City Council allows deferral of system development charge payments for new housing units

News Article
The new temporary policy is one tool to incentivize the development of needed housing.

On April 19, the Portland City Council approved an ordinance that allows for the payment of system development charges to be deferred for up to 24 months, without interest, on construction projects that provide new housing units.

System development charges are assessed by the City’s infrastructure bureaus when a construction project is expected to place new demands on existing sewers, parks, streets, water systems and other public structures. Full payment of these charges is typically required before a building permit is issued and construction can begin. This up-front payment requirement can challenge property owners and their construction firms at the beginning of a project.

The ordinance adopted on Wednesday takes effect immediately. It seeks to reduce the carrying costs for applicants and help incentivize more housing projects in the face of high interest rates and higher costs of materials and labor, thereby increasing the production of needed housing units.

This policy was first identified for possible changes in Commissioner Carmen Rubio’s 90-day action plan to increase housing production that passed City Council in February. Then, in a recent survey issued by Rubio and the Bureau of Development Services, participants indicated that the timing of payments for system development charges was one of the biggest challenges to building new housing units in Portland in the current economic climate.

“Our current housing crisis requires a fresh look at existing policies and processes,” said Rubio. “I am actively considering many ideas that can help build new housing units more quickly. Allowing system development charges to be paid over two years makes sense and is an example of a change we can make to help solve our housing needs.”

Under this new policy, permits for new housing units received by June 30, 2025, as well as those permits currently under review, may qualify to defer payments of system development charges interest-free for up to 24 months from the date the permit is issued. A qualifying permit applicant who is notified by one or more infrastructure bureaus that they are subject to system development charges must contact their reviewers at those bureaus by Aug. 15, 2025, to request a deferral of payments.

If the deferral of payments is approved, the failure to pay system development charges in full within 24 months of the issuance of a qualifying building permit will result in the accrual of interest at the City’s default interest rate. Penalties and collection charges may also accrue.

This deferral policy does not apply to permits issued before the adoption of this ordinance.

Customers with questions about this new policy are encouraged to call the Permitting Services division at 503-823-7300 or schedule a free 15-minute appointment with a permit technician.


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