Gov. Tina Kotek on Thursday began a full-court press for her $500 million plan to spur home construction, telling senators in a crowded committee hearing that they can’t go home without passing her bill and addressing the housing crisis that affects every community in the state.
Senate Bill 1537, the only bill Kotek requested this year, is a package of incentives and policy changes intended to boost construction and meet her goal of building 36,000 homes annually. Economists estimate Oregon is 140,000 homes short of the current demand and needs to build at least 500,000 new homes within the next 20 years.
“You have the power, you have the resources to allocate to this bill,” Kotek said. “You can say ‘We’re going to do housing differently over the next few years.’”
The bill calls for establishing a new state office to help cities meet their housing goals, creating a revolving loan fund that developers could tap to build homes for middle-income Oregonians who earn too much to qualify for subsidized affordable homes but too little to afford market-rate homes and giving cities more money for infrastructure and more leeway to add land for housing.
It includes about $200 million for grants and loans to cities and tribal councils to pay for infrastructure and another $200 million for the middle-income housing revolving loan fund and $20 million in grants to build homes that use electricity, rather than natural gas, for heating and cooking.
The measure has strong support from unlikely political bedfellows: Kotek later on Thursday announced support from a broad coalition including business groups, labor unions, housing developers, farmworker advocacy groups and the Community Alliance of Tenants. Lawmakers received about twice as many written comments supporting the measure than opposing it.
Jimmy Jones, executive director of the Mid-Willamette Valley Community Action Agency, said the bill was necessary to stem the steep increase in homelessness that taxes agencies like his. More than 20,000 homeless Oregonians were counted on a single night in January 2023, and more than two-thirds of homeless Oregonians lack shelter, according to the U.S. Housing and Development Department. It was a 12% increase from the year before.
Jones estimated Oregon has spent close to $1 billion in state and federal money on rental assistance since 2020, and that the state’s homeless population would be much larger without that aid.
“There are no short -term solutions to this, and we cannot keep that level of financial commitment up for the next 10 years,” Jones said. “We’re going to have to find long-term production-side solutions that will allow us to build our way out of part of this crisis.”
Land use dispute
A section of the bill on the urban growth boundary, the invisible line around cities that limits growth, drew concern, as it did last year. Environmentalists urged lawmakers to scuttle the section that would allow cities outside the Portland metro area to add up to 75 or 150 acres to their urban growth boundaries with less red tape than they usually face when trying to expand. The Oregon Conservation Network labeled the bill a “major threat” because of that provision.
And the children of two late state senators who championed Senate Bill 100, the 50-year-old state law that created Oregon’s land use system, chided senators not to weaken the law their fathers supported. Greg Macpherson, a former Democratic state representative, is the son of former Republican state Sen. Hector Macpherson, who lost his reelection in part because he crossed the aisle to vote with Democrats on the law.
“It would be terribly sad if this Legislature would have tarnished Senate Bill 100, the crown jewel of Oregon’s environmental legacy, right after the 50th anniversary of its enactment,” Macpherson said.
But Rep. Pam Marsh, D-Ashland and chair of the House Climate, Energy and Environment Committee, told senators she considers herself a “pretty passionate defender of the environment” and that she supported the measure.
“From my perspective, we approach any changes to our land use system with extreme caution,” she said. “However, we undermine the long term viability of our land use system if we reflexively reject modifications. If our land use system cannot accommodate modest change, it will calcify and it will fracture over time.”
An earlier version of the bill failed in the Senate on the final day of the 2023 session, with 10 Democrats voting against it. Five Republican senators hadn’t returned after their six-week walkout, leaving the Senate Republicans and group of Democrats who supported the proposal one vote short of passing it despite Kotek’s efforts to whip votes.
She continued to fine-tune the bill over the interim, and former Democratic opponents are more open to the idea this time around. At a Monday press conference about Senate Democrats’ priorities, four of the Democrats who voted against the prior attempt praised Kotek for her work on the bill
“The governor and her team really made an extra effort to reach out and collaborate,” said Sen. Jeff Golden, D-Ashland. “There are a lot of quite a few changes that I really appreciate, especially around the issue of need being demonstrated before there’s a UGB expansion. I see real progress on that, I’m really encouraged (and) I would love a bipartisan vote on this.”
Money in the bank
The hearing came the day after the state’s latest economic forecast, which indicated a $1.7 billion surplus for the state in the budget cycle that ends in June 2025. Even after a 1% allocation to the state’s rainy day fund, lawmakers would be left with about $1.3 billion to spend or save as they see fit.
Kotek previously urged lawmakers to consider forgoing sending money to reserves to pay for needs including housing, but she told the Capital Chronicle the latest forecast shows the state can afford her request without shorting the rainy day fund.
“This gives us a little more headroom to do more on housing, and the good thing is that we’re asking for one time money (and) the money that’s mostly available is reversions, so it is one time money,” she said. “You got this, you should spend it.”
Along with the dozens of Oregonians who packed a hearing room and an overflow room on Thursday morning and many more who joined a video call to testify remotely, nearly 180 people submitted written testimony supporting the bill and almost 100 wrote letters opposing it. Those numbers are likely to increase, as the Legislature accepts written testimony up to 48 hours after a hearing.
Committee chair Kayse Jama, D-Portland, said he’ll schedule a work session, or vote, by the weekend for sometime next week. Bills move quickly in the five-week legislative session, which must end by March 10.
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Julia Shumway is deputy editor of Oregon Capital Chronicle and has reported on government and politics in Iowa and Nebraska, spent time at the Bend Bulletin and most recently was a legislative reporter for the Arizona Capitol Times in Phoenix. An award-winning journalist, Julia most recently reported on the tangled efforts to audit the presidential results in Arizona.
