A new report from Hillsboro's planning department reveals how effective governance, infrastructure finance and market readiness can lead to new housing in areas added to the region's urban growth boundary.
The report, delivered to the Metro Council on Thursday by Hillsboro Mayor Jerry Willey, points out that more than 20 percent of the homes planned for the areas added to the UGB since 1998 have reached the “entitlement” stage – where developers have planned a subdivision, and it’s been approved. The next step after "entitlement" is the issuance of building permits.
According to an earlier report from Metro, only eight percent of the homes – 5,400 out of 67,000 – planned for UGB expansion areas have actually gotten building permits. That report came as the Legislature was considering adding land to the UGB for affordable housing.
Willey said urban growth boundary expansion areas could see more than 12,000 new homes in the next five years.
Hillsboro Mayor Jerry Willey, right, talks to Metro Council President Tom Hughes at the April 22, 2016 Regional Leadership Forum.
Metro has added 26,000 acres – more than 40 square miles – to the urban growth boundary since 1998, enough land for 67,000 new homes.
As of 2014, which is the most recent data available around the region, only 5,400 of those homes had been built or received building permits. That’s almost as many homes as were built in Portland in 2015.
"Planning and development takes time," said Metro Council President Tom Hughes, in response to the Hillsboro report. "This is why we have a 20-year land supply. Some areas will develop in five years. Others may take a decade or more."
The Hillsboro report details the challenges faced in building on farmland and forests added to the UGB. The report groups UGB expansion areas into four categories, including planning, the furthest from construction.
Areas in the development stage are the closest to construction. But even those areas, the report says, take time to develop.
“For those areas in the Development phase, it takes about 6 years from the time of UGB expansion to complete plans, resolve any governance and litigation issues, adopt funding mechanisms for infrastructure and install gateway infrastructure,” Hillsboro’s report says. “From this point, it typically takes just over one year for major development activity to occur.”
In a letter addressed to the Metro Council and attached to the report, Willey wrote that there are nuances between the region’s UGB expansion areas.
“Not surprisingly, the research found that while there can be similarities, no two areas are the same and broad generalizations about the performance of new urban areas as a whole doesn’t tell the story of how they are actually performing,” Willey wrote.
He said areas added to the UGB after the Great Recession have had greater success in getting to development. Those areas are also the ones that have been added to the urban growth boundary after the adoption of the region’s landmark urban and rural reserves plan, which reformed the region's land use approach and made it easier to expand the UGB in areas that are most suitable for new development.
The Hillsboro staff report discusses the challenges faced by cities, developers and builders in a variety of UGB expansion areas.
For example, an area added to the UGB near Oregon City in 2002 hasn’t had any homes built on it, because voters have rejected annexing it into the city limits. A new state law should help end that impasse, but still, the Hillsboro report says, “Major infrastructure issues are likely to stall development for the foreseeable future.”
More than 1,500 homes are planned for that area.
In Gresham, more than 5,000 homes were planned for a 1,000-acre expansion area in Pleasant Valley, which was added to the UGB 18 years ago. But only 145 homes have been built or permitted, and another 105 are “entitled.”
“Gresham is developing an infrastructure funding plan to replace the plan brokered with developers prior to the Great Recession,” the report says.
And in Hillsboro itself, a 1,062-acre expansion in South Hillsboro, added to the UGB in 2014, hasn’t seen any construction.
“Funding agreements for infrastructure recently finalized,” the report says, highlighting how long it takes to reach agreements to pay for pipes, roads and parks – even in areas that developers find desirable and marketable. “Home construction (is) expected to begin in late 2017.”
According to a recent presentation at the Hillsboro City Council, city construction fees to build those pipes, roads and parks needed to serve new residents could cost more than $37,000 per home.
"Mayor Willey raised some really important points about the challenges of building housing in new areas at the edge of our region," Hughes said. "It's clear that we need to work together to overcome the challenges that new development faces, from governance to infrastructure to market demand."
Not every urban growth boundary expansion area has struggled. More than 1,400 homes have been built or permitted in a 1998 expansion near Happy Valley. Nearly 900 were built or permitted in a 1998 expansion south of Hillsboro.
The Portland region's urban growth boundary, or UGB, has to have enough land in it to accommodate 20 years of growth.
In Wilsonville’s Villebois area, utilities are paid for and being installed, schools are opening and more than 1,000 homes have been built, permitted or are "entitled." And in Washington County’s North Bethany, added to the UGB in 2002, construction on pipes, roads and other public services began in 2013. More than 2,000 homes have been “entitled”; one-quarter of those have been built or permitted.
The cheapest home for sale in North Bethany as of mid-April was going for $450,000.
More homes are coming, Willey said in his letter. “Looking at all the case studies together, these areas could see 12,500 additional housing units in the next 5 years alone,” he wrote.
That, coupled with the 11,000 units that have been built in the Portland city limits in the last two years, might make a dent in addressing the region’s housing crisis, Hughes said.