Item 9: Resolution Approving PROS Project and Priority Plan

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This project list with the required timing, estimated costs, and percentage of costs eligible to be funded with SDCs is often referred to as the 309 List. The project list proposed by staff contains all of the elements required by the statute. The key issue, however, is: What is the proper allocation of the project costs for growth? To determine that, one has to go to another part of the SDC statute to determine what percentage of the cost is eligible to be funded from the improvement fee for each improvement. The projects on the list that are proposed by staff to be SDC eligible are the type of capital improvements which fall under the definition of improvement fee. ORS 223.304(2)(b) requires that improvement fees must be calculated to obtain the cost of capital improvements for the proiected need for available system capacity for future users. Therefore, the growth allocations on the project list must be the percentages of the cost of the capital improvements that are needed to provide the capacity needed to serve future growth. Capacity not needed to serve future growth during the planning period must be paid for by current residents. If excess capacity is created that exceeds the needs of both current residents and the growth projected during the planning period, then growth in the following planning periods can be required to reimburse the extra cost paid by current residents through a reimbursement fee. There are also some well established rules that courts have fonnulated over the years. One is that growth can not be charged SDCs that would establish a higher level of service for growth than current residents would have. For example, if current residents would have 10.0 acres of natural area per thousand residents under the plan, growth can not be charged an SDC that would provide 20.0 acres of natural area for new homebuyers. Another rule is that projected growth for a specific planning period can only be required to pay for projects that are planned for that same planning period. Projects planned for a subsequent planning period would be paid for by the projected growth for that planning period. Both of these rules come into play with this project list, and that leads into the specific issues we have with the project list. The percentages of the allocated costs of the project list are inconsistent with the capacity data and growth allocation percentages provided by staff in spreadsheet Table A: PROS Project and Priority Plan - Project Acres and Growth Allocation. The state System Development Charge statute requires that the 309 List contain a list of projects, as well as the percentage of an improvement fee project cost that is SDC eligible. The state statute also requires that the percentage of cost be based upon the portion of the capacity costs ofthe project that is needed to serve growth. The most obvious thing that must be provided initially, therefore, is the total capacity ofthe project, because without the capacity data, there is no way to determine what portions of the project costs are needed to serve future growth. In the case of parks, the capacity ofland acquisition is typically measured in acres. Capacity of park development projects is typically measured in terms of park amenities - ball fields, swimming pools, and tennis courts, for example. I would like to start with an example and follow that example through my discussion to demonstrate the issues as I elaborate on them. The example I will use is found on the project 2