In its quest to add affordable housing, the City of Bend has made a habit of waiving costs like infrastructure fees or property taxes that might make development more expensive.
Yet when it comes to the City’s impending fee on new homes powered by natural gas, builders of lower-cost homes won’t be off the hook.
The Bend City Council made that decision on Wednesday following a lobbying effort that split developers over the future of the City’s affordable housing stock.
Perhaps counterintuitively, it was nonprofit home builders who cater to the lowest income earners who urged the City not to exempt their developments from the new fee. They said all-electric homes — which are typical for affordable housing developments — would be safer and result in lower energy costs for homeowners in the long run.
“I’m leaning on the experts,” said Bend City Councilor Steve Platt Wednesday evening. “They believe it’s the wrong move for us, the wrong signal for us, to do any kind of exemption for affordable housing. I’m a strong ‘no’ on that.”
Meanwhile, the local building industry argued for an exemption, maintaining its stance that natural gas fees will increase the price of housing in Bend, making it out of reach for more low- and middle-income earners.
Bend is on the doorstep of becoming the second city in Oregon, behind Ashland, to adopt a fee for using natural gas in residential construction. After two years of policy development, the City Council is expected to adopt the fee in June. The affordable housing discussion is one part of a larger debate over electrification, with environmental advocates urging the City to do its part to reduce greenhouse gas emissions as the climate warms. Meanwhile, builders, gas utilities, and business and labor groups are pushing back with concerns over affordability and energy reliability.
The proposed climate pollution fee is meant to encourage builders to install electric appliances in new development while generating revenue for other electrification efforts.
According to staff estimates, the fee will cost builders who install gas appliances anywhere from $1,400 to $3,300, depending on the size of the home. It’s based on the difference in carbon emissions between gas and electric appliances, multiplied by a portion of the social cost of carbon, a metric created by the U.S. Environmental Protection Agency to estimate damages to humans and the environment from climate change.
Two of Bend’s primary nonprofit affordable housing builders — Habitat for Humanity and Rooted Homes — wrote letters to the City Council earlier this month encouraging the City to apply the natural gas fee across all levels of housing. Both already strive to build all-electric homes that are net-zero, meaning they are highly efficient and use solar panels to create as much energy as they consume.
Bend-Redmond Habitat for Humanity Chief Executive Officer Carly Colgan told the City cost exemptions are “very helpful” but shouldn’t be applied when policies relate to health and safety, like fire resilience and electrification.
“If exemptions are granted, affordable homes may end up built to a lower standard than market-rate housing, creating a two-tiered system where lower-income households bear higher energy and maintenance costs,” Colgan wrote.
The developers rely on state and City funding to help build homes usually restricted to people earning less than 80% of the area median income — about $91,000 for a family of four — or in some cases up to 120%. Bend grants exemptions on System Development Charges — fees to help build out the City’s water, sewer and roads — for housing restricted to less than 80% of the area median income. It also offers property tax rebates for multi-unit housing where at least 15% of homes are restricted for people making 90% of the area median income or below.
Colgan said Habitat for Humanity has built 50 homes in Bend in the last five years. On average, their buyers earn 55% of the area median income, or about $57,000 for a family of four.
According to a state housing analysis, about two-thirds of the housing stock built in Bend in the next 20 years will need to be restricted to 120% of the area median income or below, or about $148,000 and below. More than one-third will need to be attainable to people making 80% or below.
Not all lower-cost housing comes from nonprofit developers. Some of those homes will come from larger for-profit builders like Hayden Homes, which doesn’t use government subsidies to build homes for lower and middle incomes, said Jenn Kovitz, community engagement and government affairs manager with the developer.
At an April 8 stakeholder roundtable meeting, the Central Oregon Builders Association advocated for exempting housing up to the 120% area median income restriction.
According to Hayden Homes, 40% of the 340 homes in the Parkside Place development under U.S. Highway 20 in east Bend will be restricted for people earning 80% or less of the median income.
“We are doing what we can on our end to build homes that can sell to that area median income,” Kovitz told the Source. But lower-cost housing is the most vulnerable to what Kovitz called “affordability erosion” from policies like electrification, she said.
Bend’s natural gas fee comes as builders adapt to other new policies, such as the City’s tree preservation code adopted in 2024 and “home hardening” codes for wildfire resilience that go into effect next month.
Bend City Councilor Megan Perkins been the lone councilor against fees on natural gas, arguing instead for incentives and education. But if there is going to be a fee, she told the Source, it wouldn’t make sense to exempt affordable housing if the vast majority is already all-electric.
Instead, she hopes builders can see cost reductions by using dual-fuel appliances, those that can run on either gas and electricity.
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Dual fueled appliances will increase the cost more than simply electrifying.
They often cost 30-50% more than single-fuel alternatives because they combine two systems in one, require both gas and electric hookups, and offer premium performance
The cost of natural gas relative to electricity is going to stay pretty consistent. Electrification, as an environmental benefit, is asinine at this point. If we had plenty of hydro and plenty of Nuclear powered generation, then electrification would make sense, but we don’t and hydro seems to be going away and nuclear is a long way off if ever due to previous bad mistakes. Bend city council says they want affordable housing but then they go and make it more expensive for the consumer and when the power outages come, those same consumers won’t have heat and won’t be able to eat hot food.