Staff propose 50% cut to Gladstone system development charges for accessory dwelling units

City staff recommended a one‑time, blanket 50% reduction in Gladstone’s system development charges for accessory dwelling units, saying the cut would lower a significant up‑front barrier to homeowners building ADUs while preserving some SDC revenue for future capital projects.

Jackie, a city staff member who introduced the subject, told the council that SDCs are “a one‑time fee charged to new development” used only for growth‑related capital improvements in water, sewer, stormwater, parks and transportation and not for routine maintenance or staff salaries. Jackie and Heather, another staff member, said the city’s packet and peer‑city comparisons informed the recommendation.

Heather said staff propose applying a 50% reduction uniformly across the different SDC categories so the calculation remains administratively simple: “It’s just 0.5 of whatever they’re already doing for an existing single‑family home,” she said. Staff recommended excluding short‑term rentals (uses of 30 days or less) from the reduction, arguing that short‑term rental units do not serve the same long‑term housing need as rentals intended for residents.

Kristen Bowen, who processes SDC calculations for the city, provided examples of how fees vary by permitted work: tapping water and sewer on property can reduce SDC liability (one example cited about $14,000), while running a separate sanitary sewer line for an 800‑square‑foot ADU produced an SDC figure just under $20,000. Staff and councilors said those up‑front costs frequently discourage homeowners: Kristen estimated roughly 6–8 ADUs permitted in the last year and said she has fielded “upwards of 20” inquiries where homeowners stopped pursuing ADU construction after seeing cost estimates.

Staff also described permit timing and how SDCs are collected: the city contracts with Clackamas County for building permits and aims to return initial reviews within two to three weeks; SDCs are typically paid before a permit is issued and, once paid, the SDC credit stays with the property. Jackie noted SDC funds may be used only for eligible portions of capital work; she cited the Sherwood neighborhood water pipe replacement where 4.36% of the project (about $103,000 under study methodology) would qualify for SDC funding.

Council members asked practical questions about implementation, enforcement and program evaluation. Councilor Garlington and others supported excluding short‑term rentals and asked for a firm one‑year review; Heather said staff will place the reduced SDCs in the city’s master fee schedule on July 14, with the change expected to take effect in August 2026 and a reassessment slated for about August 2027.

There were no formal motions or votes recorded at the work session; council directed staff to proceed toward updating the master fee schedule and to return with a one‑year evaluation of fiscal impacts and housing outcomes.