News

ARTICLE
Date ArticleType
6/30/2021 Member News

With Support from HBA and OHBA, SDC Accountability Legislation Passes


On the last day of session, House Bill 3040, sponsored by Representative John Lively (D-District 12) passed the legislature. The bill requires the Oregon Housing and Community Services Department to conduct a comprehensive study of system development charges (SDCs). It now awaits signature by the Governor.

The study will focus on the role that SDCs play as both cost drivers for market-rate housing and sources of revenue for infrastructure needed for housing, the full range of factors that contribute to SDC rates, and cover all types of market-rate housing including single-family, multifamily and manufactured homes. It is required to include the history and role of system development charges in supporting residential development, including:

- The methodologies used for setting fees, stated separately for urban and rural communities.
- Which entities, whether public or private, bear the cost of system development charges and the degree to which costs are passed on to homebuyers.
- The impact of system development charges on overall housing costs and affordability and the equity of housing development.
- How system development charges compare to other housing cost drivers, including, but not limited to, the costs of land, labor and materials, utility rates, the costs of infrastructure and costs associated with regulatory compliance.
- The cost of carrying system development charge interest according to the size and nature of the development and the potential cost savings to private parties of deferring system development charge fee payments.
- The cost to public agencies of deferring system development charge fee payments, including potential unintended consequences of deferred payments and the need for remedies to address noncompliance.
- The potential costs and benefits to the public from system development charge fee payment deferrals and the transfer of carrying costs.

The bill includes two important dates; December 31, 2021 when a preliminary report is due and June 1, 2022 when the final report is due to the legislature.

In addition to the study, the bill also requires cities, counties and special districts that levy SDCs to publish on their website information about their SDC program. The information must include:

- The current system development charge fees for each type of development
- Methodology used to determine the fees
- List of capital improvement projects that will receive funding from SDCs
- Contact information for a local official responsible for answering questions about system development charges

Early in the committee process HBA secured member testimony to support an amendment offered by Rep. Lively which would have held juridictions accountable and required them to offer SDCs deferral options. The amendment would require jurisdictions to spend SDCs only on qualifying projects and replace misused SDC funds from other sources with the misused funds being deposited in an account to fund future qualifying projects. In addition this oversight would also require the jurisdictions to provide an administrative process to challenge the methodology of fee calculation or expenditures of SDCs. 

More importantly, it would also require that jurisdictions offer SDC payment deferral to certificate of occupancy or time of sale. Although the amendment wasn’t adopted, HBA will continue to work with OHBA in supporting these changes to statute in future legislative sessions. For more information on advocacy efforts at the state level, contact OHBA.