Bend Oregon Real Estate

The Bend Oregon Real Estate Blog ~ Learn about Homes For Sale in Bend, OR. Here!

Bend Developer Moving Forward With Master Plan in NW Crossing

NW Crossing to add 650 homes, cottages, and apartments - bend, Oregon

Northwest Crossing

Bend Bulletin

Two master plans that could eventually add 1,750 units of housing to the city of Bend will debut to the public this year.

First up is Discovery West, which Brooks Resources will present to the Bend Planning Commission on Monday evening.

The master plan calls for 650 single-family homes, townhouses, cottages and apartments or condominiums on 245 acres west of NorthWest Crossing.

View NW Crossing Homes For Sale | Map of NW Crossing | Link to original Article

This summer, Pahlisch Homes plans to file a master plan with the city for about 175 acres northeast of Deschutes Market and Butler Market roads that would contain 1,100 houses, townhouses and apartments.

Each of the master plans calls for more housing units than any other plan the city has approved since 2012, said Russell Grayson, Bend Community Development director. If built today, the 1,750 units would increase Bend’s current housing stock of about 34,000 units by 5 percent.

The developers expect it will take a decade or more to build out their plans. The city approves a few hundred residential lots each year, including those that are part of master plans.

The number has ranged from 191 to 423 over the last four years, Grayson said.

Brooks and Pahlisch executives said their plans reflect lessons learned about what consumers want in their homes and neighborhoods.

After developing NorthWest Crossing around a retail center, Brooks Resources has realized that proximity to parks and trails is a big draw, President Kirk Schueler said.

Discovery West will have a long swath of parkland that creates connectivity to Shevlin Park via the next neighborhood to the west, Tree Farm.

Pahlisch has heard from city officials about the so-called “missing middle,” or lack of homes affordable to middle-income households, said Cory Bittner, operations and design partner at Pahlisch.

The volume home builder’s master plan, called Petrosa, is a response to that need, he said.

“What you’re going to see here is a mix of housing you haven’t seen in Bend before,” said Jerry Jones, a land development consultant who is working with Pahlisch on the plan.

In addition to 450 apartments, the plan includes a variety of single-family home types. There will be townhouses and one-story and two-story houses, both with garages facing the street and with garages off an alley. Sizes will range from 1,100 square feet to 3,500 square feet.

“And not just a handful of these smaller ones,” Jones said, referencing a draft of the plan. “There’ll be a good supply of these.”

The breakdown

About half the size of NorthWest Crossing, Discovery West isn’t large enough for its own commercial center, Schueler said. The plan shows areas of employment and limited commercial uses along Skyliners Road west of Miller Elementary.

Just north of the school is where the majority of apartments would be located, Schueler said.

A smaller number of apartments would be in a mixed housing area on the northeast end of the development, where Skyline Ranch Road intersects with a new road serving the standard residential lots to the west.

The mixed housing area would include cottages, townhouses and apartments that will range from four to eight units, Schueler said.

Also in that core area around Skyline Ranch Road, Brook hopes to improve upon the concept of live-work spaces, or living quarters above a storefront, Schueler said. NorthWest Crossing has live-work spaces, but in Discovery West they will have bigger windows, and perhaps more prominent signs, he said.

“The idea is the architecture will convey a ground-floor retail look,” he said. He hopes that will attract small shops.

Purely a land developer, Brooks will select home builders to work on Discovery West. If the master plan is approved, Schueler said he hopes to select home builders this spring and finish laying the groundwork for the first phase by the end of the year.

“Those builders would not close on those lots until this time next year,” Schueler said. “Then, they start building homes in 2020.”

Petrosa would be the largest project Pahlisch has undertaken in Central Oregon since the recession, but it’s not a first for the company, Bittner said.

The master-planned community is similar to Butternut Creek, a master-planned community in south Hillsboro, he said.

Pahlisch has been assembling parcels in northeast Bend and meeting with city officials over the past year. The company intends to file at the same time its master plan and area plan for annexation.

In addition to 1,100 units of new housing, the master plan includes a commercial area in the southwest corner along Butler Market Road.

Ideally, the commercial area would be connected by multi-use path to a new elementary school in the northeast corner, Bittner said.

“The concept here is to make sure the community’s very walkable,” he said.

The development would be bounded on the north side by an extension of Yeoman Road and divided north to south by an extension of Eagle Road.

The North Unit irrigation canal cuts across the northwest corner, which is designated for apartments. A 5-acre park is at the very center of the plan.

Pahlisch executives declined to release a rendering of their plan because details are still under discussion. The development could require as much as $30 million in off-site improvements, Bittner said.

One of the elements they’re negotiating with the city is who will pay for the extension of Yeoman Road, he said. That will have a big impact on the cost of development.

— Reporter: 541-617-7860, kmclaughlin@bendbulletin.com...

Oregon Rent Control Senate Bill 608 Explained

OREGON RENT CONTROL SENATE BILL 608 

Eviction Standards
Eliminates no-cause eviction standard after the first year of occupancy.

o Landlords can continue to evict for a tenant-based cause (current law – i.e., non-payment, violation of
the rental agreement, outrageous conduct, etc.).
• Adds new landlord-based for-cause reasons to evict a tenant:
o Sale to a person who will move in;
o Landlord or family member move-in;
o Significant repair or renovation of the unit;
o Removal of the unit from residential use.
• If landlord uses one of these four landlord-based reasons, they must provide the tenant with 90-day notice and
relocation expenses in the amount of 1 month’s rent.
Exceptions
• Small landlords (4 or fewer units) do not have to pay relocation expenses.

• Landlords who live on the same property as their tenant (owner occupied, 2 units or less) may still use a no-
cause eviction at any time.

Month-to-Month Tenancies
• For the first 12 months of occupancy, a landlord may terminate the tenancy without cause with a 30-day notice.

• After the first 12 months of occupancy, a landlord may only evict a tenant for cause, by using an existing tenant-
based reason or by using one of the four new landlord-based reasons.

Fixed-Term Tenancies
• After the first 12 months of occupancy, the fixed-term lease will automatically roll over to month-to-month
unless the landlord has a tenant or landlord-based reason to terminate.
Exceptions:
• A fixed-term lease might not automatically roll over at the end of the fixed term per landlord discretion if
the tenant has violated the terms of the rental agreement 3 separate times during a 12-month period, with
written warnings for each violation given contemporaneously with the violation.

Annual Rent Increase
• Landlords may increase rent by no more than 7% + consumer price index in a 12-month period.
• Maintains current law regarding rent increases: prohibits rent increases in first year of month-to-month tenancy
and requirement that landlords give 90-day notice of rent increases thereafter.
Exceptions:
• New Construction: A landlord may increase the rent above 7% +CPI in a 12-month period if the certificate of
occupancy was issued less than 15 years ago.
• New Tenancy: If the previous tenant vacated the unit voluntarily or their tenancy was otherwise terminated in
compliance with other applicable law, the landlord may reset the rent on the new tenancy without limitation.
• Subsidized Housing: If the landlord is providing reduced rent to the tenant as part of a federal, state, or local
program or subsidy, they are exempt.
Enforcement
• If a landlord violates the new provisions, they are liable for three months’ rent plus actual damages.

2

SENATE BILL 608 SUMMARY

Frequently Asked Questions: SB 608
When will the changes go into effect?
Senate Bill 608 has an “emergency clause” and thus becomes effective once signed by Governor Brown. We anticipate
this could be as early as March 1, 2019.

If I have a transaction that closes after the law goes into effect, can the new owner evict the tenants?
Depends. Generally, you may only evict for a tenant cause or a “qualifying reason for termination” under of the
enumerated circumstances that the law provides.
Once you become an owner of qualifying rental property, you become a “landlord” whose conduct is governed by the
bill and you should review both the current law and existing tenant contracts of the property you’re purchasing.
However, the law does allow for specific circumstances under which a landlord, including a new landlord, could evict a
tenant landlord-based reasons including significant renovations, demolitions, safety, or owner-occupancy.

How does this impact closing timelines for rental occupied properties where the new owner will occupy the
residence?
The closing date in the sale of real property is a construct of contract law between the parties and thus would not be
affected by the new law which governs landlord-tenant relations.
However, displacing a current tenant (and thus effectuating the intent of new owner who would like to move-in) is
another issue (because notwithstanding the transaction between the buyer and the seller, the tenant has their own
rights subject to their lease agreement and current law).
If the tenant is a week-to-week tenant, or a month-to-month tenant within the first year, you have some flexibility to
displace them without cause (so long as you give them the specified amount of notice) and certain circumstances apply.
If the current tenant is a month-to-month renter who has been occupying for more than a year or is under a fixed term

lease, evicting a tenant is subject to more regulations. Fixed-term leases will always continue, unless there is a tenant-
based reason (failure to pay rent) for eviction. On a month-to-month tenancy, 90-days’ notice and the payment of

relocation expenses (1-month’s rent) will be required.

I heard that the law caps rent increases, but that cities and counties will be able to set high rent caps if they
want?
There are no exceptions for cities and counties, and therefore the rent increase cap would apply to the entire state
equally. Further, any local ordinances that conflict with the statewide cap on rent increases would likely be preempted
by the legislature’s acts. We advise seeking legal counsel to determine where estate and local laws may conflict and the
potential impact of such a situation.

3

SENATE BILL 608 SUMMARY

When it says that it applies to buildings 15 years or older, when does that date start? Is it rolling?
The time period is calculated by the difference between when a notice of rent increase is sent out and when a certificate
of occupancy was issued for the dwelling unit.

Does selling your home count as a for-cause or no-cause eviction?
The bill is intended to provided protections for tenants. Thus, if a home owner wishes to sell their home, this law would
have no effect on that transaction (which is between the buyer and the seller) unless the rights of a tenant are affected.
Fixed-term leases will always continue, unless there is a tenant-based reason (failure to pay rent) for eviction. On a
month-to-month tenancy of under a year, a no-cause notice may be issued with 30-days’ notice. On a month-to-month
tenancy of over a year, 90-days’ notice and the payment of relocation expenses (1-month’s rent) will be required.

Resources:
Please reference Senate Bill 608 on the Oregon State website at
https://olis.leg.state.or.us/liz/2019R1/Downloads/MeasureDocument/SB608/Introduced

...

Oregon Statewide Rent Control first in Nation

Oregon Rent control law signed, takes effect immediately.

By Sarah Zimmerman, The Associated Press

SALEM — Gov. Kate Brown signed the nation’s first statewide mandatory rent control measure Thursday, giving a victory to housing advocates who say spiraling rent costs in the economically booming state have fueled widespread homelessness and housing insecurity.

Brown said the legislation will provide “some immediate relief to Oregonians struggling to keep up with rising rents and a tight rental market.”

Landlords are now limited to increases that cannot exceed 7 percent plus inflation, and can only raise rents annually.

The law prohibits them serving no-cause evictions after a tenant’s first year of occupancy, a provision designed to protect those who are living paycheck to paycheck and who affordable housing advocates say are often most vulnerable to sudden rent hikes and abrupt lease terminations.

The law takes effect immediately. Democrats, who control the Legislature, say the state’s housing crisis justified passing the bill as an emergency measure.

New York has a statewide rent control law, but cities can choose whether to participate. California restricts the ability of cities to impose rent control; in November, voters defeated a ballot initiative that would have overturned that law.

In hearings for the Oregon bill, tenants testified that they have struggled to keep up with skyrocketing rents, with many saying they’ve been forced from their homes. Kori Sparks, of Bend, said she relies on disability and has “to deal with the stress of losing an accessible home on short notice.”

She said rent control will protect vulnerable people from “a predatory system where profit comes before people and denies them of a basic human right.”

Housing crunch

Builders in Oregon have not been able to build enough houses and apartments to meet the demands of the thousands of people moving to the state for jobs and, in some cases, for a lower cost of living. Many people move to the state from California.

A state report estimated that a renter would need to work 77 hours a week at minimum wage to afford a 2-bedroom apartment. Many renters in Oregon are paying more than 50 percent of their income on rent, far higher than the Congressional-set definition of housing affordability, which suggests setting aside 30 percent toward rent.

In the Portland metro area, rent began to plateau in 2017 after four consecutive years of rent hikes averaging 5 percent or more. The average rental unit costs about $1,400 a month, according to city data.

Oregon is also suffering from a lack of affordable housing and has one of the highest rates of homelessness in the country.

Landlords and developers argued that rent control would make the housing crisis worse, saying investors will now be less willing to build or maintain properties.

“History has shown that rent control exacerbates shortages, makes it harder for apartment owners to make upgrades and disproportionately benefits higher-income households,” said Doug Bibby, president of the National Multifamily Housing Council, a national association representing apartment building owners.

The governor acknowledged that rent control alone isn’t enough, and that the state needs an “all hands on deck” solution. Brown has proposed a $400 million investment in affordable housing solutions in her two-year budget proposal.

...

Federal Opportunity Zones

Are Opportunity Zone Funds Right For My Real Estate Investment Portfolio?

Post written by: Drew Dolan - Forbes Council

The Opportunity Zone (OZ) tax incentive has now been widely written about, and experts predict that $100 billion will flow into Opportunity Zones this year. Real estate developers should be evaluating each land purchase and each deal to make sure that any government incentive available supports the bottom line of their investments. The new Opportunity Zone incentive affects a handful of projects in my firm's current development pipeline, and in order to monetize Opportunity Zone pipeline projects, we had to understand the answers to a few key questions: What are Opportunity Zone funds? How do we evaluate them? Are they right for every investor? Are they right for us?

Examine the answers below to help inform your next real estate investment decision in the OZ space.

What are Opportunity Zone Funds?

Opportunity Zone Funds (OZF) are primarily a way to roll capital gains into new business or real estate investments with tax deferrals and overall reduction. In order to enjoy the full benefit of the Opportunity Zone tax incentive, an investment must be held for 10 years to reach forgiveness for additional capital gains.

How do I evaluate an Opportunity Zone Fund deal differently?

As the key to this process is holding a deal for 10 years, it goes without saying that it is important to study the hold/disposition strategy for each deal. Competition upon disposition will also be something to consider for many of these projects. Ultimately, good deals can become great upon disposition, but bad deals cannot become good. The internal rate of return (IRR) is sensitive to the time value of money, so many investors will examine cash-on-cash metrics instead of heavily relying on IRR. Cash flow from 12% to 14% will ensure that investors can actually hold the property for the required amount of time and generate income while waiting for the maximum tax benefit to become available.

The OZF rules favor ground-up real estate development due to the requirement that invested capital gains must “substantially improve” the property or business, which means the entire initial investment must be matched in improvements to the property. While this can be achieved in a myriad of ways, the most straightforward way to meet this requirement is to purchase land within an Opportunity Zone and build something on the raw land.

It is paramount that good underwriting is in place for any real estate deal, but Opportunity Zone deals must be analyzed specifically for their time requirements. Investors seek to invest quickly so that the benefit is greatest, which will require you find expert underwriters.

Another piece of the Opportunity Zone puzzle is understanding the perishability of returns over time. Returns decrease from 3.08% for investments made in 2018 to 1.74% for investments made in 2025. The rush to deploy capital in these locations will certainly impact strategy and favor those funds and groups that are able to act swiftly.

Data presented (registration required) by Marcus & Millichap last year demonstrates standard after-tax IRR compared to the returns available when the Opportunity Zones capital gains deferrals increase in basis over time (10-15%) and eventual forgiveness. Assuming a standard after-tax IRR of 6%, reported jumps are from 35% to 51%. These benefits are significant, and we anticipate a good deal of competition for not only land in Opportunity Zones, but for “half-baked” deals that groups with capital to deploy can take over.

Are OZF deals right for my real estate investment portfolio?

Opportunity Zone Funds are a fantastic opportunity, and the benefits cannot be understated. If you already have existing capital gains, a solid Qualified Opportunity Zone Fund (QOZF) project could deliver higher returns compared to one not in an Opportunity Zone.

That being said, it is important you consider the implications of QOZFs when evaluating existing deals and consider the risks of funds that do not have a pipeline to execute, expert underwriting and post-tax return analyses. The benefit of this tax incentive will be extremely meaningful; however, it cannot make a bad deal a good one.

Bottom Line

QOZFs will make sense for some pipeline developments and not for others. The strength of any real estate development project is held in a conservative pro forma. Smart developers will seek to invest in QOZFs with strong fundamentals that can demonstrate speed to market.

...
Bend Real Estate Update BEND REAL ESTATE
Sign me up

Bend Real EstateUPDATEGet the Latest on the
Bend Real Estate Market

Sign Me Up! »
List your home with us! List your home with us!

Call 541.280.BEND (2363)