Item C: Systems Development Charges

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Examples of the types of projects funded in part by SDCs include the following: pavement preservation on arterial and collector streets; traffic signals and other intersection improvements; off-street bicycle paths; parks land acquisition and development; wastewater facilities rehabilitation; and, stormwater facilities construction. In recent years, SDC revenues and expenditures have averaged approximately $6.3 million per year. The amount of SDC revenue varies considerably from year to year, depending on the volume and nature of development, which are tied to local economic conditions. Expenditures also vary in relation to the types and SDC-eligible costs of capital projects funded as well as the amount of available funding. A significant decline in SDC revenue has occurred during the most recent fiscal year; for FY09, total revenues are estimated at approximately $2.9 million. This reduction in revenue has resulted in the delay of a number of planned capital projects. Financial Implications for Development Projects SDCs are one-time charges, often of a sizeable dollar amount, and can represent a significant percentage of a development project’s total cost, ranging from a few percent to 20 percent or more. The amount of SDCs for a development is variable, depending on several factors including size and type of development and available SDC exemptions or credits. SDCs are proportionate to a development’s claim on system capacity and thus vary by development type and size. For example, a restaurant may have a relatively large impact on wastewater system capacity as compared to an office building of the same size. Attachment A provides a comparison of SDCs to project construction value for several example development types, prior to any credits. SDCs are paid, or an agreement to pay is executed, at the time of issuance of a building permit as provided in Eugene Code section 7.720. City financing of SDCs allows for semi-annual payments over a 10-year period, with the first payment due approximately six months after permit issuance. Contracted payments are typically secured by a lien on the property being developed, with other forms of security allowable. SDC credits and exemptions provide some potential incentives for low-income housing, mixed-use, infill and redevelopment as well as development in the downtown core. In 1997, the council adopted an exemption of local SDCs to qualified projects providing housing to low-income persons. This exemption has provided approximately $815,000 in assistance to housing projects over the past 12 years. SDC credits account for reduced impacts of certain development projects as well as credits for improvements built by a developer that would otherwise have been funded by the City with SDC revenues. For redevelopment of existing sites, SDC credits are provided for prior uses at the site, reducing and sometimes eliminating SDCs for a project. Additionally, development in nodal or mixed- use development centers receives a 10 percent reduction in the street-related transportation SDC. For development in the downtown, redevelopment involving intensification of use of pre-existing spaces is not charged a transportation SDC. Current Measures to Provide Relief for Development The City Council and City Manager have implemented several measures to provide a degree of relief from SDC increases during the current economic situation. Recently, the council chose to ease the impact of a proposed July 1, 2009, administrative rate increase by postponing the effective date to January 1, 2010. Normally, SDC rates are adjusted annually, typically in April, to reflect the prior year’s changes in indexed infrastructure costs. Earlier this year, the City Manager directed that the Z:\CMO\2009 Council Agendas\M090713\S090713C.doc