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Recession tanked Newberg's residential building activity and the effects continue to linger

Three local studies have indicated a common factor restricting Newberg’s growth.

Examining tourism, downtown improvement and economic development, city staff and committees found one barrier impacting future opportunities in all three areas: housing — particularly a shortage of it.GARY ALLEN - The Terra Estates subdivision is one of several that are either under construction or in the planning stages in Newberg, but building activity is still far behind the level it was at prior to the recession.

And the impact doesn’t stop there. Hospitality facilities have trouble attracting and retaining staff who can afford to live in Newberg, many new teachers in the Newberg School District can’t find a place to live that matches their income, and students at George Fox University may have trouble finding off-campus housing (and when they do, observers charge they are displacing local residents who could otherwise live in those homes).

Hard data

Everyone’s heard that housing construction halted during and after the recession hit in 2008 and 2009.

But a look at the numbers for Newberg provides a dramatic glimpse of just how much the impact was felt locally. Data provided by the city’s community development department shows that in fiscal year 2007 (July 1, 2006 to June 30, 2007) there were 270 residential building permits issued. That number fell to 190 during the same period the following year, and down to 153 the next, as the global economy entered a downturn.

Then came fiscal year 2010, with the sharpest decline yet: just 58 residential permits were issued that year, less than a quarter of the number from only three years prior.

“Things really went the other direction with the economy when we went into recession,” said Community Development Director Doug Rux.

Residential activity has since seen a tapered increase. After a further drop to 44 residential permits in fiscal year 2014 and stagnation during the following year, the number increased to 62 permits last fiscal year. And there have been more than 30 permits issued in just the first four months of the current fiscal year.

In the past 20 months there have been nearly 600 new lots in the city in some phase of planning, from the pre-application phase to the final plat approval. At the same time there have been pre-application meetings that could lead to 225 multifamily units, Rux said. Those might not all pan out, though they show renewed interest in local construction.

But the years of sparse building activity are taking a toll on a city that is concurrently seeing more new residents moving in. People are simply having a hard time finding a place to live, and prices are rising.

With land prices and other costs associated with construction, a local builder recently said the minimum that a modest, safe, 1,200-square-foot home could be built for, is $280,000.

“It’s a supply and demand issue, bottom line,” Rux said. “That’s what it comes down to.”

Possible solutions

The recurrence of housing shortage in each local study, as well as housing news coming out Portland — which last year declared a housing “state of emergency” — led Newberg area Habitat for Humanity executive director Rick Rogers to organize a housing-focused forum last month.

“We all understand that housing is a statewide issue but also feel Newberg offers some unique characteristics that might allow us to come up with some novel approaches,” Rogers said.

He invited local builders, realtors, developers, housing advocates, elected officials, city staff and major employers, to an early October meeting. The goal, Rogers said, is to come up with a recommendation that can be forwarded to the City Council via city staff.

Five areas to further explore were identified during the first meeting, including finding ways to decrease the cost of housing through adjusting regulations and requirements at the city level; examining how to increase land availability and increase the level of density in new land annexed into the city; exploring housing that’s targeted to certain segments of the economy (student or workforce housing, for instance); and studying the financial resources available to fund housing, such as the city’s affordable housing trust fund, and possible new revenue sources like a construction excise tax.

Finally, the group hopes to sell the need to the community through education and advocacy. Builders at the meeting cited the difficulties that generally arise with high-density construction.

“Builders tend to get a level of pushback from neighbors,” Rogers said.

Indeed, the 56-unit Deskins Commons affordable housing development faced strong opposition from neighboring residents when the land was rezoned for high density in 2010. And developers faced similar resistance when requesting a high density rezone for the Martell Commons site on Villa Road (see business section for an update). Lower-density projects like subdivisions frequently face some criticism from neighbors during the planning stage as well.

So the group aims to link what Newberg residents have often named as priorities, such as not becoming a bedroom community for Portland, with increased density as a solution.

Rogers pointed to an oft-repeated sentiment suggesting that may be a hard sell:

“Oregonians really hate sprawl, we hate it,” he said. “But we also hate density. That’s really the push we are facing.”

The committee’s next meeting is slated for Nov. 15, at which time breakout groups will discuss each of the five identified areas.

“Probably this next meeting will indicate how much we can pursue this,” Rogers said.

Mobile home repairs

Elsewhere on the housing front in Newberg, a city committee has been meeting quarterly to make decisions on the city’s affordable housing trust fund, a pot of money designated for “the development, preservation and rehabilitation of housing that is affordable” to local individuals and households whose incomes do not exceed the area median income, according to the city’s description of the program. The 2016 median household income in Newberg was $54,856.

The fund was established in 2012 and offers several grant programs for which the fund was seeded about $70,000. That money was available for applicants seeking to rehabilitate older homes so they remain affordable, or to assist with development of new affordable housing.

But the program has been virtually unused since it began four years ago, leading the council to make a significant change to the trust fund in August: a manufactured and mobile home repair fund is being added into the program.

These residences represent a substantial portion of the city’s affordable housing supply, but until now they didn’t qualify to apply for the repair funds.

“We’re trying to focus on those low to very low income level households living in mobile or manufactured homes who need assistance to do rehabilitation and repair on those units so they can continue to be affordable units,” Rux explained.

On Nov. 21, Rux will present the new grant program’s guidelines that have been formed by the trust fund committee, and shortly after the program will begin asking for applications.

The grant program takes a two-pronged approach: an individual can apply for funds up to $1,000 to work on their own mobile or manufactured home; or an organization can apply for a larger pot of money, up to $10,000, and there are guidelines of how that organization will use the money to assist with home repairs.

Either way, the applicant has to put up a one-third match amount, meaning, for example, an individual who is awarded $1,000 needs to provide an additional $333.

A new form of local affordable housing?

Besides the grant program, the trust fund committee is looking at a number of other potential affordable housing measures.

Last week the group discussed accessory dwelling units and particularly the possibility of easing regulations for ADU construction in the R-1 residential zone.

ADUs, otherwise known as mother-in-law units or granny flats, are a second, smaller residence on the same tax lot as an existing residential unit. It could be a garage converted into a separate living space or construction of a new studio space in a backyard, for example.

These units haven’t quite taken off in Newberg. One accessory dwelling unit was approved over the summer amidst protests from neighbors, while a stalled development on the site of the former Newberg Marquis is proposed to include 10 ADUs. But the units have become much more prominent in Portland, Seattle and elsewhere as a way to boost housing supply through densification.

As Newberg experiences those same housing issues on a smaller scale, ADUs are coming under more serious consideration.

“When you look at the impact of student housing on affordable housing units, because for every student housing unit that’s needed that can take one potentially affordable housing unit out of the general population inventory, ADUs are potentially a big opportunity,” said Stuart Brown, chairperson of the trust fund committee. “They have been in other urban areas, to increase the number of affordable housing units in a given area.”

ADU regulations, which were created in 1999 and revised six years ago, require an additional parking space for the unit and have size restrictions of a maximum 1,000 square feet. In the R-2 and R-3 zones they are allowed as a permitted use, but right now in the more common R-1 residential zone they have to go through a conditional use permit process, which means a lot of back-and-forth with city planning and building staff before the project can move forward.

“We put a significant financial cost on somebody to go through that conditional use application, we put a lot of time into that process, which is a discouragement,” Rux said.

The community development department has had internal conversations about making ADUs an outright allowed use in the R-1 zone provided they stay within a certain size range, 500 or 700 square feet for instance.

Possibilities for the trust fund to be used in relation to ADUs could include providing permitting fee grant funds for homeowners interested in constructing a secondary unit.

The committee agreed to begin a work project to study and revise ADU regulations.

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