Plan aims to fund parks
Builders object to push to raise construction charges
By Lee van der Voo
The Portland Tribune, Nov 2, 2007
A proposal to nearly triple the fees home builders pay to support Portland parks is meeting with enthusiasm from parks fans but getting push-back from local builders, who say the city is squeezing out small builders and making Portland less affordable.
City Commissioner Dan Saltzman proposed the fees after a city task force failed to reach consensus on how much developers should pay toward buying land for new parks.
The group of development, neighborhood and business interests, which met for nine months, was asked to review the one-time parks fees that developers pay on new buildings, called a system development charge.
Its goal was to narrow the gap between current system development charges for parks, and the actual cost of building parks.
Builders also pay system development charges, or SDCs, for transportation, water and sewer on new construction, as well as permit fees on new construction.
For parks, builders now pay $3,117 in SDCs per single family home, or $2,027 per unit in condos. Those figures could increase up to $8,632 per single family home and up to $5,543 per unit in condos, depending on proximity to the city’s core.
The money that builders pay goes toward building new parks in areas of the city affected by growth. The proposed increase in SDCs aims to address Portland’s growing population and accommodate the shift toward more urban living. Affordable housing projects would be exempt from the fees.
But home builders say the fees will harm buyers and small businesses and might still fail to get the city more park land because the city still wouldn’t be able to afford the land.
They say an increase in the parks systems development charges would be unneeded if the city sought other ways to increase park land, including pursuing deals where land owned by other public entities – such Portland Public Schools or the Portland Water Bureau – could be made available for parks.
Simon Tomkinson, chairman of the city’s Development Review Advisory Committee, said the timing of the proposed fee increase is bad.
“We have an SDC that’s going to triple right in the middle of the worst possible outlook for housing in the next 18 months,” he said. He said the advisory committee, which reviews issues affecting the development community, should have been asked to weigh in on the fees.
Parks advocates say builders already pay to offset their impact to utilities and should also be willing to shoulder the cost of new parks.
“They are creating the demand and they pay 100 percent of the … water and the sewers but only 20 percent of the parks,” said Linda Robinson, a neighborhood advocate who serves on the city’s task force.
Parks officials say the current fees fund roughly 25 percent of the cost of building new parks. The task force inquiry aimed to boost that support to at least 66 percent, with Saltzman’s proposal ultimately landing at 75 percent.
Charges called ‘untenable’
Home builders say they are frustrated at being asked to nearly triple their payments toward parks. Under the proposal, parks’ SDC costs would be split between two zones – a zone that includes downtown and close-in neighborhoods and a zone outside of that.
Developers would pay $8,632 per single-family home downtown, $7,879 outside it. Condo developers would pay $5,543 per unit downtown and $5,170 outside of downtown.
If approved, Tomkinson said, the proposed fees could boost costs on large projects by hundreds of thousands of dollars and could lead to canceled projects at a time when the housing market is taking a downturn.
“That will be untenable,” he said. “If SDC charges continue to go up like they’re going up, we’re going to see more and more folks from the local community unable to build their own businesses and buy houses here.”
Where locals suffer, Tomkinson said, corporations will have an edge in their ability to pay higher startup costs.
“We’re going to have more Starbucks and more corporate work going in, and I know most of Portland doesn’t want that,” he said.
He also said the cumulative impact of city fees is an added problem. Once SDCs for water and transportation systems and the cost of permits are added in, Tomkinson said developers pay more – between $11,000 and $16,000 on a single-family home.
He said the costs trickle down to homeowners. The Home Builders Association of Metropolitan Portland agrees and also objects to the fee increase.
Most have higher charges
Riley Whitcomb, SDC program manager for Portland Parks and Recreation, said the reaction is consistent with the way builders always have reacted to SDCs. Charges for parks were first put in place in 1998 and were increased in 2004.
“Whenever it comes up there’s always a little bit of gloom and doom that takes place,” he said. But, he said, the fees never have stifled growth in the construction industry.
According to a city report, Portland’s SDCs actually are lower than those in most surrounding cities.
Portland currently ranks 12th out of 14 surrounding communities in terms of how the city levies SDCs for parks, according to a city report.
Only one city, Canby, is cheaper to build in when all city fees charged are considered.
But if the increased parks SDC is approved, Portland’s SDCs would be among the highest in the region. And the city would have the highest charges for parks in the region.
“People complain about us being unable to meet our operations and maintenance duties. Well, that’s obviously true if we’re having to use general fund money for capital improvements and parks,” he said.
Shifting costs to builders
Matt Grumm, who serves as Saltzman’s liaison to the parks bureau, said the commissioner’s move to increase cost recovery from builders for new parks reflects a recent City Council shift toward viewing parks as critical infrastructure rather than as amenities.
He said water and sewer SDCs already recover 100 percent of the cost of serving new development. Saltzman felt parks should see an increased investment from builders, Grumm said.
“We feel that the home builders – whether they’re small home builders or large home builders – recognize that they receive more value from building a house where parks are adjacent or close to those houses,” Grumm said.
Sharing the profits, he said, is only right. Parks supporters are pleased the city is asking developers to shoulder more of the cost of building new parks.
“It is critical that development pays its way,” said Bob Salinger, director of the Wildlife Care Center at the Audubon Society of Portland.
Salinger also was a member of the city’s task force on park SDCs. “Right now we’re at the bottom of the region in terms of park SDCs, and Portland ought to be at the top,” he said.
Salinger said only 49 percent of Portlanders live within a quarter-mile of a public open space. That’s below the regional average of 51 percent and well below averages of 80 percent or higher in communities like Sherwood and West Linn.
The idea will have a public hearing before the City Council at 2 p.m. Dec. 12.
The Portland Business Alliance has yet to take a position on a portion of the proposal that also would require new businesses, based on the number of employees they bring into the city, to pay SDCs when they locate here.