Councilors OK plan to raise building fees

Kelly Kenoyer

City Council members came to a consensus on planned increases to system development charges at a work session on Thursday, Sept. 3.

The council decided, informally, to implement the increase in phases, and also capped the increase about $3,000 lower than city staff had suggested.

System development charges, or SDCs, are fees cities charge to new construction in order to fund the services those new buildings will use. In Sweet Home, the proposed SDCs will cover costs for transportation, water, stormwater, parks and wastewater.

The city’s current SDCs only include water and wastewater, and total $1,839, far below the $18,800 average for cities in Oregon. Staff initially recommended raising the SDCs to $17,953 per new construction unit, but city councilors at the work session expressed concern at raising the fees to that level, not wanting to have a chilling effect on development.

Councilors Diane Gerson, Greg Mahler, Susan Coleman, Lisa Gourley, Dave Trask, and Cortney Nash were in attendance at the Sept. 3 meeting, with Councilor James Goble calling in remotely to attend.

At the previous meeting, councilors told city staff that they’d like to have the SDC increase implemented in phases, so much of the discussion on Sept. 3 involved what those phases would look like and concerns about the sum cost being too high. Compared to current SDCs in cities the same size as Sweet Home, that cost was slightly above average.

“I’m not comfortable being towards the higher end of that at this point,” Gerson said.

Compared to Lebanon and Albany, the suggested figures in Sweet Home were even higher – though city staff stated that Lebanon is also in the process of adjusting its SDCs. Currently, Lebanon’s SDCs are around $11,900 per unit, City Manager Ray Towry said, but that number may not be accurate for much longer.

Gourley agreed with Gerson, not wanting Sweet Home to charge higher SDCs than neighboring towns that are larger. Coleman concurred.

Mahler suggested that the cost would be going too high, too fast.

“I don’t think in four years we should be all the way up to the $17,000; that’s a bit aggressive.” He suggested a four-year phase ending at $15,000, then a fifth year taking the total to the $17,000 mark.

Trask disagreed, saying the city should move faster and raise the SDCs to the suggested level within four years.

“I think we’ve been so far behind for so long,” he said. “We’re stuck in a mess here because we need the money to get us to where we need to be. I know it’s a tough deal, but my goodness. We’ve been giving this stuff away.”

Towry told the council that it’s up to them how they decide to raise the SDCs, but said it would be best to create a plan and stick to it, so as to remain predictable to developers. He also said it would be beneficial to get the process moving quickly.

“We’re the only community with the amount of land that we have from Portland down to Eugene,” he said.

Completing the city process to raise SDCs would mean that any potential growth in Sweet Home would automatically come with funding for necessary improvements.

“If a company wants to come in but they don’t want to pay, you would have the ability to negotiate,” he added.

“With every developer who has come in and inquired, and I would say serious inquiries, I would say 250 units are in the pipeline right now,” he said. “We need to see that balance of what is enticing to builders but still meets the needs of the community.”

If the money for wastewater, stormwater and other services doesn’t come from SDCs, he said, it will have to come from charging service users instead.

After nearly an hour of discussion, the council landed on a consensus: SDCs will be raised to $15,000 per unit over the course of four years, and may include an automatic accelerator based on inflation, either of the entire economy or within the construction industry specifically.

That conclusion will set City Council on a path to officially vote the increase through in upcoming sessions. A meeting on preliminary findings will be held Oct. 14, which kicks off a 90-day period for stakeholders to get involved and comment. A methodology report comes 30 days later, with a 60-day window for public comment. The council will hold a final hearing on SDC adjustments in January.

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