Medford Adopts Pro-Housing Strategies

Greg Holmes
Thu, 06/28/2018 (All day)
Cherry Creek Apartments in Medford have 50 1 - 3 bedroom homes for low-income community members.
Photo Credit: Housing Authority of Jackson County

Earlier this month Medford became the latest city in Oregon to establish a Construction Excise Tax (CET) to help fund affordable housing projects. The tax became effective when the state approved (acknowledged) the city’s urban growth boundary expansion proposal.

Amid growing concern about how the state’s housing crisis was impacting Medford residents, the Medford City Council convened a “Housing Advisory Committee” to study the problem and make recommendations for changes to city policies. Made up of affordable housing advocates, home builders, finance experts, DLCD’s regional representative, and 1000 Friends’ Southern Oregon Advocate Greg Holmes, the Committee met about eight times between September 2017 and January 2018. They studied housing policies in Medford’s city code and heard how other cities in Oregon and elsewhere were addressing similar problems.

The Committee eventually made about three dozen recommendations to the City Council. The cornerstone of the package of recommendations was the CET. Modeled on a successful program that Bend has had in place for many years, the approved CET will include a fee on most construction permits of 1/3 of one percent of the value of the project. Certain types of projects, such as affordable housing projects being built by non-profits, will be exempt. Bend has used the revenue they have generated to attract between $8 and $12 of federal and state funding for every local dollar they have raised through their tax in order to fund affordable housing projects in their community. Hundreds of affordable units have been built using this funding. The Medford Committee, led by local developers, was nearly unanimous in recommending that Medford try a similar program. They also recommended the formation of a Housing Advisory Committee to oversee the program and help evaluate which projects should receive funding from the revenues.

The CET was not the only housing policy enacted. It was a part of a package that also included measures that will cut extraneous costs on housing developers and make certain types of development inside of the city easier. One significant recommendation was to defer the collection of system development charges (SDCs). These charges are levied against construction projects to help defray the costs of development on the rest of the community—for things like roads, utilities, and other things that need to be built or expanded when new development happens. Prior to this recommendation these charges were collected when a building permit was issued, which meant that the builder had to add those costs to the amount being financed. Under the proposal, the same amount of fees will be collected, but not until the construction is complete and the building is either sold or occupied. One estimate provided to the Committee was that in some cases the developer will save almost as much in financing charges as they will pay for the CET—meaning money that was already being spent will now benefit the community instead of the shareholders of the bank.

The package also included recommendations to adjust SDCs to make them more proportional to their impact on the community—so that smaller projects pay less and projects with larger impact pay more. It also included a number of recommendations to make getting permits for certain types of projects easier, to allow duplexes to be built on corner lots in single-family zones, to facilitate remodeling over tearing down existing homes, and to encourage accessory dwelling units.

The City Council Chambers were packed with supporters in February when the Medford City Council unanimously approved establishing a Construction Excise Tax as part of a comprehensive set of changes to city housing policies.
Photo Credit: Michelle Glass

The package of recommendations went to a hearing with the City Council on February 15, 2018. Testifiers, who included many of the prominent developers in the region as well as housing advocates, were overwhelmingly in favor of the proposal. It was adopted unanimously by the City Council, to be effective when the state acknowledged the UGB proposal that was about to be submitted. That proposal was acknowledged earlier this month, making the CET effective. The process of making changes to the code for some of the changes approved in February is under way. 1000 Friends and our partners in housing advocacy will continue to be at the table to ensure codes effectively support the goal of abundant, affordable, and diverse housing in the community.