Lawmakers are considering weakening wetlands protections to encourage development of much-needed affordable housing
A bill moving through the Oregon Legislature aimed at easing housing construction in some rural areas is at odds with regulations set under the Clean Water Act.
While environmental groups say House Bill 2796 would give developers a free pass to build over the state’s dwindling stock of wetlands, developers say that without its passage, much-needed affordable housing in small Willamette Valley communities won’t be built.
The problem is that projects for workforce and affordable housing in the Willamette Valley’s smaller, economically depressed towns aren’t penciling out because a mandatory wetland mitigation program is too expensive for those towns’ housing markets to support.
The bill would weaken mitigation requirements when housing was built in “degraded wetlands,” defined as wetlands that have been manipulated in a way that interferes with the normal functioning of wetland processes.
This piece of legislation is one of four moving forward that are aimed at giving local governments more control over the permitting process and wetland mitigation program in order to clear the way for housing development.
The cost of the mitigation program to developers has been an issue for years, and finding solutions that balance the need for development with the needs of the environment hasn’t been easy, especially given the many layers of regulation and the number of government agencies involved in permitting, from municipal on up to federal.
In 22 years of working at the Capitol, “this has been the most frustrating piece of legislation I have ever worked on,” said Dave Hunnicutt, of the Oregon Property Owners Association (formerly Oregonians in Action), which helped bring the bill forward.
He said his organization heard from multiple property owners in the Willamette Valley who walked away from building projects because of the high cost of wetland mitigation.
Nick Veroske was one of them. He wanted to build a manufactured-home park on 12 acres of land he owns inside Sheridan’s urban growth boundary. This small town in the western Willamette Valley has a growing manufacturing workforce but no new developments to house workers. Veroske, who’s developed lands in various cities around Oregon, said he thought his park could help meet the growing demand for housing that’s affordable to workers making $35,000 to $47,500 a year. He developed an adjacent lot 20 years earlier without issue, and in 2016, he began to plan the park he would call Fox Hollow.
“My efforts were brought to a halt,” he told a House committee in March when he testified in favor of the bill. The reason, he said, was that since his last development, the soils on his land had become hydric and were now considered a wetland. If he wanted to build a manufactured home park, he said he would have to pay at least $705,000 in wetland mitigation expenses. That would mean his return on an investment of more than $4 million would hover around 3% – far too low for the risk. He ditched the plan, and his land remains unused.
If development is occurring in a depressed area where the cost of mitigation can’t be passed on to the buyer, “the development is not going to happen,” Veroske told Street Roots.
He said given the state’s extreme housing shortage, he was hoping the bill would give an exemption to wetland mitigation when a housing development, such as his, lays within a federally designated Opportunity Zone. These zones are areas where new investments are eligible for tax breaks as a way of encouraging economic development in an economically depressed community. There are 86 such zones in Oregon.
But as it is written, Veroske isn’t sure the bill would make his project possible because he’d still be on the hook for partial mitigation.
Affording these costs is a common problem in the Willamette Valley’s more rural communities because many overlap with flood zones and wetlands. While much of the land has, at one point or another, been drained for agriculture – as was Veroske’s – when the water returns, it’s again protected.
Alternatively, if Veroske fixed old drainage pipes on his land and let it dry out again, he could build in 10 years without paying for mitigation at all, the Department of State Lands told him. But Sheridan needs workforce housing now, he said.
Sheridan City Planner Jim Jacks said that while much of the developable land in Sheridan is wetlands, there are also vacant parcels that are not, where housing could potentially be built.
Wetlands should be protected rather than built on, says a coalition in opposition to the bill, because they offer important benefits, such as filtering pollutants from the ecosystem, recharging groundwater and storing excess water from flooding rivers.
Coalition members include representatives from The Wetlands Conservancy, Recode, WaterWatch of Oregon, Portland Harbor Community Coalition, and housing advocates from p:ear and Right 2 Survive.
Member Bob Sallinger, of Audubon Society of Portland, said even degraded wetlands offer great ecological value and systems benefits.
“This is basically a giveaway to developers who want to develop in wetlands without accountability and using the housing crisis as a wedge to do that,” he told Street Roots.
The coalition also argues building in wetlands can increase vulnerability to damaging effects of earthquakes and elevates exposure to flooding and erosion, which could burden unsuspecting homebuyers with future costs.
Opponents also point out that while developers argue the bill is necessary to build affordable housing, it is broadly written to include all “needed housing” construction.
“This country has had a goal of no net loss of wetlands for a long time,” Sallinger said, “because we decimated our wetlands, clearly, nationwide and statewide.”
Since the 1850s, approximately 98% of wet prairies and 67% of emergent marsh habitats in the Willamette Valley have been lost, and most remaining wetlands are in a degraded or altered state, according to The Wetlands Conservancy.
Extreme flooding earlier this month upstream on the Willamette River in Eugene and Corvallis “is a perfect illustration of why we need our wetlands,” said Kathleen Guillozet, who directs the Willamette Model Watershed Program for the Bonneville Environmental Foundation.
When Europeans settled in the valley more than 100 years ago, they did so along the Willamette River and its tributaries.
In 1973, Oregon instituted urban growth boundaries around established townships to prevent urban sprawl. When boundaries were drawn in areas around the existing towns and cities in the valley, much of the land that was supposed to be available for future development contained wetlands.
Around the same time those boundaries were established, the Clean Water Act gave protection to the wetlands within them. It required that to build in these federally protected areas, a property owner must mitigate for the damage caused to the watershed.
Today, the wetland mitigation program requires that developers fund the restoration of wetlands in the same watershed where they’re building on a wetland. The federal minimum is one acre restored for one acre destroyed; however, if the wetland is considered higher in ecological value, the developer may have to pay for the restoration of a higher number of acres than are being developed.
House Bill 2796 would change the ratio so that for every four acres destroyed in certain projects, just one acre would be restored.
Most developers aren’t in the business of restoration projects. Instead, they purchase credits from property owners who do the work of restoring previously degraded wetlands and maintaining their resilience. These are known as mitigation banks, and as of the end of the 2018 fiscal year, there were 27 such banks in Oregon spread across different watersheds.
While it’s much cheaper to buy a credit than it is to do the restoration on a small scale, the price has become prohibitive in markets where housing prices are lower.
The price of each credit is about $70,000 to $75,000 and can be as much as three times that amount in high-value urban areas such as Portland, said Bill Ryan, deputy director at the Department of State Lands.
He said if House Bill 2796 were to pass, it would apply only to wetlands that aren’t under the jurisdiction of the federal government, and that means it wouldn’t apply to most wetlands in the Willamette Valley because those waters are connected to a navigable waterway – the Willamette River – making them fall under the definition of waters of the United States and therefore federally regulated.
However, presidential administrations have a habit of changing the definition of what waters fall under this jurisdiction, and the Trump administration is in the process of doing just that, seeking to remove more than half of U.S. wetlands from federal jurisdiction.
If this proposed rollback were realized, then the weakened mitigation requirement could be applied more liberally, Ryan said.
“It’s particularly important that Oregon hold the line right now, at a time when the feds are going the wrong direction,” Sallinger said. “Even if we weren’t in these difficult political times, we should be strengthening those protections, not weakening them.”
Sallinger is also concerned about two other bills moving through the House that are aimed at easing development in sensitive areas. House Bill 2437 would increase the volume – by 60 times – of material that can removed from intermittent streams and creek beds without a permit, and House Bill 2436 would authorize the Department of State Lands to take over dredge and fill permits from the federal government. That means the state would be issuing fill permits for developers wishing to build in wetlands. Sallinger argues that if the state assumes this role, requirements to consult with wildlife specialists about species protected under the Endangered Species Act could be sidestepped.
“These kinds of bills are exactly the kinds of things we see the development community advocating for over and over again, and most often being rejected, so it’s particularly disappointing that you see these moving forward in a Democrat supermajority at a time when we really need folks to step up and speak up for the environment,” he said. “The governor has made protection of water one of the cornerstones of her administration, and a lot of Democrats have run on environmental platforms. These kinds of bills shouldn’t even be being heard, let alone moving forward.”
House Bill 2796, to weaken wetland mitigation requirements, was passed out of committee with a do-pass recommendation; however, now it’s sitting in Ways and Means, where changes will likely be made. Given the uncertainties with federal jurisdiction over waterways and the bill’s conflicts with federal regulation, it’s likely it will be rewritten, said Hunnicutt, of Oregon Property Owners Association.
Ryan, at the Department of State Lands, agreed.
But with or without it, another bill moving through Legislature offers a more promising solution, albeit one that will take at least five years to make a difference in the housing market.
House Bill 2438 would create a pilot project for enabling local governments to operate their own mitigation banks, and therefore charge less for credits. The pilot would be run by the Oregon Cascades West Council of Governments, which includes members in the Willamette Valley and Central Coast, and has already mapped out potential wetland restoration sites. That program, however, would take time, and developers see House Bill 2796 as necessary to enable the construction of housing that’s needed today.
Email Senior Staff Reporter Emily Green at emily@streetroots.org. Follow her on Twitter @greenwrites.
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