support from the Middle Potential incentives could include: • Income Level: Development Code Housing Code Advisory Committee as part of the House Bill 2001 code • Bonuses for height, density, lot size, or floor area ratio (similar to Strategy A03). All income levels updates. updates. • Tax abatements Strategy . • Tenure: • Tax abatements would • (see E04) Accessibility features can add to the cost of construction for a development, Potential requirements could include: For rent or sale require City Council which can make affordable housing projects less financially feasible. Elevators, adoption by resolution • Requiring visitability in middle housing development—this would ensure that anyone in particular, add significant cost to a project. using a wheelchair can visit the subject homes. or ordinance. • While mandates may provide more accessible units,they could prevent some • Requiring housing that receives public funding to provide more accessible units or affordable housing projects from being developed. more universal design features than required under federal standards. • Incentives must be calibrated effectively to be attractive to both a non-profit • Requiring elevators in some or all multi-story buildings. and for-profit developer.The benefit of using the incentive should outweigh the costs associated with implementing accessible design features. MIG, Inc. I Lake Oswego Housing Production Strategy 6 of 10 LU 24-0024 EXHIBIT D-3/PAGE 113 OF 129 Strategy Alternatives Memo December 1, 2023 # Strategy Purpose Housing Need Fulfilled Actions Needed to Opportunities, Constraints,and Other Considerations Task Force Implement Support B01 Remove or Reduce Minimum Parking Requirements • Populations Served: • Amendments to • Parking mandates are often cited as a major barrier for market-rate multi- Medium- Removing parking requirements for residential uses provides the opportunity to reduce the Especially beneficial Development Code. dwelling and regulated affordable housing. Low amount of lot area used for pavement and provides more space for housing and open to low-to moderate- • Developers often choose to provide parking, even if not required. space.This strategy offers greater flexibility to site housing and reduces costs associated income households Lenders/investors may require some parking to ensure marketability of units. with providing parking. • Income Level: . There could be community opposition to removing all parking mandates, due The City is not enforcing minimum parking requirements within 1/2-mile of priority transit, All income levels— especially 30 120% to higher usage of on-street parking. es which includes the entire Downtown Town Center, and will likely remove minimum parking p Y requirements in the City's other climate-friendly area (Lake Grove Village Center)to comply AMI with state rules on Climate Friendly and Equitable Communities (CFEC). • Tenure: There is interest from City Council in potentially repealing minimum parking requirements For rent or sale citywide. D10 Tax Increment Financing (TIF) • Populations Served: • Evaluate the potential • There is direction from the Lake Oswego Redevelopment Agency(LORA)to Medium This strategy involves using TIF funds to support affordable housing development.This Low-income for creation of one or expand the use of urban renewal in the city—particularly in the Foothills could involve creating one or more new TIF districts and incorporating affordable housing households more new TIF districts. neighborhood. into new TIF district plans. For example,the City could create a TIF set-aside for affordable • Income Level: • Incorporate affordable • TIF results in foregone tax revenue for the City and any other overlapping housing development programs within the district. 0-80%AMI housing into new taxing districts for several decades, although it can (and should) grow the tax TIF is a funding mechanism in which future tax revenues in targeted development or • Tenure: district plans. base in the long-term by supporting development that would not otherwise redevelopment areas (TIF districts/ urban renewal areas) are diverted to finance For rent or sale • City Council adopt URA have occurred. infrastructure improvements and/or development. boundaries and plan via • If a new TIF district were established, it would likely be several years before At the time of adoption,the tax revenue flowing to each taxing jurisdiction from the TIF ordinance. there would be sufficient revenue in the district to make significant investment district is frozen at its current level.Any growth in tax revenues in future years, due to in housing. annual tax increase plus new development, is the "tax increment"that goes to the district • Coordination and agreement with other taxing districts is also important. 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. F04 Public-private partnerships • Populations Served: • Work with nonprofit, • The City is pursuing this strategy with several ongoing projects.This includes Medium- Public-private partnerships (PPPs) are arrangements between public and private entities to Depends on the type faith-based, or other partnering with the Sisters of Holy Names of Jesus and Mary(Sisters) and High develop housing, especially affordable housing. PPPs have the capacity to bring resources of PPP organizations to discuss Mercy Housing NW in developing the Marylhurst Commons affordable to the table that would otherwise not be available if each institution were to provide • Income Level: opportunities in Lake housing development. housing on its own. Depends on the type Oswego. • PPPs are often opportunity-driven and may be spearheaded by the City or by The City could partner with organizations to support their affordable housing efforts in a of PPP • Partnership activities private developers or partner agencies. variety of ways: • Tenure: depend on the project, • Cities are often asked to provide land,financial assistance, and or technical • Acquire land and/or donate city-owned land; For rent or sale organization, and assistance, with potentially moderate costs. More significant financial • Provide grants or low-interest loans for specific development or rehabilitation available resources. assistance would depend on a new funding source,such as construction projects; excise tax. • Provide direct funding; and/or • Leverage federal,state, and regional resources. Additionally,the City can pursue specific types of PPPs such as: MIG, Inc. I Lake Oswego Housing Production Strategy 7 of 10 LU 24-0024 EXHIBIT D-3/PAGE 114 OF 129 Strategy Alternatives Memo December 1, 2023 # Strategy Purpose Housing Need Fulfilled Actions Needed to Opportunities, Constraints,and Other Considerations Task Force 1 I Implement Support • 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 D10)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. Lower Priority for Discussion: Strategies to Allocate Funds for Affordable Housing The following strategies describe various ways that the City could allocate funds to support affordable housing production or preservation. Each of these strategies would depend 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. Strategy Purpose Housing Need Task Force Actions Needed to Implement Opportunities,Constraints, and Other Considerations Fulfilled Support D03 Housing Trust Funds • Populations • Identify a potential funding • Provides flexibility for opportunity-based investment. However, some funding Medium Housing Trust Funds are a public sector tool used to direct financial resources to Served: source (or sources). sources (e.g., CET) have requirements for how funds are spent. support a variety of affordable housing activities. Housing Trust Funds are not Low-income • Identify priorities for how • Takes time to accumulate enough to make a difference and requires consistent revenue sources themselves, but rather are tools for consolidating revenue, planning households funds will be spent. investment with a long-term outcome perspective. for how the funds are spent, and directing them to housing programs. • Income Level: • Continuously fund a • Relies on identifying a sustainable funding source with sufficient revenue to A Construction Excise Tax could be a potential revenue source (see Strategy D09). 0-80%AMI Housing Trust Fund. have impactful contributions. Other sources could include the City's general fund,TIF funds, state grant funding, • Tenure: and/or programmatic fees associated with affordable housing development. For rent or sale • There is potentially a high cost to seed the program. D13 Low-Interest Loans/Revolving Loan Fund • Populations • Identify a potential funding • Opportunities depend on what type of loans are offered. Medium This strategy would provide low-interest loans or revolving loans for affordable Served: source (or sources). • Loans for home repair could help prevent displacement by assisting existing housing production, preservation, or maintenance activities. Low-income • Identify priorities for how low-income residents remain in their homes. Housing Repair and Weatherization Assistance is offered to low-income households households funds will be spent. • Loans for affordable housing development could help non-profit developers through various County governments—the City could contribute funding for use • Income Level: • Develop loan programs, bridge gaps in construction lending. within Lake Oswego. 0-80%AMI potentially in partnership An example of offering loans for housing production is the City of Tigard's Middle • Tenure: with lending institutions. Housing Revolving Loan Fund.This fund was created by the Tigard City Council in For rent or sale 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. MIG, Inc. I Lake Oswego Housing Production Strategy 8 of 10 LU 24-0024 EXHIBIT D-3/PAGE 115 OF 129 Strategy Alternatives Memo December 1, 2023 # Strategy Purpose Housing Need Task Force Actions Needed to Implement Opportunities,Constraints, and Other Considerations Fulfilled Support F03 Community Land Trusts • Populations • Work with CLTs to discuss • Dependent on partnership,funding stream, and land acquisition. Medium- Community land trust (CLT) is a model wherein a community organization owns land Served: opportunities in Lake • Financing the initial acquisition of land and securing enough equity to scale Low and provides long-term ground leases to low-income households to purchase homes Low-income Oswego. the strategy are key challenges for the CLT model. Across the country, land on the land, agreeing to purchase prices, resale prices, equity capture, and other households • Take action on partnership trusts use a variety of land acquisition mechanisms,from private financing and terms.This model allows low-income households to become homeowners and • Income Level: models and programs that municipal subsidies to relationships with land bank entities. capture some equity as the home appreciates, but ensures that the home remains 0-80%AMI best benefit the • CLTs are unlikely to produce substantial unit numbers unless significant affordable for future homebuyers. • Tenure: organization and the City's resources are raised from a broad mix of funding partners, but they can Proud Ground is an example of a CLT working in the region. Proud Ground partners For sale financial and/or provide permanent affordability of the units they develop.The City's funds can with other organizations to build the homes,then manages the sales, ground leases, administrative capacity. help to leverage investments from other partners. and other programs. I • Potentially provide on- Habitat for Humanity uses a similar approach to CLT to maintain the affordability of going financial support. 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. F05 Preserving Low-Cost Rental Housing to Mitigate Displacement • Populations • Identify a potential funding • Dependent on partnership and funding stream. Medium Preventing displacement and preserving "naturally occurring" affordable housing Served: source (or sources). • Lake Oswego does not have a large stock of naturally occurring affordable through acquisition, low-interest loans/revolving loan fund for preservation, and/or Low-income • Identify affordable housing housing. However, what's there is important to preserve if possible. code enforcement. households units to preserve (see • Income Level: Strategy F19). 0-80%AMI • Develop loan programs, • Tenure: potentially in partnership For sale with lending institutions. Lower Priority for Discussion: Low-Barrier Strategies The following strategies are lower-barrier than some of the strategies discussed above, but also are expected to have less impact on housing production. As such,these have been identified as a lower priority for Task Force discussion. Housing Need Task Force # Strategy Purpose Fulfilled Actions Needed to Implement Opportunities, Constraints,and Other Considerations Support A21 Pre-Approved Plan Sets for ADUs • Populations • Develop ADU plans in collaboration • Lowers site and building design costs,which could lead to an increase High Pre-approved (or permit-ready) plan sets have been reviewed in advance for Served: with one or more of the partners in new ADU units and increase rental stock. conformance with zoning and building codes. Permit-ready plan sets can reduce housing Moderate to discussed at right. • There are upfront costs associated with developing the pre-approved development costs by reducing design and permit process times and fees.This strategy higher-income • Work with the Building Division to plans, including paying design fees for architects that develop the base could be used to encourage more development of ADUs or middle housing types(see households ensure plans meet all City Code plans, and dedicating staff time for working with the architects and Strategy A20). • Income Level: standards, approve the plans, and reviewing the plans. Permit-ready plans can reduce costs in three main ways: Likely 80%AMI adopt reduced fees for the plans. and above • The City could partner with a university, design institution, or develop • Streamlining permit processes—Permitting times are frequently cited by • Work with the Building Division to a competition toproduce plans. • Tenure: p market-rate builders as a major barrier to housing production, as delays in implement a streamlined review For rent • ADUs may be a better candidate for this program due to their small permitting often translate into increased costs. process size and relative simplicity(as compared to middle housing, which may require more customization). Also, homeowners wanting to build an MIG, Inc. I Lake Oswego Housing Production Strategy 9 of 10 LU 24-0024 EXHIBIT D-3/PAGE 116 OF 129 Strategy Alternatives Memo December 1, 2023 # Strategy Purpose Housing Need Task Force Actions Needed to Implement Opportunities, Constraints,and Other Considerations Fulfilled Support • Reducing permit fees—The Building Department may decrease permit review ADU may be more interested in pre-made designs than experienced charges for applicants because of the simplified review. homebuilders. • Reducing design fees—The builder would pay less in professional services to architects, etc. A20 Pre-Approved Plan Sets for Middle Housing Typologies • Populations • See above. • This could help attract developers that typically develop only single- Medium Permit-ready plan sets for middle housing types, such as duplexes,triplexes, and cottage Served: family housing to get involved. clusters. Moderate to • A potential consequence is too much architectural uniformity. higher income • Template plans may not work on all lot layouts or provide enough households • Income Level: personal design flexibility, and so would not be appropriate for all Likely 80%AMI projects. Lake Oswego has significant topography and often requires and above customized designs, so template plans for middle housing may be less • Tenure: feasible. For sale or rent B14 Fair Housing Policy and Education • Populations • Policy adoption requires Legislative • This strategy would not necessarily contribute to housing production, Medium- This strategy involves amending the Comprehensive Plan to explicitly make Affirmatively Served: Comprehensive Plan text amendment. but would demonstrate the City's commitment to working towards High Furthering Fair Housing a Housing Policy. Fair Housing laws protect individuals in Protected classes • Partner with organizations such as the fair housing outcomes. "protected classes"from housing discrimination. Protected classes in Oregon include • Income Level: Fair Housing Council of Oregon on • Training and education would require staff time and resources to race, color, national origin, religion, disability, sex (includes pregnancy), sexual All income levels training. implement. orientation, gender identity, age, and marital status.The City could add additional • Tenure: . Develop informational materials. protected classes, such as ancestry, ethnicity, or occupation. For sale or rent The City could also pursue the following types of actions to affirmatively further fair • Provide training to current staff and housing and work to reverse discrimination, exclusion, and concentrations of wealth in new hires. Lake Oswego: • Create an Analysis of Impediments to Fair Housing(Al). • 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. F19 Affordable Housing Preservation Inventory • Served: • Use Census data as a starting point. • This strategy could help offset some of the need for costly new Medium- Prepare an inventory of subsidized and naturally occurring affordable housing to Low-income • Work with property owners to construction. High support proactive policies intended to preserve the affordable housing stock.The households document housing costs. • Would be a good starting point for a housing preservation strategy inventory would be used to target potential properties for implementation of this • Income Level: • Update inventory on a regular basis. (Strategy F05). strategy. 0-80%AMI • Would require staff time and resources to implement. • Tenure: For sale or rent MIG, Inc. I Lake Oswego Housing Production Strategy 10 of 10 LU 24-0024 EXHIBIT D-3/PAGE 117 OF 129 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 LU 24-0024 EXHIBIT D-3/PAGE 118 OF 129 • 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 LU 24-0024 EXHIBIT D-3/PAGE 119 OF 129 • 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? LU 24-0024 EXHIBIT D-3/PAGE 120 OF 129 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. LU 24-0024 EXHIBIT D-3/PAGE 121 OF 129 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 LU 24-0024 EXHIBIT D-3/PAGE 122 OF 129 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 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. 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: 2 LU 24-0024 EXHIBIT D-3/PAGE 123 OF 129 • 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 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 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: 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. 3 LU 24-0024 EXHIBIT D-3/PAGE 124 OF 129 Activities—As described above/no change Timeline: Mid-April—late-July; meet with Task Force in late June Initial Draft HPS Report Jun 3 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 2 Revise Draft HPS Report based on Task Force +CC/PC input Jul 3—Jul 22 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 22 DLCD Notice Aug 5 Planning Commission Public Hearing(PC-PH) Sep 9 +Adoption of Findings Sep 23 City Council Public Hearing(CC-PH) Oct 15+Nov 5 +Adoption of Findings Nov 5 or 19 4 LU 24-0024 EXHIBIT D-3/PAGE 125 OF 129 El Memorandum to Lake Oswego Planning Commission from Kate Rogers and Matt Hastie, MIG cc Erik Olson and Jessica Numanoglu, City of Lake Oswego re Lake Oswego Housing Production Strategy Supplemental Information about Construction Excise Tax date December 22, 2023 Introduction This memorandum provides additional information about Construction Excise Tax(CET) and is intended to supplement the Strategy Alternatives Memo dated December 1, 2023.At the Planning Commission work session held on November 13, 2023, Commissioners requested additional information about using CET as a funding source for affordable housing.The Strategy Alternatives Memo includes some additional information regarding how a CET works, what the options are for structuring and tailoring a CET to suit local needs, and various other considerations.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). 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.1 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. Exemptions: In addition to the required exemptions,Tigard exempts the following types of development from CET:2 Oregon Revised Statute 320.173. 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 1 of 4 LU 24-0024 EXHIBIT D-3/PAGE 126 OF 129 CET Supplemental Memo December 22, 2023 • 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. 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%. 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 to construct 770 affordable housing units.3 3 City of Bend,Affordable Housing. https://www.bendoregon.gov/government/departments/housing/affordable- housing MIG, Inc. I Lake Oswego Housing Production Strategy 2 of 4 LU 24-0024 EXHIBIT D-3/PAGE 127 OF 129 CET Supplemental Memo December 22, 2023 • 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.' 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 income.5,6 • 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. 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.' 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.' 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 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/CETRes3787Setti ngCETRates.pdf 'City of Newport, Housing Production Strategy, 2023. https://www.oregon.gov/Icd/UP/Documents/20230616H PS Newport.pdf 'City of Eugene,Affordable Housing Trust Fund. https://www.eugene-or.gov/4232/Affordable-Housing-Trust-Fund MIG, Inc. I Lake Oswego Housing Production Strategy 3 of 4 LU 24-0024 EXHIBIT D-3/PAGE 128 OF 129 CET Supplemental Memo December 22, 2023 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 • Rental or security deposit assistance for people who rent their homes.' Milwaukie Adoption and Tax Rate: Milwaukie adopted a CET in 2017, with a tax rate of 1%for both residential and commercial construction.11 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 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.13 10 City of Eugene, CET FAQ. https://www.eugene-or.gov/DocumentCenter/View/46871/Affordable-Housing- Construction-Excise-Tax-FAQs 11 Milwaukie Construction Excise Tax. https://www.milwaukieoregon.gov/communitydevelopment/milwaukie- construction-excise-tax-cet 12 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 H PS Milwaukie.pdf MIG, Inc. I Lake Oswego Housing Production Strategy 4 of 4 LU 24-0024 EXHIBIT D-3/PAGE 129 OF 129 ,A,A E 0 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 LU 24-0024 EXHIBIT D-4/PAGE 1 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 2 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 3 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 4 OF 171 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(SOC)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 LU 24-0024 EXHIBIT D-4/PAGE 5 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 6 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 7 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 8 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 9 OF 171 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 Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY LU 24-0024 EXHIBIT D-4/PAGE 10 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 11 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 12 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 13 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 14 OF 171 • 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 LU 24-0024 EXHIBIT D-4/PAGE 15 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 16 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 17 OF 171 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) 11111(100)0 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 LU 24-0024 EXHIBIT D-4/PAGE 18 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 19 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 20 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 21 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 22 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 23 OF 171 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 MLPTE 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 LU 24-0024 EXHIBIT D-4/PAGE 24 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 25 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 26 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 27 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 28 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 29 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 30 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 31 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 32 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 33 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 34 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 35 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 36 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 37 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 38 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 39 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 40 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 41 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 42 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 43 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 44 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 45 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 46 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 47 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 48 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 49 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 50 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 51 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 52 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 53 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 54 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 55 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 56 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 57 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 58 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 59 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 60 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 61 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 62 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 63 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 64 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 65 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 66 OF 171 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 LU 24-0024 EXHIBIT D-4/PAGE 67 OF 171 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 Ta