Agenda Packet 2-12-20 Work Session

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Attachment A Potential Financial Incentives for ADUs February 2020 City of Eugene 2 February 12, 2020, Work Session – Item 1 Description Legal Issues Administrative Requirements Estimated Cost Reduction to Property Owner Fiscal Impact to City of Eugene B. Waive SDCs System Development Charges are collected from development and redevelopment projects. SDCs are designed to recover a fair share of the costs to increase capacity of infrastructure to accommodate new growth. The City collects SDCs for wastewater (local and regional), stormwater, transportation and parks. In 2018, the City collected about $7,500 in SDCs per ADU. In 2019, SDCs for ADUs declined in 2 ways: MWMC reduced its SDC for ADUs by about $200; The City waived Transportation SDCs for ADUs, up to a $40,000 annual cap. In 2019, SDCs for ADUs were about $6,200. In addition to the City’s SDCs, new development pays SDCs for water (collected by EWEB). The City of Eugene has an on- going program to waive SDCs for ADUs that meet criteria to be considered affordable housing. The exemptions can be used for rental housing targeted to households earning 60% of the area median income and 80% for owner-occupied units. The City waives SDCs for affordable units up to $240,000 annual cap. The City Council would have to pass an ordinance authorizing a program to waive SDCs for ADUs that do not meet affordability criteria. Staff estimate that the administrative burden of implementing a waiver is low and could be incorporated into the existing fee collection in the permitting process. To receive the SDC waiver for qualifying affordable ADUs, the applicant submits a form prior to construction that documents request. Renter must meet income qualifications at initial move in. About $6,000. This figure includes estimated SDCs for City wastewater Parks Stormwater Transportation Administrative fee It does not include the cost of the MWMC wastewater SDC. Waiving SDCs for ADUs would require a subsidy from some other source (such as the General Fund) or would create unfunded liabilities for future infrastructure projects. The impact to the SDC funds would depend on the number of ADUs constructed. If the City’s SDCs for local wastewater, stormwater, transportation, and parks were waived, the total avoided revenue to the combined SDC funds per ADU would be about $6,000. In 2019, the City waived 12 Transportation SDCs (reported by Public Works Engineering). If the City had waived all SDCs for those 12 units, it would have foregone about $72,000.