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HomeMy WebLinkAboutItem 4: Resolution on Systems Development Charges ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Resolution No. 4977 Adopting an Amendment to the Systems Development Charges Administrative Fee and Amending Resolution No. 4900 Meeting Date: May 26, 2009 Agenda Item Number: 4 Department: Public Works Staff Contact: Fred McVey www.eugene-or.us Contact Telephone Number: 682-5216 ISSUE STATEMENT The proposed resolution implements an increase in the Systems Development Charges (SDC) administrative fee percentage rate from 5% to 9%, and increases the flat rate from $60.00 to $80.00. The administrative fee is set within the SDC methodologies and is based on estimates of the periodic and on-going direct and indirect costs associated with complying with the requirements of state law and the cost of administering the SDCs. The proposed adjustments, in combination with administrative cost reductions, are necessary to ensure cost recovery for required SDC administrative functions. BACKGROUND Council Action History The council last adopted the SDC administrative fee rate set within the City of Eugene Systems Development Charges Methodologies via Resolution 4929, effective April 3, 2008. Mayor Piercy and the City Council were notified on January 15, 2009, of notice provided to interested persons of intended amendments to Eugene SDC methodologies related to the administrative fee. This notice was required at least 90 days in advance of a public hearing on a resolution amending the SDC methodologies. Mayor Piercy and the council were again notified on February 12, 2009, prior to the proposed modifications being posted for public review on February 18, 2009, at City Hall and the Public Works Engineering lobby, as well as on the City’s web site. A public hearing was held on May 18, 2009, to receive public comment on the proposed SDC modifications; no persons spoke at the hearing. Two written comments were submitted via email to Mayor Piercy and the council prior to the hearing, one in favor and one opposed, to the proposed resolution. Financial Considerations In Oregon, a statewide statutory framework provides for minimum requirements and standards for developing and modifying SDCs, the calculation of SDC rates and individual charges, provision of required types of credits, required administrative processes, allowances for financing of SDCs, limitations on use of revenues, and requirements for annual accounting for SDC revenues and project expenditures. Statutes allow SDC revenues to be expended on the costs of complying with these Z:\CMO\2009 Council Agendas\M090526\S0905264.doc provisions. The City of Eugene has implemented an administrative fee to account for SDC administrative revenues and expenditures separate from SDC capital project expenditures. Administrative costs funded through the administrative fee include: ? Costs of developing and modifying SDC methodologies through a system of periodic review and regular update to ensure accurate cost recovery. This work helps ensure compliance with the council’s Growth Management Policy and adequate funding for planned capital projects. ? Determining the amount and administering use of required credits and exemptions, including public improvement credit, credits for prior payment and existing uses, and exemptions for qualified affordable housing projects. ? Determination of the amount of SDCs associated with proposed development and administration of SDCs associated with building permits. ? Accounting and fund management for SDC revenues and expenditures as required by law. Over the last several years, SDC administrative expenditures have out-paced revenues. This is primarily due to reduced revenues resulting from declining development activities. While administrative costs have also been reduced during this period, a severe imbalance in the SDC administrative fund has resulted. The fund’s six-year forecast projects ongoing deficits in future years without additional decreases in costs and increased revenues over the forecast period. A rate of 9% is proposed as the minimum rate, when combined with cost reductions, adequate to continue provision of basic SDC administrative services. This rate is consistent with existing administrative fee rates charged locally for building permit administration. The effect of the proposed rate increase of 4% translates to adding approximately $280 in total City of Eugene SDCs for a typical new single-family residence, from a current total of $7,325 to a proposed total of $7,604. Other development types would experience similar proportionate increases in total SDCs of approximately 4%. The minimum administrative fee is proposed to be adjusted to more accurately capture a fixed level of costs associated with building permits that are charged a relatively small net SDC; typically these permits involve the calculation and administration of SDC credits. No change in the maximum administrative fee of $30,000 is proposed at this time. 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. The SDC administrative fee helps fund the development, collection and administration of transportation as well as other SDCs. Timing Local SDC rates were last updated in April 2008, reflecting costs and rate factors current through December 2007. Recognizing the current difficult economic conditions, annual inflationary adjustments to SDCs which would normally have become effective in April 2009, have been postponed through the remainder of the calendar year. The proposed SDC administrative fee increase was also temporarily postponed; originally scheduled, if approved by the council, to become effective May 11, the increase is now proposed to become effective July 1, 2009. While these delays in fee increases will have an effect on SDC funding available to cover the costs of administering SDCs and on planned capital projects, staff wishes to mitigate potential impacts of fee increases on the local economy and have delayed Z:\CMO\2009 Council Agendas\M090526\S0905264.doc implementation. Staff is regularly monitoring the health of the SDC administrative fund and will evaluate the administrative fee rate with each future annual SDC adjustment. RELATED CITY POLICIES Growth Management Policy 14 is directly related to implementation and modification of SDCs. The Eugene Code, Chapter 7, prescribes the process for development, adoption and administration of SDCs, providing for adoption and modification of methodologies related to SDCs consistent with statutory requirements. The council has adopted by resolution the SDC methodologies which provide that SDC administrative fees be based on costs associated with complying with state law and administering SDCs. COUNCIL OPTIONS The council can approve the resolution, direct the City Manager to modify the proposed resolution and return to council at a future date, or take no action on the resolution at this time, retaining the current SDC methodology and rates. CITY MANAGER’S RECOMMENDATION The City Manager recommends approval of the resolution. SUGGESTED MOTION Move to adopt Resolution No. 4977 adopting an amendment to the Systems Development Charges Administrative Fee and amending Resolution No. 4900. ATTACHMENTS A. Proposed Resolution FOR MORE INFORMATION Staff Contact: Fred McVey Telephone: 682-5216 Staff E-Mail: fred.mcvey@ci.eugene.or.us Z:\CMO\2009 Council Agendas\M090526\S0905264.doc ATTACHMENT A RESOLUTION NO. 4977 A RESOLUTION ADOPTING AN AMENDMENT TO THE SYSTEMS DEVELOPMENT CHARGES ADMINISTRATIVE FEE AND AMENDING RESOLUTION NO. 4900. The City Council of the City of Eugene finds as follows: A. The System Development Charges (SDC) Methodologies were adopted by Resolution No. 4900 effective May 7, 2007. B. Resolution No. 4900 has subsequently been amended by Resolution Nos. 4929 and 4943. In addition, inflationary adjustments of Systems Development Charges for Local Wastewater System, Stormwater System, and Transportation System were adopted by Administrative Order No. 58-08-02-F, effective April 3, 2008. C. Based on estimates of the periodic and on-going direct and indirect costs associated with complying with the requirements of state law and the cost of administering the SDCs, it is necessary to increase the Administrative Fee percentage rate from 5% to 9%, and to increase the flat rate from $60.00 to $80.00. Section 2.4 of the SDC Methodologies requires that revisions to fees by more than five percent shall be established by resolution of the City Council. D. This adjustment to the SDC Administrative Fee is in conformity with applicable state law, authorized by EC 7.710(5) and Section 2.4 of the Methodologies, and should be implemented effective July 1, 2009. NOW, THEREFORE,based upon the above findings, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. The Systems Development Charges Administrative Fee is increased to 9% and the flat rate is increased to $80.00. Section 2 . Resolution No. 4900 is amended as described in Section 1, as of the effective date of this Resolution. Section 3 . The City Recorder is requested to append a copy of this Resolution to Resolution No. 4900. Section 4 . This Resolution shall become effective on July 1, 2009. The foregoing Resolution adopted the _____ day of May, 2009. ___________________________________ City Recorder 00218727.DOC Resolution – Page 1 of 1