Planning commission hears update on SB 1537, SB 1564 housing rules and local options

Depot Bay — An outside consultant told the Planning Commission on Aug. 13 that two 2024 state laws, Senate Bill 1537 and Senate Bill 1564, significantly expand developer options and give cities new financing and code tools aimed at speeding housing production across Oregon. Zach Pels, a consultant with AKS, summarized the bills and answered commissioners’ questions.

Pels said the bills include several immediate changes local staff should track. “This creates a new division ... called the Housing Accountability and Production Office,” he said, describing a state office that will provide technical help to both local staff and the development community. He added the bills allow housing applicants to opt in to rules adopted after they file an application, rather than being locked to the rules in place at submission.

That change to the longstanding Oregon “goalpost” approach, Pels said, is voluntary: applicants may choose newer standards that benefit their project or keep the earlier rules if later rules are less favorable. “They can pick and choose which new rules they want to take advantage of,” he said.

Why it matters: the bills combine rule changes with dollars and flexibility intended to reduce barriers to housing. Pels told commissioners the legislation earmarks $3,000,000 in statewide planning funds for city projects that enable housing (for example, water or street improvements) and creates a $75,000,000 statewide revolving loan fund to underwrite infrastructure grants to developers. “That will still be an attractive financing tool for the private development community,” he said, while also noting cities will need to clarify whether the loan would be in a city’s name or provided directly to developers.

The memo Pels presented highlights several other major provisions. SB 1537 creates by-right “adjustments” — up to 10 individualized waivers of dimensional standards (setbacks, parking minimums, lot size, etc.) — that must be granted administratively for qualifying housing applications unless a city obtains an exception. The bill also expands the list of limited land-use decisions that can be decided administratively (with notice and appeal rights) rather than by public hearing, and it provides a streamlined, conditional pathway for limited one-time urban growth boundary expansions to add land for below‑market housing.

Pels and commissioners discussed how those changes apply in practice. He said the city can apply for an exception to the mandatory-adjustment rule by demonstrating that its existing processes already provide adequate, timely relief or by submitting developer testimonials showing local procedures have worked. If a jurisdiction wins an exception, the state requires annual reporting tied to that exception; otherwise staff must start implementing the adjustment rules.

Commissioners pressed on details the memo did not fully resolve. Commissioner Watkins asked whether mixed-use projects qualify for the revolving loan funds; Pels said mixed‑use projects with a residential component would likely be eligible, but the amount might be prorated. Commissioner Kim asked whether the city could take on the loan itself; the commission discussed reports that the state program may structure the loan so a developer, not the city, ultimately holds the debt; Pels recommended the city follow up with the Housing Accountability and Production Office or the state’s Department of Land Conservation and Development for definitive terms.

Commissioners also raised timing and oversight questions. Pels noted a model ordinance providing clear-and-objective standards for three city-size categories is due by Jan. 1, 2026, and the memo recommends waiting for that model code before committing to extensive local rewrites. The memo also recommends tracking requests for adjustments to spot recurring topics where code amendments could remove the need for repeated administrative adjustments.

What the commission is doing next: staff reported they have applied for a DLCD Housing Planning Assistance grant to audit local zoning barriers and prepare code amendments, as suggested in Pels’ memo. Commissioners asked staff to confirm reporting requirements and the loan structure for the revolving fund and to schedule a follow-up briefing after DLCD publishes the model ordinance.

No formal vote or ordinance action was taken at the work session; commissioners requested follow-up information and signaled interest in a grant-funded code audit and continued monitoring of state guidance.