The Portland City Council has moved forward with a proposal to temporarily waive certain construction fees in an effort to stimulate the development of new apartments in the city.
Council President Elana Pirtle-Guiney, representing District 2, emphasized the necessity of this action during a council meeting held on June 25, stating, “We need to jumpstart housing in our community. I think this is really critical.”
The proposed policy centers around waiving system development charges, or SDCs, which are fees typically imposed on housing developers to help offset the costs associated with providing city utilities and services such as sewer systems, streets, and parks.
These SDCs average around $20,000 per new housing unit in Portland and have long been regarded by developers as a significant financial impediment to new construction.
Michelle Schulz, the owner of GBD Architects, underscored this concern, highlighting a disturbing slowdown in housing development that has been exacerbated by such financial barriers.
“In recent years, we’ve seen a troubling slowdown in housing development, driven in part by financial barriers that make it increasingly difficult to get projects off the ground,” Schulz stated. “But this measure isn’t just about lowering costs; it’s about removing a key hurdle that’s preventing much-needed housing from moving forward.”
Currently, Portland already waives SDCs for developers constructing affordable housing for low-income families earning up to 120% of the area median income for a family of four, which is approximately $149,000. However, the new policy aims to extend this fee waiver to apartment buildings across all price points.
The proposed SDC waiver will remain in effect for three years or until it facilitates the construction of 5,000 new housing units, whichever occurs first. This initiative stems from a task force established in May by Mayor Keith Wilson and Governor Tina Kotek to tackle the issues surrounding Portland’s lackluster housing construction rates.
Mayor Wilson expressed optimism regarding the measure, saying, “By temporarily waiving these fees, we can turn stalled plans into real homes for real people.”
While the waiver is designed to support housing developers financially, it will come at a significant cost to the city.
Based on current construction rates, projections indicate that approximately 2,600 new housing units could be developed under this policy within its three-year time frame.
This could result in an estimated loss of $63 million in revenue across various city bureaus, with the greatest impact felt by Portland Parks & Recreation, which has already been facing substantial budget cuts in recent years.
District 1 Councilor Candace Avalos raised concerns about the potential revenue loss during the meeting.
“If we approve this proposal as is, we’re agreeing to lose a lot more than $63 million,” Avalos cautioned. “We could stand to lose twice as much.”
She underscored the serious implications this lost revenue could have on the city’s ability to maintain essential infrastructure, including roads and water pipes, especially in underserved communities like East Portland.
Bill Crawford, who manages SDC fees for Portland Parks & Recreation, echoed Avalos’s concerns, stating that the cuts to SDC revenue would lead to a decline in park maintenance and ultimately affect the quality of life for Portland residents.
“These impacts will be significant and deeply felt in underserved communities,” Crawford remarked, questioning the wisdom of shifting resources away from vulnerable populations to benefit wealthy and out-of-state developers.
At the council meeting, Avalos proposed an amendment to withdraw the fee waiver once the city reached $63 million in forgone SDC revenues.
However, developers and other council members argued that such a limit would undermine the purpose of the waiver.
Sarah Zahn, managing director of development at Security Properties, a real estate investment firm, stated that creating a $63 million cut-off would diminish the certainty that developers need to proceed with their projects.
“Anything short of a clear timeline and absolute certainty means we cannot rely on that fee reduction,” she said. “This ultimately serves to entirely negate the waiver’s value as we would have to disregard the benefit in our underwriting, putting us back to square one.”
Avalos’s amendment ultimately failed.
However, an alternative proposal from District 3 Councilor Angelita Morillo, which mandates Mayor Wilson to report back on the policy’s effectiveness every six months, was successfully passed with an 11-0 vote.
Pirtle-Guiney supported Morillo’s amendment, stating that it addressed some of the concerns raised by Avalos.
The council plans to hold a final vote on the SDC waiver later this month.
image source from：opb
