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Scappoose keeps business fees at bay despite growth spurt

City sees new construction, but revenue may be further down the road

Scappoose is growing, but the city's revenue from new businesses may take years to catch up.

In 2009, the Scappoose City Council voted to suspend fees for annual business licensing, effective the following year. The idea was to give local small businesses a break during the recession, and attract new businesses. It was part of a larger economic development proposal that included reductions in development and building department fees, as well as liquor licensing fees.

Since then, the council has yet to reinstate the $55 licensing fees.

The city's municipal code requires anyone doing business in city limits to obtain a business license, but some admit it's currently just an exercise in record keeping.

"There was some discussion about maybe implementing that fee, but the council was pretty adamant that they felt it was important to not have that, because it sends a message that we're open for business," Michael Sykes, Scappoose's city manager, said by phone last week. "The mayor feels very strongly it's not something we should be considering."

Existing businesses still receive annual renewal notices, but do not pay fees.

Reinstating the license fees likely wouldn't bring in much revenue, Sykes added.

"The fee is the same for all businesses, so I'm not sure it would be that much money," he said.

Where the city recoups more revenue is through system development charges, commonly known by its acronym, SDCs, and other fees associated with building plans and review.

Scappoose is already experiencing small, but noticeable growth in industrial business, and its housing growth is the most robust in the county.

New developments pay SDCs for services like a new water line, wastewater, roads and even parks.

The city uses a formula system based on the type and size of new construction, and water meter size, to determine fees for developers.

"It looks at your system and determines what improvements you're gonna need to make," Sykes said of the

city's formula for calculating SDCs.

A new single family home will come with about $12,400 in SDCs for parks, water, sewer and transportation, not including inspection or plan review fees the city also charges. Those fees are typically paid by developers, who make it up on the back end by recouping the expense in a home's listing price.

A sit-down restaurant can expect to pay about $23,000 in fees, depending on the size of water and sewer lines needed.

He said the city also relies on growth models to estimate what level of resources and amenities it will need to provide to accommodate new growth.

As the city has tried to maintain a business-friendly fee system, some at the state level suggest the costs to cities to provide enough services to support commercial and population growth sometimes outpaces the associated revenues.

According to the League of Oregon Cities, research firms, along with the Home Builders Association of Metropolitan Portland, agree that infrastructure costs can easily surpass tax revenues from new businesses or residents.

"By large margins, growth costs local governments more than it creates in new revenue," an article titled, "The Cost of Growth" in the November issues of LOC's "Local Focus" magazine states. The article cites Eben Fodor, principal of consulting firm Fodor & Associates, which specializes in community planning.

SPOTLIGHT FILE PHOTO - A newly developed Cascades Tissue paper plant in Scappoose is the largest industrial building the city has seen in years. Despite new industrial and commercial growth, the city has yet to bring back some of its recession-era business policies.

Big business, big perks

In addition to breaks on licensing fees, some large businesses also take advantage of tax breaks through enterprise zone agreements.

Scappoose and other cities in Columbia County may approve two- or three-year property tax exemptions to large businesses like Cascades Tissue, which boast job creation. Municipalities in the South Columbia County Enterprise Zone, which includes the cities of Scappoose, St. Helens and Columbia City, have already approved a request from Cascades to extend its tax abatement benefits by an additional two years, after the company was granted a three-year exemption.

Cascades also got help

from Scappoose when the city applied for Immediate Opportunity Fund grant money through the state to use on road and frontage improvements along West Lane Road, where the company's new paper conversion plant was developed.