Senate Bill 1537 Bend Gets a One-Time UGB Expansion Opportunity

Oregon's Urban Growth Boundary system has been both a defining feature and a persistent frustration for growing cities. Bend, which has pushed against the edges of its UGB for years, just received an unusual tool to work with. Senate Bill 1537, passed by the Oregon Legislature in 2024, gives qualifying cities a one-time opportunity to add up to 100 acres to their Urban Growth Boundary through an expedited process. Bend initiated this process in June 2024, and the decision about where those acres go could shape the city's housing landscape for the next generation.

Understanding Oregon's Urban Growth Boundary

Oregon is one of the few states that requires cities to establish Urban Growth Boundaries, defined lines beyond which urban development generally cannot occur. The system, established in the 1970s, was designed to protect farmland and natural areas from sprawl. It has largely succeeded at that goal: drive outside almost any Oregon city and you transition quickly from developed land to farms and forest.

The downside is that the UGB constrains the supply of developable land, which in high-demand markets like Bend contributes to elevated land costs. When demand for housing is strong and the supply of buildable land is limited, prices go up. Expanding the UGB is possible under existing law, but the process is notoriously slow. Bend's last major UGB expansion took years of study, review, and legal challenge before the added land became available for development.

What SB 1537 Changes

SB 1537 creates a parallel, faster process. Instead of the multi-year review through the normal UGB expansion framework, qualifying cities can apply for a one-time expansion of up to 100 acres with an expedited timeline. The key provisions:

• One-time use only. Each qualifying city gets one shot at this expedited process
• Up to 100 acres can be added to the UGB
• 30% affordable housing requirement. At least 30% of the housing built on the expansion area must be affordable
• Income thresholds defined: Rental affordability is set at 80% of Area Median Income (approximately $83,750 for a family in Bend) and homeownership affordability at 130% AMI (approximately $136,110)
• Expedited review by the state, significantly faster than the traditional process

The 30% affordable housing requirement is the trade-off for the faster process. The state is essentially saying: we'll let you expand faster, but you have to use some of that expansion to address housing affordability directly.

Why This Matters for Bend

Bend has been one of the fastest-growing cities in Oregon for over two decades. The city's UGB has been a consistent constraint on housing supply, particularly for more affordable housing types that require less expensive land to pencil out economically. With development costs already at roughly $300 per square foot, the cost of land within the existing UGB makes it extremely difficult to build anything that qualifies as affordable without heavy subsidies.

Adding 100 acres of land to the UGB, with the requirement that a significant portion support affordable housing, directly addresses both the supply constraint and the affordability challenge. It's not a complete solution to either problem, but it's a meaningful step.

The Site Selection Process

Bend initiated the SB 1537 process in June 2024, beginning the evaluation of potential expansion sites. The selection criteria include:

• Proximity to existing infrastructure (water, sewer, transportation)
• Compatibility with adjacent land uses
• Capacity to support the required housing mix including affordable units
• Environmental considerations and natural hazard avoidance
• Connection to the existing urban fabric

Multiple sites around Bend's perimeter are being evaluated. The decision about which site to select will involve public input, technical analysis, and ultimately a City Council vote. The outcome will determine not just where new homes are built, but which part of the city absorbs the growth and infrastructure demands that come with it.

What It Means for Home Buyers

For people looking at homes in Bend, the UGB expansion creates future supply that doesn't exist today. However, "future" is the operative word. Even with an expedited process, the land won't be available for development immediately after selection. Master planning, annexation, infrastructure extension, and actual construction all take time. Realistic timelines suggest the first homes from this expansion won't be available until 2027 or later.

The affordable units represent a direct opportunity for households earning around the area median income. If you earn between $80,000 and $136,000 and have been priced out of Bend's existing market, the homes from this expansion could be your entry point into homeownership.

What It Means for Existing Homeowners

If the expansion site is near your neighborhood, you should pay attention to the master planning process. New development brings both benefits (commercial amenities, improved roads) and challenges (construction disruption, increased traffic, changed neighborhood character). Engaging early in the public comment process is the most effective way to influence design and mitigation measures.

On property values: additional housing supply generally moderates price appreciation rather than causing price declines. The effect is gradual and distributed across the market. If you own a home in Bend, the UGB expansion is unlikely to reduce your home's value, but it may slow the rate at which values increase compared to a scenario with no expansion.

What Comes Next

How SB 1537 Differs From Normal UGB Expansion

To appreciate what SB 1537 offers, it helps to understand the traditional UGB expansion process. Under normal Oregon land use law, expanding a city's UGB requires extensive justification: the city must demonstrate that it has exhausted reasonable options for accommodating growth within existing boundaries through density increases, infill development, and redevelopment. The city must then evaluate multiple potential expansion areas against criteria including agricultural land protection, transportation impacts, and public service costs. The process typically involves a multi-year planning effort, followed by hearings, adoption, and often appeals to the Land Use Board of Appeals.

SB 1537 compresses this timeline significantly by providing a parallel, expedited process. The trade-off is the affordability requirement: 30% of housing must be affordable. The state determined that the public benefit of increased affordable housing production justifies the faster track. For Bend, the expedited timeline could save years compared to a traditional expansion.

The site selection process will unfold over the coming months, with City Council expected to make a final decision later in 2024. We will be covering the options, the public input process, and the council's decision in our housing market section. For a broader view of how Bend's growth policies affect real estate decisions, talk to our team.