Customer & Community Notification
June 27, 2018
Contact: Matt Wickstrom
City Council Extends the SDC Waiver for ADUs, with Conditions
City Council passed an ordinance on June 27, 2018 to extend a waiver of system development charges (SDCs) for accessory dwelling units (ADUs) with additional requirements to contribute to Portland’s housing capacity. Specifically:
- Property owners who participate in the ADU system development charges waiver program receive a waiver of system development charges fees.
- The program requires the property owner to sign a covenant stating that neither the ADU nor the house will be rented as accessory short-term rentals (ASTRs) for 10 years.
- Listing any on-site structure on a short-term rental platform is a violation of the covenant. Participating owners who violate the covenant will be required to repay waived fees at a rate of 150 percent the current system development charges rates.
- The program does not restrict the rental of on-site structures including the ADU; however tenancy must be arranged on a month-to-month basis or longer.
- Property owners who don’t participate in the ADU system development charges waiver program will pay full system development charges fees and can list the ADU on a short-term rental platform.
- The revised ADU system development charges waiver program goes into effect August 1, 2018 and doesn’t have an expiration date. The program is not retroactive and does not apply to property owners who previously received ADU system development charges waivers if approval of final inspection is received no later than June 30, 2020.
Updates made as part of the change
Staff from Development Services, Water Bureau, Parks & Recreation, Transportation, Environmental Services and Revenue Division of Revenue and Financial Services collaborated to develop a process for development applications that involve system development charges waivers for ADUs and to ensure property owners who accept the system development charges waiver sign and record the covenant. Title 17 and Title 21 were also updated to reflect the ADU system development charges waiver program.
Fees and data collected
The Revenue Division will be responsible for administering the restrictive covenant and enforcing violations. There is a $600 application fee for the ADU system development charges waiver, which will help fund a position in the Revenue Division to oversee the program and administer covenants. The Revenue Division will also collect annual data about rents charged for ADUs that receive system development charges waivers to report to City Council every two years.
In 2009, the year before system development charges were waived, 24 permits for new ADUs were issued - both newly constructed and conversions of existing living space. In 2016, 615 ADU permits were issued, amounting about ten percent of permits for new dwelling units that year.
Additionally, due to the need to complete and record the restrictive covenant, it will be less likely that permits for ADUs can be approved over the counter in the Development Services Center.
Read the proposed ordinance:
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