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System Development Charges waiver for Accessory Dwelling Units extended to Sept. 30, 2020

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The Portland City Council views construction of Accessory Dwelling Units (ADUs) as an essential component of meeting the City of Portland’s housing goals. Building permits submitted to the Bureau of Development Services (BDS) that include new dwelling units are charged System Development Charges (SDC). These fees, which are assessed by the Water Bureau, Portland Parks and Recreation, Bureau of Environmental Services, and Portland Bureau of Transportation, are used to offset the impacts that project will have on the City’s infrastructure.

To encourage development and increase housing stock, the Portland City Council began waiving SDC fees assessed to ADU permits in 2010. In 2018, City Council revised the SDC waiver and reaffirmed a deadline for previously approved ADUs to complete construction.

If you applied for a permit to construct an ADU on or before July 31, 2018, the deadline for your project to be completed and receive final inspection approval was June 30, 2020, if you wanted to take advantage of the SDC waiver. Due to the COVID-19 pandemic impact on the construction industry and the protocols put in place by BDS to ensure public health and safety during inspections, the Portland City Council extended the final deadline to receive final inspection and certificate of occupancy by three months to Sept. 30, 2020.

If your ADU project completion occurs on or after Oct. 1, 2020, you will have the following options:

  • To pay the SDCs that are owed prior to calling for the final inspection; or
  • Submit a recorded covenant that prohibits the use of the ADU or any other structure on the property as an accessory short-term rental for a period of 10 years from the date of permit final inspection.  This 10-year covenant requirement mirrors the existing language in Portland City Code Chapter 17.14.070.F., which applies to applications for ADUs with an intake date on or after Aug. 1, 2018.

Please note that the covenant must be reviewed and approved by BDS no later than Sept. 30, 2020, and a recorded copy of the covenant must be received by BDS no later than Oct. 31, 2020.

When planning your project, please be mindful of these deadlines. Although ADUs are typically smaller than single-family residences, construction and inspections of an ADU do not happen on a shrunken schedule.

Participation in the SDC ADU Waiver Program requires a $600 processing fee paid to the Revenue Division of the Office of Management and Finance. The SDC ADU Waiver Program also requires a restrictive covenant to be recorded with the county recorder’s office stating that you agree not to use any structure on the lot (including the ADU) as an accessory short-term rental for 10 years after final approval of the building permit. If the ADU is used as an accessory short-term rental at any time during the 10-year period, any waived SDC fees must be repaid at 150% of the then-current SDC rate. Specific guidelines on the new ADU SDC Waiver Program may be found here.

Zoning regulations related to ADUs, where they can be constructed and applicable design parameters are available in the Portland Zoning Code, Chapter 33.205. More information about System Development Charges can be found here.

If you have questions about whether your ADU project is subject to the deadline for final inspection approval, please contact Rochelle Hunter-James at 503-823-0678 or Rochelle.Hunter-James@portlandoregon.gov.