Urban Growth Boundary & the City of Damascus, Oregon

A scandal impacting everyone in the city

This was originally posted as a comment here on this The Oregonian/OregonLive piece by Molly Harbarger.

Way deeper background for folks interested.

This Oregonian piece leaves out a HUGE piece of Damascus history: it's incorporation in the Urban Growth Boundary.

One absolutely critical component of the Urban Growth Boundary policy - perhaps the actual lynch pin as to if the policy is successful or not - is dependent upon UGB's eventual expansion. The UGB was never intended to be a policy about "density" but controlled and deliberate growth. Written into the rules of the UGB is a clause stating that Metro (who oversee the administration of the UGB) must maintain a 20-year supply of buildable land within the boundary, and that every 6 years they must review this supply of land.

Why a 20-year supply? Because this would ensure that we would not create an artificial shortage of available land, because a restricted supply on land would mean that housing prices would skyrocket.

Through decades of administration of the UGB the policy worked as intended: back in the 1990's for example, my mom bought a home for $90,000 in Beaverton - pretty much market rate matching our region. Yes, our population was booming (not as much as in the last few years, but all the same, we were growing rapidly) and Metro was good stewards of this policy, housing prices remained stable.

Then in 2002 Metro decided to expand the Boundary by incorporating Damascus and a few other areas (like North Bethany). North Bethany got built, whereas Damascus refused to cooperate.

Since 2002 we have barely expanded the UGB, because Metro has kept looking at our population numbers rising and say "We're going to build Damascus up!" But they didn't. Damascus wouldn't play ball. Clackamas County would throw hissy fits, and the whole thing faced various legal challenges.

Very predictably our housing prices started climbing - not just because of Tech, or Californians - but primarily because we were not building new houses in areas where we are supposed to be building new houses. We created the scarcity. This is why a home in Vancouver, WA costs $325k, a home in Portland costs $450k, and just outside of the UGB in Canby, OR a home is $350k. Due to these inflated housing prices, most of the population that has moved to Oregon in the last several years has moved outside of the UGB - thus creating the sprawl and traffic problems the UGB was meant to prevent.

These days Metro is a bunch of cowards. We recently looked at *expanding the UGB* rather than building on the land we already have! In this 2018 article about the UGB status from Metro they clearly explain that Damascus was never built up, then go on to propose 6 locations for build-out exclusively on the West Side of the river, as if Hillsboro and King City is the last bastion of buildable land. Yet when Metro looks at these proposed ~2,500 acre of land they're still including Damascus in their factoring of 20-year supply. We've done this disingenuous song and dance since 2002 - and for the first few years there could have been valid excuses - but we're long past that.

The worst part about it is if you look at a satellite map of Damascus you'll see that 98% of the area is just single family homes on 1 to 5 acres. This isn't agricultural land, it's our neighbors being shitty, and Metro being cowardly about expanding and not forcing the issue.

If you're wondering why you can barely afford a home and rent in Portland, Damascus is a big reason why. We should have built *thousands* of homes there 10 years ago.

All of this disincorporation is about the City of Damascus having a "Comprehensive Plan", as barely mentioned in the OLive article here:

Every Oregon city must pass a comprehensive plan before it can take on zoning, economic development and capital projects to become a true city. The plan usually is adopted by a city governing body after public hearings.

“A new day is dawning and Damascus can get back down the road to becoming a real city with a comprehensive plan,” DeYoung said.

This 2015 article also makes it clear,

"It was our anticipation as best I can remember that we felt once the city had a comprehensive plan, we could expand the UGB."

Writer’s note: in the original Reddit thread I answer multiple questions, and I’m reposting one specific criticism here

it's unfair to blame more than a fraction of our housing cost problem on Damascus.

Metro actually did a comparative analysis as a footnote back in 2014. I have plenty of critiques of this analysis - but what Metro speculated is:

What happens to residential location prices between scenarios when the capacity is altered in Damascus/Happy Valley vicinity and entirely removed from eastside Damascus? (Comparison is between UGR scenario and disincorporation scenario)

Because of the displacement of [Single Family Residence (SFR)] development out of Damascus, anywhere that has capacity to absorb the displacement of SFR units sees modest price appreciation because of additional demand. The result is a modest increase in residential location prices on the order of 2 percent in the light pink areas and up to 5 percent more in the pinker hued tracts.

Then notes:

Aside: 5% in today’s median sales price of over $300,000 per home amounts to $15,000 more in home purchase price. Anticipating over a 20 year time frame, average home sales price could be $500,000 per house and an additional 5% more would amount to $25,000 more tacked on to the sales price of an average house.

However, in this scenario they only expected 4,000 less homes - they're still somehow expecting an additional 15,000 homes according to their projections through 2035 - that's completely impossible, we'll be lucky to see 1/10th of that. So if 4,000 less homes means 2% to 5% impact on housing, that means we're probably talking about 7.5% to 18.75% artificial inflation on home prices based upon supply if we do not build 15,000 homes, and more if we don't build the 20,000 homes Damascus is easily capable of having. In real terms this means a house that would cost $500,000 would cost $535,000 to $590,000 for no reason.

Can we look at this retrospectively? How much does not having Damascus cost us today?

In 2002 Metro made it's biggest expansion ever, very well timed and reasonable in my opinion: 17,000 acre expansion of the UGB, with 12,000 of those being in Damascus. Included in those 4,000 acres is North Bethany which is still very much being built - so if Damascus followed the same theoretical timetable, then Damascus would have had minimal impact on our housing prices, just a percentage at most. If it was on an expedited time table, if done in phases and we had built 10,000 homes by 2018 with more on the way by 2025, then absolutely home prices would be lower - very likely comparable to the property values outside of the UGB - my supposition is that a Portland median home price would be $375k instead of $450k.

Depending upon the hypothetical, you could argue the impact any way you want.

Another perspective is to look at other Metro forecasts for our housing supply need:

Metro estimates that over the next 30 years, more than 500,000 residents and 279,000 households will be added to the seven-county region

Depending upon density, Metro squeezes somewhere around 9,000 residences on 2,000 acres - so metro basically needs 62,000 acres. Damascus represents 12,000 acres of this need, approximately 20%.

And have no doubt about the massive cascading effect on housing, as over the last decade we've seen all the tiny bungalows "starter homes" get gobbled up by home flippers and cash-buyers, nearly eliminating our affordable housing stock. By removing the low and lowest end, it raises the median. This wouldn't have happened if supply was not restricted.