Oregon is experiencing a severe housing crisis that affects both urban and rural communities. Housing costs in the state significantly exceed national levels, with expenses averaging nearly 40 percent higher than the national baseline. The state currently lacks an estimated 128,000 affordable housing units for extremely low and very low income households. These shortages are especially acute in smaller rural communities where limited inventory, aging infrastructure, and rising development costs make it difficult to meet demand. The 2023 passage of House Bill 3395 was a major policy step by the Oregon Legislature to address these challenges. The bill created new pathways for housing production, streamlined shelter siting, and provided resources to strengthen local government and regional capacity. This memo summarizes HB 3395, highlights how MCEDD has leveraged the bill in the Mid-Columbia region, and outlines lessons and next steps.

The shortage of affordable housing is visible across the Gorge. In Hood River County the median property value reached $571,200 in 2023, nearly twice the national median of $303,400. In the city of Hood River, home values average more than $700,000. Prices across the region rose by approximately 24 percent in the past year alone, adding over $90,000 to the average cost of a home. Communities are experiencing direct impacts. Employers struggle to recruit because new hires cannot find local housing. For example, Maupin was unable to hire a teacher due to lack of available housing. Infrastructure projects face higher costs when contractors must import crews from outside the region. Essential workers are forced into long commutes, while population growth and school enrollment stagnate due to limited housing opportunities.

House Bill 3395 is designed to remove barriers and accelerate housing development statewide. It authorizes affordable housing development on commercially zoned land inside urban growth boundaries. It requires cities to approve qualifying emergency shelters regardless of local zoning restrictions. It dedicates resources to low income students, agricultural workers, and rural communities. It provides five million dollars for councils of governments and economic development districts such as MCEDD to support housing initiatives. It also creates new grant and loan programs to reduce barriers and accelerate production.

MCEDD has acted as a convener, grant administrator, and technical assistance provider to ensure Gorge communities could compete for HB 3395 funds. Our organization has supported local governments with applications and fiscal sponsorship, provided planning and project development support, and coordinated regionwide collaboration. Funded examples include the Hood River Heights Proportionate Share Study, awarded $35,000 to evaluate infrastructure cost sharing for new housing; the City of The Dalles Chenowith Loop Housing Development, awarded $71,998 for design and traffic impact analysis; and the City of Moro Dewey Street Housing Development, awarded $92,000 for design and engineering of housing infrastructure.

Even with HB 3395, communities face significant obstacles. Development costs continue to rise due to land, labor, and material expenses. Smaller jurisdictions lack staff capacity and technical expertise to advance complex housing projects. Infrastructure systems for water, sewer, and roads often require upgrades before homes can be built. Community opposition to growth, density, or shelters creates further delays. Competitive grant processes and short application timelines introduce uncertainty into project delivery.

MCEDD will continue supporting implementation by assisting Hood River, The Dalles, and Moro as they transition from planning to construction. Regional coordination remains essential to maximize the impact of HB 3395 and to prepare a pipeline of future projects that can compete for additional funding. Several lessons have emerged. Housing is economic development, and stable housing is essential for workforce retention and investment. Regional collaboration allows small communities to access resources they cannot secure alone. Projects with planning and engineering readiness are the most competitive. Councils of governments and economic development districts are vital as grant writers, fiscal sponsors, and conveners. Community engagement reduces opposition and builds long term support.

HB 3395 provides Oregon with new tools to confront a housing crisis that threatens economic vitality across the state. In the Mid-Columbia region, MCEDD has already leveraged the bill to bring resources into Hood River, Wasco, and Sherman counties. Continued focus on readiness, capacity building, and partnerships will ensure that the Gorge is well positioned to turn policy into real housing solutions.