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The new policy means developers will need to remove less of a structure upon redevelopment, or pay tax

PMG FILE PHOTO - Under new policy, Lake Oswego will define a demolition as any project removing at least 50% of the exterior walling of a home. Lake Oswego City Council concluded a lengthy deliberation regarding how encompassing the city's new policy for residential demolition should be. In order to do so, the council chose to redefine this form of housing renovation as removing at least 50% of the exterior walling. The council plans to revisit the topic in two years.

The city's previous policy had what might be considered a loophole for developers — if they kept just a single exterior wall, their redevelopment project would be considered a remodel rather than a demolition. This distinction is relevant because the city previously implemented a $15,000 demolition tax and public noticing requirements are required for demolitions, but not remodels.

Some councilors felt the new policy was spot on, whereas others were worried that it didn't go far enough — particularly because interior structures would not be considered in demolition language. However, a consensus was reached when the council agreed to revisit the issue after staff examines how it's working.

"It's a balancing act of property owners' rights as well as community. I think this is a really good step," Councilor Rachel Verdick said at the meeting. "I think staff has done an excellent job with an extremely complex, difficult subject. I'm not sure it goes far enough but I think it makes sense for today."

A staff analysis determined that of the 390 structural permits that were issued in 2021, 29 that were considered a remodel under old code would constitute a demolition with the code update, and 50 more could be depending on further staff analysis (the new definition only applies to future demolitions). The city instituted the demolition tax in 2019 mainly as a way to generate revenue for local parks, but councilors felt that maintaining neighborhood character was also an important consideration. Since late 2016, demolitions have been involved in 50% of all single-family dwelling construction.

"The primary idea in my mind is to maintain the existing housing stock that's there and keep the character of the neighborhood (by disincentivizing demolition)," City Councilor Daniel Nguyen said.

Council President John Wendland felt that the code change was good policy because of its simplicity, and he did not want to place more stipulations that could make things more complicated and costly for developers.

"We have so many codes we put on our structures (for) people doing remodels and building in Lake Oswego that it's more costly. Every time we put in another nuance or another ordinance, it's more expensive to build," he said, adding that developer costs can lead to higher housing prices.

In her public testimony, Lake Oswego resident Carole Ockert posited that the new code was a good start but fell short. She advocated for the definition of a demolition to be 50% or more of the entire foundation.

"When you're in the realm of completely gutting the (interior) structure of the older home, you're taking it down to the studs, having to redo electrical, plumbing. We all know they're building a new home. It's fine to do that. What I'm saying is it fits into the category of demolition," she said.

City staff determined that the replacement of interior structures has less of an impact on nearby residents than exterior wall renovation, thus leading to its policy recommendation.

The demolition tax has a sunset clause and will expire at the end of this year. The council plans to revisit that topic prior to that point in time.


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