Chapter 13.08
SYSTEM DEVELOPMENT CHARGES

Sections:

13.08.010    Findings.

13.08.020    Definitions.

13.08.030    Purpose.

13.08.040    Scope.

13.08.050    Systems development charge established.

13.08.060    Methodology.

13.08.070    Revenues and expenditures.

13.08.080    Collection of charge.

13.08.085    Installment payment.

13.08.090    Exemptions.

13.08.095    Deferrals.

13.08.100    Calculation where there is existing use – Credits.

13.08.110    Challenge to expenditure.

13.08.115    Appeal of calculation.

13.08.120    Prohibited connection.

13.08.130    Penalty.

13.08.010 Findings.

A. The system development charge established in this chapter is a charge upon the act of development by whoever seeks the development. It is a fee for service because it contemplates the development receive essential municipal services based upon the nature of the development. The timing of the development and the extent of the development is within the control and discretion of the developer, subject to city code requirements.

B. The system development charge imposed by this chapter is 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.

C. The system development charge imposed herein is also found to be an incurred charge within the meaning of Section 11b, Article XI of the Oregon Constitution and the statutes implementing it because:

1. It allows the owner to control the quantity of the service by determining the extent of development to occur upon the property.

2. It allows the owner to determine when the service is to be initiated or increased by controlling when the development occurs.

3. State law and the ordinances of this city require the owner to provide certain basic utility services to the property when it is developed for human occupancy. The provision of these basic utility services is a routine obligation of the owner of the affected property and essential to the health and safety of the community.

D. The system development charge imposed by this chapter is based upon the actual costs of providing existing or planned-for capital improvements and does not impose charges on persons not receiving a service and imposing a burden upon the city’s existing capital improvements. (Ord. 91-30 § 2)

13.08.020 Definitions.

As used in this chapter, except where the context otherwise requires, words and phrases have the following meaning:

“Capital improvements” means facilities or assets used for any of the following:

1. Water supply, storage, treatment and distribution;

2. Wastewater collection, transmission, treatment and disposal;

3. Drainage and flood control, including but not limited to storm sewers, collection, transmission, treatment and detention;

4. Transportation, including but not limited to streets, sidewalks, bike paths, street lights, street trees, public transportation, vehicle parking, and bridges; or

5. Parks and recreation, including but not limited to mini-neighborhood parks, neighborhood parks, community parks, metropolitan parks, and other recreational facilities.

“Development” means the act of conducting a building or mining operation, or making a physical change in the use or appearance of a structure or land, which increases the usage of any capital improvements or which creates the need for additional capital improvements.

“Improvement fee” means a fee for costs associated with capital improvements to be constructed after the date the fee is adopted or modified as provided by this chapter.

“Reimbursement fee” means a fee for costs associated with capital improvements constructed, or under construction, on the date the fee is adopted or modified as provided by this chapter.

“Systems development charge” means the sum of the system development charge components, including reimbursement fees, improvement fees, or combinations thereof, assessed or collected at any of the times specified in this chapter. It shall also include that portion of a water or wastewater connection charge that is greater than the amount necessary to reimburse the city for its average cost of inspecting and installing connections with the water system or the wastewater system. “Systems development charge” does not include:

1. Any fees assessed or collected as part of a local improvement district;

2. A charge in lieu of a local improvement district assessment; or

3. The cost of complying with requirements or conditions imposed upon a land use decision. (Ord. 2003-13 § 1; Ord. 91-45 § 1; Ord. 91-30 § 2)

13.08.030 Purpose.

The purpose of the systems development charge is to impose a portion of the public cost of capital improvements upon those developments that create the need for or increase the demands on capital improvements. (Ord. 91-30 § 2)

13.08.040 Scope.

The system development charge imposed in this chapter is separate from and in addition to any applicable tax, assessment, charge, fee in lieu of assessment, or fee otherwise provided by law or imposed as a condition of development. A systems development charge is to be considered in the nature of a charge for service to be rendered or a service hookup charge. (Ord. 91-30 § 2)

13.08.050 Systems development charge established.

A. Unless otherwise exempted by the provisions of this chapter or other local or state law, a systems development charge is imposed upon all new development within the city, and all new development outside the boundary of the city that connects to or otherwise uses the wastewater facilities, drainage and flood control facilities, or water facilities of the city. For new development within the city, the systems development charge shall be the sum of the wastewater system, drainage and flood control system, water system, transportation system, and parks and recreation system development charge components. For new developments outside the boundary of the city, the systems development charge shall be the sum of the system development charge components for the specific systems to which the development connects and for the parks and recreation system.

B. A system development charge for each system shall be adopted and may be modified by resolution of the council. In adopting or modifying a system development charge, the city shall use the following procedure:

1. The city shall maintain a list of persons who have made a written request for notification prior to adoption or modification of the methodology for the system development charge components;

2. At least 90 days prior to the first hearing on adoption or modification of a system development charge component, the city shall mail written notice of the hearing to persons on the list of those who have requested notification. The failure of a person on the list to receive a notice that was mailed shall not invalidate an action of the city in adopting or modifying a system development charge component;

3. The written methodology supporting the system development charge component, as proposed to be adopted or modified, shall be available for public review at least 60 days prior to the first hearing on adoption or modification.

C. An adjustment in the amount of a system development charge component shall not be considered a modification for purposes of subsection (B) of this section, if the adjustment is based on the periodic application of a specific cost index that is incorporated in a methodology adopted in accord with subsection (B) of this section. (Ord. 2003-13 § 2; Ord. 91-30 § 2)

13.08.060 Methodology.

A. The methodology used to establish the reimbursement fee shall consider the cost of then-existing facilities, prior contributions by then-existing users, the value of unused capacity, rate-making principles employed to finance publicly owned capital improvements, and other relevant factors identified by the council. The methodology shall promote the objective that future systems users shall contribute no more than an equitable share of the cost of then-existing facilities.

B. The methodology used to establish the improvement fee shall consider the cost of projected capital improvements needed to increase the capacity of the systems to which the fee is related.

C. The methodology used to establish the improvement fee or the reimbursement fee, or both, shall be contained in a resolution adopted by the council. (Ord. 91-30 § 2)

13.08.070 Revenues and expenditures.

A. The revenues received from the systems development charges shall be deposited in accounts designated for such moneys and budgeted and expended as provided by state law. The five funds so established shall be denominated: water system development fund; wastewater system development fund; drainage and flood control system development fund; transportation system development fund; and parks and recreation system development fund. The accounting of such revenues and expenditures required by state law shall be included in the city’s annual financial audit required by ORS Chapter 294.

B. The capital improvement plan required by state law as the basis for expending revenues from the improvement fee portion of a system development charge component shall be adopted by resolution of the council. (Ord. 2003-13 § 3; Ord. 91-30 § 2)

13.08.080 Collection of charge.

A. The systems development charge is payable upon issuance of:

1. A building permit;

2. A development permit for development not requiring the issuance of a building permit;

3. A permit to connect to the water system;

4. A permit to connect to the wastewater system; or

5. A permit to connect to the drainage and flood control system.

B. If development is commenced or connection is made to the water system, wastewater system or drainage and flood control system without an appropriate permit, the systems development charge is immediately payable upon the earliest date that a permit was required, but the amount of the systems development charge shall be the amount in effect on the date of payment.

C. The finance director shall collect the systems development charges from the person responsible for or receiving the benefit of the development. The planning and community development director shall not issue any permit or allow such connection until the charge has been paid in full, unless an exemption or deferral is granted by this chapter. (Ord. 2011-05 § 1; Ord. 2003-13 § 4; Ord. 96-2 § 4; Ord. 91-45 §§ 2, 3; Ord. 91-30 § 2)

13.08.085 Installment payment.

A. Notwithstanding any other provision herein to the contrary, and when authorized in a local improvement district or reimbursement district ordinance or resolution, whenever a system development charge of $1,000 or more would otherwise be due and collectible, the owner of the parcel of land subject to the development charge may make application to the city manager for payment of the charge in installments, plus interest on the unpaid balance in accordance with ORS 223.208. In addition, SDC installment payment shall also be available to the owner of a parcel of land with an existing building on a septic system, when voluntarily connecting to installed or available city sewer or when required to connect to such sewer facilities under LCMC 13.12.160(A) (six-month time frame for connection), (B) (48-month time frame for connection), or (C)(1) or (4) (failure or significant repair of septic system). The installment payment agreement may be secured by property lien, bond(s), deposits, letter of credit or other security instrument, acceptable to the city manager and city attorney. Installment payment agreements may also be enforced after notice by disconnection of water service.

B. The city manager shall provide application forms for installment payments, which shall include an installment payment agreement and financial security or agreement and waiver of all rights to contest validity of the lien. An applicant for installment payments shall have the burden of demonstrating as part of the application the applicant’s ownership and authority to assent to the imposition of a lien or other security on the parcel and that the property interest of the applicant is adequate to secure payment of the lien or other security instrument.

C. Upon receipt of such an application, the city manager shall compute the amount of the system development charges, the dates upon which such charges are due, the name or names of the owner(s) and the description of the property upon which the development is occurring or has occurred.

D. The frequency of installment payments and the applicable interest rate shall be as established for the LID in the formation resolution or assessment ordinance. For reimbursement districts, the frequency of payments and interest rate shall be set forth in the formation resolution or modified resolution. If an owner of real property in the LID or reimbursement district has signed an application and agreement to pay in installments, the owner shall also pay at the time of submission of the application and agreement a processing fee in the amount of one-half percent of the final assessment to cover the costs of processing the application and agreement, and also shall pay the amount of the county recording fee for the lien or other security instrument.

E. If the manager elects to secure the charge(s) with a lien on real property, or other security instrument encumbering the property, the owner shall obtain the consent of all owners of record or of the contract purchaser or purchasers of record of the real property. The burden of showing the identity of the owner or owners of record or of the contract purchaser or purchasers of record of the parcel shall be upon the developer.

F. Any deferred payment secured with real property shall become a lien upon the property and the city manager shall docket the lien in the docket of liens; and from the time that docketing is completed, the city shall have a lien upon that described property for the total amount of the system development charge, together with interest on the unpaid balance at the range established by the council. To the extent permitted by law, that lien herein shall have priority over all other liens and encumbrances of any character. The lien shall be enforceable in the manner provided in ORS 223.505 to 223.650, or any other method allowed by law. (Ord. 2019-09 § 1; Ord. 2016-06 § 1; Ord. 2016-01 § 1)

13.08.090 Exemptions.

The following are exempt from the systems development charge or an increase in the charge:

A. A building or other structure for which a building permit application was filed prior to the effective date of the charge or increase in the charge, providing the information accompanying the application was sufficiently complete to meet the requirements for issuance of a building permit for the entire structure, and all previously applicable system development fees are paid and substantial construction begins within 180 days of the date the permit was issued.

B. The city of Lincoln City.

C. Any structure which is built to replace a structure that was destroyed, demolished or removed shall not be assessed systems development charges if construction of the new structure is completed within 18 months of the time that the original structure was destroyed, demolished, or removed; provided, however, that any new structure does not increase the usage of any capital improvement.

D. Additions to single-family dwellings that do not constitute the addition of a dwelling unit, as defined by the State Uniform Building Code, are exempt from all portions of the system development charge.

E. An alteration, addition, replacement or change in use that does not increase the parcel’s or structure’s use of a capital improvement is exempt from all portions of the system development charge. (Ord. 2011-05 § 1; Ord. 96-2 § 5; Ord. 91-30 § 2)

13.08.095 Deferrals.

A. The city council may approve an application for deferral of the requirement to pay systems development charges, or for continuation of an approved deferral, for a qualified entity that meets all the following criteria:

1. The use proposed by the applicant fits within a type of use identified by the city council by resolution as lacking in the city and urgently needed, such as child care;

2. The use serves a widespread community need, as identified by the applicant;

3. The deferral applicant is a nonprofit corporation, or any agency or subdivision of the federal, state or local government, or a private entity that has committed to the proposed use in a binding executed agreement with the city (e.g., a 30-year affordability covenant for workforce housing);

4. The applicant demonstrates the need for financial support to develop the use;

5. The applicant demonstrates local support for the use, such as through fundraising for the use;

6. The development will occur on property located within the city limits;

7. The applicant agrees to enter into an agreement to pay systems development charges if the city approves the application.

B. An application for deferral of payment of systems development charges or a continuation of a deferral shall be submitted to the city manager for review. The city manager shall review the application and make a recommendation to the city council, which in its discretion may approve or deny the application, decline to take action, or take other action such as requesting additional information.

C. Any approval of an application for deferral or continuation of a deferral under this section shall be contingent on the city and the applicant entering into an agreement in which the applicant acknowledges the terms of the deferral and agrees to pay systems development charges in the amount calculated at the time the use no longer qualifies for deferral, as specified in subsection (D) of this section. If the applicant is not the property owner, the property owner will be required to consent to the deferral application and sign the agreement. The agreement shall be recorded and shall run with the land.

D. The deferral will apply until such time as a new use occupies the building that was constructed in conjunction with an approved deferral. If the new use would not meet the application criteria to qualify for continuation of the deferral of system development charges, prior to use or occupancy of the facility by a new use all applicable system development charges shall be paid. The system development charges owed will be based on the approved schedule and methodology of system development charges in effect for the new use at the time of occupancy.

E. The city council may approve a deferral of payment of systems development charges under this section for up to 10 years, with possible extensions of time as approved by the city council, provided the use continues to qualify for deferral. (Ord. 2016-01 § 2; Ord. 2011-05 § 1)

13.08.100 Calculation where there is existing use – Credits.

A. When development occurs that must pay a systems development charge under this chapter, and if there already is an existing use on the development site, then each of the system development charge components that would comprise the systems development charge for the existing use shall be calculated using current systems development charge rates. In addition, each of the system development charge components that would comprise the systems development charge for the proposed use shall be calculated using current systems development charge rates. If, for a particular system, the calculated charge component for the existing use is less than the calculated charge component for the proposed use, then the system development charge component for that particular system shall be the system development charge component for the proposed use using current systems development charge rates. If, for a particular system, the calculated charge component for the proposed use is less than the system development calculated charge component for the existing use, then no system development charge shall be required; however, no refund or credit shall be given.

B. A credit shall be given for the cost of a qualified public improvement associated with a development. A “qualified public improvement” means a capital improvement that is required as a condition of development approval, is identified in the capital improvement plan adopted under LCMC 13.08.070, and is:

1. Not located on or contiguous to property that is the subject of the development approval; or

2. Located in whole or in part on or contiguous to property that is the subject of the development approval and required to be built larger or with greater capacity than is necessary for the particular development to which the improvement fee is related.

If a qualified public improvement is located in whole or in part on or contiguous to property that is the subject of the development approval, the credit shall be given only for the cost of the portion of the improvement that exceeds the city’s minimum standard facility size or capacity needed to serve the particular development project or property. The credit provided for by this subsection shall be only for the improvement fee portion, if any, of the system development charge component for the system of which the improvement being constructed will be a part and, except as provided in subsection (D) of this section, shall not exceed the improvement fee portion even if the cost of the capital improvement exceeds the applicable improvement fee portion.

C. Credit shall not be transferable from the system development charge component for the system of which the improvement being constructed is a part to the system development charge component for another system.

D. Credit shall not be transferable from one development or development phase to another, except that the city may enter into an agreement to allow a credit to be transferred when the city, at its sole discretion, determines it will be in the interest of the affected system to do so.

E. A person seeking a credit under this section shall have the burden of demonstrating that the person is entitled to the credit. (Ord. 2003-13 § 5; Ord. 96-1 § 1; Ord. 91-30 § 2)

13.08.110 Challenge to expenditure.

A. A person challenging the propriety of an expenditure of systems development charge revenues under ORS 223.297 through 223.314 may challenge the expenditure decision or the expenditure to the city council by filing a written notice of challenge with the city manager. A written notice of challenge must be filed either by its actual delivery to the office of the city manager or by its mailing via certified mail, return receipt requested, addressed to: City Manager, P.O. Box 50, Lincoln City, OR 97367. A notice of challenge shall be considered filed on such actual delivery or mailing. To be considered, a notice of challenge must be filed within two years of the date of the challenged expenditure.

B. Challenge Filing Fees. A filing fee shall be required for the processing of a challenge and shall be in an amount set by resolution of the city council. The failure to submit a required fee with a notice of challenge, including returning of checks unpaid or other failure of consideration, shall be a jurisdictional defect and the city shall deem the appeal abandoned.

C. The notice of challenge shall state:

1. The name and address of the challenger;

2. The specific expenditure being challenged;

3. The specific provision of ORS 223.297 through 223.314 alleged to be violated;

4. The reason the expenditure violates the specific statutory provision.

D. If a challenger does not file a properly completed notice of challenge within the time permitted, the city shall dismiss the challenge.

E. Unless the challenger and the city agree to a longer period, a challenge shall be heard within 30 days of the receipt of the notice of challenge. At least seven days prior to the hearing, the city shall mail notice of the time and location thereof to the challenger.

F. The city council shall hear and determine the challenge on the basis of the challenger’s written statement and any additional evidence the city council deems appropriate. At the hearing, the challenger may present testimony and oral argument personally or by counsel. The rules of evidence as used by courts of law do not apply.

G. The challenger shall carry the burden of proving that the expenditure being challenged violates a provision of ORS 223.297 through 223.314.

H. The city council shall issue a written decision within 30 days after the hearing date and that decision shall be final. The written decision shall be provided to the challenger by certified mail, return receipt requested. The written decision shall include notice that the challenger has the right to petition for judicial review of the decision under ORS 34.010 through 34.100. (Ord. 2003-13 § 6; Ord. 91-30 § 2)

13.08.115 Appeal of calculation.

A. Any person required to pay a systems development charge may appeal the correctness of the city’s calculation of the charge to the city manager by filing a written notice of appeal. A written notice of appeal must be filed either by its actual delivery to the office of the city manager or by its mailing via certified mail, return receipt requested, addressed to: City Manager, P.O. Box 50, Lincoln City, OR 97367. A notice of appeal shall be considered filed on such actual delivery or mailing. To be considered, a notice of appeal must be filed within 30 days of the date the appellant was given the appealed calculation.

B. The notice of appeal shall state:

1. The name and address of the appellant;

2. The specific reason the city’s calculation is incorrect; and

3. What the correct calculation should be.

C. If a appellant does not file a properly completed notice of appeal within the time permitted, the city manager shall dismiss the appeal.

D. The city manager shall determine the appeal on the basis of the appellant’s written statement and any additional information the city manager deems appropriate.

E. The appellant shall carry the burden of proving that the calculation being appealed is incorrect and what the correct calculation should be.

F. The city manager shall issue a written decision within 30 days after receiving the properly completed notice of appeal and that decision shall be final. The written decision shall be provided to the appellant by certified mail, return receipt requested. The written decision shall include notice that the appellant has the right to petition for judicial review of the decision under ORS 34.010 through 34.100. (Ord. 2003-13 § 7)

13.08.120 Prohibited connection.

No person may connect to the water, wastewater or drainage and flood control systems of the city unless the appropriate systems development charge has been paid. (Ord. 2003-13 § 8; Ord. 91-30 § 2)

13.08.130 Penalty.

Violation of LCMC 13.08.120 is punishable as a Class B violation. Any fine imposed as a result of such violation shall be in addition to the required systems development charge. (Ord. 2015-10 §§ 5, 6; Ord. 91-30 § 2)