Housing laws leave city in ‘reactive role’

State legislation aimed at cutting red tape for housing has already impacted local projects and has the city of McMinnville scrambling to determine what oversight it still has on residential development.

Over the past two years, the Oregon Legislature has passed three bills that work together to streamline housing development, in part by reducing local authority for items like noticing, appeals and design standards.

Passed in 2024, SB 1537 (known as Gov. Tina Kotek’s housing production package) established the Housing Accountability and Production Office and introduced mandatory adjustments on development and design standards for any housing project with at least 10 units per acre in McMinnville (based on population).

In 2025, SB 974 limited local review processes and shortened timelines. It also exempted developments of 20 or more units from certain design standards.

This year, the legislature approved HB 4037, which mandates that only applicants have the opportunity to appeal decisions and reduces noticing requirements for middle housing, multifamily and affordable projects.

The latter two bills went into effect in June and July, respectively, and the trio is impacting projects already in the application process.

A 72-unit Second Street apartment complex was approved by the Historic Landmarks Committee in June after applicant Binestar invoked adjustments eliminating parking and design standards for open space, its facade and glazing.

There are 23 potential adjustments, and developers can select up to 10 with no say from local governments. The adjustments are for all qualifying residential units, not just affordable projects.

The modifications can eliminate parking and requirements for balconies and porches and allow for changes like an extra story or a 10% reduction to setbacks.

Developers MAC Multi (which is planning a 75-unit complex on McDonald Lane) and Holt Homes (which is constructing a 392-home subdivision west of Southwest Hill Road) have also contacted the city about what the legislation means for their projects, according to Community Development Director Heather Richards.

The city received a grant to study the new rules and will have a clearer understanding when the project concludes next summer. Until then, the city is in a reactive mode, Richards told the News-Register.

“The $150,000 grant is to work with legal counsel on what are all the bills that have passed recently, understand them, and bring our code up to date to reflect what’s in there. But we’re only kicking that off right now. Our first meeting is next week.”

The city doesn’t have staff capacity to update code as new laws take effect, she said.

“The larger cities have enough staff that they actually have dedicated staff following all the bills and then bringing them into their teams. We don’t have that. So, there’s bills passing that I’m not even aware of and someone will come in and share it with us and then we’re like, ‘oh, OK.’”

“We just don’t have (the) staff capacity to keep up with the regulatory changes happening at the state. So that’s problematic, and then when someone brings in, you know, ‘this bill applies to a project,’ we’re then scrambling to figure out what that means. And so that’s not a good position to be in for us or the applicant. But this grant should help us with that. So, I’m hoping that will get us into a proactive role rather than a reactive role.”

Applicants can approach the Community Development office and argue they are exempt from local requirements because of a provision of the legislation. Staff then runs the request through outside land use attorneys to see if it can be applied.

“They’ll come in and say, we — per this bill — we are exempt from X, Y, and Z, and then we have to go look it up. And so we’re reacting and flying by the seat of our pants,” Richards said. “We’ll say if you can just provide us your legal opinion as to how you think this affects your development, we’ll have our legal counsel review it and then move it forward appropriately. That’s where we’re at right now.”

While the bills eliminate design standards, they don’t remove historic preservation rules; projects still must gain approval to alter a historic site before proceeding with a renovation, according to SB 1537.

“First, they have to get the approval to demolish the historic building. And then they get approval for the new construction. The mandatory adjustments (are) just for the design of the new construction,” Richards said.

For everything else, from a land use perspective, it’s seemingly the Wild West.

“It’s getting that way,” Richards agreed.

The new rules erode design guidelines the city spent more than two years crafting following complaints from residents on the aesthetics of a development.

“Now, every year they’re coming out with new legislation that just sort of takes the work we did and removes it,” she said. “So, to me, it’s concerning, it’s frustrating, because now the communities don’t really have a say. And you know, sure, housing’s important and we don’t want NIMBYism (not in my back yard) to prevent housing from occurring. But I think local community should have a say in what it looks like and how it creates a sense of place for that community.”

The ambiguous nature of the rules leaves major questions for pending projects. While new rules typically don’t apply to applications submitted before they went into effect, SB 1537 allows developers with pending applications to opt into the newer, more favorable regulations.

The Binestar project is scheduled for an appeal hearing before the planning commission on July 16. Residents near the MAC Multi project have opposed it since it was announced and will likely appeal any approvals.

Asked if MAC Multi could opt into the new rules eliminating outside appeals, Richards was non-committal.

“Yeah, it might be able to,” she said. “We don’t have a handle on that.”

She added, “My hope is before that happens, we know the answer to these questions.”

A zone change application for the McDonald Lane project is also on the agenda for the planning commission’s July 16 meeting.

The same request could theoretically be made by Binestar, although its representatives have not discussed aspects of the legislation with staff other than the mandatory adjustments, Richards said.

The discussions aren’t limited to pending projects. As developers become aware of the rules, they are approaching the city to see what can be implemented for their projects, according to Richards.

“This is happening with every housing project right now.”