Division II. System Development Charges
Chapter 13.70
SYSTEM DEVELOPMENT CHARGES
Sections:
13.70.040 System development charge established.
13.70.060 Authorized expenditures.
13.70.070 Expenditure restrictions.
13.70.090 Collection of charge.
13.70.100 Delinquent charges – Hearing.
13.70.130 Segregation and use of revenue.
13.70.150 Prohibited connection.
13.70.190 Installment payments.
13.70.010 Purpose.
The purpose of the system development charge is to impose a portion of the cost of capital improvements for the water system, sewer system, storm drainage, transportation, and parks and recreation capital improvement projects that create the need for or increase the demands on capital improvements. (Ord. 94-135 § 1, 1994; Ord. 92-110 § 2, 1992)
13.70.020 Scope.
The system development charge imposed by this chapter is separate from and in addition to any applicable tax, assessment, charge or fee otherwise provided by law or imposed as a condition of development. (Ord. 92-110 § 2, 1992)
13.70.030 Definitions.
For purposes of this chapter, the following mean:
A. “Capital improvements” means facilities or assets used for:
1. Water supply, treatment and distribution;
2. Waste water collection, transmission, treatment disposal;
3. Drainage and flood control;
4. Parks and recreation; or
5. Transportation.
B. “Permittee” means the person to whom a building permit, development permit, a permit or plan approval to connect the sewer or water system, or right-of-way access permit is issued.
C. “Qualified public improvements” means a capital improvement that is:
1. Required as a condition of development approval; and either
2. Identified in the plan adopted pursuant to SMC 13.70.080; or
3. Adopted into the plan pursuant to SMC 13.70.080 at any time prior to final completion and acceptance thereof; and either
4. Not located on or contiguous to a parcel of land that is the subject of the development approval; or
5. Located in whole or in part on or contiguous to property that is the subject of development approval and required to be built larger or with greater capacity than is necessary to the particular development project to which the improvement fee is related.
6. For purposes of this definition, “contiguous” means in a public way which abuts the parcel.
D. “Development” means conducting a building or mining operation, making a physical change in the use or appearance of a structure or land, and creating or terminating a right of access.
E. “Improvement fee” means a fee for costs associated with capital improvements to be constructed after the date the fee is adopted pursuant to SMC 13.70.040.
F. “Land area” means the area of a parcel of land as measured by projection of the parcel boundaries upon a horizontal plane with the exception of a portion of the parcel within a recorded right-of-way or easement subject to a servitude for a public street or scenic or preservation purpose.
G. “Owner” means the owner or owners of record title or the purchaser or purchasers under a recorded sales agreement, and other persons having an interest of record in the described real property.
H. “Parcel of land” means a lot, parcel, block or other tract of land that is occupied or may be occupied by a structure or structures or other use and that includes the yards and other open spaces required under the zoning, subdivision or other development ordinance.
I. “Reimbursement fee” means a fee for costs associated with capital improvements constructed or under construction on the date the fee is adopted pursuant to SMC 13.70.040.
J. “System development charge” means a reimbursement fee, an improvement fee or a combination thereof assessed or collected at the time of increased usage of a capital improvement, at the time of issuance of a development permit or building permit, or at the time of connection to the capital improvement. “System development charge” includes that portion of a sewer or water system connection charge that is greater than the amount necessary to reimburse the city for its average cost of inspecting and installing connections with water and sewer facilities. “System development charge” does not include fees assessed or collected as part of a local improvement district or a charge in lieu of a local improvement district assessment or the cost of complying with requirements or conditions imposed by a land use decision. (Ord. 98-109, 1998; Ord. 94-135 § 2, 1994; Ord. 92-110 § 2, 1992)
13.70.040 System development charge established.
A. System development charges shall be established and may be revised by resolution of the council.
B. Unless otherwise exempted by the provisions of this chapter or other local or state law, a system development charge is imposed upon all parcels of land within the city, and upon all lands outside the boundary of the city that connect to or otherwise use the sewer facilities, storm sewers, or water facilities of the city. (Ord. 92-110 § 2, 1992)
13.70.050 Methodology.
A. The methodology used to establish the reimbursement fee shall consider the cost of then-existing facilities, prior contributions by then-existing users, the value of unused capacity, rate-making principals employed to finance publicly owned capital improvements, and other relevant factors identified by the council. The methodology shall promote the objective that future systems users shall contribute no more than an equitable share of the cost of then-existing facilities.
B. The methodology used to establish the improvement fee shall consider the cost of projected capital improvements needed to increase the capacity of the systems to which the fee is related.
C. The methodology used to establish the improvement fee or the reimbursement fee, or both, shall be adopted by resolution of the council. (Ord. 92-110 § 2, 1992)
13.70.060 Authorized expenditures.
A. Reimbursement fees shall be applied only to capital improvements associated with the systems for which the fees are assessed, including expenditures relating to repayment of indebtedness.
B. 1. Improvement fees shall be spent only on capacity increasing capital improvements, including expenditures relating to repayment of future debt for the improvements. An increase in system capacity occurs if a capital improvement increases the level of performance or service provided by existing facilities or provides new facilities. The portion of the capital improvements funded by improvement fees must be related to demands created by development.
2. A capital improvement being funded wholly or in part from revenues derived from the improvement fee shall be included in the plan adopted by the city pursuant to SMC 13.70.080.
C. Notwithstanding subsections A and B of this section, system development charge revenues may be expended on the direct costs of complying with the provisions of this chapter, including the costs of developing system development charge methodologies and providing an annual accounting of system development charge expenditures. (Ord. 92-110 § 2, 1992)
13.70.070 Expenditure restrictions.
A. System development charges shall not be expended for costs associated with the construction of administrative office facilities that are more than an incidental part of other capital improvements.
B. System development charges shall not be expended for costs of the operation or routine maintenance of capital improvements. (Ord. 05-03 § 1, 2005; Ord. 94-135 § 4, 1994; Ord. 92-110 § 2, 1992)
13.70.080 Improvement plan.
The council shall adopt a plan that:
A. Lists the capital improvements that may be funded with improvement fee revenues;
B. Lists the estimated cost and time of construction of each improvement; and
C. May be modified at any time by council resolution. (Ord. 98-109 § 3, 1998; Ord. 92-110 § 2, 1992)
13.70.090 Collection of charge.
A. The systems development charges established by resolution pursuant to this chapter are payable upon issuance of:
1. A building permit;
2. A development permit for development not requiring the issuance of a building permit;
3. A permit to connect to the sewer system; or
4. A permit to connect to the water system.
B. If no building, development, or connection permit is required, the system development charge is payable at the time the usage of the capital improvement is increased.
C. If development is commenced or connection is made to the water or sewer systems without an appropriate permit, the system development charge is immediately payable upon the earliest date that a permit was required.
D. The city manager or designee shall collect the applicable system development charge when a permit that allows building or development of a parcel is issued or when a connection to the water or sewer system of the city is made.
E. The city manager or designee shall not issue such permit or allow such connection until the charge has been paid in full, or until provision for payment has been made pursuant to SMC 13.70.190, or unless an exemption is granted pursuant to SMC 13.70.110. (Ord. 05-03 § 2, 2005; Ord. 04-104 § 1, 2004; Ord. 92-110 § 2, 1992)
13.70.100 Delinquent charges – Hearing.
A. When, for any reason, the system development charge has not been paid, the city manager shall report to the council the amount of the uncollected charge, the description of the real property to which the charge is attributable, the date upon which the charge was due, and the name of the owner.
B. The city council shall schedule a public hearing on the matter and direct that notice of the hearing be given to each owner with a copy of the city manager’s report concerning the unpaid charge. Notice of the hearing shall be given either personally or by certified mail, return receipt requested, or by both personal and mailed notice, and by posting notice on the parcel at least 10 days before the date set for the hearing.
C. At the hearing, the council may accept, reject or modify the determination of the city manager as set forth in the report. If the council finds that a system development charge is unpaid and uncollected, it shall direct the city manager to docket the unpaid and uncollected system development charge in the lien docket. Upon completion of the docketing, the city shall have a lien against the described land for the full amount of the unpaid charge, together with interest at the legal rate of 10 percent and with the city’s actual cost of serving notice of the hearing on the owners. The lien shall be enforceable in the manner provided in ORS Chapter 223. (Ord. 92-110 § 2, 1992)
13.70.110 Exemptions.
A. Structures and uses established and existing on or before the adoption of the ordinance codified in this chapter are exempt from a system development charge, except water and sewer charges, to the extent of the structure or use then existing and to the extent of the parcel of land as it is constituted on that date. Structures and uses affected by this subsection shall pay the water or sewer charges pursuant to the terms of this chapter upon the receipt of a permit to connect to the water or sewer system.
B. An alteration, addition, replacement or change in use that does not increase the parcel’s or structure’s use of the public improvement facility is exempt from all portions of the system development charge.
C. A project financed by city revenues is exempt from all portions of the system development charge.
D. A project financed by Habitat for Humanity; provided, that such projects provide housing to families at or below the city’s 80 percent median income level as defined by the U.S. Department of Housing and Urban Development. (Ord. 23-04 § 1, 2023; Ord. 02-111, 2002; Ord. 92-110 § 2, 1992)
13.70.120 Credits.
A. A system development charge shall be imposed when a change of use of a parcel or structure occurs, but credit shall be given for the computed system development charge to the extent that prior structures existed and services were established on or after the effective date of the ordinance codified in this chapter. The credit so computed shall not exceed the calculated system development charge. No refund shall be made on account of such credit.
B. A credit shall be given to the permittee/developer for qualified public improvements required to be built as capacity-increasing capital facilities with greater capacity than is necessary for the particular development project, as defined in ORS 223.307. The credit shall apply only for the portion of the improvement that exceeds the city’s minimum standard facility size or capacity needed to serve the development, including all future phases or adjacent properties with common ownership. In no case shall credits be given for more than the over-capacity portion of a public improvement required as part of the development approval.
C. The applicant shall have the burden of demonstrating that a particular improvement qualifies for credit under this subsection. The credit shall not exceed the improvement fee and shall require acceptance of the public improvement and receipt of written confirmation thereof from the city manager or designee.
D. The request for credit for a qualified public improvement shall be filed with the city manager, or his designee, not later than 60 days after approval of the development by the city. The request shall include:
1. A legal description of all land within the development;
2. A legal description of any land proposed to be donated as part of the qualified public improvement;
3. A written appraisal of the fair market value of donated lands which are a part of the qualified public improvement. The appraisal shall be prepared by a certified professional appraiser and based upon comparable sales of similar property between unrelated parties;
4. A detailed written estimate of proposed construction costs for each qualified public improvement, prepared by a professional engineer. The estimate shall include separate costs for that portion of each improvement that exceeds the city’s minimum standard facility size or capacity;
5. If the qualified public improvement is not currently on the city’s capital improvement plan, a statement requesting the addition of the improvement onto the plan shall be made in writing;
6. The signatures of all legal owners of the development property together with the designation of who is to receive any credits and the designated percentage for each, if more than one person or entity is designated.
E. When the construction of a qualified public improvement located in whole or in part or contiguous to the property that is the subject of development approval gives rise to a credit amount greater than the improvement fee that would otherwise be levied against the project, the credit in excess of the improvement fee for the original development project may be applied against improvement fees that accrue in subsequent phases of the original development project.
F. Credits shall not be transferable from one development to another.
G. Credits shall not be transferable from one type of system development charge to another.
H. Credits shall be used within 10 years from the date the credit is given.
I. Where a public improvement qualifies for both credits for system development charges from the city and reimbursement from such other property owners receiving service from the improvement pursuant to Chapter 12.08 SMC, the developer shall only be entitled to a combined total redeemed credit and reimbursement amount not greater than the total qualified public improvement cost.
J. Where a public improvement qualifies for both credits pursuant to this section and reimbursement pursuant to Chapter 12.08 SMC, the city shall assume any right for reimbursement for any credits redeemed by a developer for that portion of the improvement up to and including the city standard for size or capacity. (Ord. 09-09 § 1, 2009; Ord. 98-109 § 2, 1998; Ord. 94-135 § 5, 1994; Ord. 92-110 § 2, 1992)
13.70.125 Notice.
A. The city shall maintain a list of persons who have made a written request for notification prior to adoption or amendment of a methodology for any system development charge. Written notice shall be mailed to persons on the list at least 45 days prior to the first hearing to adopt or amend a system development charge. The methodology supporting the adoption or amendment shall be available at least 30 days prior to the first hearing to adopt or amend a system development charge. The failure of a person on the list to receive a notice that was mailed shall not invalidate the action of the city.
B. The city may periodically delete names from the list, but at least 30 days prior to removing a name from the list, the city must notify the person whose name is to be deleted that a new written request for notification is required if the person wishes to remain on the notification list. (Ord. 94-135 § 6, 1994)
13.70.130 Segregation and use of revenue.
A. All funds derived from a particular type of system development charge are to be segregated by accounting practices from all other funds of the city. That portion of the system development charge calculated and collected on account of a specific facility system shall be used for no purpose other than those set forth in SMC 13.70.060.
B. The city manager shall provide the city council with an annual accounting, based on the city’s fiscal year, for system development charges showing the total amount of system development charge revenues collected for each type of facility and the projects funded from each account. (Ord. 92-110 § 2, 1992)
13.70.140 Appeal procedure.
A. A person challenging the propriety of an expenditure of system development charge revenues may appeal the decision or the expenditure to the city council by filing a written request with the city manager describing with particularity the decision of the city manager and the expenditure from which the person appeals. An appeal of an expenditure must be filed within two years of the date of the alleged improper expenditure.
B. Appeals of any other decision required or permitted to be made to the city manager under this chapter must be filed within 10 days of the date of the decision.
C. After providing notice to the appellant, the council shall determine whether the city manager’s decision or the expenditure is in accordance with this chapter and the provisions of ORS 223.297 to 223.314 and may affirm, modify or overrule the decisions. If the council determines that there has been an improper expenditure of system development charge revenues, the council shall direct that a sum equal to the misspent amount shall be deposited within one year to the credit of the account or fund from which it was spent.
D. A legal action challenging the methodology adopted by the council pursuant to SMC 13.70.050 shall not be filed later than 60 days after the adoption. (Ord. 92-110 § 2, 1992)
13.70.150 Prohibited connection.
No person may connect to the water or sewer systems of the city unless the appropriate system development charge has been paid or the lien or installment payment method has been applied for and approved. (Ord. 92-110 § 2, 1992)
13.70.160 Penalty.
Violation of Chapter 13.70 SMC is punishable by a fine as adopted by resolution of the city council. (Ord. 92-110 § 2, 1992)
13.70.170 Construction.
The rules of statutory construction contained in ORS Chapter 174 are adopted and by this reference made a part of this chapter. (Ord. 92-110 § 2, 1992)
13.70.180 Severability.
The invalidity of a section or subsection of this chapter shall not affect the validity of the remaining sections or subsections. (Ord. 92-110 § 2, 1992)
13.70.190 Installment payments.
A. When an eligible systems development charge is due and collectable, the owner of the parcel of land subject to the development charge may apply for payment in up to 40 semi-annual installments, to include interest on the unpaid balance, in accordance with ORS 223.208 and city ordinances. In addition to single-family residences and multifamily dwellings, the city hereby also authorizes the use of installment payments for all types of development, including but not limited to commercial and industrial properties. The application shall provide that the owner agrees to pay an additional specified amount for bond issuance and administration costs, which shall be determined on the same basis as the most recent bond issuance and administration costs charged to persons for bonding assessments for local improvements. The application shall provide that the owner agrees to pay interest at the rate of eight percent per annum on the unpaid balance until the bonds are sold and thereafter the rate shall be the net effective interest rate on the bond issue rounded up to the next one-tenth of one percent. The application shall also provide that the owner agrees to pay a billing charge to be added to each installment. The billing charge shall be a prorated share of the actual cost of billing and keeping records of installment payment accounts. The amount of the billing charge shall be determined from time to time by the finance director.
B. The city manager shall provide application forms for installment payments which shall include a waiver of all rights to contest the validity of the lien except for the correction of computational errors. The applicant shall pay an administration fee in cash at the time of application in the amount of three percent of the balance due or $25.00, whichever is greater.
C. An application for installment payments shall have the burden of demonstrating the applicant’s authority to assent to the imposition of a lien on the parcel and that the interest of the applicant is adequate to secure payment of the lien.
D. Upon acceptance of the application, the lien shall be entered in the lien docket. From that time the city shall have a first lien upon the described parcel for the amount of the systems development charge, together with interest on the unpaid balance at the rate established by the council. The lien shall be enforceable in the manner provided in ORS Chapter 223.
E. Only those systems development charges designed to finance the purchase or development of a public park or recreational facility, or the construction, extension or enlargement of a street, storm sewer, community water supply or sewerage or disposal system (the last three facilities as defined in ORS 199.464), imposed by the city as a condition to issuance of any occupancy permit or imposed at some other time determined by ordinance, are eligible for payment in installments as set forth in this section. (Ord. 05-03 § 3, 2005)