Lake Oswego City Council mulls incentives for workforce housing
City Councilors have narrowed their list of proposed incentives for encouraging economical housing in Lake Oswego, voting yes on increasing design flexibility for affordable housing projects but no to a rent voucher system or a local housing bond.
Imposing System Development Charges (SDCs) for demolitions and reducing SDCs for multi-unit housing also got the green light for further study at the council's meeting in late July. But councilors rejected the idea of inclusionary zoning and said no to using capital improvement funds to pay for new infrastructure for workforce housing projects through development agreements.
The council also voted against considering any affordable housing amendments to existing urban renewal plans, such as the East End and Lake Grove districts. But the group did agree that the City should consider affordable housing goals during the creation of any future urban renewal districts, such as one in the Foothills area.
The development of new strategies to spur affordable housing — also called workforce housing — appeared on the council's list of annual goals in both 2017 and 2018. One of the proposed strategies has already seen significant progress in the past several months: Accessory Dwelling Units (ADUs).
The council recently passed a package of measures aimed at streamlining the process of building ADUs and has directed City staff to draft further modifications that would ease the SDC burden on ADU projects.
Other strategies have been discussed during previous study sessions, City Manager Scott Lazenby said, but the council hadn't yet given clear directions to staff about how to proceed. That prompted City staff to create a list of all the proposed solutions for the councilors to consider at their meeting last month.
During the discussion, Councilor Theresa Kohlhoff said inclusionary zoning policies — which require new apartment projects to include a certain percentage of below market-rate units — have seen mixed and inconclusive results in Portland, although she said that may have been due to setting a required percentage of affordable units that was too high.
Mayor Kent Studebaker expressed concerned about the idea of allowing more design flexibility, which he said would likely cause objections from residents. And Councilor Skip O'Neill raised concerns about policies that would cause a tax increase for Lake Oswego residents, saying the onus for affordable housing development lies primarily with the financial institutions that supply loans for development projects, rather than with the developers themselves.
"I think we're going to be constantly frustrated — not just here in Lake Oswego, but in Portland and across the country — until there's some incentives through financial institutions that allow entrepreneurs to develop economical housing or affordable housing," he said. "It's the financial institutions that need the pressure on them to allow entrepreneurs to build affordable housing."
Councilor Jackie Manz said she wanted the City to emphasize preserving as much of its existing housing stock as possible. In response, Planning Director Scot Siegel said imposing SDCs on teardowns would be one of the possible ways to keep existing housing in place.
The City currently does not assess SDCs for replacement houses, Siegel said, under the assumption that the overall impact of the property on the City's systems will be unchanged. But adding SDCs could incentivise people to remodel their homes rather than completely redevelop them, he said.
That idea proved to be one of the most popular among the councilors, who narrowed the list of options through a series of votes.
"What I've always heard people tell me is they just hate the teardowns," Kohlhoff said. "So to the extent that we can maintain the affordable housing that we have, that seems exceedingly important and the most likely to be accepted by the left and the right and the middle."
Rent vouchers could also help preserve existing rental housing stock, Siegel said, although he cautioned that they're usually employed on a larger scale.
"On a local level for a small city such as ours, vouchers would be a pretty heavy lift in terms of administering and funding a program like that," he said.
Councilor Joe Buck said he supported both the SDCs-for-teardowns policy and the inclusionary zoning idea, and he suggested that the latter could be made more effective through the use of incentives for developers, such as forgoing SDCs on multi-family units.
Kohlhoff also urged her colleagues to consider the idea of a local housing bond. Most of the councilors seemed reluctant because of the upcoming, region-wide housing bond proposed by Metro, but Kohlhoff argued that the Metro bond might only have a minimal impact on Lake Oswego because it's intended to target incomes below Lake Oswego's average.
Councilor John LaMotte suggested that rather than focusing on ways the City can directly intervene, the council should work on developing tools that officials can quickly use to assist the nonprofit housing developers and preservation groups that would take more direct action.
"I just think it's us being proactive and intervening where we can," he said. "What are the tools that are easy on us with low administrative impact and that we have ready to go when they knock on the door?"
According to Lazenby, staff will use the finalized list — charging SDCs for demolitions, reducing SDCs on below-market multi-unit construction, increasing design flexibility and adding affordable housing to future urban renewal districts — to create a more fleshed-out set of policies for the council to consider at a future meeting.
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