From Zoning Reform to Shared Ownership
How Oregon’s new housing rules incentivize co-ops
By Garlynn Woodsong, Woodsong Associates, LLC
December, 2025
Oregon has just taken a bold step toward making shared ownership and cooperative housing viable at scale. Through new, just-adopted housing production rules, including a model statewide zoning code, the state will re-legalize neighborhood-scale apartment buildings that were effectively banned for decades under the restrictive, exclusionary local zoning rules adopted nationwide during the mid-20th century. While the most visible impact of these reforms will be an increase in housing supply, their deeper significance lies in the kinds of homes they enable: a new generation of cooperative, shared-equity housing that supports long-term affordability, walkable neighborhoods, stronger community life, and collective stewardship in everyday neighborhoods across Oregon.
At the heart of this shift is a fundamental rethink of how we treat land. For decades, zoning codes have limited the number of homes allowed on a parcel through rules that overwhelmingly favor single-family housing. These limits function as a hidden subsidy, inflating land values for exclusive uses, while excluding many people and locking households into long, car-dependent commutes. This dynamic is often described as exclusionary zoning, a set of rules that severely limits how many homes can be built on a given parcel, typically favoring single-family housing and effectively reserving high-opportunity neighborhoods for those who already have wealth.
When zoning artificially restricts housing supply in desirable areas, it drives up land prices by creating scarcity. The value of the land rises not because of improvements made by the owner, but because the rules prevent others from building nearby. That increase in value accrues almost entirely to existing property owners, concentrating wealth in exclusionary neighborhoods while pushing new housing, and the people who need it most, farther away. Oregon’s new standards flip that script by legalizing three- and four-story apartment buildings on smaller parcels that are already served by infrastructure. The result is a redistribution of opportunity, allowing more people to live near jobs, services, schools, and community life.
Critically, the new framework goes further when housing is developed for long-term affordability rather than speculation. If a proposed project is a limited-equity cooperative or another form of regulated affordable housing, it becomes eligible for a significant density bonus, allowing buildings of up to seven stories (where market-rate housing would otherwise be limited to four stories).
This is not subtle. The state is clearly signaling that if you want to build conventional market housing, there are limits, but if you want to build homes that are removed from speculative price escalation, Oregon is prepared to allow more homes on the same land.
In the context of an ongoing housing crisis, this incentive has the potential to meaningfully accelerate the development of limited equity housing cooperatives across the state.
In practice, these changes will lower barriers that have long made infill housing difficult, infeasible, or impossible to build. By expanding where apartments are allowed, Oregon reduces the embedded subsidy for exclusionary zoning, and opens up land for uses that serve a broader range of households. Instead of funneling value to a few, the new code stewards land toward inclusion, social connection, and long-term resilience. Rather than locking our communities in amber, preventing them from changing over time in response to the needs of current and future residents, the new rules allow neighborhoods to evolve and grow organically in response to shifting needs and opportunities.
Limited equity housing cooperatives (LEHCs) offer a particularly powerful way to operationalize this shift. LEHCs separate the cost of land from the cost of the building itself, creating a structure where subsidies can be used strategically and efficiently. In a typical LEHC model, the cooperative owns the building but leases the land, often under a 99-year ground lease, from a Community Land Trust (CLT). This allows public or philanthropic subsidies to be applied once, up front, to buy down the cost of development and lower initial home prices. Any portion of the project cost that is not reflected in the sale price of the homes, is effectively assigned to the land, ensuring long-term affordability.
For example, imagine a four-plex that costs $1 million to develop. If public or philanthropic subsidies cover $600,000 of that cost through the land, the remaining $400,000 is then divided across four homes. Each household can buy into the cooperative at roughly $100,000, rather than purchasing a market-rate unit priced far higher. A household might put down a modest down payment of 3%, or $3,000, and then make monthly payments on a low-cost share loan, similar to a mortgage, but at a fraction of the cost (this could work out to something on the order of $500 per month on a $100,000 note).
Because the land is held in trust, and the resale price of each home is limited by a formula, affordability is preserved permanently. The subsidy stays with the land, not the individual household, allowing each generation of residents to benefit.
The result is a system fundamentally different from conventional rental affordable housing models, such as those relying on Low Income Housing Tax Credits (LIHTC). LIHTC and other “Affordable rental” types of projects generally require ongoing subsidies and regulatory oversight to maintain affordability year after year. By contrast, a limited equity co-op requires a single initial subsidy. Affordability is then preserved permanently through a resale price formula that limits appreciation, while still allowing residents to build modest equity. This makes LEHCs both fiscally efficient and socially stabilizing.
Some observers have compared Oregon’s new housing rules to California’s builder’s remedy, a policy that allows developers to bypass local zoning when cities fail to meet state housing requirements. In California, the builder’s remedy has been used to override local denials and fast-track projects in jurisdictions that have not adopted housing plans compliant with state law, weakening the grip of exclusionary zoning through enforcement pressure.
Oregon’s approach points toward a more measured and collaborative alternative. Rather than relying on ad hoc legal bypasses, the state establishes clear performance expectations and evaluates cities based on actual housing outcomes. When jurisdictions fall short, the state’s model code becomes the default, though these changes will roll out gradually over the coming eight or so years as cities complete required planning cycles and implementation steps.
Importantly, Oregon’s approach is not limited to a model code and a backstop enforcement mechanism. The state has also created a safe harbor, sometimes called a rebuttable presumption, that cities can use during their next housing planning cycle. In plain terms, this means that if a city adopts the state’s model code, or rules that clearly result in allowing a similar amount of housing, the state will presume the city is complying with housing law unless strong evidence shows otherwise. Jurisdictions that choose to adopt the state’s model code, or rules that are demonstrably equivalent, gain a strong presumption of compliance with state housing law. In practical terms, this provides cities with a clear, low-risk path forward: adopt rules that meaningfully allow housing, and the state will largely get out of the way.
This safe harbor framework matters because it changes the political and administrative calculus for local governments. Rather than forcing cities into a binary choice between resistance and punishment, Oregon is offering a collaborative off-ramp from exclusionary zoning. Cities that want to plan proactively can do so with confidence that their efforts will be upheld, while those that continue to underperform face a predictable and transparent consequence in the form of the state’s default standards.
This combination of flexibility and accountability helps normalize better zoning outcomes, rather than relying on constant conflict or litigation to achieve them. This creates predictability, transparency, and a shared set of rules. Communities and builders can plan together within a known framework, rather than navigating an adversarial system driven by lawsuits and brinkmanship.
Taken together, these reforms are contributing to an emerging housing paradigm that creates especially fertile ground for cooperative housing in Oregon. By normalizing multi-unit buildings in residential neighborhoods and pairing that shift with meaningful incentives for affordability, the state is making room for co-ops, shared equity models, and community land trusts to become part of the everyday housing landscape. This widens the range of ownership options that offer real resident control, long-term affordability, and collective stewardship.
By orienting land use policy around outcomes rather than exclusion, Oregon is taking a decisive step toward housing that anchors communities and reduces dependence on car-centric sprawl. Cooperative housing fits naturally within this emerging ecosystem, offering stability, shared responsibility, and deep social ties.
Now is the moment to harness these changes to build places where people can live close to daily needs, walk or bike to work, share meals and music with neighbors, and collectively steward the spaces they call home. This is how we move toward a more equitable, resilient, and humane housing future for Oregon: not through speculation and sprawl, but through shared ownership, collective stewardship, and neighborhoods designed for people rather than cars.
Thanks to Izzy Davids for editorial review.
