2024-2025 Oregon Legislative Housing Bills

Recent housing legislation passed by the Oregon Legislature in 2024 and 2025 affects the development review process for your residential application. Below you will find an overview of the topics. If there is a conflict between the adopted city code and the provisions of the following bills, the language of the bills will be directly applied until the city can update its development code. 

If you have any questions, please contact the Planning Division at (503) 722-3789 or ocplanning@orcity.org. 

SB 1537 (2024) – Mandatory adjustment exception - Status Update

Where requested as part of an application for housing, local governments must grant adjustments/waivers to certain design and development standards (including historic preservation overlay required protections). 

Oregon City submitted an exemption request to the Housing Accountability and Production Office (HAPO) on December 30, 2024. During the review of the city’s application, the residential mandatory adjustment provisions of Senate Bill 1537 (2024 Session) do not apply until the HAPO issues a final decision, which will occur before October 16, 2025. The Housing Accountability and Production Office (HAPO or ‘Office’) has completed its review. The Office has approved the city’s exemption request with seven conditions, including a required notice for all prospective housing applicants. 

This decision and statuses for other cities may be accessed at the Flexibilities to Housing Development and Design Standards Dashboard. Visit the HAPO housing dashboard for more information.

SB 974 – Design exceptions & limited review process for 20+ unit housing developments

Requires cities to waive certain specific “standards intended to preserve the desired character, architectural expression, decoration, or aesthetic quality of new homes, including the following: 

Waiver applies to: Development proposals that include more than 20 single-family or multi-family housing units, or an application for 1 or 2 mixed use housing units with a shared wall, floor, or ceiling.

Waiver does not apply to: Development proposals that include an application for 19 or fewer single dwelling units, manufactured dwellings, or units of middle housing; An application for 3 or more housing units with a shared wall, floor, or ceiling; Setbacks, building height, accessibility, fire standards, public health or safety, water quality standards, Goal 5 implementing standards, Goal 7, the Willamette River Greenway implementing standards.

This provision is effective September 26, 2025.

Please utilize the SB 974 waiver form to indicate that you are eligible to request the design waiver.

SB 974 – Engineering review shot clock 

For all engineering plans necessary for development, including engineering building permits and public works permits, a 14-day completeness period is required, followed by a 120-day review period, with the possibility of mutual extension for up to 245 days in total. This provision takes effect on July 1, 2026. 

SB 974 – Type II Processes for Residential Upzoning, PUD's, and Residential Variances.

For the following types of residential land use applications (now defined as “urban housing applications”), limits public notice to those within 100 feet and replaces the initial public hearing with a 14-day comment period: 

1. Zone change to allow for more dense development, 
2. A planned unit development, or 
3. A residential variance. 

The City may provide a de novo appeal right that includes a hearing. This provision is effective July 1, 2026. 

SB 1099 - Preschool and Pre-K Education Uses on Land where Places of Worship are Allowed

Requires local governments to allow preschool or pre-kindergarten education on land where places of worship are allowed. This provision is effective June 3, 2025.

HB 2005 - Siting of Psychiatric and Behavioral Healthcare Facilities

• Requires local governments to allow by right a residential treatment facility or residential home within a UGB on lands zoned for residential commercial, employment, and industrial uses under specific criteria, in addition to public lands (excluding park lands). There are exceptions for lands that have natural resource or hazard restrictions or cannot be provided with public services. Does not require local governments to update any analyses related to land use goals. Exempts these decisions from the Land Use Board of Appeal’s (LUBA) authority. Requires a local government to issue a decision within 120 days. 
• Within an urban growth boundary, requires a local government to allow by right a mental or psychiatric hospital on lands zoned for commercial, employment, and industrial uses, as well as public lands (excluding park lands), and where it is adjacent to an existing or pending crisis stabilization center. Exceptions are made for lands that have natural resource or hazard restrictions or cannot be provided with public services. Does not require local governments to update any analyses related to land use goals. Exempts these decisions from LUBA authority. Requires a local government to issue a decision within 120 days. 
• Requires a local government to allow by right a crisis stabilization center within a UGB if the property is owned by a public body and adjacent to an existing or pending mental or psychiatric hospital. Repeals ORS 197.670, which addresses existing zoning requirements and prohibitions for residential homes and facilities. 
• This provision is effective June 30, 2025.

HB 2138 – Middle housing revisions (Governor’s bill). Note that the effective dates vary per topic.

• Tree removal codes related to housing must be clear and objective. This provision is effective July 17, 2025.
• Amends the definitions of duplex, triplex, and quadplex to include detached units. This provision is effective July 17, 2025.
• Middle housing land divisions:
  • Allowed on lots with pre-existing nonconforming middle housing units.
  • Prohibited from further land division only where the minimum density of the zone has not been met on the parent lot.
  • Simultaneous subdivision and Middle Housing Land Division application processes now permitted.
  • Removes the noticing requirement and local appeals process for Middle Housing Land Divisions and Expedited Land Divisions. Middle Housing Land Divisions and Expedited Land Divisions now noticed only to the Applicant.
  • These provisions are effective July 17, 2025.
• Middle Housing and Middle Housing Land Divisions to be allowed on lots with Accessory Dwelling Units (ADU's). Middle Housing Land Divisions may now result in a single-family dwelling together on the same "child" lot, or a duplex on the same "child" lot. This provision is effective January 1, 2027.
• Traffic Impact Analyses or traffic-related exactions not required for middle housing projects of 12 units or less, and on lots created by a land division more than five years prior. This provision is effective January 1, 2027.
• Where an accessible (Type A) or affordable (<120% AMI) middle housing unit is proposed within a duplex or triplex, the city must allow one additional unit, creating a triplex or fourplex. For townhouses, a quadplex or cottage cluster, two additional units are allowed. This provision is effective January 1, 2027.
• In multi-family zones that allow five or more units, additional density and limited parking for single-room occupancies. This provision is effective January 1, 2027.
• Voids all recorded covenant provisions that prohibit middle housing (and manufactured housing) otherwise allowed by zoning. This provision is effective January 1, 2027.

HB 2138 asks that, before January 1, 2028, LCDC adopt rules that:

• Eliminate siting and design standards that prevent or discourage the manufacture, site-built, or prefabricated housing;
• Define “unreasonable cost and delay” that affects ADUs and SROs;
• Incentivize cottage clusters and defining the qualification for “small footprint or floor area”;
• Amending siting and design parameters for middle housing types
• Amending permissible discretionary criteria available on the alternative track
• Developing a model system development charge system for residential development types
• Estimating reasonable zoned capacity for an inventory of buildable lands.

HB 2347 - Manufactured Housing Units

Clarifies that local governments may only apply housing development standards to manufactured housing units that they would to site-built housing units of the same type. This provision is effective January 1, 2026.

HB 2658 - Frontage Improvements for Building Alterations

Prohibits a municipality over 15,000 in population (Including Oregon City) from requiring a frontage improvement as a condition of approval for a construction permit to alter or renovate an existing building, so long as there is no increase to the square footage, the alteration cost does not exceed a limit set by the director of the DCBS, and the changes do not result in a change of occupancy classification. Sets alteration cost limit initially at $150,000, with annual increases due to the Consumer Price Index. If frontage improvements along a state highway are required for final action on a permit or zone change, requires ODOT or the municipality to coordinate on if design, engineering, or construction plans already exist. Makes these provisions applicable to all size cities on January 1, 2031. This provision is effective January 1, 2026.

HB 3560 - Child Care Uses in Multiunit and Institutional Zones

• Changes zoning requirements to allow child care centers as an outright use on land zoned for multiunit (multi-family) residential and institutional uses. Relocates the child care facility siting statute from ORS 329 to ORS 197. Modifies the definition of “child care center” to include a preschool recorded program, school-age recorded program or a parent cooperative. Inside Metro's UGB, this bill permits child care centers in areas zoned for multiunit residential densities of at least 17 units per acre. 
• Local governments may not add additional conditions of approval before allowing a child care center to co-locate with a conditional institutional use.
• These provisions are effective January 1, 2027.

HB 2258 – Pre-approved site and building plans

Directs LCDC to adopt rules requiring that cities approve applications for certain single-family, middle housing, and small multiunit housing on lands zoned for residential use, even where it might contravene any comprehensive plan, land use regulation, or statewide planning goal
requirement:

Qualifying property must be larger than 1,500 square feet, smaller than 20,000 square feet, vacant, and not located on steep slopes. LCDC may set conditions limiting city procedures, design standards, densities, parking requirements, and tree protections. Building plans preapproved by the Building Codes division. Implementing rules to be adopted before January 1, 2027

HB 3031 - Housing-related infrastructure
Creates a housing infrastructure financing program with $10 million in funding to be used in grants, loans, or forgivable loans for transportation, water, wastewater, or stormwater infrastructure necessary to accommodate housing. Eligibility requires: 1) At least 17 dwelling units per net residential acre 2) Grant and forgivable loans are limited to very low income, low income, or moderate income affordable housing.