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HomeMy WebLinkAboutItem 3G: Resolution adopting SDC Inflationary Adjustments ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Adoption of Resolution 4998 Adopting Inflationary Adjustments to Systems Development Charges for Parks System, and Local Wastewater System, Stormwater System, and Transportation System; Superseding Administrative Order 58-08-02-F; and Amending Resolution No. 4900 Meeting Date: January 11, 2010 Agenda Item Number: 3G Department: Public Works Staff Contact: Nancy Burns www.eugene-or.gov Contact Telephone Number: 682-6887 ISSUE STATEMENT The City Council is asked to approve a resolution adopting an increase in Systems Development Charges (SDCs) for the local wastewater, stormwater, transportation and parks systems. The proposed adjustment follows adopted policy for implementing periodic adjustments to SDCs based on adopted cost indices. An adjustment to local SDC rates was not implemented in 2009, in consideration of the local economic downturn; therefore the current proposal reflects a two-year adjustment period. 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. BACKGROUND Council Action History Effective May 7, 2007, the council adopted the System Development Charges (SDC) Methodologies by Resolution No. 4900 which updated the parks SDC methodology and rates. Resolution No. 4900 has subsequently been amended by Resolution Nos. 4929 (inflationary adjustment to Parks SDC rates effective April 3, 2008), 4943 (inflationary adjustment to regional wastewater SDC rates effective July 1, 2008), 4977 (amending the local SDC administrative fee effective January 1, 2010), and 4991 (modifications to the regional wastewater SDC methodology and rates effective January 1, 2010). In addition, inflationary adjustments of SDC rates for the local wastewater, stormwater, and transportation systems were adopted by Administrative Order No. 58-08-02-F, effective April 3, 2008, and inflationary adjustments of the regional wastewater SDC rates were adopted by Administrative Order Nos. 58-07-08-F (effective August 20, 2007) and 58-09-08F (effective July 1, 2009). This action is being placed on the Consent Calendar because the resolution adopts a standard periodic adjustment following policies and procedures previously adopted by the council. 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 Z:\CMO\2010 Council Agendas\M100111\S1001113G.doc 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. The proposed rate adjustment to the local wastewater, stormwater and transportation SDCs is based on a single adopted cost index, the 20-city national average construction cost index (CCI) as published by the Engineering News-Record (ENR). The ENR CCI reflects an increase in average construction costs of 6.8% for the prior 24-month period as reported in December, 2009. The proposed adjustment to the parks SDC is based on two adopted cost indices: 1) as with other local systems, the ENR CCI is used to adjust park development costs; and 2) the Lane County Assessment & Taxation Office’s (LCA&T) published Sales Ratio Report is used to adjust park land acquisition costs. Application of the published 2008, and 2009, Sales Ratio Reports reflects a 28.6% increase in average costs of vacant residential and recreational land over a 24-month adjustment period, in this case calendar years 2007, and 2008, since a published Sales Ratio Report reflects the previous calendar year’s data. The combined effect of applying these two indices to the parks SDC is that rates for residential development types increase by approximately 22.5% while rates for nonresidential development types increase on average by 29.4%. The difference in parks SDC rate adjustments between residential and nonresidential categories is related to the different effect of the inflationary adjustments on the park bond debt service SDC credit calculation versus the gross SDC calculation. This is a result of how construction and land costs impact the various projects in the adopted Parks, Recreation & Open Space (PROS) Project and Priority Plan; the SDC rate is based on a different mix of construction and land acquisition project costs than the mix of these project costs anticipated to rely on property tax or bond funding which form the basis of the SDC credit. Due to these differences, the gross SDC per unit increases more than the credit. Because the nonresidential SDC has a higher credit against the gross SDC per unit to begin with, it results in the net SDC increasing more for nonresidential than residential development types. The proposed rate adjustments across all four local systems translate to an approximate 12.3% increase in total gross SDCs for a typical new single-family residence, from a current total of $7,977 to a proposed total of $8,961. Other development types would experience similar proportionate increases in total SDCs, typically ranging from approximately 5% to 12% over current totals. Council Goals/Action Priorities This agenda item relates to one of the council’s current goals, the Transportation Initiative, in that a portion of transportation SDC revenues are dedicated to preservation and rehabilitation of the existing system. Timing Local SDC rates were last updated in April 2008, reflecting ENR CCI adjustments through December 2007, and LCA&T Sales Ratio data through December 2006. The proposed adjustments to rates based on the ENR CCI through December 2009, and LCA&T Sales Ratio data through December 2008, provides for timely updates of rates. While the Eugene Code and Oregon SDC statutes do not require notice of adoption by resolution of inflationary adjustments based on a cost index, a notice has been provided as a courtesy to interested persons. The notice was published in the Register Guard on December 26, 2009, and posted, along with the draft resolution and exhibit, at Eugene City Hall and the Z:\CMO\2010 Council Agendas\M100111\S1001113G.doc Public Works Engineering lobby. This information has also been made available at the City’s website at www.eugene-or.gov/SDC. The adjusted rates are proposed to go into effect on April 1, 2010. RELATED CITY POLICIES The council has adopted by resolution Growth Management Policy #14 which provides that development shall be required to pay the full cost of extending infrastructure and services. Chapter 223 of the Oregon Revised Statutes prescribes the rights and responsibilities of local governments in developing and imposing SDCs, providing for adoption of a cost index as an administrative means for adjustments to SDCs. The Eugene Code, Chapter 7, prescribes 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 provide for periodic adjustment of Eugene’s SDCs based on adopted cost indices. The methodologies provide that the City Manager may adopt fee changes based on an adopted index by administrative order so long as the fees are not revised by greater than five percent. Per the methodologies, revisions to fees by more than five percent shall be established by resolution of the council. COUNCIL OPTIONS 1. Adopt the resolution providing an inflationary adjustment of local SDC rates. 2. Take no action on the resolution. 3. Direct the City Manager to prepare other adjustments to local SDC rates. CITY MANAGER’S RECOMMENDATION The City Manager recommends adoption of the resolution providing an inflationary adjustment of local SDC rates. SUGGESTED MOTION Move to adopt Resolution 4998 providing an inflationary adjustment of Systems Development Charges for local wastewater, stormwater, transportation and park systems; superseding Administrative Order 58-08-02-F and amending Resolution No. 4900. ATTACHMENTS A.Proposed Resolution and Exhibits FOR MORE INFORMATION Staff Contact: Nancy Burns Telephone: 682-6887 Staff E-Mail: nancy.j.burns@ci.eugene.or.us Z:\CMO\2010 Council Agendas\M100111\S1001113G.doc ATTACHMENT A RESOLUTION NO. _____ A RESOLUTION ADOPTING INFLATIONARY ADJUSTMENTS TO SYSTEMS DEVELOPMENT CHARGES FOR PARKS SYSTEM, LOCAL WASTEWATER SYSTEM, STORMWATER SYSTEM, AND TRANSPORTATION SYSTEM; SUPERSEDING ADMINISTRATIVE ORDER NO. 58-08-02-F; AND AMENDING RESOLUTION NO. 4900. The City Council of the City of Eugene finds as follows: A. The System Development Charge (SDC) Methodologies were adopted by Resolution No. 4900 effective May 7, 2007. B. The SDC Methodologies adopted by Resolution No. 4900 have subsequently been amended by Resolution Nos. 4929, 4977 and 4991. In addition, inflationary adjustments to SDCs have been adopted for:(1) the Regional Wastewater System by Administrative Order No. 58-07-08-F, by Resolution No. 4943, and by Administrative Order No. 58-09-08-F; and for (2) Local Wastewater System, Stormwater System, and Transportation System by Administrative Order No. 58-08-02-F. C. Based on: (1) the park development/renovation cost adjustment using the Engineering News-Record 20-City national average Construction Cost Index and, (2) the park land acquisition cost adjustment using the Lane County Assessment & Taxation office’s published 2008 and 2009 Sales Ratio Reports, it is necessary to adjust the Parks System SDCs by implementing a 22.5% increase in the Parks System SDC for residential development, and an average 29.4% increase in the Parks System SDC for nonresidential development. D. Based on the Engineering News-Record 20-City national average Construction Cost Index, it is necessary to amend the Local Wastewater System, Stormwater System and Transportation System SDCs by implementing a 6.8% increase for those SDCs. E. 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. F. These inflationary adjustments to the SDCs are in conformity with applicable state law, authorized by EC 7.710(5) and Sections 2.1 and 2.4 of the Methodologies, and should be implemented effective April 1, 2010. 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: Resolution – Page 1 of 2 ATTACHMENT A Section 1. The Systems Development Charges for the Parks System are amended by implementing a 22.5% increase in the Parks System SDC for residential development, and an average 29.4% increase in the Parks System SDC for nonresidential development as set forth in Exhibit A attached to this Resolution. Section 2. The Systems Development Charges for the Local Wastewater System, Stormwater System, and Transportation System are amended by implementing a 6.8% increase, as set forth in Exhibit B attached to this Resolution. Section 3. Administrative Order No. 58-08-02-F is superseded as of the effective date of this Resolution. Section 4 . The City Recorder is requested to append a copy of this Resolution (without its attachments) to Administrative Order No. 58-08-02-F. Section 5. The City Recorder is requested to append a copy of this Resolution, including exhibits, to Resolution No. 4900. Section 6 . This Resolution shall become effective on April 1, 2010. The foregoing Resolution adopted the _____ day of January, 2010. ___________________________________ AIC City Recorder Resolution – Page 2 of 2 EXHIBIT A Parks System Development Charge Text with strikeout: Existing data proposed for revision. Text without strikeout: Proposed data. EXHIBIT B Local Wastewater, Stormwater, and Transportation Systems Development Charges Text with strikeout: Existing data proposed for revision. Text without strikeout: Proposed data.