74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2678
A-Engrossed
House Bill 3485
Ordered by the House May 2
Including House Amendments dated May 2
Sponsored by Representative DINGFELDER; Representatives BARNHART,
BOONE, BUCKLEY, CANNON, COWAN, GELSER, KOTEK, MACPHERSON,
MERKLEY, ROSENBAUM, TOMEI, WITT (at the request of Portland
Community Land Trust)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.
Authorizes creation of affordable housing covenant restricting
price, rental rate or occupancy to ensure adequate supply of
rental and owner-occupied affordable housing for low or moderate
income households.
A BILL FOR AN ACT
Relating to affordable housing covenants; creating new
provisions; and amending ORS 94.504 and 197.309.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + The Legislative Assembly finds and declares
that:
(1) There is a serious shortage of decent, safe and sanitary
housing available and affordable to low and moderate income
households in the State of Oregon.
(2) The inadequacy in the supply of decent, safe and sanitary
affordable housing endangers the public health and jeopardizes
the public safety and general welfare of the state.
(3) To obtain the benefits of covenants and restrictions that
seek to preserve and maintain affordable housing, the Legislative
Assembly authorizes the creation and enforcement of affordable
housing covenants. + }
SECTION 2. { + As used in sections 1 to 6 of this 2007 Act:
(1) 'Affordable housing covenant' means a nonpossessory
interest in real property imposing limitations, restrictions or
affirmative obligations that encourage development or that ensure
continued availability of affordable rental and owner-occupied
housing for low or moderate income individuals.
(2) 'Area median income' means the median income for the
standard metropolitan statistical area in which the affordable
housing is located, as determined by the Housing and Community
Services Department, adjusted for household size.
(3) 'Eligible covenant holder' means:
(a) A public body, as defined in ORS 174.109;
(b) An agency of the United States government;
(c) A public benefit corporation or religious corporation, as
those terms are defined in ORS 65.001, one purpose of which is to
provide affordable housing for low or moderate income households;
(d) A consumer housing cooperative, as defined in ORS 456.615;
(e) A manufactured dwelling park nonprofit cooperative
corporation; or
(f) A federally recognized Indian tribe.
(4) 'Low income household' means a household with income less
than or equal to 80 percent of the area median income.
(5) 'Moderate income household' means a household with income
less than or equal to 120 percent and greater than 80 percent of
the area median income.
(6) 'Subsidy' includes, but is not limited to:
(a) A grant, loan or contract made by a federal agency, a
federally recognized Indian tribe or a public body, as defined in
ORS 174.109;
(b) A grant, loan or contract made by a nonprofit corporation
or a limited liability company the sole member of which is a
nonprofit corporation;
(c) A subsidized loan from a lending institution that makes
loans for residential housing; or
(d) A subsidized private transaction.
(7) 'Third-party right of enforcement' means a right provided
in an affordable housing covenant to a third party to enforce the
terms of the covenant. + }
SECTION 3. { + (1) A person may create an affordable housing
covenant as a condition of giving or receiving a subsidy during
ownership or upon conveyance of real property, in the form of a
covenant, servitude, easement, condition or restriction in a
deed, declaration, land sale contract, trust deed, mortgage,
security agreement, assignment, will, trust, rental agreement,
lease or other written instrument that is:
(a) Executed by the owner of the real property and the covenant
holder; and
(b) Recorded in the deed and mortgage records of the county in
which the real property is located.
(2) The affordable housing covenant creates a real property
right in an eligible covenant holder to:
(a) Limit the use of real property to occupancy by low or
moderate income households in rental or owner-occupied housing;
(b) Restrict the rental rate or sale price of real property to
ensure affordability by future low and moderate income
households; or
(c) Limit, restrict or condition the use and enjoyment of real
property to create or retain rental or owner-occupied affordable
housing for occupancy by low or moderate income households.
(3) The affordable housing covenant may be conveyed, assigned,
modified or terminated by a written instrument recorded in the
deed and mortgage records of the county in which the real
property is located. The affordable housing covenant may be:
(a) Conveyed or assigned by a written instrument executed by
the conveying or assigning covenant holder and the accepting
covenant holder;
(b) Modified by a written instrument executed by the covenant
holder and the owner of the real property; or
(c) Terminated by a written instrument executed by the covenant
holder and a third party with the right to enforce the covenant.
(4) An affordable housing covenant is not invalid because a
holder of the covenant is not an eligible covenant holder. A
covenant holder who is not an eligible covenant holder may not
modify, terminate or commence an action to enforce the covenant.
However, the covenant holder may convey or assign the covenant to
an eligible covenant holder who may modify or terminate the
covenant or commence an action to enforce the covenant.
(5) An affordable housing covenant is unlimited in duration
unless:
(a) The instrument creating the covenant provides otherwise; or
(b) The duration of the covenant is modified prior to the
expiration of its stated term.
(6) Upon termination of an affordable housing covenant for any
reason prior to the expiration of its stated term, the covenant
holder is entitled to receive the difference between the fair
market value of the real property immediately before termination
and the fair market value of the real property immediately after
termination.
(7) An interest in real property in existence when an
affordable housing covenant is created is not impaired by the
affordable housing covenant unless the owner of the interest is a
party to the affordable housing covenant, subordinates the
interest to the affordable housing covenant or otherwise agrees
to be bound by the affordable housing covenant.
(8) The instrument creating an affordable housing covenant may
grant the eligible covenant holder, or a designee of the eligible
covenant holder, a right to enter the real property to ensure
compliance with the covenant and, if the right is granted, the
instrument shall designate the time and manner in which the
eligible covenant holder or designee may enter the real property.
(9) An affordable housing covenant holder may assign a
third-party right of enforcement, by a written instrument
executed by the covenant holder and recorded in the deed and
mortgage records of the county in which the real property is
located, to a person that qualifies to be an eligible covenant
holder but that is not the holder of that covenant. + }
SECTION 4. { + An affordable housing covenant may:
(1) Include limitations, restrictions and affirmative
obligations on the sale price or rental rate of real property or
the use of real property or the income or assets of purchasers or
tenants;
(2) Limit the amount of equity appreciation that a property
owner may derive from ownership of the real property;
(3) Grant a right of first refusal or an option to purchase to
the eligible covenant holder;
(4) Restrict the class of persons to whom real property may be
sold, leased or rented according to, but not limited to,
household income, assets, residency and prior homeownership;
(5) Limit the use of the real property to residential use as
the primary residence of a low or moderate income household;
(6) Limit, condition or prohibit leasing or subletting;
(7) Impose obligations for maintenance and insurance of the
real property;
(8) Limit, condition or prohibit the owner from allowing liens
on the real property; and
(9) Make other limitations, conditions or prohibitions that
affect the affordability of real property for low or moderate
income households. + }
SECTION 5. { + An action affecting an affordable housing
covenant may be commenced or intervened in by:
(1) The owner of an interest in the real property burdened by
the covenant;
(2) An eligible covenant holder of the benefit of the covenant;
(3) A person that has a third-part right of enforcement; or
(4) A public body, as defined in ORS 174.109, in the
jurisdiction of which the real property burdened by the covenant
is located. + }
SECTION 6. { + (1) An affordable housing covenant is valid and
enforceable even though the covenant is not of a character
traditionally recognized at common law or is inconsistent with a
common law doctrine of real property law that might invalidate,
impair enforcement of or cause the termination of the covenant,
including but not limited to common law doctrine that holds that:
(a) The covenant is not appurtenant to an interest in the real
property.
(b) The covenant imposes a negative burden.
(c) The covenant imposes affirmative obligations upon the owner
of an interest in the burdened real property or the eligible
covenant holder.
(d) The covenant is held by an eligible covenant holder that
does not have an interest in the real property that is benefited
by enforcement of the covenant against the burdened property.
(e) The benefit of the covenant does not touch or concern real
property in any other way.
(f) There is no privity of estate or privity of contract.
(g) The covenant can be or has been conveyed or assigned to a
covenant holder.
(h) The covenant is as an unreasonable restraint on
alienability.
(i) The covenant is a clog on the equity of redemption.
(j) The covenant lacks adequate consideration.
(2) An affordable housing covenant is valid and enforceable
even if the covenant violates the rule against perpetuities set
forth in ORS 105.950 to 105.975.
(3) If a court denies equitable enforcement of an affordable
housing covenant because of a change of circumstances that
renders the covenant not in the public interest, the court may
award damages as the only remedy in an action to enforce the
affordable housing covenant.
(4) The court may not use a comparative economic test as a
basis for a determination that an affordable housing covenant is
not in the public interest. + }
SECTION 7. ORS 94.504 is amended to read:
94.504. (1) A city or county may enter into a development
agreement as provided in ORS 94.504 to 94.528 with any person
having a legal or equitable interest in real property for the
development of that property.
(2) A development agreement shall specify:
(a) The duration of the agreement;
(b) The permitted uses of the property;
(c) The density or intensity of use;
(d) The maximum height and size of proposed structures;
(e) Provisions for reservation or dedication of land for public
purposes;
(f) A schedule of fees and charges;
(g) A schedule and procedure for compliance review;
(h) Responsibility for providing infrastructure and services;
(i) The effect on the agreement when changes in regional policy
or federal or state law or rules render compliance with the
agreement impossible, unlawful or inconsistent with such laws,
rules or policy;
(j) Remedies available to the parties upon a breach of the
agreement;
(k) The extent to which the agreement is assignable; and
(L) The effect on the applicability or implementation of the
agreement when a city annexes all or part of the property subject
to a development agreement.
(3) A development agreement shall set forth all future
discretionary approvals required for the development specified in
the agreement and shall specify the conditions, terms,
restrictions and requirements for those discretionary approvals.
(4) A development agreement shall also provide that
construction shall be commenced within a specified period of time
and that the entire project or any phase of the project be
completed by a specified time.
(5) A development agreement shall contain a provision that
makes all city or county obligations to expend moneys under the
development agreement contingent upon future appropriations as
part of the local budget process. The development agreement shall
further provide that nothing in the agreement requires a city or
county to appropriate any such moneys.
(6) A development agreement must state the assumptions
underlying the agreement that relate to the ability of the city
or county to serve the development. The development agreement
must also specify the procedures to be followed when there is a
change in circumstances that affects compliance with the
agreement.
(7) A development agreement is binding upon a city or county
pursuant to its terms and for the duration specified in the
agreement.
(8) The maximum duration of a development agreement entered
into with:
(a) A city is 15 years; and
(b) A county is seven years.
{ + (9) ORS 94.504 to 94.528 do not limit the authority of a
city or county to take action pursuant to sections 1 to 6 of this
2007 Act. + }
SECTION 8. ORS 197.309 is amended to read:
197.309. (1) Except as provided in subsection (2) of this
section, a city, county or metropolitan service district may not
adopt a land use regulation or functional plan provision, or
impose as a condition for approving a permit under ORS 215.427 or
227.178, a requirement that has the effect of establishing the
sales price for a housing unit or residential building lot or
parcel, or that requires a housing unit or residential building
lot or parcel to be designated for sale to any particular class
or group of purchasers.
(2) { - Nothing in - } This section { - is intended to - }
{ + does not + } limit the authority of a city, county or
metropolitan service district to { + :
(a) + } Adopt or enforce a land use regulation, functional plan
provision or condition of approval creating or implementing an
incentive, contract commitment, density bonus or other voluntary
regulation, provision or condition designed to increase the
supply of moderate or lower cost housing units { + ; or
(b) Enter into an affordable housing covenant as provided in
sections 1 to 6 of this 2007 Act + }.
SECTION 9. { + (1) Sections 1 to 6 of this 2007 Act apply to a
covenant:
(a) Created under sections 1 to 6 of this 2007 Act on or after
the effective date of this 2007 Act.
(b) Created before the effective date of this 2007 Act if the
covenant would have been enforceable under sections 1 to 6 of
this 2007 Act had it been created on or after the effective date
of this 2007 Act.
(2) Sections 1 to 6 of this 2007 Act do not invalidate an
otherwise enforceable affordable housing covenant, as defined in
section 2 of this 2007 Act, created before, on or after the
effective date of this 2007 Act. + }
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