City hears wastewater System Development Charge plan, with possibility of it going into effect this year
When new residents flood a community, city infrastructure usually takes a hit. Beginning in the 1970s some cities looked to SDCs or system development charges to help soften the blow to a city's streets, water and sewer facilities.
With the population of Prineville now more than 10,000, city officials are looking to maintain existing services and create new ones at a level that will serve all residents of the community, new and old.
On Tuesday, Prineville City Council heard a summary of a draft for Wastewater System Development Charge Methodology by consultant Andy Parks of GEL Oregon, Inc.
City Councilor Gordon Gillespie asked Parks if system development charges for wastewater go into effect starting this year, is it possible the city may be prepared for its anticipated growth?
"Yes," Parks responded. "If we implement this piece today or near term, yes, we'll generate enough money through the process to build the improvements identified in the plan."
He added, "Each five years you will have a review of where you are with the plan, update the plan, update the methodology so that hopefully you will constantly be making minor shifts as you go through this."
The council will have about a month to peruse the document and direct their questions to Parks. The consultant will return to the council at that time to address the collected questions.
"The building community is going to be very interested in this," Parks said. "They are going to be directly affected by this."
Kirk Schueler, president of Brooks Resources Corporation, has experience working with SDCs. Schueler served on a transportation SDC methodology committee as well as a parks SDC methodology committee, both in Bend. He plans to serve on a committee considering a new transportation SDC for Deschutes County.
Brooks Resources' IronHorse community will feature 2,771 homes on 1,100 acres in Prineville. The homes will be built by builders Viking Construction, Sun Forest, and SunWest Builders.
Brooks Resources does not build homes. The company develops land into individual lots, then sells those lots to individuals and builders. They have however, built some commercial buildings, for which they paid SDCs.
"We are believers in SDCs," Schueler said. "SDCs are the most efficient way for a community to fund or finance improvements like these."
He added SDCs are usually most equitable, but not in all cases.
"There are some gray areas," he said. "When you are dealing with capacity in a sewer system that is pretty straight forward."
The impact of SDCs, Schueler said, is dependent on the market.
When the market was going along at high speed in central Oregon two years ago, the City of Bend presented a new transportation SDC at more than $4,000 per house. Central Oregon Builders Association and others were opposed to that high of an SDC, claiming it made housing unaffordable. They negotiated the SDC down approximately $1,000 less, but many claimed it was still too high.
"But it really didn't slow anything down," Schueler said. "Because the market was so strong."
He added now the market is weaker, and one must consider if that $1,000 is the difference. Schueler doesn't think so.
"Obviously, there is a breaking point," he said. "Maybe in Prineville an $8,000 sewer SDC maybe is the breaking point, I don't know."
The draft wastewater SDC methology report supplied three potential system development charges.
The calculations are based on the cost to complete improvements to maintain current service levels for a city population increased to approximately 36,000.
"The maximum wastewater SDC for treatment facilities designed for the current flow per Equivalent Residential Unit is $10,562," Parks concludes in the report. "This amount includes interim treatment improvements... The maximum SDC, excluding the cost of interim improvements, is $9,862. The maximum SDC utilizing reduced flow of 260 gallons per day/ERU is $8,677."
At this juncture, the city council must consider what they believe their community can bear, Schueler said. The City of Bend, for example, adopted rates that were less than what the methodology came up with.
Schueler explained SDCs can be a double-edged sword.
On the one hand you don't want to burden the home-buyer, he said. But cities also need to generate funding for services the home-buyer will be utilizing.
Cities may also look toward federal grant programs for additional funding for sewers and other services, for example.