Sooner or later, the Oregon Legislature will have to face up to redesigning a state creation that now looks like two icebergs on a collision course.
One iceberg is the wildly high cost of housing along with other living costs including electric power and water; the other, the need to grow the state’s economy and shore up its softening base in the technology sector.
The locus for this conflict: Urban growth boundaries.
UGBs are one of those Oregon peculiarities, dating from the Tom McCall era and the 1973 enactment of Senate Bill 100, which framed the state’s land use system. Under its terms, urban areas in the state have to periodically estimate their needed growth for the coming 20 years and draw growth boundaries outside of city limits. The process is overseen by the Land Conservation and Development Commission.
The Oregon Encyclopedia says that generally, “Housing tracts, shopping malls, and other kinds of urban development are not allowed to sprawl past that boundary, while agricultural lands and open space outside a UGB are preserved.” The idea was partly to preserve open and farm spaces and partly to curb suburban sprawl, encouraging compact development to reduce infrastructure and other costs.
They have succeeded to a great degree, but bugs have begun to multiply in the system. Some of those were hinted at in one national study noting that critics say UGBs “can stifle economic growth and development within the designated areas. Restricting the amount of land available for businesses and industries to expand can limit job growth and economic opportunities.”
Hillsboro, in central Washington County, offers the best current case study.
That city has been growing as tech businesses like (most notably) Intel have sometimes expanded and more recently struggled. Hillsboro also has become a major center, even from a national perspective, for large data centers; as many as 20 are located in the area. These are heavy consumers of resources like electricity and water. Available space for ongoing expansion within the UGB has been limited.
The process for expanding a UGB is complex and difficult, and requires demonstration of a need for growth and evidence it can’t be met within existing limits. Cities are supposed to review them every five years. But the DLCD reports that “Since 2016, when the Land Conservation and Development Commission adopted revised rules regarding urban growth boundary expansions, cities and counties in Oregon have successfully approved 46?expansions or adjustments to their urban growth boundaries.” That’s not a lot.
One academic study suggested UGBs began to have a “binding impact” on growth starting in the 1990s.
Hillsboro Mayor Beach Pace and area legislators in recent years have pressed what was called the Oregon Jobs Act, sponsored by Senator Janeen Sollman of Hillsboro, which sought to expand local growth areas by about 1,700 acres, to allow for industrial growth. But opposition became so fierce the measure died in the legislature this session. Much of that pushback focused on data centers and other developments; one report even highlighted a “spider’s web” of links between corporate and local government officials.
Nellie McAdams, executive director of Oregon Agricultural Trust, opined Sollman “heard loud and clear not only from her constituents but from people all over the state that we’re not interested in poorly planned economic development that doesn’t result in jobs and destroys farmland.”
UGBs, then, have become a brake point for many Oregonians concerned about data centers. But limitations on them have other impacts as well.
One study of UGBs said a key criticism was that they “can lead to increased housing costs within the boundary area. By restricting the amount of land available for development, the law of supply and demand can come into play, driving up property prices and making housing less affordable for residents.”
Many Oregon communities have hit, or are approaching, that wall. Some smaller cities are surrounded, or nearly so, by farm and other open lands, and expanding UGBs into those areas involves clearing hurdles.
The Legislature has acted on some of this. It passed in 2024 a measure planned to help communities where rents were especially high to make a one-time expansion of its boundaries. But at least one poster child city for the effort, Woodburn, still was unable to accomplish its hoped-for expansion. In this year’s session a follow up bill was passed which may help with Woodburn’s issues.
The problem for the legislature, however, is larger than these local small-bore efforts suggest. So far the question of how to treat UGBs and who uses them and for what, has been dealt with piecemeal. A larger frame for the subject needs to be developed.
This could turn into a battle of more than housing versus economic growth, if only because those two things are related. Oregonians are going to face some hard choices if they’re going to untangle the web.
This article originally appeared in the Oregon Capital Chronicle.
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