Amend Partial and Full Exemptions of System Development Charges for Affordable Housing Developments Code to temporarily remove income requirements for homeownership units (amend Code Section 30.01.095)

This legislation temporarily removes the income requirement for homebuyers purchasing homes benefitting from the Affordable Housing System Development Charge (SDC) Exemption Program. Removal of the homebuyer income requirement only applies to Affordable Housing SDC homeownership units that were applied for by the builder and had their building permits issued prior to January 1, 2026, and have not sold prior to September 30, 2028 (the sunset date of the Temporary SDC Exemption Program).Portland Housing Bureau (PHB) administers the Affordable Housing SDC Exemption Program authorized under PCC 30.01.095. This development incentive helps promote the creation of newly built homes. Homeownership is traditionally considered to be a generational wealth-building tool and provides stability for families.The Affordable Housing SDC Exemption Program reduces the building permit cost by around $30,000 for each new home built, thereby encouraging the development of new homeownership opportunities within Portland.The Affordable Housing SDC Exemption Program requires homes to be owner-occupied and not used as rental properties. Currently, homebuyers must income-qualify by earning no more than 100% of area median family income (MFI) for a household of four. The sale price cap for 2026 is $455,000.On July 16, 2025, Council passed ordinance 192082, which temporarily exempts system development charges for new housing in Portland with permit issue dates between August 15, 2025, and September 30, 2028, with the intention of creating 5,000 new housing units. The Temporary SDC Exemption Program applies to all newly built residential housing units, not just affordable housing units. As such, homebuyers purchasing units that received the Temporary SDC Exemption do not need to income-qualify.Temporarily removing the income requirement for the Affordable Housing SDC Exemption Program helps homebuilders who opted to participate in the Affordable Housing SDC Exemption Program and had their building permit issued prior to the effective date of the Temporary SDC Exemption Program to sell units that remain unsold without needing to find an income-qualified homebuyer, similar to the Temporary SDC Exemption Program.

Temporarily removing the income requirement to allow access to more potential homebuyers will affect homes already in the planning phases, currently under construction, or built and listed for sale. The affected homes have already been approved for the Affordable Housing SDC Exemption and have already been submitted to the SDC bureaus to have the exemptions applied to building permits. There are currently about 700 unsold homes that applied for the Affordable Housing SDC Exemption and received their building permit prior to January 1, 2026.

Homebuilders have requested a change to the Affordable Housing SDC Exemption Program in order to reduce any unfair competition between homes approved for the program and those being sold without the regulatory requirements.

This legislation does not increase the amount of foregone revenue in the form of system development charge exemptions because the limited number of applications this applies to have already been approved. This will likely increase the number of homes sold to eligible homebuyers rather than exemptions needing to be paid back due to homebuyers not qualifying under the income requirements of the program.

Not applicable.