When Stefan Shemek learned what it would cost to build an accessory dwelling adjacent to his Portland home, he suffered a severe case of sticker shock.

“We would have been grossly over-budget, or have to re-design the entire project,” Shemek said.

Of the $100,000 estimated cost for Shemek's accessory dwelling unit, about $18,000 would have gone to city of Portland systems development charges.

But all that changed Wednesday, as the Portland City Council voted unanimously to suspend systems development charges on accessory dwelling units (ADUs).

“We were on the verge of halting the project, but now we will be able to apply for permits in the next two weeks,” Shemek said.

The council said that architects and builders would see immediate benefits by suspending the charges and at the same time, the city would create an incentive for home owners to build more affordable housing.

“This couldn’t happen at a better time, given the significant hardships faced by builders and the construction industry, and in terms of our goals for sustainability in our community,” said Mayor Sam Adams.

At a city council meeting Wednesday, several architects and builders outlined their cases for asking the city to waive the systems development charges.

Alan Armstrong, a local ADU builder, said the systems development fees, particularly on small projects, amounted to as much as 44 percent of the total cost of the project.

He said a recent project for a 400-square-foot ADU would have had $12,000 in systems development fees – even though the total cost of the project would only be $25,000.

Joe Robertson of ADU Building Co. told the council that the systems development charges were “counter-productive” because the fees discourage the expansion of affordable housing. He said a recent ADU project which cost $65,000 racked up $18,500 in development charges.

Robertson said when the city amended the planning code to allow ADUs in 1998, many of his clients wanted to build rental units. However, in recent years he has seen an increase in retirees or empty-nesters who want ADUs built in their back or side yards where they can live, while renting out the primary residence.

In some cases, the empty nesters rent out the main home to their adult children, and grandchildren.

City officials said the number of ADUs being built here has dwindled in recent years, possibly attributable to the expense of the systems fees. The fees could be standing in the way of construction, they said.

Beth Meredith, a principal with Living Spaces in Portland, said she and her clients are proponents of “small footprint living.” She said the current ADU code should be altered to allow residents to stray from some of the design and materials seen in the primary residence on a property.

The council didn’t address code restrictions on ADUs, regarding how the design of the ADU must mimic the primary home. Nevertheless, Meredith said, “This is a huge leap for the community, in terms of making these small homes possible."

Council member Nick Fish said the only downside to the council’s action is that the city would lose out on the development charges. “The small decline in systems development revenues will be greatly outweighed by the benefits to the housing stock, in terms of affordability,” Fish said.