Oregon needs to build more than 550,000 homes over the next 20 years

By Julia Shumway, Oregon Capital Chronicle

Housing will remain a top focus when the Oregon Legislature begins its 2023 session Jan. 17, a top Democratic lawmaker tells the Capital Chronicle. 

Rep. Julie Fahey, D-Eugene and the House majority leader, recently met with White House officials and more than dozen lawmakers from other states to discuss a housing crisis that exists across the nation but is felt most acutely on the West Coast.

The meeting let Fahey share information about what’s working in Oregon — the White House last year heralded the state’s 2019 law requiring cities to permit duplexes anywhere single-family homes are allowed as an example other states should follow — and learn from other states. Fahey said emulating California’s regional approach for planning for housing needs is one approach legislators will try in 2023.

The Legislature appropriated more than $1 billion in 2021 and 2022 toward building subsidized affordable homes, preventing evictions, providing shelters for homeless people and assisting first-time homebuyers.

Much of that money came from federal pandemic relief funds, and it won’t be there in the next two-year budget cycle. Lawmakers and Gov.-elect Tina Kotek face a projected $560 million budget shortfall.

“We have invested record amounts of funding in the construction and preservation of affordable housing, and those units are starting to come online from the investments that we’ve made, which is really exciting to see,” Fahey said. “But it just isn’t enough.”

Fahey said it was too early to speculate on the scale of state funding for affordable housing during the next budget cycle, as lawmakers are waiting for the state’s next quarterly revenue forecast on Feb. 22. Kotek will propose her budget on Feb. 1, and negotiations with the governor’s office, state agencies, local governments and interest groups will continue for weeks or months until a final document is approved. 

Kotek has signaled that she will propose a significant amount of money for housing and homelessness, including expanding Project Turnkey, a program she spearheaded in 2020 that spent $65 million to turn 19 unused hotels and motels into homeless shelters. Legislators added another $50 million for 10 more shelters in 2022, and during a meeting with community leaders in McMinnville last week, Kotek asked if the community could use another Project Turnkey shelter. 

“You have to prioritize limited dollars,” she said. “I believe in phasing, I believe in prioritizing so you can get the progress you need.”

With limited money, legislators have said there will be a greater focus on workforce housing, for people who earn between 80% and 120% of the median income in their area. That cohort, which includes teachers, police officers, and other government workers, makes too much to qualify for subsidized housing but doesn’t earn enough to afford to buy a home or spend less than 30% of their income on rent in many Oregon cities. 

According to a recent report from the Oregon Department of Land Conservation and Development, the state needs to build more than 550,000 homes over the next 20 years. Nearly one-third of the homes will be needed for low-income Oregonians and will likely require public funding, the report continued. 

And there isn’t time to wait: Years of failing to build homes at a quick enough pace to meet the state’s growing population means that roughly 140,000 homes are needed now, according to a February 2021 analysis from Oregon Housing and Community Services. The state has averaged about 20,000 new homes per year in recent years.

“I think the data shows when you look at where we are short on housing units, we are short at all income levels, from the highest to the lowest incomes in terms of housing that’s affordable to those in each income bracket,” Fahey said. 

Legislators will look at regulatory barriers, including the time it takes to obtain permits to build homes and the cost of supplies. That could mean fine-tuning recent zoning reforms or looking at incentives for new building techniques, such as using 3-D printing or expanding the construction of modular housing, Fahey said. 

They’ll also consider changes to Oregon’s 2019 rent stabilization law, which caps annual rent increases at 7% plus inflation for all buildings constructed more than 15 years ago and restricts no-fault evictions. This year, record-high inflation meant that some tenants received notices of rent increases up to 14.6%, higher than they’ve seen since the law took effect.

Fahey said discussions about whether the rent stabilization law needs adjusting will start in the Senate, but that she’ll follow it closely. 

“We know that rent stabilization can be an important tool to support renters and to prevent some of the really high levels of rent gouging that we were seeing from landlords,” she said. “Before that bill passed, landlords across the state could increase rent by 30%, 40%, 50%.”

Julia Shumway has reported on government and politics in Iowa and Nebraska, spent time at the Bend Bulletin and most recently was a legislative reporter for the Arizona Capitol Times in Phoenix.