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HomeMy WebLinkAboutAgenda Item - 2024-09-09 - Number 07.1 - 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