On June 6, Oregon’s newest housing production bill, Senate Bill 1537, officially became law. Gov. Tina Kotek sponsored SB 1537 as part of her ongoing agenda to increase housing production across the state. The governor’s bill makes essential changes to Oregon law to address the state’s ongoing housing shortage, and a companion bill (SB 1530) provides funding for infrastructure to serve a number of housing projects across Oregon. These two measures were Governor Kotek’s top priority for the 2024 legislative session, and they passed both chambers with bipartisan support.

Here is a summary and analysis of SB 1537’s eight primary provisions:

1. Create a state-level Housing Accountability and Production Office: SB 1537 creates a new office within the Department of Land Conservation and Development and the Department of Consumer and Business Services known as the Housing Accountability and Production Office or “HAPO.” Its primary goals include ensuring compliance with state housing laws, providing technical support to local governments and developers, and minimizing barriers to housing production. HAPO is intended to respond to alleged violations of housing laws by local governments. SB 1537 allows developers to file complaints directly with HAPO for any local government violation of housing laws (including the needed housing rules in ORS 197A.400). If a local government does not remedy a violation after HAPO investigates and issues a warning, the new office may initiate requests for an enforcement order from the Land Conservation and Development Commission or seek a court order to compel the city to act.
2. An “opt-in” code allowance for developers to amend housing regulations in certain scenarios: Until now, permits, subdivisions, and limited land use applications were entitled to “goal posting,” whereby an application could not be subject to changes in local government regulations adopted after the application was submitted. SB 1537 now gives applicants the discretion to subject themselves to standards and criteria operative at the time of the request, so long as the application is related “to development of housing.”
3. A broader and clarified statutory definition of “limited land use decisions” that allows expedited applications: Under Oregon law, “limited land use decisions” are local government decisions that do not require the exercise of substantial discretion and are intended to be processed without a hearing (unless appealed) . SB 1537 formally amends the “Limited Land Use Decision” definition in ORS 197.015 to include approval or denial of applications for replat, property line adjustments, and extensions, alterations, or expansions of nonconforming uses. Although this is largely a clarifying amendment, SB 1537 is particularly useful in foreclosing the requirement for a hearing on nonconforming use issues — unless such a decision is appealed.
4. Expanded eligibility for awarding attorney fees to housing developers in appeals to the Land Use Board of Appeals: SB 1537 amends ORS 197.843 to authorize the award of attorney fees to developers and local governments in LUBA appeals, so long as the developer’s application was only for the development of housing and was approved by the local government. LUBA must also affirm the approval for the developer and local government to collect attorney fees. This provision of SB 1537 is effective only for appeals submitted after Jan. 1, 2025.
5. An allowance for developers to apply for land use adjustments in affordable housing projects: A key objective of SB 1537 was to provide additional development code flexibility for housing development. Although the legislature could not, as a practical matter, rewrite each local zoning code to create such flexibility, it adopted what amounts to generic variance allowances by providing for limited deviations (“adjustments”) from certain common development code requirements, including setbacks, lot size, parking standards, lot coverage, and design adjustments. Adjustments to development requirements are allowed under SB 1537 so long as they will provide for more housing to be built than would otherwise, and other criteria are met. Local governments can apply to HAPO for an exemption to an adjustment requested by a developer. However, the local government must demonstrate it has approved at least 90 percent of other adjustment requests or at least is flexible and accommodating, as demonstrated by the testimony of other developers who have actually been granted adjustments from the local government.
6. A limited, fast-track process for cities to expand their urban growth boundaries: Undoubtedly, one of the most controversial portions of SB 1537 is the one-time allowance for cities outside Metro to add sites inside their urban growth boundary, and for cities within Metro to petition to add a site within the Metro UGB. This allowance can only be triggered by eligible cities under specified conditions for the purpose of building housing of specified types and affordability. SB 1537 allows cities with population greater than 25,000 to add up to 100 acres and cities with population up to 25,000 to add up to 50
   acres. Using SB 1537, cities may undergo an abbreviated UGB expansion process to build affordable and market-rate housing more quickly than in a typical UGB expansion.
7. Funding for municipalities to build infrastructure projects that support housing production: The legislature appropriated $3 million to the Oregon Business Development Department to create the “Housing Infrastructure Support Fund.” This is intended to “provide capacity and support for infrastructure planning to municipalities to plan and finance infrastructure for water, sewers and sanitation, stormwater and transportation consistent with opportunities to produce housing units.”
8. A revolving loan program for affordable housing: SB 1537 appropriates $75 million to establish the Housing Project Revolving Loan Fund. Specifically, SB 1537 directs Oregon Housing and Community Services to develop a program to make loans to local jurisdictions, which in turn would award grants to developers to cover eligible costs — including infrastructure and system development charges, predevelopment costs, construction costs, and land write-downs. To be eligible, costs must be incurred in the development of moderate-income housing.

Some provisions of SB 1537 do not take effect until Jan. 1, 2025 . However, SB 1537’s one-time UGB expansion process, the process for opting in to amended housing regulations, the expanded definition of “limited land use decisions,” and funding provisions are currently in effect. Some eligible jurisdictions have already begun accepting site applications for potential UGB expansions. Although the lasting impact of SB 1537 remains to be seen, the bill clearly expresses Governor Kotek’s intent to offer a menu of tools to ease Oregon’s housing shortage.

This column is intended to provide readers with general information and not legal advice. Consult professional counsel for help regarding specific situations.

Column first appeared in the Oregon Daily Journal of Commerce on August 16, 2024.