Across the nation and in Oregon, the housing crisis remains a top concern. Construction of new housing over the past 20 years has fallen 5.5 million units short of long-term historical levels, according to a 2021 report by the National Association of Realtors. From 2010 to 2020, new-home construction fell 6.8 million units short of the minimum projected units necessary to meet household formation growth and replace units in the nation’s aging housing inventory.

Limited supply has been a recent driver of rising housing prices for renters and homebuyers, alongside robust demand. Nationally, the median existing-home price rose 19 percent from a year earlier to $341,600 in April, a record high. Oregon’s median home value rose to $509,539 in May 2022; that was an increase of 19.7 percent from the same time a year earlier. And the average cost of buying a home across the state is projected to continue to rise. In Portland, the median sale price for a single-family home in June was $575,000.

As median home prices continue to rise, homebuilders are struggling to keep up. Builders looking to expand to meet booming demand for new homes are constrained by the number of lots ready for construction. Acquiring and preparing land for new-home construction can be a lengthy process, especially within the Portland metropolitan area, where development is constrained by the urban growth boundary.

Developers often acquire land long before homes are built, and regularly spend years in the entitlement process working to obtain permits and install infrastructure such as water, sewer, and roads prior to preparing the lots for sale and construction. The scarcity of developed land in urban areas across the state means builders are unable to meet the ongoing demand for new housing.

The housing supply shortage has become especially acute in the past year. Due to the COVID-19 pandemic, developers have delayed certain land purchases and development projects. In addition, low mortgage rates and an increase in remote work led to a surge in demand for single-family housing. Even with interest rates on the rise, July’s 30-year fixed mortgage rate of 5.82 percent remains well below historic averages.

Builders in recent years have also been forced to deal with wildly fluctuating prices of lumber and other building materials. More than 90 percent of homebuilders surveyed by the National Association of Home Builders in May 2021 reported shortages of appliances and framing lumber. Undeveloped land prices have also increased in and around urban centers, where demand is highest. And labor shortages continue to present challenges for builders trying to bring new housing to the market.

Recognizing the inherent volatility of market conditions affecting developers and homebuilders, many jurisdictions have turned their attention to restrictive zoning codes that have historically limited new construction and impeded densification, suppressing housing supply even as demand rises. Whether by limiting the heights of new buildings or prohibiting infill and densification in the single-family zoning districts, zoning restrictions often make construction more difficult and expensive. Ultimately, advocates across the political spectrum feel that state and federal governments should promote more policies that create affordable/attainable housing.

In 2019, the Oregon Legislature passed House Bill 2001, which was aimed at providing Oregonians with more diverse and affordable housing choices. HB 2001 made it easier to achieve greater density in residential zones by requiring Oregon’s “medium-size” cities to allow duplexes on each lot or parcel zoned for residential use that allows single-family homes by June 30, 2021. Additionally, by June 30, 2022, Oregon’s “large” cities (those with populations exceeding 25,000) and cities in the Portland-metro region must plan for middle housing by allowing development of duplexes, triplexes, quadplexes, cottage clusters and townhouses in residentially zoned areas.

Under HB 2001, cities will continue to set reasonable siting and design requirements for all housing built in residential zones, and will be able to ensure that new housing is built with adequate infrastructure. As of July 2022, most jurisdictions across Oregon have amended their development codes to comply with HB 2001’s mandate to allow for middle housing and increased densification in residential zones.

Although HB 2001 has the potential to dramatically alter Oregon’s development landscape, the transformation of housing choices will be gradual. While many cities in Oregon have allowed some types of middle housing in certain areas for decades, there has often been little interest from developers. New construction of middle housing will remain dependent on local housing markets, with smaller-scale local builders and contractors taking the lead.

While HB 2001 paves the way for greater density in urban areas, development of middle housing will remain constrained by lack of adequate infrastructure in certain areas. Some observers also fear that HB 2001 does not address potential land use conflicts – including the elimination of off-street parking requirements and variable property values – as a result of middle housing projects coming online in traditionally single-family neighborhoods. And affordable housing advocates have voiced concern that HB 2001 may not address the need for true affordable housing, instead creating an environment for institutional buyers to develop middle housing in high-end neighborhoods and rent out units at high price points.

Ultimately, HB 2001 represents a concerted effort from the Oregon Legislature to address the affordable housing crisis. Still, Oregon has underbuilt housing by 111,000 units in recent decades. Nationwide, projections indicate that builders will need to exceed the long-term historical average pace of 1.5 million units a year to catch up to demand. Even building at 2.1 million units a year, near the level reached in the housing boom of 2005, it would take a decade to close a gap of 5.5 million units.

In Oregon, the effects of HB 2001 are yet to be fully understood as the deadline for large cities to update their development codes recently passed. The development industry must continue to adopt innovative strategies to address the ongoing demand for new housing, and HB 2001 provides one tool for doing so.

Keenan Ordon-Bakalian is an attorney with Jordan Ramis PC and a member of its land use and development practice group. Contact him at 360-567-4843 or keenan.ordon-bakalian@jordanramis.com. 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 author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

The post OP-ED: The impact of HB 2001 on the affordable housing crisis appeared first on Daily Journal of Commerce.

As the affordable housing crisis continues across the region, developers should always be seeking an edge to get their projects approved. Enter Oregon’s “needed housing” statutes.

These statutes are set out at ORS 197.295 to ORS 197.314 and should be in every builder’s toolbox for residential developments. When enacted 40 years ago, the needed housing statutes incorporated into law the “St. Helens policy,” to end attempts by local governments to exclude certain housing types that met lower, moderate or “least cost” housing needs. Since their adoption, the needed housing statutes have been extended to most residential developments, making efforts to gain approval substantially easier.

The central provision of the needed housing statutes is the “clear and objective” requirement of ORS 197.304(4). Local government may adopt and apply only clear and objective standards, conditions and procedures regulating the development of housing, including needed housing. The Land Use Board of Appeals (LUBA) has found that approval standards are not clear and objective if they impose subjective, value-laden analyses that are designed to balance or mitigate impacts of the development on: 1, the property to be developed or 2, the adjoining properties or community. The standards, conditions and procedures subject to needed housing may include, but are not limited to, provisions regulating density and height of development. In short, development standards may not have the effect, either in themselves or cumulatively, of discouraging needed housing through unreasonable cost or delay.

Critical to a project is the fact that ORS 197.304(4) does not require a developer to demonstrate that the development is “needed housing,” as defined in ORS 197.303. Instead, needed housing requires local governments to apply only clear and objective standards to applications for all housing, and not just “needed” housing. Many jurisdictions continue to have secondary non-clear-and-objective standards for residential development approval, which is allowable under state statutes so long as the jurisdiction also provides at least one clear and objective path.

Developers can rely on needed housing to avoid all manner of subjective standards that a decision maker or project opponent could use to derail approval. This includes ambiguous street improvement standards that fail to clarify timing, extent and scope; landscape preservation requirements that rely on the decision maker’s subjective analysis of compliance; and the classic catch-all provision that “the development will not alter the character of the surrounding neighborhood.” The clear and objective standard of needed housing allows a developer to sidestep these value-laden analyses that would otherwise put the project in jeopardy.

Also on the table for developers wielding needed housing is the prospect of receiving attorneys’ fees at LUBA in the event the local government denies a project in violation of the needed housing statutes. Although appeals delay the timeline for a project, a developer that successfully appeals a project denial to LUBA on the grounds of needed housing may be entitled to attorneys’ fees under ORS 197.835(10)(b). Needed housing can be utilized to demonstrate that the decision maker erroneously issued a denial because of a failure to apply clear and objective standards to the project.

Requiring local governments to apply clear and objective standards to residential developments provides developers with the degree of certainty necessary to plan successful projects. Needed housing statutes allow one to understand where the goalposts are and how to avoid all sorts of subjective standards that could be adopted by a decision maker or project opponent.

Amid low inventory and rapidly rising prices, housing starts are on the rise across the region. As Oregon moves past the impacts of the COVID-19 pandemic, more housing projects are expected to come online in response to chronic undersupply. Regardless of where in the region a residential development is planned, it is important to understand that needed housing statutes are at one’s disposal.

Keenan Ordon-Bakalian is an attorney in Jordan Ramis PC’s land use and development practice group. Contact him at 360-567-4843 or keenan.ordon-bakalian@jordanramis.com. 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 author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

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In a matter of months, the coronavirus outbreak has fundamentally impacted the commercial real estate (CRE) landscape. Foremost, COVID-19 remains a humanitarian and public health crisis. Companies across the Pacific Northwest have moved quickly to safeguard their employees and transition to new ways of conducting business.

Across various industries, leaders will use the lessons learned during this pandemic to reimagine the nature of their businesses and the role that offices and commercial space will play. Within the CRE industry, it has become apparent that merely adapting to variable conditions will not be sufficient. COVID-19 has led to a mass exodus of traditional tenants, and a significant decrease in leasing activity is expected in the near future. Creatively repositioning existing properties will be essential for the industry to weather the coronavirus storm and be well situated to capitalize on future growth opportunities.

Many existing properties are ripe for repurposing, including hotels. A new survey of American Hotel & Lodging Association (AHLA) members shows the pandemic continues to have a devastating effect on the hotel industry and its employees. In response to an AHLA survey published on July 29, over half of the respondents said their hotels are in danger of falling into foreclosure, and only 37 percent said they had enough business to bring back at least half of their employees. Because there will be significant lag time for the hospitality industry to return to normal, hotels are prime to be repurposed into health care facilities or affordable housing, due to existing infrastructure and layouts with many individual rooms.

Retail space, however, remains the sector of the CRE industry where developers, brokers, architects and end users can implement some of the most creative repositioning strategies. A recent report from Coresight Research predicts that as many as 25,000 U.S. stores will close in 2020. Even before the coronavirus outbreak, suburban malls were experiencing store-rationalization trends with reduced shopper traffic and closures. Coronavirus shutdowns may represent a turning point for this sector.

Boutique retail spaces are expected to remain resilient and emerge from COVID-19 with new or existing tenants in place. However, big-box retail spaces and larger ones face the prospect of being repositioned in order to ensure ongoing viability. Large retail spaces can accommodate a variety of other uses, including conversion into centralized culinary hubs for the growing “digital restaurant” industry. Repurposing large retail spaces into kitchens and delivery points for multiple restaurants will allow CRE to meet the online food delivery industry’s growing need for space. Alternatively, the large square footage of these retail spaces is also conducive to social distancing – and these spaces may lend themselves to office collaboration centers where employees can work safely.

Big-box retail can also be reinvented to serve multiple purposes at once. These properties can maintain their retail character in front while their back portions are repurposed to serve as distribution centers or warehouses for e-commerce. This would allow shopping centers to remain viable but not lose their character of use. Suburban shopping centers are also well positioned to recapture parking areas as outside space for restaurants to facilitate socially distant dining.

Underperforming retail sites also have the potential to be repurposed as last-mile warehouses, because of their close proximity to population centers and existing infrastructure improvements. Specifically, many big-box retail spaces have multiple access points and loading docks, allowing for an efficient transition to industrial use. Retail-to-industrial conversions have accelerated. According to CBRE Group, in the past three years, 13.8 million square feet of retail space has been converted to 15.5 million square feet of industrial space. This trend is likely to continue because of coronavirus and the ongoing consumer transition from brick and mortar to online shopping.

Even as Oregon moves forward with incremental reopening, it has become apparent that things will not return to the way they once were. The time for developers to act is now. Brainstorming adaptive reuse projects is one thing, but putting plans into effect can take a long time. The regulatory structure of a specific municipality can dictate a project’s duration, which can be months or even years – with challenges arising along the way. Proactively engaging with both a municipality’s planning and economic development departments can help developers map out prospective projects and establish community support.

Adaptive reuse projects are not without their hurdles. Converting a property from one use to another doesn’t always require a zoning change, but when it does, it can take anywhere from two months to a year or more. Additionally, developers also need to remain cognizant that their new vision for a property may be drastically different from the current use. Shopping centers may have existing tenants with long leases or tenants that own their spaces outright. Negotiations with these tenants can draw out a project and create barriers to obtainment of approvals, especially if existing tenants are opposed to the new development plans.

Developers also need to remain alert for structural deficiencies and ensure there is a plan in place to address them, prior to commencing an adaptive reuse project. Conversions of older buildings may require unanticipated work that can result in change orders, cost increases, and even wholesale design changes. By taking an active role in the due diligence phase, in conjunction with design professionals, project owners can help guard against these issues.

There is some good news for developers. Due to COVID-19, municipalities are more open to ensuring the CRE economy gets back on track. As government officials search for creative ways to maintain their tax base, support jobs, and revitalize their local economies, adaptive reuse projects become far more appealing than the alternative: vacant buildings.

Keenan Ordon-Bakalian is an attorney in Jordan Ramis PC’s land use and development practice group. Contact him at 360-567-4843 or keenan.ordon-bakalian@jordanramis.com. 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 author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

The post OP-ED: Commercial real estate in Oregon: Don’t just adapt; reinvent appeared first on Daily Journal of Commerce.

The COVID-19 pandemic has upended the world of land development, causing confusion and uncertainty for developers and contractors across Oregon. For some folks in land development, COVID-19 has led to a shift to working from home, but for people in the construction industry, remote work has not been possible. Meanwhile, the coronavirus has also dramatically altered the land use permitting process, leading to project delays and variability for both applicants and local government.

The coronavirus’ impact caught many of us unawares, and due to the nature of public service, local government was not well-equipped to transition to remote work at the onset of the outbreak. Many municipalities have expended tens of thousands of dollars to acquire remote work technology and adapt to new workflow processes.

For land development professionals on the managerial and administrative side, simply walking into a local municipal office to submit applications or pull permits is no longer an option. Municipal permit and development services centers have been closed since mid-March. Permit submittal is now conducted digitally or, in some jurisdictions, by appointment. Meetings traditionally conducted in-person now occur on one of the plethora of digital meeting platforms. With local government staff working from home, the processing and review of land use applications, engineering plans and building permits is continuing. However, the transition of staff to remote work and digital permitting processes has dramatically slowed the review time for land use applications in many jurisdictions.

A key consideration for developers is that the time restraints Oregon law imposes on local government to process land use applications in 120 or 150 days – depending on whether the subject property is within the urban growth boundary – are still in effect. Officials may ask applicants to grant a waiver or toll this statutory processing deadline, but it is up to the applicant to grant such a waiver. If the applicant chooses to do so, it should be done in writing and for a definite period of time. Especially in this period of uncertainty, granting an indefinite waiver of the land use processing timelines may result in significant project delays.

Many municipalities are now conducting public hearings via teleconference, with some holding “practice” hearings to acclimate the applicant, hearings officer and the public to the teleconference platform of choice. Keep in mind that the ability of the applicant to present evidence during a digital public hearing may be significantly limited by technological constraints. To avoid such issues, applicants and their representatives should ensure that all supporting evidence is submitted into the record prior to the hearing. Applicants can also submit exhibits to local government staff, who may have a greater ability to display these exhibits during the digital hearing.

Importantly, the Land Use Board of Appeals is continuing to process appeals, with in-person filings made on an appointment-only basis and oral arguments being conducted by teleconference.

With Phase 1 and 2 reopening under way across the state and the summer building season upon us, developers and contractors should continue to exercise caution and adhere to all COVID-19 safety measures. After months of experiencing pandemic-related project delays, avoiding a “second wave” outbreak of COVID-19, which may result in a delayed reopening, is both a public health and business necessity.

Finally, as reopening commences, the question remains: What lasting impact will the COVID-19 outbreak have on Oregon’s development landscape?

Although the land development process has not been impacted directly like that of the construction industry, the biggest disruptions have been coordinating site visits and handling delays in application processing, including meetings with municipalities, project consultants and other parties needed to complete the transaction and entitlement process. In the short term, state and local governments will be allocating significantly more resources to economic recovery and public health measures, which may lead to capacity and resource-related delays to the land use process. Specifically, budget cuts have resulted in city of Portland employees taking occasional unpaid furlough days through October 2020, which means delays in service.

Long term, there will be irreversible changes in the way we work, with more people working remotely on a permanent basis and an increased reliance on cloud-based permitting processes and digital meeting platforms. This, in turn, will have a dramatic impact on development trends, with higher demand for residential supply that caters to those working remotely on a permanent basis. This shift to remote work may also lead to decreased demand for commercial office space, causing oversupply and a limited number of new construction starts. Also, the attendant economic crisis may contribute to increased demand for accessible multifamily options.

In addition to shifting development trends, the impacts of COVID-19 have rocked the architecture industry, leading many architects “to reevaluate their life’s work, and what it might mean to design for a world that will never be quite the same, especially when it comes to how we gather in and use large public spaces, like airports, hotels, hospitals, gyms and offices,” Alyssa Giacobbe writes in Architectural Digest. Concerns about future viral outbreaks may lead to projects being designed with an eye toward open spaces that promote social distancing.

It may be years before the impacts of COVID-19 on land development are truly quantifiable. Developers must remain vigilant in responding to shifting trends and should take steps to promote flexibility within their companies, which will allow them to best respond to the next period of uncertainty.

Keenan Ordon-Bakalian is an attorney in Jordan Ramis PC’s land use and development practice group. Contact him at 360-567-4843 or keenan.ordon-bakalian@jordanramis.com. 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 author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

The post OP-ED: Oregon’s development landscape amid COVID-19 and in years ahead appeared first on Daily Journal of Commerce.

On March 23, Oregon Gov. Kate Brown issued Executive Order No. 20-12. “Stay Home, Save Lives” became effective immediately until further notice.

The coronavirus outbreak and the governor’s order have had an extremely disparate impact on businesses and employees across the state. For the many Oregonians who do not work in high-tech offices, working from home is not logistically possible. Indeed, a person’s ability to work from home is highly dependent on his or her line of work.

Although some people have the capability to work in their homes for the duration of the governor’s order, most construction workers are required to be on jobsites. According to the U.S. Bureau of Labor Statistics, only 16 percent of construction workers do some or all of their work from home. EO 20-12 has left construction companies questioning how to operate under the order, and when they can resume normal operations.

Here’s some clarity for your business. Oregon did not issue an essential business list. Instead, it has provided a list of businesses that must stop operating because the nature of these businesses make it impossible to adhere to social distancing protocol. EO 20-12 did not list construction as a “nonessential business” which means the Oregon construction industry can continue operations as currently scheduled and under way.

For your business to comply with EO 20-12, workers must adhere to social distancing requirements. These include remaining six feet apart and designating a social distancing officer (SDO) to establish, implement and enforce social distancing policies. The designated SDOs must be on the jobsite at all times, and must also enforce social distancing policies as they relate to essential visitors. Work in offices is prohibited whenever telework and work-at-home options are available. Businesses are encouraged to require as many employees as possible to work from their homes. If your business has remote-work technology, it must be utilized to the greatest extent possible for those employees able to work from home.

Several recommendations for working safely on the jobsite – beyond the designation of SDOs – include staggering work schedules to lower the total number of employees on the site at any given time, requiring the use of personal protective equipment (PPE) on the jobsite, safety vests with social distancing reminders, safety stand-downs designed to make sure every employee knows and follows new coronavirus safety guidelines, frequent cleaning and disinfecting high-touch surfaces around the jobsite, adding additional hand sanitizing stations, prescreening all employees and visitors to the jobsite, and ensuring any employee feeling sick remains home.

With social distancing measures in place, most work will be allowed to continue. However, some tasks and trades may have to wait. There are aspects of physical construction that are impossible to complete while maintaining the 6-foot buffer required by EO 20-12. Tasks and trades that rely on squads of two people or more to lift or install heavy items, such as glass paneling, will run afoul of the social distancing mandates.

As to whether tasks that will violate the 6-foot rule can continue, a great deal of uncertainty remains. Gov. Brown has acknowledged that “the six feet of distancing, telecommuting, that probably doesn’t work on a construction site … But they also have equipment, from masks and helmets, that should provide a layer of protective gear.” Importantly, several guidance documents released by Oregon OSHA have urged contractors to maintain a social distance of 6 feet where possible. Due to the lack of clarity being provided by the state’s messaging, businesses should evaluate their individual situations and projects, and enact best practices designed to protect their workers’ health and safety.

Contractors should continually evaluate the specific hazards at their jobsites in accordance with the Centers for Disease Control and Prevention (CDC) and Oregon OSHA/Public Health Authority recommendations to determine the most appropriate job hazard analysis for the project or task as it relates to the spread and/or transmission of COVID-19. Businesses should develop job hazard analyses (JHAs) related to each activity for each trade “when social distancing is not an option” because the task or activity requires two or more workers to perform the work.

Although the coronavirus pandemic has dramatically changed the way we work, few industries are as well suited to protecting workers as the construction industry. Contractors are accustomed to following complex and ever-changing safety rules as well as finding ways to make inherently dangerous work safer. Working safely in the midst of the coronavirus pandemic will require the industry to adopt the best practices detailed above and develop creative solutions to keep key projects on track and on time. Companies with digital infrastructure can remain busy even as physical construction has slowed. Design and pre-construction can continue, as well as development of more robust processes for efficiency and safety. Contractors should review their contracts regarding any notice and documentation requirements for claims for additional time and costs.

Many industry groups, including the Oregon Home Builders Association and Associated General Contractors’ Oregon-Columbia chapter have produced job safety resources available on their websites to assist in keeping construction industry members and the community safe.

Keenan Ordon-Bakalian is an attorney in Jordan Ramis PC’s land use and development practice group. Contact him at 360-567-4843 or keenan.ordon-bakalian@jordanramis.com. 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 author and do not reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

The post OP-ED: Recommendations for building safely during the pandemic appeared first on Daily Journal of Commerce.

At the Metro Technical Advisory Committee (MTAC) meeting on Jan. 15, the committee was briefed by staff from the Oregon Department of Land Conservation and Development (DLCD) regarding the ongoing implementation of recently adopted HB 2001, also known as the “Missing Middle Housing” bill.

Requirements for large and medium cities

The Oregon Legislature passed HB 2001 on the final day of the 2019 session in an attempt to allow for greater housing choice and increased supply in residentially zoned areas. In passing the bill, the Legislature identified what it believes to be a significant lack of supply of middle housing, which bridges the gap between single-family homes and mid- or high-rise apartment buildings. Affected cities are required to update their local regulations, which have previously limited what types of housing could be built. Supporters of the bill argue that those limitations led to increased housing costs across the state. However, many people believe the bill will negatively impact neighborhood character and accelerate housing displacement, especially within Portland city limits.

Implementation of HB 2001 is of primary concern to the Metro Council, because its impact will be felt most significantly by metro cities, which are largely defined as “large cities” under HB 2001. These include cities with a population greater than 25,000, unincorporated areas within the Portland-metro boundary that are served by sufficient urban services, and cities within the Portland-metro boundary with a population greater than 1,000.

The bill requires all large cities to allow construction of additional “middle housing” inventory beyond duplexes. These include fourplexes, multiplexes, accessory dwelling units (ADUs), and cottage clusters of homes centered around a common yard.

HB 2001 affects cities statewide, including sizable ones like Bend and Medford, but also smaller ones like Newport and Pendleton. These “medium cities,” as defined in HB 2001, are all those “outside the Portland-metro boundary with a population between 10,000 and 25,000.” HB 2001 requires medium cities to specifically provide for construction of duplexes in areas zoned for single-family dwellings.

In addition to specific changes to local development regulations, HB 2001 also imposes new limitations on, for example, zoning and development standards relating to ADUs, CC&R provisions relating to middle housing in residential neighborhoods, and building codes.

The bill does provide some flexibility for medium and large cities to regulate siting and design of middle housing, provided that the regulations do not, individually or cumulatively, discourage development of all middle housing types permitted in the area through unreasonable cost or delay. The bill also provided $3.5 million for technical assistance to cities, and DLCD has been tasked to work with local governments to update their codes and implement the specifics of the bill by mandated timelines.

Deadline for new regulations

Medium cities have until June 30, 2021 to adopt local code sections implementing HB 2001 requirements. Large cities have until June 30, 2022 to do the same. While affected cities may request an extension from DLCD due to infrastructure deficiencies, if the extension is not approved by DLCD and the city fails to develop regulations implementing middle housing by the applicable deadline, a model code promulgated by DLCD will apply directly.

DLCD has a deadline of Dec. 31, 2020 to adopt a model code for all affected cities. DLCD noted at the MTAC meeting that this is a significant undertaking, because the bill requires promulgation of a code that will be generally applicable to all affected cities, while at the same time accounting for the fact that cities across the state face diverse planning and infrastructure challenges.

Impacts of HB 2001

The cumulative effect of HB 2001 on metro-area cities – where the bill will have the most acute impact – remains to be seen. The city of Portland is in the process of undertaking its own Residential Infill Project, which will allow for additional middle housing in conjunction with the requirements of HB 2001. Additionally, the city is revising its rules around multifamily housing, called “Better Housing by Design.”

Another metro-area city, Beaverton, is in the process of developing its own Housing Options Project, which is designed to increase middle housing inventory within existing neighborhoods. However, because affected cities are still in the planning stages of implementing HB 2001, the implications of the bill will not be fully revealed until new housing development comes online.

Beyond the impact to Oregon cities, the bill will also require private developers to adjust market strategies and long-term planning objectives. Small-scale developers have historically been the most active builders of middle housing, while major developers have focused on large single-family homes in suburban areas or high-density multifamily projects. It is not clear whether HB 2001 will encourage major developers to become more active in the middle housing arena.

Further, national studies have provided conflicting answers as to whether denser zoning leads to additional construction. It is highly likely that Oregon cities will see dramatically different effects when the new middle housing regulations come online. Certain cities will see a dramatic increase in middle housing supply, while others may see a less tangible change, due to infrastructure constraints, market demand, and siting and design requirements – which will vary from city to city.

HB 2001 will require private developers to engage in a complex balancing act, simultaneously striving to achieve the bill’s goal of creating more housing, while at the same time navigating shifting market demand and new development regulations.

Keenan Ordon-Bakalian is an attorney in Jordan Ramis PC’s land use and development practice group. Contact him at 360-567-4843 or keenan.ordon-bakalian@jordanramis.com. This column is intended to provide readers with general information and not legal advice. Consult professional counsel for help regarding specific situations.

The post OP-ED: Oregon cities facing balancing act in implementing HB 2001 appeared first on Daily Journal of Commerce.