Portland finance committee backs three-year temporary waiver of system development charges to spur housing

The Portland City Council Finance Committee voted 5-0 on June 16 to send an amended ordinance to full council that would temporarily exempt new residential units from system development charges for projects that meet eligibility rules and timelines set in the measure.

City staff described the proposal as a three-year, citywide SDC exemption intended to jump-start housing production by improving project feasibility and sending a market signal to developers and lenders.

City staff framed the measure as a targeted intervention to accelerate projects already in the pipeline and to attract new investment. "We're waiving SDCs for new housing for 3 years to help create 5,000 units," Kristina Gahn, a bureau staff member, said during the presentation. Donnie Olivera, DCA Olivera for the record, told committee members the proposal is “not designed to solve for every challenge” but aims to activate Portland’s stalled housing pipeline.

The ordinance would amend Title 17 of the Portland City Code to exempt transportation, parks, water, sewer and stormwater SDCs for eligible newly constructed dwelling units and congregate living facilities. Eligible projects include detached single-family, middle housing, apartments and many conversions (for example, office-to-housing), but exclude transient lodging and medical/hospital uses. Mixed-use buildings would generally qualify only on the residential portion; the legislation contains a limited exception for stormwater because impervious area is difficult to split.

Under the final, amended language the committee approved, a building permit must not have been issued before the effective date of the ordinance subsection and may be issued no later than Sept. 30, 2028; projects that receive a permit must reach a foundation or concrete-pour inspection within one year after permit issuance or the city may require payment of the previously exempted SDCs and may withhold a certificate of occupancy. Staff also included an option for projects with lender agreements to submit executed construction agreements as an alternative compliance pathway.

City staff explained the program is temporary and contains enforcement steps because applicants typically invest significant design and review costs before pulling a permit. Kristina Gahn said the city’s economic modeling — run by BPS staff using updated pro forma scenarios — shows SDCs typically amount to roughly 3%–8% of total development cost depending on building type, with an average SDC near $20,000 per unit in Portland and a typical range of $15,000–$30,000 per unit. Staff said those savings could move many small-to-medium wood-frame apartment projects and fourplexes from infeasible to feasible, while larger concrete-and-steel projects with parking would still face larger financing gaps.

The presentation said Portland’s housing production has dropped sharply: the housing needs analysis targets roughly 5,200 units a year (built on an existing deficit closer to 6,000), while the city built about 818 market-rate units in 2024. The bureaus estimate more than 7,000 units are currently in the city’s pipeline at various review stages; staff noted many of those have not issued building permits.

Public testimony was overwhelmingly supportive from architects, small and large developers, and industry groups who said the waiver would unlock projects currently stalled by financing. Isaac Ambrousso of the Oregon Home Building Association said the measure is “a targeted temporary policy to get Portland building again.” Michael Hamilton, president of Seneca Development, told the committee that since the waiver was announced some of his firm’s projects have received term sheets from lenders contingent on the waiver being implemented.

Committee members debated the program’s timelines and the trade-offs for infrastructure revenue. Councilors asked staff whether permit activity was being delayed while applicants waited for the effective date; staff said they had seen both some applicants applying now and some waiting to see whether the ordinance takes effect. Councilors pressed staff on whether the ordinance should use a hard unit cap or a date-based cutoff; staff advised that a date-based deadline is easier to implement administratively, and the committee adopted an amendment that sets the effective date as the effective date of the ordinance subsection (30 days after adoption) and retains Sept. 30, 2028 as the final issuance cutoff.

Council members also discussed potential revenue impacts and monitoring. In debate before the final vote Councilor Avalos noted the estimated foregone infrastructure revenue — a number discussed in committee — and asked for stronger tracking and midcourse evaluations so the city can review who uses the exemption and what kinds of housing it produces. The committee’s approved motion sends the ordinance to full council with the intent that bureaus continue to study impacts and return as needed.

The committee recorded two formal actions. An amendment to revise the timing language (to reference the effective date of the ordinance subsection and to clarify the Sept. 30, 2028 final cutoff) passed on a 5-0 roll call. The committee then voted 5-0 to refer the amended ordinance to full council for passage (motion moved by Councilor Novick; seconded by Councilor Green). The roll-call votes were Pertel Guinee — aye; Novick — aye; Green — aye; Avalos — aye; Zimmerman — aye.

City staff said next steps would include administrative rules and implementation work if council adopts the ordinance. Staff also noted the bureau prefers an Oct. 1 code-implementation date as a standard cycle but said they could accelerate implementation and had discussed an August 1 operational target; the final amendment adopted by the committee makes the subsection effective 30 days after adoption so staff can work to accelerate operational readiness.

If adopted at full council, the exemption would be time-limited and require projects to start construction; staff emphasized it is one of several tools (including permit reform and other code updates) intended to increase housing production. The bureaus will be expected to report usage and impacts while continuing complementary reforms to permitting and code to improve long-term feasibility.