THE HOUSING INNOVATION PARTNERSHIP (HIP)

Consisting of members from the following organizations:

The Goal: Increasing Housing Production

The Housing Innovation Partnership, a collaborative of 35 public, private, civic sector organizations, formed in early 2022 with one shared goal: addressing Oregon’s housing needs. As a state, Oregon needs to produce 360,000 units of housing in the next decade. Current methods for producing housing are inadequate to meet that benchmark. Adequate housing stock is a necessary, crucial component of a vibrant economy, and Oregon’s gap is hindering the state’s economic, social, and livability measures.

Research & Discussion

Through research and discussion, the Partnership identified the top barriers to housing production in the state. These include lack of local capacity to navigate the complex permitting and financial hurdles, low capacity for off-site built construction such as modular housing or panels, and a lack of financial capital and tools to build housing.

Especially notable is the vast gap of housing production at the workforce income level. This is defined as 60-120% area median income and is housing for teachers, hospitality workers, mill workers, bus drivers—folks that are part of the fabric of every vibrant community. In current market conditions, it is not financially feasible for developers to build workforce housing. As a result, it is vastly underproduced, creating strain on the continuum of housing in Oregon.

“Our systems for housing production are not always designed to accommodate innovation; in fact, they were designed for a very different time and set of circumstances. This is where our collective job comes in. We need to do things differently than we have in the past to succeed.”

Representative Pam Marsh

Co-Convener Housing Innovation Partnership, District 5 - Southern Jackson County

The Housing Innovation Partnership’s Working Groups

The following four Workgroups have been charged to address issues and explore innovation in the areas of Modular Housing, Middle Housing Financing and Incentives, Housing Research, and Local Capacity Building. Goals are to accelerate the availability, construction, and siting of housing stock by increasing factory built housing and panels; providing training, resources, and regulatory streamlining for builders; providing financing tools; supporting research; building the capacity for local governments to process and make modifications to plans and ordinances that will result in housing production; and more. 

Modular Housing   

The Modular Housing Workgroup is focused on examining the regulatory, sales, distribution, workforce, and market acceptance issues affecting the modular and prefabricated panels industry. They are working to create a strategy for greater use of off-site construction methods. Off-site production can help reduce construction time by 20-30%, and volumetric and panelized housing can address a range of housing types and markets, from disaster relief to middle housing. Mass timber can also play a critical role in this type of housing as the material can be digitally fabricated, sequesters carbon, and can increase economic development in rural communities.

Local Capacity Building   

Increasing the capacity and ability of local governments to carry out community development and housing construction activities is essential to increasing the state’s overall production of needed housing. Solving the current housing crisis will require, at a minimum, a strong collaboration between the State of Oregon and its local government partners. Most Local Comprehensive Plans were adopted over 45 years ago and need to be updated. To do this, cities and counties need staff that is not currently present. This Workgroup is charged with building the capacity for Local Governments to process and make modifications to plans and ordinances that will result in more housing production.

Middle Housing Financing and Incentives   

Middle housing is the level of housing needed for individuals with incomes that do not allow them to access public assistance, but who need housing that the market is not currently able to produce at affordable prices. It is generally for people earning between 80% and 120% of AMI. Whether it be modular or stick-built homes, there are no current incentives for this level of housing. The Middle Housing Workgroup was charged to develop financing models and incentives for this type of housing, considering incentives such as density bonuses, tax abatements, targeted technical assistance, and more.

Housing Research   

The Research Workgroup has been charged to collaborate with all entities that can contribute to ongoing research around housing. They are working to coordinate the public, private, and civic research capabilities in a way that creates information supporting innovation to reduce Oregon’s housing deficit.

Developing tools and taking action to eliminate Oregon’s housing deficit.

Finding Solutions

Through multi-sector convening and collaboration, the Partnership created a suite of tools to overcome the barriers. These include grant and loan programs for land acquisition and predevelopment work, as well as funds to increase local capacity at the city and county level to navigate the complex system of development. One innovative proposed solution is a tax-increment financing tool that would be capitalized across the state, creating a durable fund with lasting impact in housing production.

Taking Action

The result of the Partnership’s year of work a sets of tools that offer rapid solutions to increasing housing production to help meet our state’s goals. These tools will enable Oregon communities—urban and rural alike—to build ample housing and support the Governor’s ambitious goal of creating 36,000 units of housing annually.

Join us in this effort to ensure adequate housing – and an abundant economic future – for Oregon.

Housing Innovation Partnership Solutions and Strategies

Oregon’s Housing Problem

Oregon’s dramatic housing shortage is a threat to our residents, communities, and economy. ECONorthwest estimates that the state has a deficit of 140,000 homes statewide. Current housing production is not keeping up with demand, much less making progress on the deficit.

Approximately 30% of this shortfall is for housing serving households earning 60-120% AMI. Without subsidy, housing developments serving these households are not economically feasible. Even with successful improvements to regulatory barriers such as zoning approvals and permitting timelines, a financial gap will prevent production at scale. Currently, no sustainable gap funding resource exists. A Revolving Loan Fund was designed to fill that need and rapidly boost housing production.

The Revolving Loan Fund

A state revolving loan fund to fill housing financing gaps. Local jurisdictions access the fund to boost development of needed housing in their communities. Eligible housing can be rental or homeownership, multi-family or single family. The goal of this fund is housing production that could not otherwise be produced.

Local jurisdictions control project selection and borrow from the fund to make grants to local developments. These grants fill critical project funding gaps. The jurisdictions then pledge the amount of revenue from a fee based on the improvements to repay the loan over 10 years. After loans are repaid, full property taxes are retained by local jurisdictions.

To accommodate technical challenges of our property tax system, this program will use a 10 year tax abatement on the improvements and add an equivalent fee that will repay the loan.

  • Revolving Loan Fund: $300 million
  • Units Produced: 12,000 (plus ongoing from reinvestment)
  • Target Population: 60-120% AMI
  • Subsidy per Unit: $15,000-$35,000 (est.)
  • Project Control: Local jurisdictions with State support
  • Eligible Housing: Single and multi-family; rental or ownership
  • Fire Districts: Fully funded
  • Fund Leverage: $4.5 billion* in other funding

*Assumes $400,000/unit cost and $25,000/unit subsidy averages

 

The above organizations signed on in support of sustained and targeted funding for middle income housing.

Workforce/Middle Income Housing

Housing production can be spurred through the development of innovative financing models serving those with incomes that do not allow them to access public assistance but who need housing the market is not able to provide at affordable prices. Workforce housing is not recognized as critical housing type in Oregon and is not currently supported through any public incentives.

  1. Create an Infrastructure Grant/Loan Fund—

Create an Infrastructure Grant/Loan Fund (IGF) for public improvements associated with new workforce-income housing developments. Such an IGF would allow public and private developers to develop sites that require costly public street and utility improvements.

  1. Develop Funding for an Oregon Land Fund—

Allocate funding for an Oregon Land Fund (OLF). The new OLF would provide the early capital for acquisition and predevelopment of sites for workforce -income housing developments.

  1. Create a Workforce Housing Construction Guarantee Fund—

Create a Workforce Housing Construction Guarantee Fund (WHCG). Access to construction financing is a challenge for workforce housing developments. This guarantee, jointly pursued by developers and local jurisdictions, would incentivize private capital to support these projects at beneficial borrowing costs.

 

Local Capacity

Solving the current housing crisis will require a strong collaboration between the State of Oregon and its local government partners. Increasing the capacity and ability of local governments to carry out community development and housing construction activities is essential to increasing the state’s overall production of needed housing. In order to deal with Oregon’s dramatic deficit in needed housing, the following legislative solutions are proposed to build sustainable funding capacity and accountability for Local Governments to process permits and make modifications to plans and ordinances that will result in housing production.

Technical Experts – Most Local Comprehensive Plans were adopted over 45 years ago and need to be updated in many cases. To achieve an increase in Oregon’s production of needed housing by at least 50%, Oregon’s cities and counties need staff that is not currently present. The Office of Economic Analysis estimates that approximately 450 on-the-ground technical experts in the areas of land use planning, community development, construction inspections, and infrastructure will be needed. This legislation would add that capacity over time.

Housing Coordinators – Provide each of Oregon’s 12 regions with sustainable funding to recruit and hire a housing coordinator. These regional housing coordinators will, at a systems level, partner and consult with local governments, developers, financiers, and other interested partners to bridge any information gaps, identify and secure needed resources, and enable local governments to develop needed housing. Grants under this program will be administered by the Oregon Department of Administrative Services in consultation with DLCD and OHCS.

Education Programs – Create a statewide education program designed to explain Oregon’s unique land use system, as well as the causes of Oregon’s housing crisis and the potential solutions to overcoming it. Understanding Oregon’s land use system, as well as the housing crisis, requires specialized education, the provision of which is not readily available to local government officials across the state of Oregon. The program would be administered by AOC and LOC in consultation with DLCD.

State Liaisons – Provide The Association of Oregon Counties and League of Oregon Cities each with sustainable funding to recruit and hire their own State Housing Liaison. The two state liaisons will serve as a conduit between their respective local government members, housing coordinators, the housing production team, state agencies, the governor’s office, and the legislature.

Accountability & Outcomes – To ensure that process costs are tracked for the purpose of identifying opportunities and informing efforts for cost reduction and production time acceleration, a report from the Office of Economic Analysis shall be prepared in consultation with DLCD and OHCS on an annual basis. The report should detail staff time required to complete housing permits; conditional use permits; building inspections; needed comprehensive plan revisions; needed zoning ordinance changes; and time taken to process appeals of local decisions.

The purpose of the capacity increases are to dramatically increase housing production. While initial investments can be made in local government capacity, they should only be continued at the level that produces results in reducing Oregon’s housing deficit. These investments should also result in the acceleration of permitting and the streamlining of local process which can reduce processing time for local developers and homebuilders.