Bend sees more million dollar sales - as affordable housing needs grow

             As the conversation over affordable Bend housing continues, home prices are also escalating at a rate that may outpace any near term solutions.
            Data compiled by Beacon Appraisal Group for its monthly market report shows that the median price of a Bend single family home on less than an acre was $640,000, the third consecutive month above $600,000 although below the high monthly median of $651,00 in April.
            Perhaps more remarkable are the sales of homes at more than $1 million. There were 341 homes closed at $1 million or more for the 12 months through June of 2021, a 158% increase of the comparable midway point of 2020.
            The trajectory of the million dollar sales has more than quintupled the 67 at that range recorded in just the three years since midway 2018.
            As a percentage of all sales, those of $1 million or more accounted for only 2.6% in 2018, then rose to 4.7% in 2019; and 5.7% in 2020 before leaping to 12.3% for the 12 months ending June 20, 2021.
          Although the upward arc of regional housing sales has yet to show any weakening, it’s instructive to balance single month prices over a 12-month stretch.
            By that measure, Bend’s median single price for homes on less than an acre over the 12-months from July of 2020 through June of 2021 was $567,000, a jump of 23% over the $460,000 recorded for the comparable 2019 through 2020 period.
            The median price for the same quarter of the two years shows a greater increase, from $464,000 for the three month median in 2020 against $640,000 in 2021 – a 38% increase.

            To the north in Redmond, the region’s second largest housing market, the June median price was $451,000. For the 12 months the median was $374,000, 14% above the same 12 months of 2020. The quarter to quarter price of 2020 and 2021 rose 33% from $334,000 for the 2^nd quarter of 2020 to $443,000 in 2021.
            With Bend homes going into sales contract in last than a week on the market in the past several months, and often closing above listing price, the path for more substantial affordable workforce housing in the city is difficult.
            Bend is not unlike other smaller to mid-sized municipalities, many in the West, where attractive outdoor recreational opportunities combine with other lifestyle amenities to change the character of those once included in the “last best place” category.
            There are few undiscovered western gems left, with such towns as Whitefish, Bozeman and Livingston, MT and Prescott and Flagstaff, AZ and even Washington’s more remote Methow Valley straining under an influx of new part and fulltime residents.
            One possibility for more dedicated affordable housing lies in the distant horizon after approval of special legislation that would allow Bend to bring 260 acres of land bordering the southeast limits into its urban growth boundary.
            In theory House Bill 3318, which makes an exception to usual state land use procedures, could add land for as many as 800 affordable housing units on 20 of the 260 acres, with a 50-year deed restriction. It would also restrict 12 of the acres to anyone making 60% of the area’s median income, among other provisions.
            Also in the early stages of development in southeast Bend is what is known as the Stevens Road tract, 375 acres now held by Lands Bend Corp., a development group with several local projects whose principals include former California Republican Congressman Gary Miller.
            Lands Bend acquired the property from the Oregon Department of State Land for $22 million in the Spring of 2020. That acreage already lies within Bend’s urban growth boundary.
            The Bend Planning Commission is reviewing the company’s preliminary master plan that would provide for more than 1,700 housing units, about 650 of those single family homes, 359 townhomes and approximately 700 multi-family units.

Bend’s affordability challenge

            In a July report the Bend City Council announced the city had a total of 3,942 new housing either completed, under construction or in planning review in the period 2019-2021, which the report said exceeded a council goal of 3,000 units.
            The number included 1.976 finished units, 1,406 under construction and 560 being reviewed.
            The numbers appeared to give city leaders some encouragement in the continuing housing crunch. But another study by the city unveiled at a recent public online webinar shows affordability remains a major issue in relation to local median income.
            US Census data for the period 2015-2019 shows Bend's median household income at $65,662.
            On July 22, city officials held an information webinar to explain how the city plans comply with new Oregon legislation, HB 2001, which mandates that municipalities provide for multi-family units such as apartments, condominiums and townhomes be allowed in areas zoned for single family homes.
            A chart presented in the webinar shows that a household earning an adjusted median income of $120,600 could in theory afford a home priced at the maximum $566,980. That would leave the buyer short by $84,020 to purchase the median priced home that solid in April, according to Beacon Appraisal’s statistics as drawn from the MLS of Central Oregon.
            It would take an income of $64,300 to buy a home priced at a maximum $299,000, as noted in the city’s affordability chart. It would be a longshot if someone were fortunate enough to find one of the only 72 homes that closed at less than $300,000 out of 2,755 total sales for the 12 months that ended in April.
            And there were no closings at less than $300,000 in April.

 

Western reservoirs at historic water lows

             Central Oregon’s largest reservoir is draining ever more rapidly, resulting in an announcement July 7 that all dam releases could end within six weeks.
            The news from the North Unit Irrigation District came only a few days after yet more cuts in water delivery to its member growers who account for 55% of the region’s most productive cash crops, including 40% of global hybrid variety carrot seed.
            In a July 7 letter, NUID manager Josh Bailey, wrote that barring significant rainfall Wickiup Reservoir, the region’s largest impoundment which provides about 70% of its water to the irrigation district, would reach, “the artificial ending pool of 2,500 acre-feet on or around August 18.
            That  could mean that by August 20 the district’s ability to direct water in canals fed by Wickiup discharges into Haystack Reservoir, which in turn serves to distribute water to growers.
The district also receives some water from the Crooked River but that would not save the irrigation season.
            Wickiup is at an alltime low for this time in July in the reservoir’s 75 year history, and the present situation marks another year of declining storage due to lower spring snowpacks and related runoff into tributaries that feed the upper Deschutes River.

Source: Washington Post

            Throughout the western and southwest states the drought is taking its toll on many reservoirs that are experiencing record lows similar to Wickiup.
            Lake Mead is reporterdly at its lowest level of 35% capacity since it was created by the construction of Hoover Dam in the 1930s. Lake Powell, farther up the Colorado River, is similarly at historic lows of 34% capacity since it was filled after construction of the Glen Canyon Dam.
            Reservoirs in California have also drained to perilous levels, as dramatically illustrated by aerial photos of Shasta Lake in the northern part of the state.
            A analysis the first week of July of more than a dozen California reservoirs showed severely low water. The continuing water shortage could have substantial future consequences for some California municipalities as well as impact agricultural production of major food crops for the nation.

DROUGHT: The glass lower than half empty made even worse with a June heatwave

             Everybody is talking about it, the weather that is.
            The first week of June began chilly as some nightly temperatures dropped into the 30s and days barely made it out of the 50s. And several days were marked with heavier rain and higher humidity.
            Then came a dramatic change, as the final week of the month brought Bend’s hottest day on record June 30 at 107 degrees, preceded in the previous two days by 102 and 104 readings with heat advisories daily going into the July 4^th holiday.
            Early July also saw much of the center of Oregon from the California line to Bend and Deschutes County rated either in “extreme” of “exceptional” drought, the latter being the federal Natural Resource and Conservation Service’s most hazardous parched category.

            Several newer wildfires broke out after a spectacular band of thunder and lightning cells moved across the region the final week of June. Together with larger fires in the Warm Springs area north of Bend and in northern California, Bend’s “smoke season” has gotten an early start.
            The continuing drought exacerated by a heatwave have forced regional irrigation districts to cut back water distribution from the Deschutes as natural flows continue to drop.
            On July 2 the Central Oregon Irrigation District, which manages senior water rights for 45,000 acres in the basin, announced it would be cutting back distribution to member irrigators.
            “The flows in the Deschutes River are continuing to drop and with that the COID delivery rates must decrease,” COID management informed members in a June 18 notice posted on its website.
            “Currently we are at a 65-70% delivery rate in our system. The river flows are being closely monitored and we will keep you updated as the flows and the COID deliveries decrease.”
            The COID notice said the district would begin providing 100 cubic feet per second (cfs) of its entitled senior rights to the North Unit Irrigation District, Arnold and Lone Pine districts that manage junior water rights in the basin.
            Already the North Unit had begun major reductions of water flowing to its members, who grow 55% of the region’s most productive cash crops on nearly 60,000 acres in Jefferson County north of Bend.
            The level of Wickiup Reservoir, which stores water for the North Unit is at all time lows for this time of year at 18% of capacity. On July 4 that translated to only 33,157 acre feet, 54% less than at this time in 2020, also a drought year, and 74% less than average.
    Note in the real time "Hydromet" teacup graphic available from the US Bureau of Reclamation that Crane Prairie Reservoir, which impounds water for COID, is in the best shape of any reservoir in the region. That reflects COID's standing as a senior water rights holder in the basin. 

            In a July 1 announcement on its website the NUID manager began with a dire observation:
            “It pains me to write this letter, as I am fully aware of the difficult situation that we find ourselves in,” began general manager Josh Bailey.
            The announcement then continued to inform irrigators that in an emergency meeting June 30 the board of directors had approved another reduction of water distribution. That follows an earlier ramping down only days earlier on June 21.
            The latest NUID reduction emphasizes the dramatic and accelerating basin conditions, contradicting the district's early predictions that it hoped to maintain a 1 acre-foot distribution of its Deschutes River rights and .50 acres for water from the Crooked River throughout the season.

            In its earlier June cutback, the district reduced distribution to .90 acre foot per acre (af/pa) for the Deschutes water right and 0.40 ac/pa for the Crooked River impoundment at Haystack Reservoir in Jefferson County. Starting July 3, the distribution decreases to 0.80 ac/pa and 0.50 respectively.
            The goal, Bailey wrote, is to reduce immediate system demand and, “extend the available water through the end of August.”
            Although difficult to quantify, the drain on water availability in the greater Deschutes watershed is attributed to a confluence of several other factors joining drought conditions that have existed for several years with escalating and detrimental effect.
            For the past several irrigation years irrigators have been bound by terms of a Habitat Conservation Plan, negotiated by the districts, federal agencies, conservation groups and other stakeholders. The HCP agreement regulates river flows to protect the Oregon spotted frog, listed on the federal Endangered Species Act.

 Equipment sits idle as fields dry out

            Together with lower snowpacks, the requirement that extra water be released into the river system at certain times in the frog’s life cycle has resulted in some loss of storage in area reservoirs.
             Even with cooperation among COID, NUID and the other smaller basin irrigation districts there is the overarching issue of balance between senior and junior water rights holders, one that exists throughout the structure of western water law.
            In most western states water rights dating back to the 1800s are based on the doctrine of prior appropriation, simply translated as “first in time, first in line.”
            In Central Oregon, the water rights aggregated through the Central Oregon Irrigation District in the Bend area were recorded and used on the land ahead of those implemented later by the neighboring farmers and ranchers to the north in Jefferson County.
            The paradox emerges when the North Unit providing nurturing water for typically higher value crop production has a lesser claim to the resource than COID, with fewer cash crops.
            In some cases, smaller operations are put in a position of growing hay or alfalfa in  order to maintain the lower taxes on land zoned for exclusive farm use (EFU). Also a factor is the “beneficial use” requirement that a water right must be used at least one of the past consecutive five years, giving rise to the warning to “use it or lose it.”
            Irrigators in districts who do not plan to grow crops in a  given year have the option to place to temporarily return their rights to improve river flows, or to effectively lease it to others in their district. But thus far few appear to have made that decision this season.
            COID’s gesture to release 100 cfs of its water right to benefit NUID users is no doubt welcome but will likely provide little significant relief for Jefferson County growers.
            Already many have either scaled back this year’s crops by fallowing some fields, or entirely thrown in the towel for the growing season. Some say that even trying to plant and maintain non-cash cover crops to staunch erosion will be too costly.

Measuring irrigation water: From cubic foot per second to acre feet 

    It may be easier to understand how much water is used for irrigation by doing the calculations, starting with a cubic foot per second, or cfs, diversion.
    A cubic foot per second is the amount of water that would pass a given point in one second, or7.48 gallons. An acre foot is the amount of water needed to cover one acre to a depth of onefoot.
     In one hour, a 1 cfs diversion would cover an acre of land with one inch of water. In one day or 24 hours, then, 1 cfs would cover one acre with water two-feet deep—or 2 acre feet of water.
     Therefore, 2 acre feet per day is equal to a 1 cfs irrigation diversion.A 1 cfs irrigation diversion would result in 448.8 gallons in one minute (usually rounded to 450gallons per minute, or gpm). That would amount to 26,928 gallons in an hour, 648,000 in a dayand 236,520,000 gallons in a year.

  PREVIOUS

Another drought season in the works: Low snowpack and reservoirs

 Snowpack, water and endangered species - A complicated calculus

Fact Sheet of Draft EIS for the Deschutes Basin HCP

https://www.fws.gov/oregonfwo/Documents/DeschutesHCP/deisFR/mtgs/Deschutes%20Fact%20Sheet%20-%20WEB.pdf

Complete DRAFT HCP as of August 2019

https://www.fws.gov/oregonfwo/Documents/DeschutesHCP/deisFR/DBHCP%20Entire%20Document%20August%202019.pdf

A Timeline of the Spotted Frog ESA listing in the Deschutes Basin

https://bendisbetter.blogspot.com/2016/02/spotted-frog-esa-listing-creates.html

 

Tourism and neighborhood nightly rentals: Bend struggles with the issues

           You’ve been enjoying your home in an established Bend neighborhood, with very little traffic and minimal noise except for kids playing and the intermittment buzz of mowers and lawn edgers.
            You’re happy you researched the neighborhood before buying here.
            Then you get a notice from the city. The new owners of the home next to you or maybe a few doors away plans to make their property a nightly rental for visitors. The application for a short term rental, or STR, has been filed. Now the city is giving you a two-week window to weigh in on this.
            Your first reaction is, “Can they really do this? I recall that there was something in the documents when we bought the house that said only rentals of more than 30 days are allowed.”
            You dig out your closing papers from years back. There it is, clearly stated in the Convenants, Conditions and Restrictions, or CCRs: There under section 4.14 Transient Rental Use. “No owner or owners of any unit within (Happy Acres – a pseudonym) subdivision shall be permitted to rent their unit to any person or person for transient occupancy which shall be for a period of 30 days or less.”
            So, shouldn’t that solve the issue for this application?  The city wouldn’t allow this if it goes against the CCRs, you think. Well, not exactly. And the relationship of CCRs to Bend's processing of nightly rentals has become a flashpoint in established single family neighborhoods.
            As Bend becomes ever more popular with tourists – boosted by pentup pandemic travel demand – more residential property owners are seeing a potential revenue stream in nightly rentals. And among these are out-of-area and out-of-state buyers seeing an opportunity to stake out a place in Bend.

            In 2020, a Bay Area website that focuses on Airbnb posted an article titled, "Should you invest in Airbnb in Bend in 2020?"
            The conclusion, after discussing all the the upside of property appreciation and rental revenue, "All in all, Bend is one of the best markets for Airbnb on the West Coast....a must-invest for out-of-state and Oregon Airbnb hosts."

A balloon festival in Bend

            Local opinion is mixed. Facing an outcry from some residents beseiged by noisy parties and parking issues arising from tourist rentals, the city responded a few years ago with a series of public meetings, eventualy distilling the results into a new section of the development code.

Several types of short term rentals

            The new code provisions distinguish STR permits by several categories.
            A Type III permit applies to a development that clusters nightly rentals in areas outside of residential single family zoning.
           One Type I, permit allows a property owner to have “infrequent” nightly rentals of no more than 30 nights. Another Type I permit limits rentals to fewer than 30 consecutive nights and two rooms, without a kitchen, while the owner occupies the dwelling. These are allowed in single family zoned neighborhoods.
            Perhaps the most controversial STR is a Type II that allows for a “whole house” rental of unlimited days and nights each year in typical single family residential neighborhoods.
In an effort to mitigate having multiple nightly rentals on a single street, the code requires a distance of 250 feet separating Type II STRs.
            The permit mandates a certain number of offstreet parking spaces, limits guests according ot the number of rooms, requires the owner to post regulations and to provide 24-hour contact information for neighbors to complain about noise or other problems. STR owners must also pay fees of slightly over $2,000 for a permit and $275 each year to renew an operating license, as well as an 10.4% lodging tax.
            However, the city will not act on neighbor complaints until they reach the level of a code violation related to the permit, such as excess parking and too many guests in a STR.
            In both Type I and Type II permits the city merely requires property owners to verify by signature that they have read their neighborhood CCRs as applicable to nightly rentals. The applicants do not have to affirm the nightly rental would not violate the CCRs.
            Therein is the crux of a festering issue that has divided Bend neighborhoods.            With the city’s hands-off position, residents must act through homeowner associations or independently to enforce CCRs.

Mirror Pond on the Deschute River in Bend

            In many older, mature neighborhoods with long-time homeowners the developer may have ended involvement in the community. There may be no homeowner association. And most residents may have forgotten the CCRs, absent major problems in the neighborhood.
            However, CCRs typically remain valid for 30 years, with automatic 10-year extensions unless a percentage of homeowners vote to terminate them.
            Enforcing a CCR provision, such as limitation of nightly rentals, could well require legal action. The situation in turn may result with some homeowners claiming the STR is a property right and others arguing it destroys the integrity of the neighborhood.
            Another issue gaining atttention is a section of the STR code that prohibits transfers of permits issued after April 15, 2015 at the time of a property sale. Although specifically stating a permit “does not run with the land,” a loophole allows an existing permit holder to void it, and apply for a new permit on behalf of a buyer before a property sells.
            This circumvention of the no-transfer provision creates an attractive incentive for sellers and real estate brokers to entice buyers with the promise of acquiring an immediate income producing property.

Short Term Rentals, CCRs and legal action 

 
            A couple of recent STR applications—one that was withdrawn and another that went through and perhaps heading for litigation—are illustrations of how CCRs have become part of the nightly rental discussion.
            As reported by The Source weekly, residents of the Tanglewood subdivision of southeast Bend mobilizied to amend their CCRs after a homeowner applied for a STR, perhaps with the intent of making the house more attractive for a buyer.
            The application was withdrawn after the amendment passed with a majority vote, likely with some ill will from the applicant when the property sale fell through. Although the CCR amendment to limit rentals to more 30 days may have blunted the homeowner’s plans, under the current city STR regulations it would not in itself have scotched the permit.
            Another, more complicated STR application has brought into sharper focus the issues of transferring a permit, and the place of CCRs in the equation.

STR types explained

            A homeowner with a Type II whole house permit voided it, then applied to the Community Development department for a new permit on behalf of a prospective buyer – before the property had changed hands.
            Although there was at that time no written authorization for the seller to act for the buyer, the city recognized the application process – and only weeks later had the buyer and seller complete the authorization.
            More than a dozen neighbors in that subdivision and nearby objected, citing prior noise, parking and traffic problems experienced with the property as a STR. But the application met city offstreet parking and other requirements and the permit was approved. Later the property buyer applied for and was given an operating license as needed to rent the property nightly.
            Many of the neighbors objecting to the new permit cited the previous parking and noise problems, none of which the city considers in review an application. Instead the regulation puts the onus for complaints with neighbors to contact the STR owner-operator.
            In this case, however, several objections were raised as to the loophole allowing transfer of the permit, and violation of CCRs that don’t allow rentals of fewer than 30 days.
            Now a neighbor immediately adjacent to the STR property has decided the only option is to consult an attorney, who has tactfully informed the new owners by letter that the CCRs prohibit nightly rentals.
            For now, it’s a wait and see strategy for the neighbor, with advice from the attorney that the first nightly rental – none as yet – could trigger action to prevent further rentals.
            Meanwhile other neighbors are raising problems with the city regarding the STR permit transfer loophole and ineffective language addressing whether a STR would violate the neighborhood CCRs.
            In a reply, a top city official wrote regarding the transfer loophole that, “This is a known issue that we have documented and staff can be ready to recommend changes to the Development Code when/if Council desires to make changes to the STR portion...”
            As to the tightening permit language related to CCRs, the official noted the, “...idea to have STR permit applicants acknowledge that they have read and understand their CCRs as well as that the CCRs are not violated by the STR Permit application sounds reasonable.”

Another drought season in the works: Low snowpack and reservoirs

             The headgates of irrigation ditches in Central Oregon have been open for only a few weeks. But the seasonal availability of adequate water for agricultural use is already in doubt for several irrigation districts, with another low snowpack and water storage deficit in several reservoirs.
            In its May 1 report, the Natural Resources Conservation Service, a division of the federal Department of Agriculture, noted that the Upper Deschutes and Crooked River basins snowpack was 64% of normal. This represented a precipitous drop in a single month from April 1, when the snowpack was 108% of normal.
            As of May 20, basin reservoir storage recorded by the Bureau of Reclamation ranged from a low of 23% full at Ochoco Reservoir to 87% at Crane Prairie. Wickiup Reservoir, which impounds water for the region’s largest cash crop acreage served by the North Unit district, was only 39% full.
            Wickiup’s 77,865 acre feet stored as of May 20 was 54% below average and 30% under the same date in 2020, which was also a dry year.
            Prineville Reservoir, which holds water behind Bowman Dam in the Crooked River Basin was the lowest since 1974, according to a report from the Bureau of Reclamation’s Bend field office. The inflows as of the second week of May were at 37% of normal.
            Several counties, including Jefferson north of Bend and Deschutes County, have already pleaded for the Governor to declare a drought emergency. Others include Klamath – long a flashpoint for the debate involving endangered fish and water for crops – along with Lake, Baker, Douglas, Gilliam, Morrow, Umatilla and Wheeler.
    The Central Oregon Irrigation District has issued a drought notice to its members warning that many may not have their full allocation of water, noting that, "Deschutes County is experiencing it's driest spring in 127 years... We recommend you being planning now for potential water shortages this summer."
    In its capacity as the umbrella group representing basin irrigators, conservation groups and other stakeholder, the Deschutes Basin Board of Control has also asked for a drought declaration for the region.

     Much like 2020, this year at a point in mid-winter held hope that the water deficit might not be as dire, with a burst of mid-winter storms pushing the snowpack to better levels. In early February 2020, Mt. Bachelor ski area reported its base at the highest level in 12 years.
      But the optimism was short-lived, then as with this year, when early runoff did little to recharge reservoirs that have suffered from low levels for several years running.
            The listing of the Oregon spotted frog under the federal Endangered Species Act has further complicated the water equation in Central Oregon.
            Various stakeholders in the Deschutes Basin, including environmental groups, have signed on to a “habitat conservation plan” that adjusts water releases from Wickiup Reservoir to provide more flows at certain times. This includes winter releases, which draw down storage, and early spring flow reductions that occur at the start of the crop growing cycle.
            The overall impact of the frog’s ESA listing on agriculture may take time to fully assess. But coupled with impending drought conditions, balancing water use for the species and agriculture will be a challenge well into the future.

PREVIOUS 

Snowpack, water and endangered species - A complicated calculus

Fact Sheet of Draft EIS for the Deschutes Basin HCP

https://www.fws.gov/oregonfwo/Documents/DeschutesHCP/deisFR/mtgs/Deschutes%20Fact%20Sheet%20-%20WEB.pdf

Complete DRAFT HCP as of August 2019

https://www.fws.gov/oregonfwo/Documents/DeschutesHCP/deisFR/DBHCP%20Entire%20Document%20August%202019.pdf

A Timeline of the Spotted Frog ESA listing in the Deschutes Basin

https://bendisbetter.blogspot.com/2016/02/spotted-frog-esa-listing-creates.html