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
 
                         House Bill 3485
 
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 as
introduced.
 
  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 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 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 nonprofit organization one purpose of which is to provide
affordable housing for low or moderate income households; or
  (d) A federally recognized Indian tribe as defined in ORS
97.740.
  (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 100 percent and greater than 80 percent of
the area median income.
  (6) '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 during ownership or upon conveyance of real property, in
the form of a covenant, servitude, easement, condition or
restriction in a land sale contract, trust deed, mortgage,
security agreement, assignment, will, trust, rental agreement,
lease or other written instrument executed by the owner of the
real property and 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 as a
condition of providing a subsidy that may include, but not be
limited to:
  (A) A grant, loan or contract made by 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.
  (3) The affordable housing covenant:
  (a) 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.
  (b) Is not invalid because a holder of the covenant is not an
eligible covenant holder. However, the covenant must be assigned
to an eligible covenant holder before an action to enforce the
covenant is commenced.
  (4) An affordable housing covenant is unlimited in duration
unless:
  (a) The instrument creating the covenant provides otherwise; or
  (b) The covenant is modified or terminated by agreement of the
eligible covenant holder.
  (5) 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.
  (6) 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 and, if it does, shall designate the time and manner
in which the eligible covenant holder, or designee, may enter the
real property.
  (7) A holder of an affordable housing covenant may assign a
third-party right of enforcement 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:
  (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
has not retained 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 does not run to the successors or assigns of
the eligible covenant holder.
  (h) The covenant is as an unreasonable restraint on
alienability.
  (i) The covenant violates the rule against perpetuities.
  (2) 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.
  (3) 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 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 8.  { + (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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