Oregon Gov. Tina Kotek and Portland Mayor Keith Wilson announced on Thursday, May 1, a city initiative to encourage the development of 5,000 new housing units in Portland.

If approved by the City Council, the city would waive System Development Charges for three years or until 5,000 housing permits have been issued, whatever comes first.

“Portlanders are impatient for more progress on the city’s housing supply crisis. So am I, and so is the mayor. Even in tight budget times, we need to get creative and try new things,” Kotek said. “We have to put our whole weight behind building Portland into the vibrant, safe and prosperous city we know it can be. Things are getting better all the time, and the Mayor and I are ready to double down.”

The initiative is as an early action of the Multifamily Housing Workgroup launched by Kotek and Wilson earlier this year. The partnership is part of Kotek’s ongoing work to greatly increase housing production statewide.

“By temporarily waiving these fees, we can make the numbers work and turn stalled plans into real homes for real people,” Wilson said. “Right now, developers are ready to build over 4,000 homes in Portland. But too many projects stall because of costs. Waiving SDCs can cut thousands of dollars of the cost of building a home and can make the difference in someone being able to make the decision to build homes in our city.”

Studies show the state needs nearly 100,000 additional homes to meet demand. Since taking office in 2023, Kotek has set an ambitious goal of building 36,000 housing units per year. But new U.S. Census data shows that construction in the state has slowed since 2023, and is only on track this year to build 11,184 homes, or about 31% of the governor’s goal.

The announcement was made at a Portland City Hall press conference. Kotek and Wilson were joined by: City Council President Elana Pirtle-Guiney; Councilors Jamie Dunphy and Eric Zimmerman; Oregon Smart Growth Board member and Security Properties Vice President Sarah Zahn; Urban Renaissance Group Managing Director Tom Kilbane; and Portland-based Colas Construction CEO Andrew Colas.

“As a lifelong Portlander, I know firsthand that we’re facing a housing affordability crisis,” Colas said. “The solution is to be pro-housing and accelerate housing production. Governor Kotek and Mayor Wilson’s new initiative to deliver 5,000 new housing units sends a clear national message: Portland is open for business.”

System Development Charges, or SDCs, are used by local governments to fund such services as streets and parks. According to the Oregon System Development Charges Study, the average total SDC charges in Oregon are roughly $15,000, and can be as high as $50,000. These charges can be the equivalent of 3% to 6% of total development cost and can limit the number of projects pursued by both affordable and market-rate developers.

Asked if the city can afford to lose the revenue when facing a $93 million general fund shortfall in next year’s budget, Wilson said residential construction is so low now, the city is not raising that much money from SDCs.

Kotek and Wilson first convened the Multifamily Housing Development Workgroup on March 8 to advance more multifamily housing projects in the city. Kotek also is pushing for the construction of additional homes at the 2025 Oregon Legislature, including asking lawmakers to legalize so-called “middle housing’ for middle class Oregonians in more places, to create the Governor’s Infrastructure for Housing Program, and to approve $1.06 billion to increase housing supply in every part of the state.