About 260 acres could be added to Bend for housing if a bill in the state Legislature is successful this spring.
If passed, House Bill 4012 would bring the other half of the 642-acre Stevens Road tract into the urban growth boundary. About 380 acres of the tract, which the Department of State Lands is trying to sell to a developer to build a mix of housing, public and commercial uses, was brought into the boundary in 2016. The tract sits east of SE 27th Street.
The bill, sponsored by state Rep. Brian Clem, D-Salem, was approved by the House 48-8 on Thursday.
But this proposal is unusual. In Oregon, it can take multiple years to apply for and successfully get an urban growth boundary expansion.
With this bill, Bend could see hundreds of low to middle-income homes built much sooner than it otherwise would have on this property, said Eric Kancler, a lobbyist for the city of Bend.
“This is pretty atypical,” Kancler said.
So why does a representative from Salem care whether Bend gets more acreage into its urban growth boundary?
The story starts back in 2009, when developer Shane Lundgren sought to build an eco-resort in the Metolius River Basin.
At the time, Clem was one of the house reps that fought to protect the river basin from development.
The Legislature eventually designated the river basin as an area of statewide concern, and stripped Lundgren of his development rights. In exchange, Clem helped develop something called a transferable development opportunity — otherwise known as a TDO — that would allow Lundgren to build a resort somewhere else in the state.
Ten years later, Lundgren has been unable to find another county that would allow him to build a resort and his TDO is scheduled to expire in June.
So last year, Clem and Lundgren started brainstorming about how Lundgren could be compensated for the development rights he lost.
“This was my word, and this was our word,” Clem said Thursday.
During these discussions, the two remembered that only half of the Stevens Road tract was in Bend’s urban growth boundary.
“We don’t have to do a resort right this second,” Clem said. “We can do this.”
How would it work? Basically, Lundgren would have to reach an agreement with the Department of State Lands, which owns the 260 acres outside of the boundary. Lundgren would agree to use his TDO on this property — which makes the land more valuable than it is, because right now no significant amount of housing can be developed on land outside of an urban growth boundary.
If the Department of State Lands agrees to sell the property, Lundgren would get a portion of the money from the sale, Clem said. The rest of the money would go into the common school fund, which pays for the state’s education system.
The vision is to have the land developed with housing aimed at middle- to low-income families.
“I feel like this is a chance to prove that when you don’t have any neighbors....you can build with the right kind of urban design, and maximize the return for common school fund, and add more housing supply, and get money for the developer,” Clem said. “It’s a once in a lifetime opportunity to test how to get it right, from scratch.”
But the city of Bend has to agree to the expansion for any of this to happen. Before any development could occur, the city would have to annex and plan out the area, all of which requires a public process.
The City Council hasn’t taken a formal position on the bill, Kancler said.
“The direction I’ve gotten is, ‘please explore this, but make sure the deal works for us,’” Kancler said.
What is being negotiated right now, Kancler said, is what kind of standards should be applied to the property to ensure a healthy mix of types of housing are built, and whether those standards should be incorporated in state statute or left for local leaders to create.
Some land use advocates are pushing for deed restrictions on the land, to ensure housing units would be affordable, Kancler said. But having those kinds of restrictions could make the land less attractive to a developer looking to make money, which could impact whether the land could get sold.
“If any developer sees subsidy requirements without the subsidy, they won’t pay as much for the land,” Kancler said. “So any mandates would make it less attractive for DSL because they won’t get the most money out of it.”
The city also has to evaluate factors like compatibility with neighboring areas and the cost of sewer, water, roads and other infrastructure that would be required to build up a parcel of land this size.
But after negotiations on Thursday, Kancler appeared hopeful.
“I feel pretty good,” Kancler said. “I think it’s possible. I think we’ve drafted a concept that is doable.”
A public hearing is scheduled to be held Monday in the Senate Committee On Environment and Natural Resources in Salem.