What are System Development Charges?
Environmental Services collects System Development Charges (SDCs) from developments that create a new or increased demand on the City’s sanitary and storm sewer systems. These charges are intended to promote equity between new and existing customers by recovering a proportionate share of the cost of existing and future infrastructure that serves or will serve the developing property.
Background
On July 1, 2024, Environmental Services implemented a new rate structure that changed how it calculates sanitary and stormwater system development charges (SDCs). Under the new rate structure, sanitary SDCs for all developments are based on the net increase of sanitary flow to the public sewer system as determined by proposed plumbing fixtures and corresponding drainage fixture units (DFU). Stormwater SDCs are based on the amount of stormwater billable area proposed. This change updated calculation methods for residential uses by replacing the previous flat rate per dwelling unit SDC calculations.
The decision-making criteria and means by which the new rate structure for sanitary and stormwater SDCs are implemented are described in Administrative Rule ENB-4.05 (Sanitary and Stormwater System Development Charges). These rules were updated to reflect the new rate structure. Following a 30-day public review, the then-proposed changes were adopted and went into effect on July 1, 2024.
Why are changes being proposed now?
The new rate structure produced outcomes for residential uses that were out of alignment with Environmental Services’ intended goals. Those outcomes are summarized below.
Immediate action was taken to correct the unintended outcomes by approving temporary updates to Administrative Rule ENB-4.05, retroactive back to July 1, 2024. These updates will remain in effect for 180 days. During that time, Environmental Services will proceed with adopting the temporary changes as permanent rules through the normal rule-making processes.
Unintended outcome: effect on residential additions and alterations
The new rate structure and associated policy updates expanded the applicability of sanitary and stormwater SDCs to include residential additions and alterations. Under the previous flat rate structure, residential additions and alterations were not reviewed for or subject to these charges. Outreach efforts and materials prepared in conjunction with the then-proposed rate structure did not clearly communicate the applicability of these changes to residential additions and alterations, and the significance of this was not fully realized until the updated policies went into effect on July 1, 2024. As a result, permit administrators were not provided sufficient time to plan for these changes, make the necessary technology updates, or communicate the changes to staff and affected customers.
Proposed rule change to address the unintended outcome: Changes to the rule make clear that residential additions and alterations are not currently subject to SDCs. The effect of this change retains the status quo as Environmental Services has not charged SDCs for these projects in the past and will not charge them under the new rate structure. The bureau recognizes that further analyses and improved communication are needed before SDCs are applied to residential additions and alterations. Environmental Services will reevaluate residential additions and alterations at a future date as part of a more comprehensive review of its SDCs.
Unintended outcome: Sanitary SDCs for residential development higher than anticipated
The intended effect of the new rate structure was for new single-dwelling residential development to pay sanitary SDCs comparable to those of the previous flat-fee rate structure, smaller dwelling units to pay less, and larger dwelling units to pay more. Environmental Services employees observed that implementation of the new rate structure has the potential to produce sanitary SDCs that exceed what was intended for residential development.
The discrepancy appears to be attributed to the number of plumbing fixtures and corresponding DFU values historically assumed for a typical single-dwelling residential development. Based on a review by Environmental Services and Portland Permitting and Development, historical DFU assumptions may be low compared to current residential development patterns. An example of this is evident in the higher ratio of bathrooms to bedrooms found in most contemporary residential developments. When the new rate structure is applied to contemporary residential development, the results produce sanitary SDCs that exceed the intended outcomes communicated by Environmental Services.
Proposed rule change to address the unintended outcome: Changes to the rule reduce sanitary SDC charges for residential development. This change adjusts sanitary SDC charges for new residential development to an amount that more closely aligns with the intended outcome of the new rate structure and previous communications.
Review the proposed rule changes
The proposed rule changes to Administrative Rule ENB-4.05 can be reviewed in the document below.
Language that will be added to the rule is indicated by underlined text, and language to be removed is indicated by strikethrough text. Existing language to remain unchanged is indicated by plain text.
How to submit a public comment
Environmental Services will accept public comment on proposed rule revisions from 8 a.m. Monday, October 7, 2024, to 5 p.m. Tuesday, November 5, 2024.
Comments on the proposed changes can be submitted by emailing bescoderule@portlandoregon.gov.
Comments must be received by 5 p.m. on Tuesday, November 5, 2024.
Environmental Services will hold a public hearing by request only from 2 p.m. to 3 p.m. on Tuesday, October 29, 2024. To request a hearing, contact the Codes, Rules, and Manuals Team at bescoderule@portlandoregon.gov. Environmental Services will cancel the hearing if no request is received by 5 p.m. on Thursday, October 24, 2024. A cancellation notice will be posted on this page.
For questions or more information regarding the proposed rule changes, please email the Environmental Services Codes, Rules, and Manuals Team at bescoderule@portlandoregon.gov.