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What is a Local Improvement District (LID)?

A Local Improvement District (LID) is a method by which a group of property owners can share the cost of infrastructure improvements, most commonly for transportation and stormwater projects. Financing is offered for up to 20 years, with the first payment not due until after the project is complete.

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What is a Local Improvement District?

A Local Improvement District (LID) is a method by which a group of property owners can share the cost of infrastructure improvements, most commonly for for transportation and stormwater. This can include improving the street, building sidewalks, and installing a stormwater management system. An LID can also be used to install sidewalks on existing streets that previously have been accepted for maintenance by the City. Financing is offered for up to 20 years, with the first payment not due until after the project is complete. Each property owner within an LID can separately select his or her financing terms.

LIDs are most commonly used to improve unpaved streets and to reconstruct paved streets not built to current engineering standards. If an LID is formed, the City manages the design and construction of the project, and property owners do not pay until the work is complete. Streets can also be improved under a permit job, in which case the project is privately managed and financed up front by property owners. LIDs have also been successfully used to provide sanitary sewer, water main improvements, traffic signal, and utility undergrounding improvements in conjunction with street improvements for economies of scale to provide comprehensive and complete infrastructure solutions to neighborhoods.

Read about the benefits of street infrastructure.

Read about Portland's unpaved and curbless streets. 


LID Questions and Answers

ASSESSMENTS AND ASSESSMENT METHODOLOGIES:  HOW ARE COSTS APPORTIONED?

If I sell my home with a pending lien, will I still be financially responsible?

No, liens remain with the property, and are not personal obligations. However, some mortgage companies may want a "clean" title and therefore may require that the lien be paid in full before financing is extended.

Do property owners have any input as to how the assessment methodology for their LID is derived? 

Yes, so long as it is equitable and complies with state law in accurately capturing benefit received by the property. Because the City works with property owners in developing an assessment methodology for their LID, it is generally not possible to quote an exact amount or proportion of the cost that any one property owner will be asked to share until this dialogue has taken place.

What assessment methodologies are used?

Square footage and linear (front) footage are most commonly used. Although simplest to administer, equal share is the least frequently method used, but is sometimes appropriate to use in areas of very low density, steep topography and/or lack of public sanitary sewer service, and where redevelopment potential is limited.

Will I receive a discount if I live on a lot with multiple frontages (such as a corner lot)?

If your other abutting street has previously been paved with curbs, you may be eligible for a discount on your assessable area. If an abutting street is not paved with curbs after an LID is completed, you may be eligible for a future discount if another LID is eventually formed to improve the second street to reconstruct pavement and add curbs, drainage and stormwater management facilities. 

CONSTRUCTION 

When will construction, design or engineering begin on a street improvement?

Building a street improvement begins with survey, followed by engineering and construction. Survey work does not begin until after an LID is formed.

COSTS

How can property owners minimize costs of street improvements?

Property owners can minimize project costs by working with the City and their neighbors to achieve early consensus on the project design to minimize engineering costs. This avoids the cost of redesigning a project. Working closely with the City throughout the course of the project also helps to avoid costly project delays. Costs can also be reduced through economy of scale if there is property owner support to improve several blocks at once instead of a piecemeal "block-by-block" approach.

What are the major cost elements of building a street?

Providing for proper drainage is a major portion of the expense of building a street. In general, streets in hilly areas will be more expensive to construct since a storm sewer is usually required, while in flatter areas, it may be possible to use a less-costly sump system to handle drainage although the use of sumps is increasingly being restricted by state and federal regulations. Properly-engineered streets cost more to build initially, but are much less expensive to maintain on an ongoing basis.

Can we pave a street on our own without a permit to save costs?

Section 17.24.010 of City Code requires a permit for paving in the public right-of-way if the existing surface is dirt or gravel. The City does not maintain pavement that was installed without a permit. Pavement installed without a proper base often does not last very long, breaks up and looks unsightly over time. Pavement installed without proper drainage can also flood basements and/or erode abutting properties. Abutting property owners are responsible for pavement installed without a permit; the City does not accept maintenance responsibility until the street has been improved to proper standards. See Alternatives to an LID.

When do costs become more certain for a project?

Because most of the cost of a project is construction, and because the private sector (not the City) builds street improvements, there is usually a much greater degree of certainty in the project costs once the public bidding process is complete.

Are curbs necessary?

In general, curbs are constructed on most local streets and add significant value relative to the cost.  Curbs protect the roadway edge from "unraveling"; define the roadway and parking area, keeping cars on streets or driveways; channel stormwater to inlets and away from sidewalks and private property; and provide protection for pedestrians. Curbs represent a very small portion of the project cost, and greatly reduce long-term maintenance costs.

FINANCING

Is financing available?  

Yes; each property owner chooses whether to arrange financing or to pay in full, and each property owner within an LID can separately select his or her financing term (5, 10 or 20 years). 

If I choose to pay my assessment in full, can I later choose to finance the assessment? 

No, once an assessment has been paid, it cannot be financed. You may want to finance your assessment to maximize your flexibility; you may choose later to prepay some or all of your assessment, and there is no prepayment penalty for doing so. 

What are the financing rates? 

An "interim" financing rate of 5.20% is applied until the City arranges permanent financing. The permanent rates are subject to change, but as of November 7, 2018, the five-year rate was 3.03%; the ten-year rate was 3.23%; and the 20-year rate was 3.74%.  You should budget for the "interim" financing rate because it is difficult to predict future permanent rates.

FUNDING

Will the City help share in the cost of improving my street?

Improving all 56.5 centerline miles of unpaved streets and 307.2 centerline miles of paved streets without curbs in the City of Portland would cost in the billions of dollars.  The City does not currently have funding to share in the cost of street improvements, and funding is a challenge nationwide. However, the City encourages the formation of LIDs to bring streets up to City standards, and in most cases absorbs the indirect (overhead) expenses associated with LIDs subject to City Council approval.  The property owner usually only pays the direct expenses, such as engineering, financing and the payments to the contractor. 

Are government-owned properties included in an LID?

Properties owned by city, regional or state government are generally included in an LID and are assesed, except for public rights-of-way.  Only federally-owned property is exempt from assessment. 

What is the length of the planned improvements?

Usually at least an entire block must be improved, from one intersection to another (or to the end of the street in the case of cul-de-sacs). Improving short street segments is very expensive because of lack of economies of scale.

Does the City maintain unpaved streets or provide gravel for unpaved streets?

City resources are increasingly strained to maintain the multibillion dollar investment in streets which have been properly constructed. Maintaining unpaved streets is unfortunately not cost-effective. For this reason, City Code places the responsibility for maintaining all unpaved streets and some paved streets not improved to City standards on the abutting property owner until the street has been improved to City standards.  The City does not provide gravel for unpaved street maintenance.

If someone declines to sign a petition in favor of an LID, will they be required to help pay for the street improvement?

Yes, if the property benefits from the street improvements. Financial responsibility is spread as widely as possible among those who benefit in order to make the costs as affordable as possible for everyone.

If someone signs a petition, can they later change their mind?

If petitions are received representing more than 50 percent of benefiting property owners, City Council will consider whether to form an LID. Petition support may be withdrawn before the Resolution of Intent Hearing is held before City Council. However, anyone within the proposed LID can remonstrate at the LID Formation Hearing, even if he or she has already signed a petition in favor of the LID.

Who gets to vote on an LID?

Those who are being asked to share in the cost of street improvement may sign a petition in favor of an LID. Petition support is measured by proposed assessment methodology.

The majority of the cost of a street improvement is construction. The private sector bids on projects; the City generally does not build the street. Generally about two-thirds of project-cost is for construction. Projects awarded through the public bidding process are subject to prevailing wage laws, which is not the case for permit projects. However, it is more difficult to spread the costs among benefiting property owners with a permit process than it is for an LID, and the improvements are more difficult to coordinate among all abutting property owners and with the City infrastructure bureaus (Transportation, Environmental Services and Water).

What are the impacts of an LID?  Will anything in the public right-of-way need to be removed?

Generally most fencing, landscaping or trees in the public right-of-way will need to be removed. For most residential streets, this includes any vegetation within 25’ of the centerline of the street, but the public right-of-way may be wider in some cases. We encourage you to avoid building fences or planting vegetation in the public right-of-way, even if your street will not be improved in the near future.

Where does my property end and the public right-of-way begin?

Most local streets have 50 feet of public right-of-way; some have 60 feet. The most accurate way to determine the boundary between private property and public right-of-way is by survey. However, a less formal way to approximate this boundary is to measure 25 feet from the center of the street (using a 50 foot right-of-way as an example). Please feel welcome to contact us to get an approximation of the public right-of-way width for your street.

What is a waiver of remonstrance?

A waiver of remonstrance means that a property is automatically counted in favor of a street improvement for a future LID. However, the City works closely with all property owners in an LID, whether their property has a waiver of remonstrance or not, and seeks petition support from owners of properties with waivers of remonstrance. A waiver of remonstrance does not preclude a property owner from testifying at City Council in favor of, or against, a proposed street improvement. City Council is much more likely to approve formation of an LID with petition support than with only waiver of remonstrance support.

Why are waivers used?

The City receives waivers from the original developer of a property in lieu of requiring a street improvement. They also serve an important function in that they disclose to property owners their future responsibility to share in the cost of street improvements

What is a remonstrance?

A remonstrance is a formal appeal by a property owner whose property does not have a waiver of remonstrance when action being taken by City Council to form an LID.  All property owner  remonstrance(s) are logged into the public record and are "counted" to determine whether the 60% threshold has been reached to preclude Council from forming an LID.  It is important to note that Council is not obligated to form an LID irrespective of a particular remonstrance level.

What is an objection?

At the LID formation stage, an objection is a formal appeal by a property owner whose property does have a waiver of remonstrance when action being taken by City Council to form an LID. All property owner objection(s) are entered into the public record but do not "count" to determine whether the 60% threshold has been reached to preclude Council from forming an LID.

At the LID final assessment stage, an objection is a formal appeal by a property owner whose property is propsed for final assessment, rrespective of whether the property has a waiver of remonstrance.  Objections to final assessment are entered into the public record but are not "counted" per se.  At this stage, the costs for the project have been incurred and Council is asked to approve the assessments so that the City can repay its line of credit used to finance the improvements.  While Council has the prerogative to adjust assessments based on property owner testimony, it usually defers to the apportionment formula established at LID formation.

When are remonstrances and objections allowed?

Written remonstrances are allowed up to 5:00 PM on the day seven (7) days prior to the LID Formation Hearing.  Written objections are allowed up to 5:00 PM on the day seven (7) days prior to the LID Formation Hearing and LID Final Assessment Hearing.  They must be filed with the Auditor's Office by this deadline at City Hall, 1221 SW Fourth Avenue, Room 140, Portland, OR 97204.  It is important that this deadline be met so that they can entered into the public record and provided to Council members for consideration in advance of the hearing date.  A property owner can file a written remonstrance by the deadline and objection and also testify at the hearing.  It is important to note that late filings on the day of the hearing can adversely impact other property owners participating in the LID and are rarely honored by Council.

Will someone respond to my remonstrance or objection?

The LID Administrator will submit a written report to Council that will formally respond to your timely remonstrance or objection.  This response will be posted on line at www.portlandoregon.gov/efiles.  Late remonstrances and objections up to the time of the hearing will also be posted at this link, but no response will be included.

Are there alternatives to submitting a remonstrance?

Yes. The LID Administrator is available to work with you throughout the project, from prior to LID formation to final assessment.  The LID Administrator can be reached at 503-823-5648 or at andrew.aebi@portlandoregon.gov.  The earlier the LID Administrator is made aware of a problem, the more likely he will be able to work with other City staff to address the issue of concern.

Are sidewalks required as part of a street improvement?

In most cases, sidewalks are constructed at the same time street improvements are made, in compliance with the federal Americans with Disabilities Act (ADA) and the state law. Sidewalks in most cases represent a small portion of the overall project cost and are significantly less expensive to build as part of a street improvement project than to build separately later on. The City of Portland receives many requests each year to build sidewalks in areas lacking adequate pedestrian facilities.  Sidewalks are sometimes omitted when infeasible due to topographical constraints.

What materials may be used in constructing sidewalks?

Concrete is the standard material because of its longevity; little maintenance is required if constructed properly in the beginning. Pavers may be used in lieu of concrete. Asphalt is less durable and therefore more expensive to maintain. Bark mulch and other similar materials are not used because they deteriorate rapidly and do not provide adequate access for the disabled.

Can a group of property owners save money by taking out a permit for street improvements instead of forming an LID?

In theory yes, but they will not have access to City financing.  It is also difficult to issue multiple permits to multiple property owners and coordinate them.  A coordinated LID project offers a streamlined and coordinated approach, and reduces some elements of project risk.                  


How to form an LID in your neighborhood

Step One: Getting Started

 Property owners almost always initiate the LID process. The first things to do if you are considering forming an LID are to:

  • Contact the Bureau of Transportation at 503-823-5648.
  • Let us know the general scope of what you would like done. This may change, but we will work with you and your neighbors to develop a project scope.
  • Talk to other nearby property owners to see whether they would be interested in attending a meeting.
  • Work with us to schedule and host the meeting, during which City staff will work with you and your neighbors to clarify the scope of the proposed project, explain the LID process, and discuss possible alternatives. City staff will notify you and your neighbors of this meeting.

If there is sufficient interest among property owners on your street to proceed, City staff will:

  • Inspect your street.
  • Develop one or more alternatives for improvements.
  • Provide an initial project cost estimate.
  • Provide property owners with a preliminary cost estimate for each individual property and explore alternatives for sharing costs.
  • Identify which properties benefit from the project and therefore should be included in the LID.
  • Identify properties whose owners who should be asked to sign the LID petition.
  • Communicate horizontal impacts to property owners.
  • Prepare the petition.
  • Organize a more formal follow up meeting, if desired.
  • Individually distribute the petitions to property owners for their consideration.

If a majority of property owners within the proposed LID have signed a petition in favor (as measured by assessment methodology), then City staff will:

  • Communicate to all property owners opportunities to provide comments on the project to City Council.
  • Submit to a City Council vote whether to pass the Resolution of Intent and direct initiation of LID formation proceedings.
  • Modify the proposal as appropriate, incorporating feedback from property owners and City Council, and will schedule an LID Formation Hearing.
  • Notify property owners of the LID Formation Hearing.
  • Respond to and present to City Council any written remonstrances received.
  • Begin design work if City Council approves the project by voting in favor of the LID. 
  • If City Council declines to form the LID, no further action is taken.

Step Two: Project Design 

The design phase is a cooperative effort between property owners and City staff. City staff will hold public meetings to ensure that owners' and residents' perspectives are incorporated into the project design. We encourage all property owners to give their input to ensure that the project is built to their satisfaction. Property owners will be involved in decisions about:

  • Driveway widths
  • Driveway connections to the street
  • Parking availability
  • Street widths
  • Preservation of existing vegetation and fences

Certain street features will be required to comply with safety and maintenance needs, and to accommodate stormwater drainage and environmental concerns, emergency vehicles, and pedestrian access.

Step Three: City Council Authorization of Construction Contract

Once design work has been completed, City staff will:

  • Prepare a bid package for interested contractors.
  • Advertise for bids from responsible, qualified contractors.
  • Seek City Council authorization to award the bid (smaller projects may not require City Council approval).
  • Award the bid to the lowest responsible bidder.

Step Four: Construction

 City staff will:

  • Give authorization to the successful contractor to begin work.
  • Inspect the work during construction to assure that it meets all standards and specifications.
  • Work with property owners to resolve construction-related issues.
  • Work with property owners to complete a "punch list" of construction items in order to complete the project.

There may be times when the work may temporarily interfere with access to homes and driveways. Staff will coordinate project scheduling with residents to reduce inconvenience caused by construction.

Step Five: Assessments and Payments 

In this final step, City staff will:

  • Ask City Council to certify the project as complete.
  • Mail property owners a notice of their proposed final assessment.
  • Arrange a public hearing before City Council so property owners may comment on their final assessment.
  • Respond to and present to City Council any written objections received.
  • Ask City Council to approve or modify the final assessments.
  • Mail a final assessment to property owners upon City Council approval of the final assessment.
  • Close out the LID, which will no longer exist.
  • Accept maintenance responsibility for the newly-constructed street.

Property owners then have 30 days to either pay the City in full or sign an assessment loan contract with the City Auditor's Office. Once property owners have received their final assessments, payments and financing are handled by the Auditor's Office.


Alternatives to an LID

EXPANDED MAINTENANCE OPTIONS FOR UNIMPROVED STREETS

What has changed regarding maintenance of unimproved streets without a permit?

Prior to 2003, property owners were limited to using hand tools to maintain their streets. 

Now, if the street is dirt or gravel, the street may be regraded and/or new dirt or gravel may be applied to it, subject to the restrictions in Section 17.42.025 of City Code.  

If the street has existing pavement, a new pavement overlay may now be applied, also subject to the restrictions in Section 17.42.025 of City Code.  This additional flexibility applies only to streets for which the City does not have maintenance responsibility. You can call Andrew Aebi at 503-823-5648 to determine whether the City maintains your street.

What area of the street may I maintain?

If the City does not maintain your street, you may maintain only the area abutting your property to the centerline. You may not maintain the area abutting your neighbors’ properties. They are responsible for their own portion of the right-of-way. 

It is neither your right nor your responsibility to maintain right-of-way abutting someone else’s property without their permission. While neighbors may join together to perform maintenance, the City cannot enforce collection of funds for this purpose.

Can speed bumps be installed?

Speed bumps are not allowed on streets that are not maintained by the City. Expanded maintenance options apply only to streets for which the City does not have maintenance responsibility. 

May property owners hire a contractor in lieu of doing the work themselves?

Yes. Property owners may now hire a contractor to repair streets for which the City does not have maintenance responsibility, or do the work themselves. You may also want to consider hiring an engineer as well.

Can the City recommend a specific contractor or engineer?

We cannot recommend any one firm over another, but we recommend hiring a firm that is licensed and bonded. A variety of contractors are listed in the Daily Journal of Commerce and in other publications. Design work should be done by a licensed Professional Engineer (P.E.).

What are some considerations in hiring a specific contractor or engineer?

We suggest ensuring that any firm you hire is properly registered, licensed and bonded in Oregon. By City Code, property owners are liable for the condition of abutting unimproved streets. Any issues with respect to the condition of the street are considered private disputes among property owners. The City can assist only if property owners elect to take out a permit for the work done, regardless of whether such a permit is required.

Is other notification required?

Oregon utility notification law applies if excavating more than one foot. Go to http://www.callbeforeyoudig.org/ for more information.

 PERMIT PROJECT

Unimproved streets can be improved to City standards via a permit instead of using an LID.  This approach generally works best when abutting property owners have engineering and construction expertise and can arrange for interim financing of the improvements.  More information is available on the permit process by contacting Chon Wong in Permit Engineering at 503-823-7050.

GRAVEL STREETS PROGRAM 

The Portland Bureau of Transportation has a program that improves the condition of gravel streets across the city. Learn more on the Gravel Streets Program’s website.