Item C: Systems Development Charges

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proposed annual indexed adjustment scheduled for April 2009, be postponed until January 2010. Existing provisions are available to provide for delayed payment of SDCs through City financing mechanisms. An additional administrative measure being pursued is to improve SDC financing provisions through adoption of a market-based interest rate for contracted payment options (the current rate is set at 8%). Financial Considerations SDCs provide a funding mechanism to account for the costs and value of infrastructure system capacity required by new development. The SDC Methodologies adopted by the council provide for periodic adjustments to SDCs to further account for changes in construction and land costs. Periodic adjustments allow SDCs to more closely reflect current costs of providing system capacity to new development. By postponing adjustments to rates, some reduction in overall SDC revenue is likely. To the extent that postponed rate increases provide an economic stimulus, some increase in revenue is possible due to increased development activity. Staff is regularly monitoring the health of the SDC capital and administrative funds in order to prepare and administer budgets with balanced revenues and expenditures. Council Goals/Action Priorities This agenda item relates to one of the council’s current goals, the Transportation Initiative, in that transportation SDC revenues help fund a portion of the transportation system capital needs, including preservation and rehabilitation of the existing system. Timing This item is time-sensitive insofar as efforts to provide relief or stimulus to development sectors of the local economy have urgency tied to current economic conditions. RELATED POLICIES Oregon has established statutory provisions for a uniform framework for the imposition of system development charges by local governments, to provide equitable funding for orderly growth and development in Oregon’s communities. Chapter 223 of the Oregon Revised Statutes prescribes the rights and responsibilities of local governments in developing and assessing SDCs, and for expenditure of SDC revenues. The Eugene Code, Chapter 7, sets forth local policy and the process for development, adoption and administration of SDCs, providing for adoption of methodologies related to SDCs consistent with statutory requirements. The council has adopted by resolution the SDC Methodologies which include detailed methods for establishing SDC rates and provide for periodic adjustment of Eugene’s SDCs based on adopted cost indices. Growth Management Policy 14, adopted by Resolution No. 4554, is directly related to implementation and modification of SDCs. The policy provides: Development shall be required to pay the full cost of extending infrastructure and services, except that the City will examine ways to subsidize the costs of providing infrastructure or offer other incentives that support higher-density, in-fill, mixed-use, and redevelopment. The council has also established policy for expenditure of transportation SDC reimbursement fee revenues through Resolution No. 4717, which provides: In preparing the proposed budget, the City Z:\CMO\2009 Council Agendas\M090713\S090713C.doc