Oregon House Bill 4037 (HB 4037), signed by Governor Tina Kotek on April 7, 2026, introduces ‎several targeted land use reforms. Of these, Sections 17 and 25 are among the most consequential ‎for construction project planning and entitlements. Section 17 directly affects how local ‎governments process most applications for housing by limiting public notice, hearings, and third-‎party appeal rights. Section 25, pending rulemaking, allows cities to prioritize future urban areas ‎based on the costs of providing urban services.‎

Current Laws Concerning Housing Applications
Currently, local government decision-making bodies, including planning departments, planning ‎commissions, and city councils, are responsible for approving or denying most housing ‎development applications. Historically, such applications have been subject to broad public notice, ‎an opportunity for a public hearing, and the ability for virtually anyone to appeal the decision. This ‎results in housing projects tied up in multiple rounds of appeal for periods that can easily run from ‎months to years.‎

At the same time, since the 2017 passage of SB 1051, Oregon appellate courts and Oregon’s Land ‎Use Board of Appeals have been reinforcing the Oregon legislature in its mandate to local ‎governments: all applications for the development of housing must have a “clear and objective” ‎pathway to approval. While many local governments have an alternative “discretionary” pathway ‎for such residential development (such as a planned development process), the applicant retains an ‎option for a clear and objective review process.‎

Housing Review Changes under HB 4037‎
HB 4037 modifies the local government’s housing application review process. For any residential development permit or application subject to “clear and objective standards,” the local government may only notify owners of property within 100 feet of the development site, or those whose property is within 500 feet for developments of 20 units or more. As stated in HB 4037, the local government “may not require a public hearing prior to making a decision on the application,” and local appeal rights are only available to the applicant. Additionally, only the applicant is permitted to appeal a local government decision on a “clear and objective” housing project to the Land Use Board of Appeals.

Key Implications for Housing Applicants

• More Predictable Outcomes
  HB 4037 will benefit projects designed to meet clear and objective code standards by ‎drastically reducing the prospect of local public opposition. As only applicants are in a ‎position to file an appeal, it will also serve to limit the issues in any local appeals and before ‎LUBA, further reducing the risk of an adverse permitting decision. ‎
• Potential for Faster Permits ‎
  HB 4037 does not change the statutory decision deadlines applicable to local government ‎review. However, by reducing local noticing, hearings, and appealability, HB 4037 should ‎reduce the prevalence of appeals, which typically add four to six months to a permitting ‎project (and sometimes more). It might also reduce the imposition of ambiguous or ‎discretionary conditions intended to mollify public opposition. ‎
• Local Code Amendments and Transitional Uncertainty
  Jurisdictions will need to reconcile existing code provisions with Section 17’s requirements. ‎In the near term, applicants might encounter inconsistent interpretations as local ‎governments update their local development codes and train staff.‎

HB 4037 – Section 25 Urban Reserves

• Background – Urban Reserves
  Currently, land use rules force cities and counties to prioritize certain lands for future ‎growth, i.e., “urban reserves,” regardless of the impediments to future urban services. ‎Historically, local governments have not been able to assign heavier weight to the barriers ‎to future urban services – things like severe topography, lack of infrastructure, or other ‎physical constraints. Under the status quo, cities and counties have been compelled to treat ‎all potential urban reserve land “equally” but not equitably. ‎
• Changes under Section 25‎
  Section 25 of the bill requires Oregon’s Land Conservation and Development Commission ‎‎(LCDC) to amend its rules related to prioritizing urban reserve lands. The future rules are ‎contemplated to allow local governments, i.e., cities and counties, the flexibility to rank ‎lower certain land that is unlikely to ever be reached by future urban services. The bill ‎directs LCDC to write the rules, without a rulemaking advisory committee, to achieve a ‎more equitable local analysis of potential urban reserve land. ‎

Conclusion
Sections 17 and 25 of HB 4037 represent meaningful shifts in Oregon housing permitting and land ‎use. ‎

Section 17 speeds up “clear and objective” housing application review timelines by preempting ‎housing opponents, an unnecessary barrier, particularly in a state housing crisis. While these local ‎limits on public notice, hearings, and appeals are intended to improve project efficiency and ‎certainty, they place a premium on advanced calculation preparation. Questions to consider are ‎whether the entire application—and, if not, which parts—are subject to a clear and objective ‎review pathway, and therefore subject to the new law. Stakeholders might want to adjust their ‎housing entitlement and permitting strategies accordingly to take full advantage of what the new ‎review framework starting July 1st, 2026, while mitigating risk. ‎

In the longer term, Section 25 levels the playing field for designating urban reserves, allowing ‎cities and counties to prioritize (or deprioritize) this future urban land according to its propensity for ‎future urban services. Importantly, the new future LCDC rules are a nod to the economic realities ‎behind extending important infrastructure to future growth. Key considerations for rural and urban ‎reserve property owners include best ways to engage with local governments as they become ‎increasingly empowered with a rubric that acknowledges the true cost of future urban services.‎

For additional guidance on how Section 17 might affect projects or permitting strategy, or how ‎Section 25 might affect property, please contact our land use team, situated within Schwabe’s Real ‎Estate and Construction Industry Group.‎

This article summarizes opinions that are solely those of the author’s, and ‎this article does not ‎constitute legal advice. For legal advice for ‎your situation, you should contact ‎an attorney.‎