Portland City Council Passes Emergency Ordinances to Support Office-to-Housing Conversion

Today, Portland City Council approved a pair of ordinances to incentivize office-to-housing conversions and draw more full-time residents in the city's core. The ordinances are part of an ongoing effort to help address the vacancy rate in the Central Business District, which is up nearly 26% and is expected to continue to rise. In addition, Portland's central city recovery has been slower than peer cities.

"Recognizing the enormous cost of office conversions, the City is acting to create greater financial feasibility for conversions that produce additional housing in the central city, and drive investment into empty offices for more vibrant neighborhoods in safer and more sustainable buildings," said Mayor Ted Wheeler. "While this isn't a silver bullet, it's a positive tool to overcome structural and financial barriers to reinvestment into buildings and neighborhoods. We continue to seek more state-level financial support in order to achieve scale."

The two ordinances that passed Council today include:

• Exemptions for System Development Charges: Exempts qualifying conversion projects from all System Development Charges up to the amount of the actual cost of the seismic retrofit or $3 million, whichever is lesser. Eligible conversions still must comply with Inclusionary Housing requirements. This exemption will expire and be re-evaluated in July 2027.
• Adjustment for Seismic Standard: Adjusts the seismic improvement standard for R-2 classified buildings, which is consistent with the level of safety required by other major cities in seismic areas, like San Francisco.

The ordinances come after Mayor Wheeler led several months of policy development and consultation with stakeholders including City Council offices, the Portland Housing Bureau, the Bureau of Development Services, infrastructure bureaus, building owners, architects, designers, developers, construction firms, and real estate brokers. The Mayor is committed to urgently pursuing innovative policies that reinvest into and reinvent our central city.

"These new steps will support greater activation in public spaces and increased foot traffic for small businesses to help revitalize the Central District," City Commissioner Carmen Rubio says. "It will also help achieve our goals for sustainability by increasing density and repurposing buildings in the central city and connecting people with transit to reduce commuting."

The actions taken by Council today not only address post-pandemic realities, but also could support the city's effort to increase housing should building owners decide to convert office space to housing.

In a related effort, Commissioner Rubio today also released the results of a survey aimed to identify potential changes to city or state processes or policies to increase housing production. To review the results of that survey, visit here.

Today's ordinances and the survey jumpstart the efforts by Commissioner Rubio and the Council to address the housing needs of current and future Portlanders. In addition to efforts to improve Portland's permitting process, Council will review the annual State of Housing Report on March 22.

To follow will come a series of analyses related to the overarching costs of building housing in Portland, local costs that drive housing development costs, an evaluation of inclusionary housing, and a housing needs analysis - all of which will inform the housing production strategy.

These analyses will be released throughout the year and will inform the city's effort around housing production for Portlanders for years to come.