Oregon Lifts 17-Year Ban on Inclusionary Zoning

stone buildingTexas is known as the Lone Star State. Recently, it also became the lone state that prohibits mandatory inclusionary zoning (IZ), which allows local governments to require a percentage of affordable housing units to be included with new, market-rate developments.

Until earlier this month, the only other IZ holdout had been Oregon. But state lawmakers changed that by approving a four-bill housing package, ending Oregon’s 17-year-old ban on this affordable housing mandate.

“With this bill, we put the issue of inclusionary zoning to rest into the foreseeable future,” said Jon Chandler, CEO of the Oregon HBA, and one of the bill’s primary authors. “This will make just a small dent in housing affordability, but it helps to set the stage for a more comprehensive discussion around the core problem of supply and demand.”

To give it the best chance to succeed in Oregon, the authors of the bill were sure to include several sideboards, a few of which included:

  • IZ can only apply to multifamily buildings with at least 20 units.
  • Cities and counties can require no more than 20% of the units be reserved as affordable.
  • The threshold for “affordability” is set at 80% of the median family income (compared to a traditional threshold of 60%).

Why and How: Q&A with Jon Chandler

Taking a quick break from his OHBA duties, Chandler sat down with NAHBNow to discuss why the time had come for Oregon to allow inclusionary zoning and how the builders were able to reach a compromise with state lawmakers.

After nearly two decades of inclusionary zoning prohibition, what made this the right time?  

We’ve been fighting over mandatory inclusionary zoning for over 17 years. Every year, someone would bring a bill forward to overturn the prohibition, and every year, it’d be defeated. But in Oregon’s changing political climate, it was getting harder to kill with each legislative session. It was reaching a tipping point and we knew that eventually we’d lose, so this was the best time to cut a deal.

How did your members eventually come to an agreement on the proposal?

Sometimes fighting an issue and dying on principle is the right thing to do, but sometimes it might just mean you [don’t want] to think of an alternative. When we were putting this package together, we had many internal discussions with our members to hash out the details and allow everyone to voice their opinion. We all knew cutting a deal with the people who were against us was going to be challenging, but in the end, it was the right thing to do.

What was the approach in creating this package?

Our main point to legislators was that we can’t let the affordable housing issue get worse, because we really do have an affordable housing problem in Oregon. But in order to talk about the things that are truly causing the problems, the matter of inclusionary zoning had to be addressed because it had taken on a life of its own. So we focused on ensuring inclusionary zoning couldn’t be used in a malicious way.

What were the major obstacles in reaching an agreement with lawmakers?

We first had to help the House Speaker understand that we weren’t the problem. You can beat on us all day long, but we’re not going to build anything that’s going to lose money… at least, not on purpose. We told her that this was not an ideological argument. Philosophically, we aren’t opposed to inclusionary zoning; it’s the economics of it.

I told her if they were serious about doing something about affordable housing, then I’m in. But that means [legislators] will have to actually start talking tax policy, infrastructure, land supply, construction costs, local government mandates, and particularly, Oregon’s land use planning system.

How were you able to reason with the various housing activist groups?

I’m sure we were seen as a roadblock. We did our best to position ourselves as an asset to be used, not a problem to be solved. We worked with many moderate housing groups who understand the economics of building. But there were many whom we weren’t able to work with – the real “lefties” and “red hots” who wanted inclusionary zoning to apply to for-sale housing for people making 30% of the median income. We simply can’t do that – people in that category can’t qualify for a mortgage. But the “magical thinkers” couldn’t see that. Apparently they preferred to cover their ears and hum loudly.

How do you feel about the results?

It worked out better than I had hoped. From what I’ve seen and the studies I’ve read on the subject, inclusionary zoning doesn’t work well. But if it’s going to work at all, it’s going to work in urban, high-density areas. By extracting single-family projects, we see this as a huge win.

###

NAHB continues to conduct studies and gather examples from around the country of inclusionary zoning variations and alternatives. Many resources are available on nahb.org.

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *