Will Oregon’s Housing Reforms Spark a Building Boom or Be a Bureaucratic Bust?

Oregon has one of the country’s most centralized systems of land use planning, and some of the tightest local regulations on homebuilding. State lawmakers are now proposing to use the former to overcome the latter.

Working its way through the state Legislature with bipartisan support this year is H.B. 2001. It would require cities and counties to hit state-set housing production goals for both market-rate housing and subsidized affordable housing.

If localities don’t hit those targets, the state could impose a wide range of remedies to boost homebuilding, from providing more infrastructure funding to making city hall issue building permits faster. Cities could even be required to adopt state-drafted model zoning amendments.

The bill’s premise is twofold; the state should be building lots of both market-rate housing and subsidized housing. And because local governments like to oppose both, nudges and mandates from the state government are necessary to ensure building happens on a scale that will make sufficient room for future residents.

“The person who has almost no voice in fights about housing today is the person who doesn’t yet live in the homes that aren’t built yet. Because those people don’t have a vote yet,” says Michael Andersen of the Sightline Institute, a Seattle-based urban policy think tank. “The result is we’ve put one barrier after another to housing, driven up the cost of building it, banned it outright in some cases.”

Oregon already has a rudimentary system for requiring communities to plan for more housing. Cities of 25,000 people or more must ensure they have enough buildable land to support projected household growth for the next 20 years. Cities can meet that requirement by expanding urban growth boundaries to allow more suburban housing, reforming their zoning codes to allow more dense infill housing, or both.

That sounds simple enough. Despite this arrangement, Oregon is one of the least affordable places in the country for both renters and homebuyers. Researchers estimate the state has underproduced somewhere between 86,000 and 111,000 housing units.

“It’s become impossible to expand the urban growth boundary,” says Dave Hunnicutt, president of the Oregon Property Owners Association, meaning new, cheap land isn’t opened up for development at the pace it needs.

Additionally, he says, cities have largely been left to their own devices when it comes to approving housing they’re supposed to be planning for. The result is absurdly long and expensive permitting processes.

“In a lot of cities, it’s taking two to three years from the time you submit an application before you can get approval,” he tells Reason. “Two or three years and seven figures of application costs and engineering and development costs.”

Meanwhile, fair housing advocates criticize Oregon’s current land use planning system for letting wealthy enclaves stay wealthy enclaves by having zoning laws that only allow for very expensive housing.

“If you have a community that is built on 10,000- and 15,000-foot lots and has ‘X’ number of homes and you’re expecting ‘X’ amount of growth, they might say, well, we need ‘X’ number of 10,000- or 15,000-foot lots,” says Allan Lazo of the Oregon Fair Housing Council.

Enter H.B. 2001, which would massively increase the state’s oversight of local land use laws with the purpose of building more housing that’s affordable to people up and down the income ladder.

To do this, it would create the Oregon Housing Needs Analysis (OHNA) system.

Under the envisioned OHNA system, the state’s Department of Administrative Services (DAS) would conduct an analysis of housing needs based on projected regional job growth, population growth, and an “equitable statewide distribution of housing f