Senate Bill (SB) 1537, adopted in 2024, requires cities to grant adjustments to specific dimensional and design standards to encourage housing production and affordability. However, the City requested and received an exemption from the State’s Housing Accountability and Production Office (HAPO).

• HAPO approved the City’s request for an Exemption in January 2026.
• The City will continue to apply its local processes to review adjustment requests in lieu of the Mandatory Adjustment provisions under SB 1537
• When a local adjustment pathway is not available, applicants are legally entitled to request adjustments through a Mandatory Adjustment under SB 1537

The Housing Accountability and Production Office (HAPO) approved the request with conditions in January, 2026. The HAPO decision may be found here.

Opportunities for Adjustments:

The City of Happy Valley has a variety of opportunities for adjustments including:

Class B or Class C Variance. As described in chapter 16.71 of the Land Development Code, applicant’s may apply for a variance, “except that a variance shall not be approved that would vary the “permitted uses” or “prohibited uses” of a land use district”. There are two types of variances (Class B or Class C).

• Class B variances may be granted for sections 16.2 (Land Use Districts), 16.3 (Specific Area Plan Districts and Overlay Zones), 16.4 (Community Design Standards), 16.5 (Public Facilities), or other development standards as specified in Title 16 per 16.71.040.A. Class B allows a variance of up to 20% from any dimensional or development review standard except for lot area which is limited to 10% per 16.71.040.C. Class B variances are processed using a Type II administrative procedure, which requires public notice and an opportunity for written comment, per 16.61.030. The criteria for a Type B variance may be found in 16.71.040.C-G. The general criteria may be found in LDC 16.71.040.C, with criteria specific to vehicular access and circulation in 16.71.040.D, parking and loading standards in 16.71.040.F, and maximum/minimum setbacks to avoid or reduce impacts to floodplains, significant trees, wetlands, or other natural features in 16.71.040.G.
• Class C variances apply to all housing types in all situations applicable to SB 1537 with no limitation on the percentage or amount of variance that may be requested. All housing situations identified in SB 1537 have a reasonable opportunity for approval. The criteria for a Type C variance may be found in 16.71.050.B.6 & 7. Class C variances are processed using a Type III quasi-judicial procedure, which requires public notice and an opportunity for written and/or verbal comment at a public hearing before the Planning Commission, per 16.61.040.

Modifications to Design Standards. Section 16.40.030 allows for exceptions to be granted to a variety of standards for all housing types for vehicular and bicycle parking (16.41.030), landscaping (16.42.030), shared outdoor recreation areas (16.42.080), and mobile home parks (16.44.045). Per 16.40.030, exceptions are processed as part of the underlying application (a Type II or III review is required). The Type II administrative procedure requires public notice and an opportunity for written comment per 61.030. A Type III quasi-judicial procedure requires public notice and an opportunity for written and/or verbal comment at a public hearing before a Hearings Officer, Planning Commission, or Design Review Board, per 16.61.040. The criteria for an exception may be found in 16.40.030.B which does not have a limit to the extent of the exception. However, the criteria require a physical constraint and thus the modifications would not be a reasonable avenue for approval in all situations.

Exceptions to Design Standards for Multi-Family. As described in 16.44.010.B.12, exceptions may be granted to a variety of multi-family standards including roofs, entries, building façade design, landscape/hardscape, offsets, private outdoor areas, parking lots, individual storage areas, carports/garages, shared outdoor recreation areas, safety/security, and/or service delivery screening. Per 16.44.010.B.13, exceptions are processed as part of the underlying application (Type II or III design review) or separately as a design review II application. The Type II administrative procedure requires public notice and an opportunity for written comment per 16.61.030. A Type III quasi-judicial procedure requires public notice and an opportunity for written and/or verbal comment at a public hearing before a Hearings Officer or Design Review Board, per 16.61.040. The criteria for an exception to a design standard for multi-family may be found in 16.44.010.B.12 which does not have a limit to the extent of the exception.

Affordable Housing Adjustment. Section 16.44.060 offers adjustments to incentivize affordable housing that complies with the income and other restrictions in 16.44.060.B. The adjustments include density bonus up to 50%, any amount of reduction in development standards (e.g., coverage, setback, zero lot line and/or reduced parcel sizes, architectural design requirements, public works improvements, and/or parking requirements), approval of a mixed-use component in conjunction with the housing project, other regulatory incentives or concessions proposed by the developer or the City that will result in identifiable cost reductions, and any waiver or reduction of planning application fees, building permit application fees, Transportation SDCs and/or Parks SDCs. The adjustments are processed with the development review application. Type II administrative procedure requires public notice and an opportunity for written comment per 16.61.030. A Type III quasi-judicial procedure requires public notice and an opportunity for written and/or verbal comment at a public hearing, per 16.61.040. The criteria for an adjustment may be found in 16.44.060.F.1.

Planned Unit Development. As described in 16.63.130, the purpose of a planned unit development is to “allow an alternative to the traditional subdivision that encourages conservation of natural features by relating design to the existing landscape; through the efficient use of land and public services … and the creation of public and private common open space”. Section 16.63.130.H.2.e allows for a reduction in minimum area, width, depth, frontage and setback requirements to a threshold and density transfers are also allowed from environmentally constrained areas to other locations within the development 16.63.130.H.2.a. A Type III quasi-judicial procedure requires public notice and an opportunity for written and/or verbal comment at a public hearing before the Planning Commission, per 16.61.040. Approved PUDs may be modified through a Type II administrative procedure requires public notice and an opportunity for written comment per 16.61.030, if they qualify for a minor modification in 16.66.040, or a major modification in 16.66.030 would apply.

Master Plan As described in 16.65.040, standards in Articles 16.2 (Land Use Districts), 16.3 (Specific Area Plan Districts and Zones), 16.4 (Community Design Standards) and 16.5 (Public Facilities) may be modified through a Master Plan “if the proposal will be consistent with the purpose of the standard for which a modification is requested”. The modification applies to all housing with no limitations. A Type III quasi-judicial procedure requires public notice and an opportunity for written and/or verbal comment at a public hearing before the Planning Commission, per 16.61.040.

Steps to Request a Local Adjustment

Adjustments are processed as either a standalone land use application or as a component of a broader application. The processes are described in more detail here.