The Biggest (and Little Known) Change to Oregon Housing Law

By David J. Petersen

In 2019, the Oregon Legislature passed House Bill 2001 – the “middle housing” law. This new law will bring wide-ranging changes to construction of new housing in Oregon, but has received little press so far.

The goal of HB 2001 is to reduce barriers to the construction of “middle housing,” which is defined as duplexes, triplexes, quadplexes, townhouses and cottage clusters. A townhouse is a single unit on its own lot, sharing a common wall with at least one neighboring unit; a cottage cluster is a grouping of no less than four detached housing units, each with a footprint of less than 900 square feet around a common courtyard.

Every city in the Portland metro area (regardless of size) and every other city in Oregon with 10,000 people or more is obligated to encourage more development of middle housing by amending their zoning codes. First, all cities in the metro area (or outside of the metro area with more than 25,000 people) must allow all middle housing types in areas zoned for residential use that allow single-family detached dwellings. Second, all cities subject to the law must allow duplexes on lots in residential zones on which a detached single-family dwelling could be built. Siting standards and design standards for middle housing must be clear, objective and carefully applied so as to not discourage development of middle housing through unreasonable costs or delay. Standards requiring owner-occupancy or off-street parking are expressly prohibited.

The final deadline for all affected cities to make their zoning amendments was June 30, 2022. The state Land Conservation and Development Commission (LCDC) developed a model middle housing ordinance to assist in the amendment process. For any city that did not meet the applicable deadline, the model ordinance automatically applies in that jurisdiction until the city adopts the necessary code changes. Extensions may be available, but only in limited situations where existing utilities are already at maximum capacity.

The law contains further incentives to build middle housing. Middle housing is effectively exempt from evaluation of adverse traffic impacts. Cities are encouraged to promote middle housing by waiving or deferring systems development charges, adopting property tax exemptions or freezes, or assessing construction taxes to fund low- to moderate-income homeownership programs. Codes and processes for converting existing single-family dwellings to multi-unit buildings have been streamlined and expedited. And homeowners association covenants for new development are prohibited from restricting middle housing that is otherwise allowed under the zoning.

HB 2001 is a significant victory for housing reform advocates, who have long sought for zoning codes to be more sensitive to what most people can actually afford to pay for housing. The law discourages the use of seemingly neutral zoning rules such as large lot zoning, higher fees and vague standards that can be selectively interpreted depending on the project. In practice, these rules can have the effect of driving up housing costs and causing economic and racial segregation. The model middle housing ordinance replaces these kinds of standards with more form-based rules and objective standards applicable equally to single-family homes and middle housing.

At the same time, the law creates protections against growth outpacing infrastructure, a common prediction of the law’s opponents. The law has specific relief valves to ensure that objectively deficient infrastructure is upgraded first, while curtailing the ability for opponents to cause delays based on vague claims of insufficiency. Also, HB 2001 does not mandate any specific construction, so market forces can be relied upon to delay middle housing construction in places not yet ready to accommodate the needs of middle housing buyers.

It’s important that Oregon keeps working towards affordable housing solutions. The middle housing law brings a lot of promise and early indicators suggest developers are already considering more middle housing projects. Hopefully, the work of HB 2001 will soon bear fruit and bring some much-needed relief to those currently excluded from the housing market.