Incentive for new housing construction off to promising start

Portland Permitting & Development released its first report on Feb. 27 describing the early results of a new financial incentive, enacted last summer, intended to promote the creation of 5,000 new housing units over three years. The report, which covers the first five months of this program, indicates that it is achieving some success in bringing new projects farther into the development process.

As of Jan. 15, the projects participating in this program represent 1,720 units, which is 34.4% of the 5,000-unit goal. While some of these projects are in earlier stages and will need to do more work before they can have their system development charges (SDCs) permanently exempted, this early data indicates positive momentum for the program.

"The number of units in the pipeline is an encouraging early indicator that this temporary SDC exemption program is achieving what it intended: to make it easier to build new housing in Portland and to reduce financial barriers for those builders," said Donnie Oliveira, the deputy city administrator for community and economic development.

If all of these permits were to qualify for the SDC exemption, it represents a total of $32,773,500 in foregone charges spread across the City's four public works bureaus: the Bureau of Environmental Services, Portland Parks & Recreation, Portland Bureau of Transportation, and Portland Water Bureau.

"Public Works bureaus rely on system development charges to fund infrastructure that supports Portland's growth, and this program redirects some of those resources to help advance much-needed housing development," said Priya Dhanapal, the deputy city administrator for public works. "We are seeing early signs that the program is working as intended, and we are proud to support efforts that increase housing across the city."

The full report delves deeper into this data and more, including:

• Unit characteristics (e.g., total units, structure type, income category where known)
• Development trends (e.g., comparison of quarterly permit issuance volume over the last five years, up to and following the enactment of the SDC waiver and comparison of permitting volume with published construction cost indices and benchmark financing rates)
• Identification of any material changes in the rate or timing of permit issuance and construction starts following implementation of the waiver, including observed trends in project movement, activation of previously dormant applications, or other indicators of increased project viability
   

Background on temporary SDC exemptions for new housing units

Last July, the Portland City Council adopted an ordinance that temporarily exempts most newly created housing units from SDCs, under certain conditions. SDCs are typically charged to new development projects to compensate for the increased impacts of that development on the City's existing sewers, parks, water systems and streets. These charges can add significant costs to a development project.

This temporary SDC exemption applies to most permits for new housing units issued from Aug. 15, 2025, through Sept. 30, 2028. To participate in the program and secure the exemption, the development project must meet certain eligibility criteria and achieve certain construction milestones within one year of a permit's issuance.
 

What comes next

This report will be discussed at the City Council's Homelessness and Housing Committee meeting to be held on Tuesday, March 10, from noon to 2 p.m.

A report addressing the first full year of the implementation of the temporary SDC exemption program will be issued this fall.

Learn more about temporary SDC exemptions for new housing units