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On June 6, Oregon鈥檚 newest housing production bill, Senate Bill 1537, officially became law. Gov. Tina Kotek sponsored SB 1537 as part of her ongoing agenda to increase housing production across the state. The governor鈥檚 bill makes essential changes to Oregon law to address the state鈥檚 ongoing housing shortage, and a companion bill (SB 1530) provides funding for infrastructure to serve a number of housing projects across Oregon. These two measures were Governor Kotek鈥檚 top priority for the 2024 legislative session, and they passed both chambers with bipartisan support.

Here is a summary and analysis of SB 1537鈥檚 eight primary provisions:

1. Create a state-level Housing Accountability and Production Office: SB 1537 creates a new office within the Department of Land Conservation and Development and the Department of Consumer and Business Services known as the Housing Accountability and Production Office or 鈥淗APO.鈥� Its primary goals include ensuring compliance with state housing laws, 鈥巔roviding technical support to local governments and developers, and minimizing barriers to 鈥巋ousing production.鈥� HAPO is intended to respond to alleged violations of housing laws by local governments. 鈥嶴B 1537 allows developers to file complaints directly with HAPO for any local government 鈥巚iolation of housing laws (including the needed housing rules in ORS 197A.400). If a local 鈥巊overnment does not remedy a violation after HAPO investigates and issues a warning, the new office 鈥巑ay initiate requests for an enforcement order from the Land Conservation and Development 鈥嶤ommission or seek a court order to compel the city to act.鈥�
2. An 鈥渙pt-in鈥� code allowance for developers to amend housing regulations in certain scenarios: Until now, permits, subdivisions, and limited land use applications were entitled to 鈥済oal posting,鈥� whereby an application could not be subject to changes in local government 鈥巖egulations adopted after the application was submitted. SB 1537 now gives applicants the discretion to subject themselves to standards and criteria operative at the time of the request, so long as the application is related 鈥渢o development of housing.鈥�
3. A broader and clarified statutory definition of 鈥渓imited land use decisions鈥� that allows expedited applications: Under Oregon law, 鈥渓imited land use decisions鈥� are local government decisions that do 鈥巒ot require the exercise of substantial discretion and are intended to be processed without a 鈥巋earing (unless appealed)鈥�. SB 1537 formally amends the 鈥淟imited Land Use Decision鈥� definition in ORS 197.015 to include approval or denial of applications for replat, property line adjustments, and extensions, alterations, or expansions of nonconforming uses. Although this is largely a clarifying amendment, SB 1537 is particularly useful in foreclosing the requirement for a hearing on nonconforming use issues 鈥� unless such a decision is appealed.
4. Expanded eligibility for awarding attorney fees to housing developers in appeals to the Land Use Board of Appeals: SB 1537 amends ORS 197.843 to authorize the award of attorney fees to developers and local governments in LUBA appeals, so long as the developer鈥檚 application was only for the development of housing and was approved by the local government. LUBA must also affirm the approval for the developer and local government to collect attorney fees. This provision of SB 1537 is effective only for appeals submitted after Jan. 1, 2025.
5. An allowance for developers to apply for land use adjustments in affordable housing projects: A key objective of SB 1537 was to provide additional development code 鈥巉lexibility for housing development. Although the legislature could not, as a practical matter, 鈥巖ewrite each local zoning code to create such flexibility, it adopted what amounts to generic 鈥巚ariance allowances by providing for limited deviations (鈥渁djustments鈥�) from certain common 鈥巇evelopment code requirements, including setbacks, lot size, parking standards, lot coverage, and design adjustments. Adjustments to development requirements are allowed under SB 1537 so long as they will provide for more housing to be built than would otherwise, and other criteria are met.

Local governments can apply to HAPO for an exemption to an adjustment requested by a developer. However, the local government must demonstrate it has approved at least 90 percent of other adjustment requests or at least is 鈥巉lexible and accommodating, as demonstrated by the testimony of other developers who have actually 鈥巄een granted adjustments from the local government.

6. A limited, fast-track process for cities to expand their urban growth boundaries: Undoubtedly, one of the most controversial portions of SB 1537 is the one-time allowance for cities outside Metro to add sites inside their urban growth boundary, and for cities within Metro to petition to add a site within the Metro UGB. This allowance can only be triggered by eligible cities under specified conditions for the purpose of building housing of specified types and affordability. SB 1537 allows cities with population greater than 25,000 to add up to 100 acres and cities with population up to 25,000 to add up to 50 acres. Using SB 1537, cities may undergo an abbreviated UGB expansion process to build affordable and market-rate housing more quickly than in a typical UGB expansion.
7. Funding for municipalities to build infrastructure projects that support housing production: The legislature appropriated $3 million to the Oregon Business Development 鈥嶥epartment to create the 鈥淗ousing Infrastructure Support Fund.鈥� This is intended to 鈥減rovide 鈥巆apacity and support for infrastructure planning to municipalities to plan and finance 鈥巌nfrastructure for water, sewers and sanitation, stormwater and transportation consistent with 鈥巓pportunities to produce housing units.鈥濃��
8. A revolving loan program for affordable housing: SB 1537 appropriates $75 million to establish the Housing Project Revolving Loan Fund. Specifically, SB 1537 directs Oregon Housing and Community Services to develop a program to make loans to local jurisdictions, which in turn would award grants to developers to cover eligible costs 鈥� including infrastructure and system development charges, predevelopment costs, construction costs, and land write-downs. To be eligible, costs must be incurred in the development of moderate-income housing.

Some provisions of SB 1537 do not take effect until Jan. 1, 2025鈥�. However, SB 1537鈥檚 one-time UGB expansion process, the process for opting in to amended housing regulations, the expanded definition of 鈥渓imited land use decisions,鈥� and funding provisions are currently in effect. Some eligible jurisdictions have already begun accepting site applications for potential UGB expansions. Although the lasting impact of SB 1537 remains to be seen, the bill clearly expresses Governor Kotek鈥檚 intent to offer a menu of tools to ease Oregon鈥檚 housing shortage.

Stephanie Holmberg is the leader of the Schwabe, Williamson & Wyatt real estate and construction group. Contact her at 503-796-2953 or聽[email protected].

Keenan Ordon-Bakalian is a Schwabe, Williamson & Wyatt associate. Contact him at 503-796-2470 or [email protected].

Ben Taylor, a Schwabe, Williamson & Wyatt law clerk, contributed to the development and draft of this article.

This column is intended to provide readers with general information and not legal advice. Consult professional counsel for help regarding specific situations.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the authors and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither author nor the 91视频 guarantees the accuracy or completeness of any information published herein.