Lake Oswego residents weigh in on city’s housing production plan

Attendees of the community forum on the strategies the city of Lake Oswego is considering to create more housing opportunities over the next 20 years generally supported many of the ideas mentioned.

Overall, the city is looking at an array of options — from code changes, to rezoning and financial investment — to meet Lake Oswego’s projected housing needs and to fulfill state requirements.

Here are a few takeaways from the forum, which took place virtually Thursday, March 14.

What is the city considering?

Lake Oswego long range planning manager Erik Olson explained the city will need to add about 2,000 housing units within the next 20 years to meet demand. A third of those units will need to be for those making less than 80% of the area median income. He added that the private market likely would not provide housing affordable to those folks, necessitating governmental planning.

Additionally, Olson said that a shortage of land — the city had an 86-acre deficit, according to Olson — will make the task of meeting housing needs more challenging.

Some of the ideas to create more housing in Lake Oswego include: updating local code to reduce barriers and create exceptions to incentivize development, providing property tax exemptions for affordable or market rate housing, establishing public-private partnerships to build affordable housing, rezoning areas currently designed for commercial buildings or other uses to allow for residential development, scaling development charges so they are equitable based on the size of the home and streamlining approval processes for denser housing production. Ultimately, the Lake Oswego City Council and Planning Commission will need to weigh in on a finalized draft of ideas to pursue.

Tax, rezoning could have big impact

The city mentioned a potential construction excise tax that would charge developers of new housing. Money from the tax would go toward affordable housing projects. Consultant Kate Rogers described the tax as one of the few sources of revenue generation that would be locally controlled. She added that it would potentially have a very big impact on housing production, possibly generating millions of dollars in revenue each year. Most cities that have imposed an excise tax, she said, charge a 1% rate on the value of construction.

The city identified rezoning commercial land to residential use as another possible high-impact solution. The city would likely key in on areas of town that are dense and accessible to services like transit.

City not considering curbing large home redevelopment

A couple meeting attendees lamented the recent trend of developers purchasing lots with small-to-medium-sized homes, tearing them down and building huge homes in their place, saying that these projects reduce housing affordability.

“Many of us get calls weekly about selling our properties. This will make housing in our areas less affordable,” one attendee said.

However, Olson said that, while some other cities like Portland have added policy to limit home sizes, Lake Oswego has not considered doing so.

“We are looking at the barriers we could eliminate or reduce in the code, but haven’t been looking at it quite in that way,” he said.

Feedback on tax breaks

One resident at the meeting was skeptical of developer benefits that make a project easier to build but aren’t necessarily passed on to the owner or renter. Some ideas the city is considering that may fall into this category include vertical housing programs that provide tax relief for mixed-use properties and a multi-unit property tax exemption.

Further, there was a brief discussion on the relationship between incentivizing housing development and affordability. Typically, when a local government creates a program like urban renewal to provide incentive for development, land values go up and rents and home prices correspondingly spike.

Are there enough options for seniors?

One resident felt that the city does not have enough options for seniors who want to stay in their own home.

“It so far has gotten lost in the shuffle. I think there is a huge need for it,” the resident said.

Olson said creating opportunities for residents to age in place is something the city is looking at through this process.