The City of Portland has approved a major change that could significantly reduce the cost of building new homes—including ADUs, small multifamily projects, and more. Starting August 15, 2025, System Development Charges (SDCs) will be paused for three years for most residential construction.

What Are SDCs?

SDCs are one-time fees charged by the city to help fund infrastructure like roads, parks, water, and sewer systems. These fees can add $20,000 or more to the cost of building a single home or ADU in Portland—and even more for larger projects.

What’s Changing?

From August 15, 2025 through September 30, 2028, residential building permits that meet eligibility criteria will automatically exempt applicants from paying SDCs—no special application or review needed.

This temporary pause applies to:

  • New single-family homes

  • Duplexes, triplexes, and fourplexes

  • Apartment buildings and mixed-use housing

  • Accessory Dwelling Units (ADUs)

  • Congregate housing like senior living facilities

The city is aiming to jumpstart 5,000 new housing units during the pause period by lowering upfront development costs.

What About the Existing ADU SDC Waiver?

Portland has long offered a separate SDC waiver program for ADUs, but it required a deed restriction prohibiting short-term rentals (like Airbnb) for 10 years.

Now, under this new citywide SDC pause:

  • ADUs built during the pause window also qualify

  • No deed restriction is required

  • No application is needed—the exemption is automatic for eligible permits

This makes building an ADU more flexible and affordable than ever before.

⚖️ What’s the Trade-Off?

While this is great news for builders and homeowners, the city expects to lose about $63 million in SDC revenue over three years. This could impact funding for public infrastructure like parks, roads, and transit. To help monitor outcomes, City Council has mandated regular reporting on the program’s impact.

Why It Matters

At SQFT Studios, we specialize in smart, space-efficient residential projects—including ADUs and home studios. This new policy makes it easier—and cheaper—for Portlanders to build more housing in their own backyards or neighborhoods.

We’re already working with clients to take advantage of this opportunity. If you’ve been considering an ADU or small infill project, now is the time to start planning.


Have questions about how this affects your project? Contact us and let’s talk.

Need help understanding what qualifies?

What Counts as Residential Development Under the New SDC Pause?

Not sure what qualifies? Here’s a quick guide to the types of housing that can benefit from Portland’s new SDC fee pause:

Single-Family Homes

A stand-alone house built on its own lot. It includes:

  • New construction or replacement of a detached home

  • Tear-downs and rebuilds (if a new permit is issued)

Great for: homeowners building on a vacant lot or replacing an older home.


Accessory Dwelling Units (ADUs)

Also known as backyard cottages, granny flats, or in-law units, ADUs are secondary homes built on the same lot as a primary house.

They can be:

  • Detached (like a backyard studio)

  • Attached (like a basement conversion or addition)

  • Internal (within the footprint of the existing home)

Good to know: With the new SDC pause, you no longer need a deed restriction—you can build an ADU without giving up short-term rental rights.


Duplexes, Triplexes, and Fourplexes

These are small multifamily homes with:

  • 2, 3, or 4 separate units in one building

  • Often still allowed in residential neighborhoods under Portland’s Residential Infill Project (RIP)

Great option for: families co-living, aging in place, or rental income on a single lot.


Apartment Buildings & Mixed-Use Housing

Larger residential developments (5+ units), which may include:

  • Apartments, townhomes, or stacked flats

  • Mixed-use buildings with residential units above commercial spaces

Ideal for: urban infill developers or multifamily housing projects


Congregate Housing

Special-purpose shared housing, such as:

  • Senior living facilities

  • Co-living communities

  • Group homes with shared services

Often includes private sleeping areas with shared kitchens, bathrooms, or communal spaces.

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