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The Portland City Council on Wednesday approved an ordinance that allows for payment of system development charges to be deferred for up to 24 months, without interest, on construction projects that provide new housing units.

System development charges are assessed by the city’s infrastructure bureaus when a construction project is expected to place new demands on existing sewers, parks, streets, water systems and other public structures. Full payment of these charges is typically required before a building permit is issued and construction can begin.

The ordinance takes effect immediately. It seeks to reduce applicants’ carrying costs and help incentivize more housing projects in the face of high interest rates and higher costs of materials and labor.

This policy follows the City Council’s passage of Commissioner Carmen Rubio’s 90-day action plan to increase housing production. Then, in a  issued by Rubio and the Bureau of Development Services, participants indicated that the timing of system development charge payments was one of the biggest challenges for construction of new housing units in Portland in the current economic climate.

Under the new policy, permits for new housing units received by June 30, 2025, as well as those permits currently under review, may qualify for deferral of system development charge payments interest-free for up to 24 months from the date the permit is issued. Qualifying permit applicants who are notified by one or more infrastructure bureaus that they are subject to system development charges must contact their reviewers at those bureaus by Aug. 15, 2025, to request deferral of payments.

If deferral of payments is approved, failure to pay system development charges in full within 24 months of the issuance of a qualifying building permit will result in the accrual of interest at the city’s default interest rate. Penalties and collection charges may also accrue.

This deferral policy does not apply to permits issued before adoption of this ordinance.