Chapter 9.40
UNIFORM PROCEDURE FOR REIMBURSEMENT

Sections:

9.40.010    Purpose.

9.40.020    Definitions.

9.40.030    Formation of the zone of benefit.

9.40.040    Cost recovery from zone of benefit.

9.40.050    Action on the application.

9.40.060    Obligation to pay zone of benefit recovery charge.

9.40.070    Prohibited conduct.

9.40.010 Purpose.

(1) The city of Halsey requires developers to construct and install all water, sanitary sewer, storm sewer, and street improvements necessary to serve proposed developments. These improvements are constructed in accordance with city design and construction standards and later dedicated to the city as public improvements. Often these street, water, sewer, and storm sewer improvements, particularly those constructed off site, can and will benefit other property owners when they develop their property. Therefore, these improvements represent a benefit to those property owners.

(2) The purpose of this chapter is to provide a mechanism where property which benefits from the construction of public improvements by another property owner will share in the cost of those improvements through payment of a recovery charge at the time the benefited property is developed and the improvements are utilized. This chapter provides a mechanism for the city to examine the improvements which are constructed, their cost, the properties which are specially benefited by them, and will provide a reasonable method of apportioning the reimbursable costs among benefited properties. The purpose of this chapter is not to encourage development, but to ensure that development pays for its share of benefits.

(3) Property owners whose property would be subject to the recovery charge fee will be provided an opportunity to review and comment on pertinent information prior to the city establishing a recovery charge pursuant to this chapter. The city will collect recovery charges and, upon receipt, will forward such funds to the person who constructed the improvements.

(4) The recovery charges established under this chapter are intended to become due and payable upon development of benefited property. Such charges are fees for service because they contemplate a development’s receipt of essential municipal services based upon the nature of that development. The timing and extent of any development are within the control and discretion of the developer. Furthermore, the recovery charges imposed by this chapter are not intended to be a tax on property or on a property owner as a direct consequence of ownership of property within the meaning of Section 11b, Article XI of the Oregon Constitution or the legislation implementing that section.

(5) The recovery charges established hereby are in addition to, and not in lieu of other charges which may be required of developers, including system development charges, building permit fees, inspection fees and any other development related charges. [Ord. 328 § 1, 1995.]

9.40.020 Definitions.

As used herein, the following shall mean:

“Development” or “develop” means making a material change in the use or appearance of a structure or land, dividing land into two or more parcels, creating or terminating a right of access or connection to a street or other utility, or any improvement, intensification, or reconstruction that falls under the definition of a substantial improvement (as defined in this section). Where appropriate to the context, development refers to the act of developing or the result of development. The purpose of this chapter is to ensure that a development that has been relieved of a requirement to construct all or a portion of an improvement benefiting that development will pay the development’s fair share of the improvement to the person or persons who paid the cost of the improvement. Any development proposal (such as a minor land partition, subdivision, planned development, construction a new building, etc.) that is reviewed by the city and required as a condition of approval per the Halsey zoning ordinance, to install or connect to a street or utility improvement which has already been constructed by a previous developer will pay for the portion of the existing improvement that it would otherwise have been required to provide. Improvements which are required to comply with existing state or local health, sanitary, or safety regulations, or any alterations to structures listed on the National Register of Historic Places are exempted from payback agreements, until the property is developed. Properties requiring service or annexation to resolve failed on-site systems would be obligated to pay for the failed utility portion of the payback upon connection to the utility, but would be exempt from the remaining payback until further development.

“Parcel of land” or “parcel” means a platted lot or any other tract of land which is occupied or may be occupied by a structure or structures or other use, including the yard and other open spaces required under the Halsey development code or reasonably attributable to an existing or proposed use.

“Person” means any individual, firm, partnership, unincorporated association, public or private corporation, government or government instrumentality.

“Property owner” means the owner of the title to real property or the contract purchaser of real property of record as shown on the most recent assessment roll in the office of the county assessor.

“Sanitary sewer or sewer improvement” means one or more pipes, conduits and, where necessary, related pumping facilities or combination thereof located within a public right-of-way and/or public utility easement, which are designed, constructed, and installed in accordance with city design and construction standards, and which are intended to accommodate sanitary sewage from more than a single parcel of real property.

“Special benefit” means value associated with a capital improvement which relates to a particular parcel of land to the extent such parcel is, or may be, partially relieved of a cost or expense associated with development and which is different in degree from the value or benefit received by the general public.

“Storm sewer improvements” means one or more pipes, conduits, or artificial drainage ways or improvements or combinations thereof, located within public right-of-way and/or public utility easement which is designed, constructed, and installed in accordance with city design and construction standards to provide channeling, collection, filtration, or discharge of storm and surface water or some combination thereof or other water quality improvements of a size and location to serve more than a single parcel of real property.

“Street improvement” means a street, road, or associated improvement or portion thereof within a public right-of-way which is designed and constructed in accordance with city design and construction standards and which provides a special benefit to more than a single parcel of real property including but not limited to some or all of the following: streets, storm drains, curbs, gutters, sidewalks, bike ways and traffic control devices.

“Substantial improvements” means any repair, reconstruction, or improvement of a structure, the cost of which equals or exceeds 50 percent of the assessed valuation of the structure. This definition exempts the following:

(a) Any project to improve a structure to comply with existing state or local health, sanitary, or safety regulations that is necessary solely to assure safe living conditions; or

(b) Any alteration of a structure listed on the National Register of Historic Places.

“Water improvement” means one or more pipes, conduits and, where necessary, related pumping facilities, or combinations thereof, located within a public right-of-way and/or public utility easement which are designed, constructed and installed in accordance with city standards, and which are intended to provide water for use to more than a single parcel of real property.

“Zone of benefit” means the area or parcels of real property which are determined by the city engineer to derive a special benefit from the design and construction of street, water, sanitary sewer or storm sewer improvements which are financed or constructed by a person other than the parcel owner, or which are financed or constructed by the city without formation of a local improvement district.

“Zone of benefit recovery charge” or “recovery charge” means the fee required to be paid by an owner of property within a delineated zone of benefit and determined by the city council to be the amount which is necessary or appropriate to reimburse another person or the city for financing or causing the construction of utility improvements. Recovery charges shall be treated as a single fee, and shall not be segregated into separate fees for sewer, water, storm, or street. [Ord. 328 § 2, 1995.]

9.40.030 Formation of the zone of benefit.

(1) Any person who is required by the city as a condition of development to finance construction of street, sewer, water, or storm drain improvements or some combination thereof that will provide special benefit to parcels other than those for which the person has obtained development approval may request that the city establish a zone of benefit recovery charge.

(2) A written request to establish a zone of benefit recovery charge shall be submitted to the city engineer within one year of the city’s acceptance of the improvements of special benefit. The request shall consist of the following information:

(a) Detailed plans showing the actual location, nature and extent of all improvements for which a zone of benefit recovery charge is sought. These plans shall be used to determine the basis of the recovery charge; however, the actual recovery charge shall be based on final approved as-built plans;

(b) The parcels of property identified by tax lot number which the applicant asserts are specially benefited by the improvements, and from which a recovery charge is sought;

(c) The name and mailing address of the owner of each parcel identified in subsection (2)(b) of this section, according to the county assessor’s most recent property tax assessment rolls;

(d) Detailed engineering estimates and material costs. These estimates shall be used to determine the basis of the recovery charge; however, the actual recovery charge shall be based on the developer’s actual incurred costs as indicated by detailed invoices for labor and materials devoted exclusively to the improvements for which a recovery charge is sought to be established. Costs shall not include any amount of “profit” or “overhead” of the person making the application. The applicant shall certify the accuracy of the costs paid which are submitted to the city and that the applicant shall have the burden of establishing the cost of improvements. Should the city engineer determine the contract amounts exceed prevailing market rates for a similar project, the recovery charge shall be based upon market rates. No more than 13.5 percent of the total eligible construction cost shall be creditable for survey and engineering;

(e) Any other relevant information required by the city engineer; and

(f) A nonrefundable application fee shall be made. The purpose of the application fee is intended to cover the city’s costs in providing notification to affected property owners and the city engineer’s examination, review, and administration of approved agreements. This fee is subject to review and adjustment as necessary to ensure coverage of the city’s costs in administering payback agreements. The application fee may not be included in the computation of the recovery charge.

(3) The city engineer shall review each application for the establishment of a zone of benefit recovery charge and shall determine whether a recovery charge should be established. The city engineer’s recommendation to city council shall be in writing and shall address the following factors:

(a) The extent to which the improvements have relieved another person(s) of the future requirement to construct all or a portion of the same improvements;

(b) The area of parcels which are specially benefited by the improvement, and whether or not such parcels would as a condition of future development be required to construct all or any portion of the same improvement for which a recovery charge is sought;

(c) That portion of the cost of the improvement within the area of the proposed zone of benefit which is appropriate for reimbursement by the owners of property identified in subsection (3)(b) of this section;

(d) A rational formula for apportioning the cost of the improvement among properties within the proposed zone of benefit;

(e) The results of applying the formula referred to in subsection (3)(d) of this section to the parcels identified in subsection (3)(b) of this section, which becomes the proposed recovery charge;

(f) The 10-year time frame in which to administer the cost recover request. [Ord. 328 § 3, 1995.]

9.40.040 Cost recovery from zone of benefit.

(1) In addition to those more specific limitations set forth in subsection (2) of this section, the amount of making such improvements through a zone of benefit recovery charge shall be limited as follows:

(a) No reimbursement shall be made for the costs of that portion of the improvements which specially benefits property owned or being developed by the applicant. Reimbursement shall be allowed only for those expenditures and in amounts which the city engineer determines are based upon improvement construction contract documents or other appropriate information provided by the applicant, but not exceeding prevailing market rates for a similar project.

(b) No reimbursement shall be allowed for improvements until those improvements have been dedicated to and accepted by the city as public improvements.

(c) No reimbursement shall be allowed for the cost or value of real property which the applicant was required to dedicate or reserve for public use as a condition of development.

(d) Except as otherwise provided, reimbursable costs and expenses shall be limited to the actual cost of construction and of engineering services as shown by invoice, and the estimated increase in such costs over the 10 years following completion and acceptance of the utility improvement as determined by Engineering News Record Construction Cost Index.

(e) No reimbursement shall be allowed for improvements which have been constructed by the applicant, accepted by the city and for which no application for zone of benefit recovery charge pursuant to this chapter has been received within one year from the date of city acceptance of such improvement.

(f) No reimbursement shall be allowed for that portion of the cost for which the applicant has received a credit against a systems development charge or other development or connection fee for the same improvement.

(g) No reimbursement shall be allowed for the costs of extending improvements serving a development to the edge of such development.

(h) No reimbursement shall be allowed for electrical, telephone, cable television or natural gas utility relocation.

(i) Except as otherwise specifically provided by the city council, the obligation to pay a recovery charge shall not apply to that portion of a parcel which is developed by the city for public purposes, such as parks, fire stations, or similar community service facilities. If a zone of benefit charge exists for such a parcel and that parcel is subsequently sold, then the purchaser of the property shall assume the charge.

(2) Reimbursement for street improvements shall be further limited as follows:

(a) Reimbursement shall be recoverable only from those properties which lie adjacent or contiguous to a street improvement and which, but for such improvement, would otherwise be required upon development to construct all or a portion of such improvement. [Ord. 328 § 4, 1995.]

9.40.050 Action on the application.

(1) Upon receipt of a zone of benefit application, the city engineer shall notify owners of parcels within the requested zone of benefit that the application has been filed. The notice shall state that all comments concerning the proposed recovery charge must be in writing and received by the city engineer within 14 calendar days from the date of mailing the notice. The notice shall contain at least the following information:

(a) A statement that an application for a zone of benefit recovery charge has been submitted to the city and the name of the applicant;

(b) A general description of the improvement and the estimated costs for which a zone of benefit recovery charge is sought;

(c) A statement that the city engineer will review the application and make a determination to establish or not establish the requested zone of benefit recovery charge;

(d) A statement that the failure of the owner of property subject to such proposed recovery charge to object in writing will be treated and relied upon as a waiver of objection to the establishment of the proposed zone of benefit recovery charge.

(2) The notice shall be mailed to property owners at addresses on the latest county assessment roll. Any mistake, error, omission, or failure with respect to the mailing of notices shall not be jurisdictional or invalidate the proceedings with respect to the establishment of the recovery charge.

(3) The city engineer shall conduct a review of the application in accordance with the criteria outlined in HMC 9.40.040 and shall consider any written comments and evidence presented concerning the application.

(4) After review, the city engineer may modify the proposed zone of benefit or recovery charge or both by adjusting the area or the particular properties from which recovery charges will be collected, or by adjusting the amount of reimbursable costs. If additional parcels are added to the zone of benefit, then notice shall be given to the property owners, as outlined in subsection (2) of this section. Once a final decision has been reached regarding the zone of benefit and the recovery charge, property owners shall be notified in writing of the estimated charge and the opportunity to appeal the decision.

(5) Upon the city’s acceptance of the public improvements for which reimbursement was sought, the city engineer shall use the final approved as-built plans, together with the construction contract documents and detailed final invoices to adjust the estimated recovery charge to reflect the developer’s actual incurred costs.

(6) After the actual recovery charge has been determined, the city engineer shall notify all of the affected property owners, stating the amount of the recovery charge that has been apportioned to them.

(7) The city council shall formally adopt their findings in regard to the zone of benefit and recovery charge.

(8) The apportioned recovery charges approved by city council shall be recorded, at the applicant’s cost, in the Linn County assessor’s office in order to put subsequent property owners on notice. For informational purposes, the recording document shall list the amount of the recovery charge owed by the subject property, explain how the Engineering News Record Construction Cost Index will be applied at the time recovery charge payments are made, contain a brief explanation of the establishment of the recovery charge, the conditions that must exist or occur in order for the charge to become due and payable, and the expiration date for the recovery charge. [Ord. 328 § 5, 1995.]

9.40.060 Obligation to pay zone of benefit recovery charge.

(1) The obligation to pay a zone of benefit recovery charge shall not begin unless and until it is approved by city council and an owner of property within the zone of benefit applies for or permits an application to be submitted and receives approval from the city and utilizes such approval for any of the activities referred to in subsection (2) of this section.

(2) An owner of property within any zone of benefit shall pay to the city, in addition to any other applicable fees and charges, the zone of benefit recovery charge established by the city engineer and adjusted to reflect the Engineering News Record Construction Cost Index multiplier, if within 10 years from the date on which the zone of benefit recovery charge is established by the city, the property recovery charge is established by the city, the property owner applies for or permits an application to be submitted and receives approval from the city and utilizes such approval for the earliest of any of the following activities:

(a) A permit for connection to, or actual connection to, a particular utility improvement or street improvement for which a recovery charge has been established;

(b) Issuance of a building permit for a new structure, or any substantial improvement; or

(c) A permit for any alteration, modification or change in the use of real property, which increases the number of parking spaces required under the development code as in effect at the time of permit application, as determined by the review process. For purposes of determining increases in the parking requirement, the number of required spaces for the use which existed at the time the zone of benefit recovery charge was established shall be compared with the number of required spaces for the altered, modified, or changed use or uses of the property.

(3) Failure on the part of the city to collect the zone of benefit recovery charge at the time the property owner applies for permits or application for development will not relieve the property owner of the obligation. Should an error or omission be discovered, payment of the zone of benefit charges will be due upon notification by the city.

(4) Except as otherwise expressly provided, neither the city nor any officer or employee of the city, acting in an official capacity, shall be liable for payment of any recovery charge. Only those payments which the city has received on behalf of properties within the particular zone of benefit shall be payable to the applicant for the zone of benefit. The city’s general fund or other revenue sources shall not be liable for outstanding and unpaid recovery charges imposed on private property.

(5) The right to reimbursement under this chapter may be assigned or transferred by the applicant upon written notice to the city.

(6) Upon receipt of a zone of benefit recovery charge or portion thereof, the city shall cause a record to be made of the property for which such payment is received and remit such funds to the person upon whose request the zone of benefit recovery charge was established or that person’s assign.

(7) The owner of property subject to a zone of benefit recovery charge may apply for apportionment of the recovery charge in accordance with city procedures applicable in the case of apportionment of special assessments.

(8) The city shall not issue a building permit or allow water, sanitary, or storm sewer connection until any applicable recovery charge has been paid in full. [Ord. 328 § 6, 1995.]

9.40.070 Prohibited conduct.

(1) No person may cause, maintain, or use a connection to a utility improvement for which a zone of benefit recovery charge has been established and which is due and payable, unless such recovery charge has first been paid or financed with installment payments.

(2) Violation of this section is a civil infraction, punishable by a fine not to exceed $500.00. Each day that a prohibited connection or use exists constitutes a separate violation.

(3) The remedies provided under this section are cumulative to any other remedies provided by law. [Ord. 328 § 7, 1995.]