Conversion costs a major hurdle to overcome before putting residential units in commercial buildings
By Erick Bengel, Rogue Valley Times
A bill recently passed by the Oregon Legislature that allows commercial buildings to be turned into housing is unlikely to make a difference in Medford but could have an impact in Ashland.
Under HB 2984, drafted by state Rep. Pam Marsh, D-Ashland, developers can convert underused commercially zoned property — such as hotels, office buildings and warehouses — into housing for any income level without requiring a zone change.
The bill applies to properties within the urban growth boundary of cities that have at least 10,000 residents. Industrial land is excluded.
The bill is meant to address Oregon’s housing crunch. Marsh said the state needs to produce far more than its annual rate of 18,000 new residences to put a dent in the shortage.
“We have vacancies in commercial space,” Marsh said, “so let’s think about how we can better use it and how we can revitalize neighborhoods at the same time.”
Matt Brinkley, Medford planning director, said he and Marsh agree that the housing deficit is one of the state’s most pressing concerns.
But Medford has long allowed residences in commercial zones, he pointed out. The city’s largest multifamily development, Charles Point Apartments, is on commercial land.
In addition, he said, the biggest impediment to conversion is often the price tag.
“To convert a building from commercial to residential can require a lot of additional cost compared with just building a multi-family residential building, or even a new mixed-use building from scratch,” Brinkley said.
Commercial buildings often lack residential amenities like bedrooms, bathrooms and kitchens, and must be upgraded to satisfy modern building codes. A seismic retrofit is often required to make buildings safer for people to occupy during a catastrophic earthquake, a concern that didn’t exist when local historical buildings went up.
“Just taking a building that was intended for this different purpose and making it so that it can be occupied by somebody as a resident just requires a lot of stuff, you know?” Brinkley said. “You really change the building significantly, and that’s not an inexpensive proposition.”
Ashland allows residential uses of their employment and commercial zones — up to 15 and 30 units per acre, respectively — but, depending on the area of town, a certain percentage of ground floors must be used for commercial purposes.
Brandon Goldman, Ashland’s community development director, said HB 2984 could offer more flexibility in this area.
“We’ve heard from developers that are looking at building mixed-use buildings, but do not have tenants for the ground-floor commercial and wanted to use that space as housing in the interim,” he said.
With the residential market dominating Ashland, HB 2984 is likely to promote more adaptive, flexible spaces, Goldman said.
He added that turning commercial space into residential, and vice versa, “can be very complicated and very costly.”
Marsh said the bill should be seen as part of a multi-pronged strategy to increase housing.
“This is not going to solve the housing crisis, but in solving the housing crisis, we have to look at every possible strategy, and being efficient about buildings is one of those strategies.”
She said her next move is to start looking at monetary support for these transitional projects.
“They’re not going to be cheap, in most cases,” she said.
As of Friday, Gov. Tina Kotek had yet to sign the bill into law.
Reach reporter Erick Bengel at [email protected] or 458-488-2031. This story first appeared in the Rogue Valley Times.
