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11/12/2019 Member News

Tigard Agrees with HBA and Moves Forward with System Development Charge Reform


Over the past several months, HBA has worked with Tigard staff to analyze SDC reform ideas that could save builders thousands of dollars without diminishing city funds. At last week’s City Council meeting, Councilors unanimously directed staff to bring forward an ordinance to delay the SDC point of collection until just before the issuance of a certificate of occupancy.

Currently, impact fees are collected at the issuance of a building permit. However, the fees exist to help offset the impact that the residents of new projects have on city infrastructure. These impacts include new residents using the sewer system, driving on roads, and visiting local parks. Importantly, they occur once a building is occupied. Despite this, builders are required to pay impact fees long before any actual impacts exist. Given the nexus between impacts and fees, the most appropriate point of collection is prior to the issuance of certificate of occupancy. This would ensure that the city receives fees prior to occupancy, while builders are not tasked with paying fees months before impacts exist. Shifting the point of collection would reduce housing costs in two ways. First, due to private loans, construction dollars are oftentimes more expensive earlier on in the development process. These dollars come with higher interest rates than traditional construction loans, meaning that soft costs early on in the building process are more expensive than those paid at a later date. Second, payment later in the process reduces carrying costs and interest payments. Staff indicated that they plan to bring forward an ordinance in early 2020 for City Council consideration. For more information on our work to advance impact fee reform, contact Ezra Hammer at ezrah@hbapdx.org.

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