Oregon’s self-created problem: Lack of affordable housing

Sen Doug Whitsett

by Sen. Doug Whitsett

“the proposed solution is to spend a great deal of other peoples’ money, on yet another government program, to try and solve the problem without addressing its cause”

The Legislative process often involves bringing various stakeholders together to find solutions to difficult problems. But sometimes, those problems are the result of well-meant but misguided government policies. Too often, the only proposed solutions involve the further expansion of government programs.

A lack of affordable housing has become one of Oregon’s most significant problems. It is reaching a crisis point in places like Bend, where housing stock has not kept up with demand. Working families are struggling to meet their most basic needs for affordable housing.

Since the 1970s, Oregon has pioneered a unique land-use system that heavily regulates the use of every parcel of land in the state. This top-down system restricts the amount of land that cities and counties can zone for residential, commercial and industrial use. Other states have zoning systems in place, but they are not driven by the state government in the same way that Oregon’s statewide central planning regulates landowners. Not one of the other 49 states has chosen to follow our central planning lead since the enactment of Senate Bill 100 in 1973.

A proposed solution for our state’s affordable housing woes was presented before the Ways and Means Transportation and Economic Development Subcommittee during a Wednesday, April 8 public hearing. Rep. Gail Whitsett (R-Klamath Falls) is a member of that subcommittee and participated in the hearing.

The particular request before the Legislative Assembly takes the form of Senate Bill 5513, the budget bill for the Oregon Housing and Community Services Department (OHCS). The actual sources of the money appropriated to support this agency and how that money is spent is anything but transparent.

During the public hearing, it was confirmed that the Oregon Housing Authority has approximately 49 programs with 64 funding sources, in addition to those run by the U.S. Department of Housing and Urban Development (HUD). It includes $15.7 million in appropriations from the state’s General Fund, as well as $11.9 million in lottery revenue from the Administrative Services Economic Development Fund. It also provides $155 million in federal funds for the agency from HUD and $119 million in non-HUD federal funding.

The preponderance of the funding appears to be designated to pay the principle and interest due on previously borrowed money. Past funding for those programs has thus far incurred over $1 billion in bonded indebtedness for the State of Oregon and its taxpayers.

Also included in SB 5513 is an OHCS request to borrow $100 million to fund the construction of new affordable housing. Of that $100 million, $85 million would come from the sale of General Obligation bonds, with the remainder being raised from the sale of Lottery Revenue bonds.

The program was included in former Governor Kitzhaber’s Recommended Budget. In spite of the change in governors since the start of the legislative session in February, the program and its funding allocation remain a priority for new Governor Kate Brown.

A particular source of frustration for the legislators on the committee is the lack of details attached to this $100 million plan.  The purposes for the funding request were inadequately structured and had virtually no sideboards. Instead, lawmakers were given promises that those important details would be worked out through the use of various advisory councils.

Testimony offered at the hearing revealed that the purpose of the $100 million is to pursue a “production agenda” involving the building of 3,000 to 4,000 housing units. The state would buy the land, which would then be developed by an as-yet-undetermined third party, with all of this being paid for by an unidentified mix of state and private money.

Questions were also raised about the differences between private and public sector development costs. Simple math dictates that the proposed costs of building these “affordable” housing units would exceed $250 per square foot. This calculates to more than $300,000 for an average, 1,200 square-foot single living unit!

Rep. Whitsett asked how the state planned to repay the bonds that would be used to raise the $100 million for the program. She was informed that those dollars would come from future general fund and lottery fund revenues. Her questions regarding the total future principle and interest required to repay the borrowed money went unanswered. I estimate that repayment amount to be about $190 million, assuming six percent interest and a 25-year repayment period.

In my opinion, this proposed “affordable” housing project is a clear example of a solution to a problem that didn’t exist until government created the crisis. A basic understanding of supply and demand would reveal that deliberately restricting the amount of buildable land is going to cause that land to become much more expensive. But instead of addressing the restrictive and heavy handed land-use policies that caused this problem in the first place, the proposed solution is to spend a great deal of other peoples’ money, on yet another government program, to try and solve the problem without addressing its cause.

If Oregon was truly serious about addressing its affordable housing crisis, it would initiate legislation to address the initial cause of the problem, which is the fact that it is against the law to build a home on the vast majority of the land located within the state. Unfortunately, the proposed solution is to give another blank check to a state agency in the hopes that spending more of other peoples’ money will somehow solve the government-created affordable housing crisis.

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls

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Posted by at 05:00 | Posted in Housing, Land Use Laws, OR 78th Legislative Session | 29 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    Private home building costs in rural areas like Tillamook is only about $100 per square foot (medium quality finishes, too), and a lot can be picked up for $20k to $40k. As usual the government dollar is incredibly shrinking.

    • thevillageidot

      Bob you must rememember that a government funded program requires the contractor to pay union wages. This is the dems consent to the people who ‘brung them to the dance”. they must be rewarded. in rural tilimook the unions don’t bother picketing since it is too far. probably dont want to drive that far to work. It warmed my heart when the unions were picketing outside the Waterpark building across from the library because the contractor was not using union labor. I met one of the self employed subcontractors who drove all the way from troutdale to do finish carpentry work, trim etc. non union. does anyone out there think that union workers would travel that far on their own dime just to work?

      • Bob Clark

        You know the Oregon political game style well.

        I learned a new term yesterday, called Value Engineering. It’s when a government entity finds out its over budget on new public building construction (promised the voters in a glorious artistic rendition of gold plated features), and all of a sudden all those amenities offered to voters for passing a construction bond go by the way side in re-engineering to stay within budget. The special features promised to voters disappear, eaten up by construction cost over runs. The term of spin for getting past any negative feedback is thus Value Engineering. Government’s value, your loss.

  • thevillageidiot

    obviously since 1973 there is no longer anything called rights to property, You are allowed to think you own it when in reality you are paying the bank for the priviledge to live on it and use it for the state directed purpose. anything outside of the state directed purpose for say, a retirement fund where you may sell parcels to someone wiling to pay fair market value for it is forbidden. Perhaps cities and towns should have been located on mountain tops or slopes so that the good farm land in the valleys could be retained srtictly for farming. Instead they were located to be easy access to the farmers and markets so that trade and business could be conducted cost effectively. (ease of access, flat ground, and cheap transportation waterways) in other words on prime farm ground. so it is little wonder with the restrictions from urban boundaries and use of private property that housing is unaffordable. the government solution to a government created problem is to confiscate more money.

  • Eric Blair

    Yes. I’ve been dreaming of us becoming more like Los Angeles and San Jose.

    • Dick Winningstad

      Two of the most land restricted places in the country. Why would you want that?

      • Eric Blair

        Because I love urban sprawl.

        • David Clark

          Then why did you choose the LEAST SPRAWLING city in the county as you example.
          The fact is that Los Angeles is the densest metropolitan statistical area in the county. Density is the inverse of sprawl.
          So you think it is OK to hurt people with unaffordable housing just to keep people off of a tiny amount of land?

          • Eric Blair

            Yes that is exactly what I think, Damn, you caught me.

          • Eric Blair

            So actually, you’re right about Los Angeles, so I’m more than willing to take that off the table. LOL… think you can get your inner child and name calling under control along with your predilection for hyperbole?

            Allowing unrestricted growth might (just might) relieve pressure on housing prices, but what about the other consequences of losing open spaces and farm land?

          • Dick Winningstad

            Get into an airplane and take a flight over the supposed densely packed Willamette Valley. Sprawl is not an issue.

          • David Clark

            Eric Blair — Allowing unrestricted growth might (just might) relieve pressure on
            housing prices,
            ME — are you questioning the most basic law of econ101 – supply & demand?

            Eric Blair — but what about the other consequences of losing open
            spaces and farm land?
            ME — Don’t you think having 95% of Oregon’s land off limits to living space is a bit much?

          • Eric Blair

            Of the 95% of the land in Oregon, not all of it is the same. Not all of it, by any means, can, or should be, farmed. The issue is a little more complex than that. Throwing out statistics without context is useless.

            As is supply and demand… any Econ 101 class will also provide the warning – “all things being equal”. And all things are never equal. Nor does building more house necessarily mean that low cost housing will be built or made available.

            I think the belief that removing land use restrictions will suddenly, and magically, mean more lost cost housing is, well, magical thinking not based on reality.

          • David Clark

            Eric Blair — Not all of it, by any means, can, or should be, farmed.
            ME— Who appointed you to decide who should farm their land? Why should the government tell people how to use their land shot of harming their neighbors.

            Eric Blair — As is supply and demand… any Econ 101 class will also provide the warning – “all things being equal”.
            ME — Reread ECON 101: prices rise when supply cannot supply demand. Increase supply and the price falls. The state & METRO has decided (really the 1000 nuts of Oregon) on policies that any competent economist knows will price housing out of reach of the average person. The don’t care. And it appears neither do you.

            Eric Blair — And all things are never equal. Nor does building more house necessarily mean that low cost housing will be built or made available.
            ME — You believe that because you don’t believe that free markets work. You are wrong builders will build whatever they can sell at a profit. With land in Portland over a $million an acre and $60k in permits, you have $180k before you build anything. That amount will buy a complete house in areas like Houston (which are growing faster than Portland.)

          • Eric Blair

            No, I believe that free markets work very well for some things, and not well at all for others.

            Builders will build what they can… which in a market economy means that cheap, low cost housing, is at the bottom of the list because builders can make more selling to more affluent customers.

            I’m so glad that you are willing to assume. That says quite a bit more about you than it does about me.

          • David Clark

            Eric — ” cheap, low cost housing, is at the bottom of the list because
            builders can make more selling to more affluent customers.”
            ME— I get it. Like McDonalds, Burger king, Jack In the Box, etc. do not exist because there is more money selling$50/plate dinners.

          • Eric Blair

            LOL, I think you’re making the error of a false equivalency.

          • guest

            I think your Birkenstock name be Comrade Redinski or some udder ID’d brood stock toming off the das analmal pfarm.

          • David Clark

            And you are still wrong.

  • Sol668

    That’s funny, because the average price of a home in Klamath falls is 137,000, which seems pretty darn affordable! Now if you want to live somewhere that isn’t a conservative shit hole, like Portland where we are attracting many many immigrants (in fact we’re the the most popular destination for movers in the entire US) from other states and regions, there’s no question housing prices are rising sharply. Fortunately conservatives have a solution….raise taxes, as evidently there’s a huge population migration from high tax blues states (california) to low tax red states (texas)…Simply raise taxes until people stop coming here, housing shortage solved! I’m sure this will be a problem for many greedy beady eyed conservatives, but fortunately for me?

    I love OREGON far more than I love money

    • thevillageidiot

      conservatives? The bill was presession and no sponsers but was a pet project of the most conservative govenor in oregon history except for the current one.

    • cecil91

      Conservative Portland? I don’t know of a single resident in the Portland metro area who would agree with that. This city has a longer history of voting liberal than any city in the state.

  • cecil91

    I like Oregon’s land use laws. It helps prevent urban sprawl and the bottom fish it attracts. It means if you can’t afford it then go somewhere else, there are plenty of crime-infested locations in this country for you to park your trailer. Oregon, however, likes to protect its land, not your concrete jungle. Don’t like it? Get out.

    • David Clark

      Why do you think it is OK to cleanse the region of minorities?
      Why do you think it is OK to make housing unaffordable?

      BTW, Vancouver is growing faster with better schools, lower taxes and less crime.

      Why don’t you get your racist butt the hell out of here instead of telling others to leave.

      • cecil91

        Gotta be a liberal, they like to make stuff up. Notice you are the only one who injected race into my post. But you just “know,” lol. What a complete unadulterated ackjass.

        • David Clark

          LA is the highest density (least sprawling) MSA. It is big because of its massive population.

          Forgive me for getting offended by jackasses that tell me to move from my state of birth if I don’t like a bunch of ignorant fools destroying a great place.

          • Eric Blair

            Excuse us for being offended because some people can’t help but act like children when they’re disagreed with.

  • Ron Swaren

    Clackamas County had an owner-builder program in the 1980’s. I think it was only one small street—probably no more than ten homes. But at least that is a solution that works. Something like this could even give the county certain lien rights, and I know it increased the tax base.

    What happened to the Oregon where we had real solutions without regard to party ideology? This kind of thing is done in other countries—CEMEX Corporation has been a major player—so it certainly is possible here.

  • Jim Needham

    The major cause of UNaffordable housing is Land-Use Planning which is government-regulated supply and demand.

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