Oregon Senate committee proposes pared-down version of Kotek’s $600 million housing bill

Through Senate Bill 1537 and a separate budget request, Kotek had asked for $600 million in funding, including $200 million for revolving loans developers could use to build homes for middle-income Oregonians, $200 million to help cities and tribal councils pay for infrastructure needs, $65 million to keep existing homeless shelters running and $35 million for eviction prevention.

The Senate Housing and Development Committee cut her request almost in half on Tuesday when it unanimously approved an amended version of the bill and a separate budget measure, Senate Bill 1530, with a total of $350 million. It also slashed the number of acres cities would be able to add to their urban growth boundaries for housing in a concession to environmentalists who had labeled the bill a “major threat.”

Through a spokeswoman, Kotek thanked the Legislature for working with her to spur housing production but said she’ll continue to push for more funding before the legislative session ends March 10.

“She anticipated amendments as a part of the legislative process and will continue to advocate for deeper investments for the workforce housing financing and infrastructure programs in her introduced bill,” Kotek press secretary Elisabeth Shepard said. “She hopes to see at least $200 million more than currently proposed.”

Kotek and a majority of legislators from both parties generally agree that housing and homelessness are two of the biggest issues facing the state. Economists estimate that the state needs to build about 500,000 homes over the next 20 years to make up for years of underbuilding and meet expected demand. And more than 20,000 Oregonians were counted as homeless last January, with nearly two-thirds sleeping without shelter.

The state has spent about $4 billion on housing and homelessness since Sen. Kayse Jama, D-Portland, became the chair of the Senate Housing and Development Committee in 2021. In comments at Tuesday’s hearing and a subsequent interview with the Capital Chronicle, Jama said the work will continue in the 2025 long session and for years to come.

“As a Legislature, as a lawmaker, we are committed to making sure we’re doing everything that we can to support the governor’s agenda in terms of housing production for 36,000 housing (units) to be produced, but also making sure that we keep adding to that,” Jama said. “It’s our commitment to Oregonians, making sure that we will build as many houses as possible to address both housing costs as well as housing availability.”

The proposal endorsed by the committee includes:

• $100 million for “shovel-ready projects” within existing city limits. The budget-writing Joint Committee on Ways and Means will identify eligible projects from a list from around the state that totals about $800 million.
• $75 million for 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. Kotek sought $200 million for this fund.
• $65 million to keep existing homeless shelters open.
• $40 million for rent assistance, up $5 million from Kotek’s request.
• $18 million for housing for people recovering from drug addiction. An earlier proposal sought $30 million.
• $10 million to buy land or convert buildings into affordable housing. Kotek wanted $40 million.
• $7.5 million to the state’s Healthy Homes grant program, which helps low-income Oregonians cover costs of lead, radon and mold abatement, allergen removal and making homes more energy-efficient.
• $4 million for the Department of Environmental Quality’s rebate program for heat pumps, which can both heat and cool homes, are more efficient than standard furnaces or air conditioners and have no harmful emissions.
• $3.5 million for air conditioners and air filters for at-risk individuals such as the elderly.

The slimmer budget reflects what legislative budget writers and House Speaker Dan Rayfield, D-Corvallis, have described as a return to normal after years of artificially high budgets fed by an influx of federal COVID relief money.

Last week’s economic forecast indicated lawmakers could have about $1.3 billion to spend before June 2025, or nearly $1.7 billion if they forgo investing 1% of total revenue in the state’s rainy day fund. But Rayfield told reporters last week that there isn’t actually as much money available as it may seem from the outside.

He said state agencies have asked for about $550 million to continue operating. And Kotek’s budget request, which was heavy on housing, didn’t leave much room for the additional funding lawmakers think they’ll need to address the state’s addiction crisis.

“If you look at the governor’s budget, she has always done a wonderful job of highlighting and focusing on housing,” Rayfield said. “The one thing that she has left to the Legislature to focus on is the addiction crisis component. While she was able to emphasize (housing,) she did not allocate the money in the addiction crisis pot, so we have to balance those two things.”

The Senate panel also reduced the number of acres cities could add to their urban growth boundaries, or the invisible state-approved line around a city that dictates where it can grow. Kotek’s plan had called for letting cities outside the Portland metro area that demonstrate they need land for housing add up to 75 or 150 acres, depending on the size of the city. Her pitch also would have allowed the metro to add up to 600 acres.

Senators reduced that to 50 or 100 acres for cities outside the metro and 300 for the metro area. The changes were enough for environmental groups who opposed the bill to downgrade it from a “major threat” to a “major concern,” Jama said.

“We want to make sure that we can protect our environment, which makes Oregon, Oregon,” he said. “Having said that, we also have a housing crisis, and we need to make sure that we balance making sure that we protect our environment while we’re also trying to address the housing crisis that we’re facing in our community.”

But some legislators, including Sen. Deb Patterson, D-Salem, are still on edge about the urban growth boundary expansion. Patterson voted the bill out of the committee but said she hopes lawmakers continue working on the urban growth boundary issue as the bill moves forward, saying she fears Oregon’s 50-year-old land use laws could face death by 1,000 cuts.

“I would urge us to have caution, but I also recognize the extreme need for affordable housing,” she said.