November 29, 2017

What is the Urban Land Supply?



This article originally appeared in the November 22, 2017 edition of the Oregon Daily Journal of Commerce.


Oregon cities are required to maintain a 20-year supply of land within urban growth boundaries.  Proposals to expand those boundaries are notoriously controversial, and can take decades to complete. But not all land that is inside an urban growth boundary (“UGB”) can actually be developed, and if not, does it really qualify for inclusion in the boundary?  How much of the 20-year land supply is really ready, or close to being ready, for development?  That question has political ramifications, but the answer should be based on facts, not opinions.

Metro designates land for urban development, but the mere designation does not make it ready.  Development first requires infrastructure, which takes vast amounts of time, engineering, coordination with urban service providers (a political process), and funding.  Cities are naturally cautious about annexing land before sufficient infrastructure for the new development to connect with is in place or there is funding to build it.  Cities understand that all land is not created equal.  Land that is flat, dry, and near existing infrastructure is simpler, less expensive to develop, and easier for a city to maintain in the long run, than land that is rolling, wet, or further from existing infrastructure. 

As the cost of new housing continues to increase, and exceed the average family’s ability to afford it, one might expect that land use policy would favor the development of land that can be efficiently served with public infrastructure.  However, state and Metro policies compel the protection of agricultural land, which often is the same flat, well-drained land that is least expensive to develop for new housing and complementary land uses.  By state law, that land is the lowest priority for development; notwithstanding that it is the least expensive place to develop new housing.  For example, even the new state pilot program to ease UGB expansions for affordable housing prohibits expansion onto high value farmland, and the housing requires a 100-foot buffer from any agricultural zone.  This 40-year-old political decision may have been right for its time, but is now showing unintended consequences – unaffordable housing costs – in the modern economic environment.

It is often said that personnel is policy, and a quick look at the people seated around Metro’s table reveals a remarkable dearth of the municipal officials responsible for extending infrastructure to new neighborhoods.  Metro’s Technical Advisory Committee includes representatives from 12 local governments without a public works director or a city engineer among them.  Instead, the local governments are represented by other officials for whom cost-effective infrastructure is just one of many competing priorities.

There are very large tracts of land inside the Metro UGB that cannot be built upon solely because the necessary infrastructure cannot be provided cost effectively.  Damascus is a prime example.  Despite decades of effort, as a practical matter, most of this area remains ineligible for urban level development, yet it remains in the UGB.  Land within the UGB that is not economically developable, despite the best efforts of local officials and developers, should either not be counted as part of the buildable land supply or should be excluded from the UGB.

Metro has tried to take the costs into account (estimated at $2-$3 billion back in 2004), by excluding a portion of the Damascus area from its land supply.  However, even that effort has the overly optimistic effect of saying that a great deal of land can be developed into affordable housing, when that is not the case (at least at today’s costs). 

Metro has options, however.  It can exclude further lands that are difficult to serve with infrastructure from the supply. It can move the UGB to eliminate parts of the Damascus area and substitute other areas that are more easily urbanized.  These actions would help redirect regional support needed for the heavy lifting that Tualatin, Lake Oswego, and West Linn have taken on to solve infrastructure planning issues in the Stafford Triangle; the only large block of undeveloped land inside I-205.

We all agree that housing costs are high.  Infrastructure costs contribute to the constrained supply of moderately priced housing and are driven by choices about where to locate new housing.  We, as a community, need to consider options and make hard decisions to resolve the problem.  Governor Kate Brown has made a good start with the new Workforce Housing Initiative, and Representative Tina Kotek is collaborating with housing providers to clear regulatory bottlenecks.  We hope other leaders will join their efforts to understand housing cost drivers and find creative ways to address them.

This article was peer reveiwed by Ed Tromke, Attorney, Jordan Ramis PC.

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