Urban Renewal Explores Incentives to Stimulate Middle Housing Construction in Hood River
By Cole Goodwin
Hood River, Ore. June 11, 2024 – The Hood River Urban Renewal District heard a staff presentation on a Middle Housing Incentive Concept proposal that would incentivize developers to construct more “middle housing” in Hood River. Middle housing refers to medium-density housing options such as single family homes, cottage clusters and multi-family homes like duplexes, triplexes and quadruplexes.
The Context
The concept outlined the current Hood River housing context: building is slowing, home prices have stabilized but are still out of reach of most, the population is growing and the birth rate is falling. The data also suggests young families may be being displaced by higher income residents.
Housing development in Hood River's Westside Urban Renewal District has stagnated, with only five new homes built in the last five years despite the area holding most of the city’s remaining undeveloped land. Westside District homes built in the last 10 years have averaged 2,000 sq. ft. with a median Zillow home value of $1 million.
“The free market is currently providing housing affordable for households earning roughly 200% of the area median income and above,” said Will Norris, Urban Renewal District Administrator.
The Incentive
The construction incentive would seek to address fee disadvantages faced by developers that build cottage clusters and multi-family homes.
Development fees for "Middle Housing" are higher than those for larger homes because many of the fees are fixed per dwelling and do not scale with the size of the building. Cottage cluster homes pay approximately 14% of their building permit value in development fees, that’s double what developers must pay to build a single-family home. Meanwhile multi-family developments pay 10% of the building value in fees.
Under the proposed incentive concept, development fees that exceed 7% of a building’s permit valuation would be reimbursed. The incentive would become available upon receiving a Certificate of Occupancy.
The proposed pilot program would begin with an initial allocation of $1.5 million from the Westside Urban Renewal District which represents about 1% of the Westside District’s total authorized maximum indebtedness. The incentive would then be funded by the tax property increment that the new homes generate with repayment times varying depending on the development.
Norris also suggested that the City could offer the incentives on a first come first serve basis to encourage a sense of urgency for developers.
Norris stressed that the proposed incentive program could focus on building homes which would be relatively more affordable than larger homes but still not “capital ‘A’ affordable.”
“The housing product is not likely to be affordable for the average home buyer, only relatively more affordable than what would have been built otherwise,” said Norris.
“A construction incentive is intended to be in addition to, and not a replacement for another key strategy to incentivize new housing development, Land Banking for Affordable Housing,” said Norris. “Affordable Housing” in this context is defined as requiring no more than 30% of a household’s income that earns 60% of the area’s median income.”
The incentive is based on the idea that increasing housing supply will help decrease housing prices over time and “add a rung to the ladder”. Homes constructed with the incentive are roughly projected to cost $628,749, costing almost 180% of the area median income.
Things to Consider
Norris said there were a number of factors that the Urban Renewal Board would need to consider including limited upfront money to seed the program, minimal administrative resources and little builder interest in complex programs, fairness and transparency and the fact that the incentive’s target housing product would be more affordable but not capital “A” affordable housing.
The proposal is still in the discovery and discussion phase. The Urban Renewal Agency has not approved the proposal but encouraged staff to continue exploring the concept to incentivize developers to build more middle housing.
Watch the full presentation on Youtube.
Support Local News
Available to everyone; Supported by readers like you.
