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Ms. Taylor asked what the interest rate was and when the SDCs were scheduled to be increased <br />Mr. McVey responded the interest rate was currently eight percent, but staff was working on updating the <br />rates to be more market -based through an administrative order. He added recently increasing the <br />administrative fee component of the SDCs had been considered as well and the City Council passed a <br />resolution adopting an adjustment of the rate and postponing the effective date to January 1, 2010. The <br />City Manager determined the City would not pursue an inflationary adjustment to the systems components <br />of the SDCs until after January 1, 2010. The inflationary adjustment would be brought back to the City <br />Council in December 2009 for consideration. <br />Mr. Zelenka asked if most people paid the SDCs upfront or if they used the financing terms offered by the <br />City. He asked for an explanation of SDC credits. <br />Mr. McVey stated approximately 80 percent paid SDCs through direct means or private financing at the <br />time of permit issuance while approximately 20 percent contracted with the City. He added there were <br />basically three kinds of SDC credits including: <br />• Credits provided to developers who built capacity and infrastructure through a privately - financed, <br />privately- engineered public improvement project (public improvement credits). <br />• Redevelopment or credit for existing use. <br />• Incentives that recognized when developments were built in a manner that reduced the impact on <br />the capacity and systems. <br />• The City Council had provided an exemption for low- income housing. <br />In response to a question from Ms. Ortiz, Mr. McVey confirmed the SDCs were generally established by <br />the State of Oregon. He added that SDCs must be spent on capital projects. <br />Responding to Mr. Clark's inquiry regarding financing mechanisms, Mr. McVey said the financing <br />mechanism for street assessments or other local improvement district assessments was the same type of <br />financing mechanism, with some slight differences in the statutory regulations. An exception was in local <br />improvement districts the assessment must be secured by a lien on the property, while the City was <br />allowed by statute to consider other forms of security for SDC financing. <br />Mr. Clark asked if there was a pool of funds available for the City to assist with SDCs and if developers <br />did not take advantage of financing SDCs through the City since it was more expensive than private <br />funding. <br />Mr. McVey said the SDCs were essentially a pool of money that came in over time, and was spent over <br />time, thus providing a stream of money coming from contracted payments that could be directed to capital <br />projects. Therefore, it was not necessary to have another pool of money to provide financing although <br />when the money came in more slowly it impacted the timing of projects. He concurred that market -based <br />interest rates were lower than the City's and more attractive to developers. More people would take <br />advantage of the City's financing of SDCs, particularly if other forms of security, such as certificates of <br />deposit, could be used. <br />Mr. Clark averred that by adjusting its internal policy, the City could increase the potential for economic <br />activity and development. He asked if credits were transferable or could be donated to a 501(c)(3) <br />organization when they were generated by a mixed -use development. <br />MINUTES— Eugene City Council July 13, 2009 Page 6 <br />Work Session <br />