The Finance Committee of the Portland City Council has taken a significant step toward addressing the city’s housing crisis by advancing a policy aimed at exempting new residential projects from system development charges (SDCs) for a period of three years. This exemption would take effect 30 days after the full council votes on the measure.
The initiative aligns with discussions that took place in March between Governor Tina Kotek and Mayor Keith Wilson and local developers, who have voiced concerns regarding the increasing construction costs and challenging market conditions impacting multifamily housing. On May 1, both leaders announced their shared goal of waiving SDC charges to stimulate the development of 5,000 new residential units by 2028.
System development charges are fees imposed on housing developers that contribute to the funding of essential capital projects, such as new parks and improvements to roads and water facilities. For new projects to qualify for the exemption, they must involve the creation of housing units, which encompasses single-family homes, multifamily buildings, and congregate homes.
Support for the exemption has been voiced by stakeholders like Mike Mitchoff, a Portland resident and co-owner of the development firm Portland Houseworks. During a recent council meeting, Mitchoff expressed his belief that the exemption is a constructive step that the community can stand behind, stating, “In my opinion, it’s really simple, but it’s a step in the right direction and it’s something that I think we can all be proud of.”
Micheal Hamilton, president of Seneca Development, highlighted that developers are not seeking government handouts, but rather essential tools provided by policies like the proposed exemption. He noted that due to high construction costs, many developers find themselves with stalled projects that are unable to secure the necessary funding.
Hamilton remarked on the positive response from financial institutions since the announcement of the waiver measure. “Since this SDC waiver measure was announced a few weeks ago, we have received multiple term sheets from bona fide financial institutions to fund our projects,” he stated. He expressed optimism that three of his projects are on track to break ground this year, contingent upon the waiver’s implementation.
Despite unanimous support from the council, with a 5-0 vote, concerns were raised regarding the financial implications of the exemption. Councilor Candace Avalos stressed that the city might face a loss of approximately $63 million in essential SDC revenues, which would typically be allocated to infrastructure improvements. While Avalos acknowledged the exemption’s potential to advance stalled housing projects, she underscored the importance of tracking the impact of the exemption to ensure that its benefits are effectively shared across the community.
As the committee’s decision moves forward, the full City Council is expected to deliberate and vote on the exemption in the coming weeks, with many residents and developers closely watching the developments. The outcome of this policy could have lasting effects on Portland’s housing supply and infrastructure funding.
image source from：wweek
