House approves bill clarifying use of local improvement districts to build infrastructure ahead of annexation

SALEM, Ore. — Lawmakers on the House floor voted to pass Senate Bill 967, a measure clarifying that local governments may form local improvement districts, or LIDs, to finance infrastructure on land inside urban growth boundaries before it is annexed.

Supporters said the bill removes legal uncertainty that has delayed infrastructure investments and housing development. Representative Emerson Levy, who carried the bill, described it as a practical tool to help cities and counties prepare land for essential housing and economic growth.

The bill’s sponsor told colleagues the measure “provides clarity in our statutes confirming that local governments through agreements with willing landowners can form a local improvement district within urban growth boundaries on land that has not yet been incorporated.” Levy said that explicit authorization would protect jurisdictions from appeals and delays and give local governments a reliable financing option.

The sponsor described how Bend’s 2016 urban growth boundary expansion — which added about 480 acres intended for roughly 1,230 homes and thousands of jobs — encountered delays because the use of LIDs for pre-annexation infrastructure fell into a legal gray area. She said a clearly authorized LID option would let cities act faster and more affordably, and that LIDs allow property owners to repay infrastructure costs gradually rather than via large one-time charges.

House members did not record extended debate on the floor beyond the sponsor’s remarks; the clerk announced the bill had received the constitutionally required majority and was declared passed.

The measure aims to provide local governments another financing tool to fund streets, sewers and other public works needed to support future housing development in Oregon’s growing communities.