By John Tapogna, Lorelei Juntunen, and Michael Wilkerson
The authors work at ECONorthwest, an economic consulting firm that has operated in Oregon since 1974. The views expressed are their own.
When House Speaker Tina Kotek addressed the Oregon Leadership Summit in December 2015, the 1,300 business and elected leaders anticipated a speech on underfunded schools and taxes. Instead, she declared a housing crisis and pledged to fight it. Last month, she made good on that pledge with the passage of House Bill 2001, which prohibits cities from barring multi-family housing in single-family neighborhoods. The bill recast Oregon as a state capable of landmark public policy, and if well implemented, it will find a place alongside such historic Oregon innovations as the Beach Bill, Bottle Bill, and Vote by Mail.
But there’s more work to be done.
The bill's passage, in the final hours of a session that included violent threats and walkouts, was nothing short of remarkable. In an era of deep partisan divides, a majority of Democrats and Republicans voted for the measure in the House. Then three Senate Republicans joined 14 Democrats to send the bill to Gov. Kate Brown.
Oregon’s in the national spotlight by targeting a key flaw in American housing policy: overregulation by local governments. For too long, neighborhood activists and elected local officials have collaborated in rational self-interest. Neighborhoods prefer slow- or no-growth, which puts upward pressure on property values and protects familiar amenities. City officials, reflecting the will of their voters, respond with rigid zoning and time-consuming permitting processes. To bust up that counterproductive alliance, urban economist Ed Glaeser has long argued that states should take a more active role in housing policy. The Oregon Legislature did just that.
In the Portland metro area and other Oregon cities with more than 25,000 residents, HB 2001 allows duplexes, triplexes, fourplexes and “cottage clusters” on land previously zoned for single family houses. Cities with at least 10,000 residents are required to allow duplexes in single-family neighborhoods.
In past sessions, neighborhood preservation and local control arguments would have prevailed. But HB 2001’s proponents reframed the debate and built a broad coalition around new arguments. Affordable housing advocates liked the increased supply of smaller, so-called "missing middle" housing units. Republicans liked deregulation. Smart growth advocates saw the smaller carbon footprints of denser development, educators better integrated classrooms, and the social justice community the end of single-family zoning practices designed originally to keep races and classes apart.
The political win was also an economic one. No bill from the 2019 session shows a greater potential to boost Oregon’s long-run economic prospects. Undersupplied, high-priced housing is a major headwind up and down the West Coast. It’s forced hundreds of thousands of households in California, Oregon, and Washington to spend more than half their incomes on rents or mortgages. And, it’s the key driver of homeless crises in all three states.
Concerns about housing costs are so severe in the Bay Area that 44 percent of voters say they are likely to leave in the next few years. In response, California State Sen. Scott Weiner has proposed state-level interventions—similar to HB 2001—to spur housing development. His bills have died in committee in each of the past two legislative sessions.
California’s challenges are Oregon’s opportunity. An economic development strategy, centered on housing affordability, would attract businesses and households. And, the timing couldn’t be better. Demographers anticipate slowing population and labor force growth in coming years. Talent is going to be harder to come by, and reasonably priced housing will be a key to securing it.
HB 2001 is an impressive start. But zoning changes, by themselves, don’t build housing. Cities resistant to multi-family development have other anti-growth tools at their disposal. Housing affordability will improve only if the state couples the zoning changes with enforceable, local production goals. There’s good news on that front too. A companion bill, HB 2003, directs the state economist to assess the regional housing needs of households at different income levels. Once set, the regional goals should be tied to fiscal carrots and sticks.
A housing affordability strategy also requires more public investment. Cities will need support to build road, water, and sewer infrastructure. And, in many communities around Oregon, the private market will need financial support to build housing units that are affordable to low-income households.
In a 2016 opinion piece, we asked: “Do Oregonians really want housing that’s affordable?” A bipartisan majority of the Legislature just answered “yes.” In doing so, they launched the most impressive housing reform in the nation and set the state up for a more prosperous, inclusive economic future.