Lake Oswego planning commission reviews housing production strategy implementation, timelines

The Lake Oswego Planning Commission on May 28, 2025 held a work session on implementation of the city's Housing Production Strategy (HPS), receiving a presentation from Eric Olsen, Long Range Planning Manager, on obligations tied to state approval and a schedule for multiple code, zoning and funding actions.

Olsen told commissioners the HPS was prepared to satisfy state requirements, noting that "we developed a housing production strategy based on some state requirements under Oregon Statewide Planning Goal 10 as well as through House Bill 2001." He said the State Department of Land Conservation and Development (DLCD) issued a letter of approval with five conditions that the city must address in its reporting and implementation.

The HPS conditions, Olsen said, focus on monitoring and demonstrating implementation progress, quantifying capacity added by any rezones, taking at least one concrete step on public-private partnership options, and clarifying the scope of a proposed tax increment financing (TIF) approach. He said the commission must provide a midpoint report at the three-year mark (end of 2027) and a full-cycle report by 2030.

Key implementation items and timing discussed

- Code audit and amendments: Staff proposes a comprehensive review of the Community Development Code to identify and remove rules that constrain housing production, with scoping underway and an expected completion by the end of 2027. Olsen said the city will apply for a Metro 2040 planning and development grant in mid-2025 and could issue an RFP in fall 2025 to start work in early 2026.

- Mandatory-adjustment provisions (Senate Bill 1537): The city applied in April for an exemption from SB 1537's mandatory-adjustment rules, Olsen said. He described the SB 1537 threshold (developments eligible for adjustments must be at least about 17 units per acre, roughly 2,500 square feet of lot area per unit) and said the state's new housing accountability and production office (HOPO) is reviewing public comments with a target decision by July 16, 2025. Olsen cautioned that even if the city receives an exemption, some code "cleanup" will probably still be needed to align local code with state requirements.

- Parking regulation changes: The commission was reminded that the city completed code changes in December 2024 to comply with state parking-related rules (removing or narrowing parking mandates where required), and that implementation is under way.

- Rezone land strategy and Foothills District Plan: Staff outlined a rezone strategy focusing first on nonresidential and commercial parcels where rezoning could add multifamily capacity. Olsen said staff will seek a DLCD planning assistance grant for that work (2025'27 cycle) and aims to deliver alternatives and a capacity-quantification methodology by the end of 2026, with targeted ordinance language by the end of 2027. He identified the Foothills District as a priority area (about 20 acres between the Willamette River and downtown) and said the city intends to use a Metro 2040 grant to fund a Foothills framework update; the city intends to award a consultant contract to a team led by First 40 Feet and expects council approval of the contract on June 17, 2025.

- System development charge (SDC) update: Staff plans a multi-year SDC update tying fees more closely to dwelling size. A near-term change for 2026 would lower the per-unit rate for cottage clusters compared with single-family rates; broader SDC updates are scheduled to begin in 2027.

- Tax-exemption programs: The commission was reminded the nonprofit low-income housing property tax exemption was adopted last year and has been used for Mercy Greenbrae at Marrowhurst Commons. Staff intends to propose a low-income rental housing tax exemption (available to for-profit and nonprofit developers for units at or below 60% AMI) with outreach to other taxing jurisdictions, application standards and a council adoption targeted for late 2025 or early 2026.

- Public-private partnerships and TIF: DLCD conditioned the HPS to require the city take at least one specific action from a short list of partnership options (donate surplus city land, partner with faith organizations on underused land, leverage interjurisdictional funding, or use tax increment financing). Olsen said the Foothills urban renewal area is the primary candidate for TIF investments to support affordable housing, but staff will clarify the intended scope in the midpoint report.

- Fair housing policy and education: Staff plans comprehensive plan amendments to make "affirmatively furthering fair housing" an explicit city policy in 2025, followed by a multi-year education campaign through 2028. Olsen said that an analysis of impediments to fair housing will be required in a future HNA/HPS cycle and noted the Planning Commission already received training from a Fair Housing Council of Oregon representative earlier in 2025.

What the commission decided and next steps

The only formal vote recorded in the transcript was the unanimous approval of the April 28, 2025 minutes. No other formal actions or ordinance adoptions occurred at the May 28 work session; staff and commissioners focused on direction, scheduling and grant applications.

Olsen provided several tentative dates for upcoming steps: a June 9, 2025 work session on home-occupation standards and related urban-agriculture rules; a likely Foothills update to the commission on June 23; council consideration to approve the Foothills consultant contract on June 17; a proposed fair-housing training for council on July 15; a staff update to council on HPS implementation on Aug. 5; and a possible Aug. 11 commission discussion of straightforward comp-plan amendments before public hearings.

Commissioners asked clarifying questions about whether the Foothills project could advance multiple HPS actions; Olsen said the Foothills planning and an urban renewal plan could advance several strategies, including TIF and portions of rezoning work.

Other business

Commissioners were told of a recent advisory opinion from the Oregon Government Ethics Commission that affects municipal practices around providing refreshments; staff said they are exploring procedural fixes.

The commission did not take additional formal action at the meeting. Staff indicated it will return with detailed scopes, grant applications and ordinance drafts for the commission and council in the coming months.