Portland staff recommends opposing LC 5 as drafted; sponsor and advocates say technical fixes can address risks

Portland Housing Bureau officials told the Homelessness and Housing Committee on Jan. 13 that they recommend opposing Legislative Concept 5 (LC 5) in its current form, while the bill’s sponsor and several housing advocates said the bill’s core aims are compatible with Portland policy and that technical edits could address the bureau’s concerns.

Sen. Khan Pham, who chairs the Senate Housing and Development Committee, urged the committee to direct city government-affairs staff to avoid obstructing the bill. Pham said LC 5 is designed to encourage funded, calibrated inclusionary housing programs and to prevent unfunded mandates that reduce housing production. “An unfunded, malfunctioning inclusionary housing program is the worst of both worlds,” she said, urging a formal statement of support or neutrality.

PHB’s position: Interim PHB director Michael Bonacore and senior policy analyst Jesse Connery reviewed Portland’s inclusionary-housing history (2016 adoption, a 2023 calibration study) and the city’s current offset package (excise-tax waivers, SDC waivers, tax exemptions, development incentives). PHB identified three main concerns: residual legal risk despite amendments, a prescriptive economic-analysis requirement that PHB says could effectively require the city to make projects “whole” for developers’ marginal loss in value, and significant administrative burden that may not make the concept more adoptable by other Oregon cities.

City attorney Adrian Delgado said if LC 5 were interpreted to require compensation it could obligate the city to pay the net loss in value over a 99-year regulatory term in some scenarios. PHB argued that the bill’s current calibration language could create the practical need for project-level analyses and potentially slow permitting.

Advocates respond: Michael Anderson of Sightline Institute, an invited witness, said the bill is intended to require a program-level feasibility analysis rather than project-by-project calculations and urged line edits to fix any drafting ambiguities. “If PHB thinks, or if the city attorney’s office thinks that’s what the current draft says, then that’s a drafting error, and we urge the city to send some line edits that would resolve that,” Anderson said.

Council reaction and next steps: Councilors expressed a range of views. Some said they were persuaded that the bill could help level requirements across jurisdictions; others worried about asking Portland to prioritize inclusionary zoning when the city already faces vacancies and homelessness. Chair Avalos committed to continued negotiation between PHB, government-relations staff and the senator’s office to try to find technical fixes that would reduce legal and fiscal exposure while preserving the bill’s stated goals.

No formal committee vote on LC 5 was taken; the committee ended the hearing and asked staff to continue partner-level negotiations and to return with clarifications if necessary.