Portland City Councilors advanced a plan last week to temporarily waive some construction fees to boost new apartment development.

“We need to jumpstart housing in our community,” said Council President Elana Pirtle-Guiney, who represents District 2, at a June 25 council meeting on the policy. “I think this is really critical.”

The policy would waive fees called system development charges, or SDCs. The city usually requires that housing developers pay SDCs to offset the cost that new construction may have on certain city utilities and services, like the sewer, streets or parks. Portland developers pay around $20,000 on average in these fees per new housing unit.

Portland developers have long painted SDCs as a deterrent to new construction due to their cost.

“In recent years, we’ve seen a troubling slowdown in housing development, driven in part by financial barriers that make it increasingly difficult to get projects off the ground, said Michelle Schulz, owner of GBD Architects, who testified in support of the waiver last week. “But this measure isn’t just about lowering costs, it’s about removing a key hurdle that’s preventing much needed housing from moving forward.”

The city already waives these fees for developers who build housing that’s affordable to low-income homebuyers who make no more than 120% of the area median income for a family of four (which is currently around $149,000). But this policy would apply to apartment buildings at all price points.

The new SDC waiver would last for three years or until it’s used to build 5,000 units – whichever comes first. The proposal was the result of a task force convened in May by Mayor Keith Wilson and Gov. Tina Kotek to address Portland’s lagging housing construction.

“By temporarily waiving these fees, we can turn stalled plans into real homes for real people,” said Wilson at the time.

The waiver is meant to save money for housing developers. But it comes at a cost for the city.

Based on Portland’s current construction rates, it is estimated that around 2,600 new housing units could be built in the three years that this policy is in place. If the city does forgo SDC revenues for those 2,600 new housing units, it will lose an estimated $63 million in revenue across city bureaus. The largest reduction will hit Portland Parks & Recreation, which has faced significant budget cuts in recent years.

It’s likely these cuts will be deeper. That’s because the proposal is meant to stimulate new construction. According to the city, the waiver could lead to more than 4,000 new units over three years. It’s not clear how much revenue loss that equates to.

District 1 Councilor Candace Avalos raised an alarm about this potential loss at the council meeting.

“If we approve this proposal as is, we’re agreeing to lose a lot more than $63 million,” Avalos said. “We could stand to lose twice as much.”

Avalos, whose district includes most Portland neighborhoods east of Interstate 205, pointed to the impact this lost revenue could have on repairing roads, water pipes, and other utilities.

“That much in lost infrastructure revenue is really serious, especially the communities like East Portland like that are still waiting for the basics,” she said.

Bill Crawford, who oversees SDC fees in Portland Parks & Recreation, agreed. Crawford testified that the cuts to SDC revenue will be reflected in a decline in parks maintenance, which will impact Portlanders’ quality of life.

“These impacts will be significant and deeply felt in underserved communities,” said Crawford, who was not speaking on behalf of the Parks Bureau. “Why transfer wealth and opportunity away from our city’s most vulnerable to wealthy and out-of-state developers?”

Avalos introduced an amendment at the council meeting that would have withdrawn the waiver after the city hit $63 million in forgone SDC revenue.

But developers and other councilors argued that this limit would defeat the policy’s purpose. Sarah Zahn is the managing director of development at Seattle-based real estate investment firm Security Properties. She said that the three-year (or 5,000-unit) backstop to this policy gives developers certainty. Creating a new $63 million cut-off squanders that.

“Anything short of a clear timeline and absolute certainty means we cannot rely on that fee reduction,” said Zahn. “This ultimately serves to entirely negate the waiver’s value as we would have to disregard the benefit in our underwriting, putting us back to square one.”

The amendment failed.

Another amendment was more successful. District 3 Councilor Angelita Morillo’s proposal to require Wilson report back on the policy’s effectiveness every six months passed 11-0.

“I think this gets to some of the concerns that Councilor Avalos was raising as well,” said Pirtle-Guiney before voting to pass the amendment.

Councilors will hold their final vote on the SDC waiver later this month.

News Source : https://www.opb.org/article/2025/07/02/portland-city-council-advances-plan-to-boost-apartment-construction-with-fee-waivers/