The City of Portland, Ore., made some big changes this year that went into effect Aug. 1.

To combat the city’s affordable housing crisis, city council members rescinded the city’s longstanding waiver of its system development charges for folks building accessory dwelling units and renting them out as short-term rentals.

For builders who want to build an ADU as a long-term rental, their fees will be waived permanently. Other builders will have to revisit the scope of their project.

What does this mean in plain English?

If you’re building an attached or detached dwelling adjacent to your home (think: tiny house, mother-in-law unit, backyard cottage), you won’t be able to rent it out on Airbnb, VRBO or any number of other short-term vacation rental sites (or not through a site) without paying the city’s very high system development charge — between $12-19K!

If you want to take advantage of the waiver and save $12,000, your dwelling must be rented out as a long-term rental for 10 years.

If the city finds out you’ve been using your dwelling to make extra cash renting it out short-term to tourists, they’ll charge you 150 percent of the original SDC waived.

This all only applies to new dwellings permitted after July 31.

While we have many Portland customers who previously took advantage of the SDC waiver (and who are not affected by this change since they’re not new builds), ultimately, we feel as though this could be a good thing for Portland’s tight housing market.

“Since Portland has more people than housing, rental rates have gone way up with the shortage,” Modern-Shed general manager Tim Vack noted. “If all residents could put a rental unit in their backyard that would alleviate the market. It’d be a win-win.”