Lake Oswego staff outline SB 1537 mandatory‑adjustment implications; council secured exemption with conditions

Planning manager Johanna Hastie briefed the commission on Senate Bill 1537 and how its mandatory‑adjustment program applies to Lake Oswego, explaining that the city obtained a state exemption with conditions but remains subject to the law for three specific areas: special street setbacks, the charter’s 50‑foot residential height cap, and maximum unit density caps.

Hastie summarized the purpose of SB 1537 as a state effort to increase housing supply by allowing applicants for eligible housing projects to request up to 10 mandatory adjustments to specified design and dimensional standards. The city sought an exemption and was granted one in July; the exemption requires the city to publish a “local adjustment handout” and provide notice to applicants about available adjustment pathways.

“The exemption came with conditions of approval and performance objectives,” Hastie said. Among the conditions is a public‑facing notice and a dense 20‑page handout listing local adjustment pathways and the three items for which the city lacks a local adjustment process. The city must also ensure future code changes do not create new barriers to housing and must maintain a rolling 90% approval rate for local adjustments adjudicated by the current planning office.

Hastie described the three areas where the city lacks a local adjustment pathway:

- Special street setbacks: the state requires at least a 10% reduction to special street setback measurements for eligible projects. Hastie explained how special street setbacks, often measured from an adjusted right‑of‑way line, can affect corner lots and that the city’s engineering review concluded a 10% reduction would create only a minimal impact to required public improvements.

- Charter height limit: Lake Oswego’s charter caps residential height at 50 feet. The state’s mandatory adjustment would require cities to allow either a 20% increase or one story (whichever is greater) to maximum height for eligible projects. Hastie said the city cannot amend the charter without a public election and that the city will have to handle height adjustments on a case‑by‑case basis when they implicate the charter limit.

- Maximum density: the state’s program requires that density caps not block additional units when other massing or dimensional adjustments are granted. Hastie said the city’s code does not allow variances to unit density caps in some zones (for example, the R‑3 multifamily cap of 12 units per acre), so eligible projects seeking massing increases could trigger mandatory adjustments to density.

Hastie noted the exemption is time‑limited and will be reviewed; the city will report annually on adjustment approvals and maintain the 90% rolling approval metric. Commissioners asked clarifying questions about how the 20%/one‑story height increase would be calculated and how the mandatory adjustments would play out procedurally; Hastie said most situations will be resolved through existing local adjustments but that the three specified areas will require attention on a case‑by‑case basis.

The commission received the report; no action by the commission was required. Hastie said the city council had chosen to retain the exemption and the conditions rather than pursue code amendments at this time.

Ending: Staff said they will monitor how mandatory adjustments are used and will return to council if recurring conflicts or adverse effects to the city’s required approval metrics appear.