Oregon Cities

Oregon lawmakers send money for housing projects down the drain — literally

Oregon state lawmakers largely aligned this legislative session when it came to housing: the state needs more.

They made it easier for some cities to sidestep laborious land-use laws and expand their urban growth boundary. They created a fund for cities to allow them to make interest-free loans to local governments to finance affordable housing projects.

And they took a direct approach: sending about $100 million taxpayer dollars directly to cities to update aging infrastructure or improve sewer systems, both of which can impede housing development.

The state’s direct funding was great news for the city of Manzanita, population 600.

Manzanita City Manager Leila Aman said the nearly $3 million the city expects to receive will mean the small coastal town will take a big leap toward building its first 120 affordable housing units the town has ever had.

“We got $2.7 million dollars so for a little town like ours, it’s amazing,” Aman said. “It’s going to be used to implement a waterline extension and expansion that will basically provide water flow and capacity … We can’t do anything until this line gets put in place.”

Housing projects all over the state — from Madras to Monmouth to Medford — will receive money for storm and wastewater projects. But the process of giving state taxpayer dollars directly to cities for private projects has also raised questions about transparency and oversight.

FILE - Oregon Gov. Tina Kotek examines a mass timber affordable housing prototype at the Port of Portland in Portland, Ore., on Jan. 27, 2023.

FILE – Oregon Gov. Tina Kotek examines a mass timber affordable housing prototype at the Port of Portland in Portland, Ore., on Jan. 27, 2023.

Claire Rush / AP

Gov. Tina Kotek’s original housing package suggested creating a fund for the money where cities could apply. In an effort to save money, lawmakers slashed through bureaucracy and instead gave directly to cities; it was part of an overall $376 million housing package in the most recent legislative session.

“Here’s my biggest concern about direct allocations,” Kotek said recently. “I think there’s a fairness and equity issue. If you’re a community that needs something and you somehow didn’t hear that you needed to get your thing in, or your legislator wasn’t on the stick and didn’t get their application in or their information into legislative leadership, you get left out.”

Related: Oregon state senators approve more than $350 million to help state’s housing and homelessness crisis

Kotek recently sent an email to 44 different cities asking for more details about their projects.

“We’re looking at what it means to do a direct allocation like that, how much oversight can we have?” Kotek said.

The governor also said she wants to set clear expectations that there are going to be “houses down the line” within the next five years as a direct result of the sewer and stormwater funding.

‘There should be transparency in the process’

Rep. David Gomberg, D-Otis, who was instrumental in choosing which cities received the money, said money being sent directly to the city of Tigard to improve sewer and stormwater infrastructure, or $1.2 million to the city of Monmouth for water and sewer upgrades, or $1.4 million to the city of Madras for stormwater infrastructure, will be “transformational.”

“If you build new housing and you don’t have clean water out of the tap or dirty water going down the drain, you don’t have housing Oregonians need,” Gomberg said.

But others felt like the direct allocation route was lacking in transparency.

Kimberley Priestley, senior policy analyst with the nonprofit WaterWatch of Oregon, noted that when public dollars are used for certain private infrastructure projects, there is a requirement that there is a public benefit.

“From our point of view, if the state is going to give direct appropriations there should be transparency in the process and the projects should be explained at length so the public can have the opportunity to weigh in on them and understand if there are environmental effects,” Priestley said, adding that despite asking for details during the session the group got very little and what was provided was “vague.”

Related: Lawmakers approve Gov. Tina Kotek’s top priority for the session; funding expected to ease Oregon housing crisis

Gomberg, the state lawmaker, said each project was vetted and whittled down from a much longer list.

“Who is shovel ready? Who has made local investments of their own? What is the best rate of return?” Gomberg said.

And, he said, giving directly will mean more housing is built, faster.

“We suggested direct allocations because these projects are ready to go and need the help now,” he said. “We didn’t want them held up for 9 months while someone has to go through an application process with a state agency.”

Infrastructure funding is needed to build more housing, politicians say

In Kotek’s first days in office, she made it clear she wanted to see the state take a much more aggressive role in creating housing. She established an aggressive statewide housing production goal of 36,000 new housing units a year — up from the 22,000 or so Oregon builders were creating.

For Sean VanGordon, the mayor of Springfield, the $3 million from the state he’s getting will go toward sewer infrastructure improvements for a project known as the Glenwood Riverfront area, which sits along the Willamette River.

“For cities, infrastructure is a huge issue that holds us back on the housing front,” VanGordon said.

The injection of cash will help the project keep moving.

“Solving the housing problem is a marathon and it’s a game of inches,” he said. “This is tangible progress for my community.”

Related: Small Oregon cities hope to get a piece of state’s $500 million housing development proposal

Rep. Tawna Sanchez, D-Portland, who co-chairs the state’s powerful budget writing committee, said lawmakers fully vetted the projects.

“There is no house without the foundation and we needed to fund these water infrastructure projects to build more housing in Oregon,” Sanchez said in an email to OPB. “The Legislature fully vetted these projects to make statewide investments as soon as possible during a short session, making the timing of these direct allocations unique but our criteria for deciding them was robust and grounded in doing what we must to build more housing in Oregon.”

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