Chapter 13.25
SYSTEM DEVELOPMENT CHARGES
Sections:
13.25.020 Scope and interpretation.
13.25.040 System development charge imposed – Method for establishment created.
13.25.060 Authorized expenditure.
13.25.080 Collection of charge.
13.25.090 Deferral of system development charges.
13.25.140 Notification – Appeals.
13.25.010 Purpose.
The purpose of this chapter is to provide authorization for system development charges for capital improvements pursuant to ORS 223.297 through 223.314 for the purpose of creating a source of funding for existing system capacity and for the installation, construction and extension of capital improvements. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 1, 2000; Ord. 243 § 1, 1991. Code 2002 § 13.20.010].
13.25.020 Scope and interpretation.
The system development charges imposed in this chapter are separate from and in addition to any applicable tax, assessment, charge, or fee otherwise provided by law or imposed as a condition of development. System development charges are not taxes on property or on a property owner as a direct consequence of ownership of property within the meaning of Article XI, Section 11B of the Oregon Constitution or the legislation implementing that section and are not subject to the limitations imposed by that section. The city manager is authorized to adopt administrative regulations, policies, applications, and guidelines to implement the provisions of this chapter. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 2, 2000; Ord. 243 § 2, 1991. Code 2002 § 13.20.020].
13.25.030 Definitions.
For purposes of this chapter, the following definitions shall apply:
“Capital improvements” means facilities or assets used for:
(1) Water supply, treatment and distribution;
(2) Sewage and waste water collection, transmission, treatment and disposal;
(3) Drainage and flood control;
(4) Transportation; or
(5) Parks and recreation.
“City manager” means the city manager or designee.
“Development” means any physical change in the use or appearance of a structure or land.
“Improvement fee” means a fee for costs associated with capital improvements to be constructed after the date the fee is adopted pursuant to this chapter.
“Land area” means the area of a parcel of land as measured by projection of the parcel boundaries upon a horizontal plane with the exception of a portion of the parcel within a recorded right-of-way or easement subject to a servitude for a public street or scenic or preservation purpose.
“Occupancy permit” means a certificate of occupancy, final inspection, or similar instrument or determination that, in general, verifies that a building or structure is safe to occupy and meets all local building codes, zoning laws, and regulations. This term also includes the issuance of a temporary certificate of occupancy or similar authorization which, in general, verifies that a building or structure is safe to occupy while the building or structure continues to be brought into compliance with all local zoning laws and regulations by a specified date.
“Owner” means the owner(s) of record title or the purchaser(s) under a recorded sales agreement, and other persons having an interest of record in the described real property.
“Parcel” means a lot, parcel, block or other tract of land that is occupied or may be occupied by a structure or structures or other use, and includes the yards and other open spaces required under the zoning, subdivision, or other development regulations of city.
“Permittee” means the person to whom a building permit, development permit, or right-of-way access permit is issued.
“Qualified public improvement” means a capital improvement that is:
(1) Required as a condition of development approval;
(2) Identified in the system development charge fund project plan; and
(3) Not located on or contiguous to a parcel of land that is the subject of the development approval, or located in whole or in part on, or contiguous to, property that is the subject of development approval and required to be built larger or with greater capacity than is necessary for the particular development project to which the improvement fee is related.
“Reimbursement fee” means a fee for costs associated with capital improvements constructed or under construction on the date the fee is adopted pursuant to this chapter.
“System development charge” means a reimbursement fee, an improvement fee or a combination thereof assessed or collected at the time of increased usage of a capital improvement, at the time of issuance of a development permit or building permit, or at the time of connection to the capital improvement. “System development charge” does not include fees assessed or collected as part of a local improvement district or a charge in lieu of a local improvement district assessment, or the cost of complying with requirements or conditions imposed by a land use decision, expedited land division or limited land use decision. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 3, 2000; Ord. 243A § 1, 1996; Ord. 243 § 3, 1991. Code 2002 § 13.20.030].
13.25.040 System development charge imposed – Method for establishment created.
(1) Unless otherwise exempted by the provisions of this chapter or other local or state law, system development charges for water, wastewater, transportation, and parks are hereby imposed upon all development within the city of Sisters, on all development outside the city that connects to the water, sewer, and/or transportation facilities of the city, and on all other development or uses that increase the usage of the water, sewer, transportation and/or park system or that contributes to the need for additional or enlarged capital improvements. The owner of the property on which the activity for which a system development charge is imposed is ultimately responsible for payment of system development charges, which obligation runs with the land.
(2) Systems development charges shall be established and may be revised by resolution of the council. The resolution shall set the amount of the charge, the methodology used to set the amount of the charge and, if the charge applies to a geographic area smaller than the entire city, the geographic area subject to the charge. The resolution may include such additional information or provisions as may be appropriate to implement the applicable system development charge.
(3) Any action to establish or modify a system development charge will only occur after a public hearing with notice provided in accordance with state law including, without limitation, notice to persons who have made written request for notification prior to adoption or amendment of a methodology for any system development charge. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 4, 2000; Ord. 243A § 2, 1996; Ord. 243 § 4, 1991. Code 2002 § 13.20.040].
13.25.050 Methodology.
(1) Council may adopt, from time to time, a methodology for determining the amount of system development charges by resolution.
(2) The methodology used to establish or modify a reimbursement fee must be based on the cost of then-existing facilities, including design, financing and construction costs; the value of unused capacity available to future system users or the cost of the existing facilities; rate-making principles employed to finance publicly owned capital improvements; prior contributions by other users; gifts or grants from federal or state government or private persons; and other relevant factors identified by the council, consistent with applicable law. The methodology must promote the objective of future systems users contributing an equitable share of the cost of then-existing facilities.
(3) The methodology used to establish or modify an improvement fee must consider the estimated cost of projected capital improvements identified in a project plan that are needed to increase the capacity of the systems to which the fee is related and other relevant factors identified by the council. The improvement fee must be calculated to obtain the cost of capital improvements for the projected need for available system capacity for future users.
(4) The methodology used to establish the improvement fee or the reimbursement fee, or both, shall be adopted from time to time by resolution of the council.
(5) A change in the amount of a reimbursement fee or an improvement fee is not a modification of the system development charge methodology if the change in amount is based on:
(a) A change in the cost of materials, labor or real property applied to projects or project capacity as set forth on the list adopted pursuant to ORS 223.309; or
(b) The periodic application of one or more specific cost indexes or other periodic data sources. A specific cost index or periodic data source must be:
(i) A relevant measurement of the average change in prices or costs over an identified time period for materials, labor, real property or a combination of the three;
(ii) Published by a recognized organization or agency that produces the index or data source for reasons that are independent of the system development charge methodology; and
(iii) Incorporated as part of the established methodology or identified and adopted in a separate ordinance, resolution or order. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 5, 2000; Ord. 243A § 3, 1996; Ord. 243 § 5, 1991. Code 2002 § 13.20.050].
13.25.060 Authorized expenditure.
(1) Reimbursement fees shall be applied only to capital improvements associated with the systems for which the fees are assessed, including expenditures relating to repayment of indebtedness.
(2) Improvement Fees.
(a) Improvement fees shall be spent only on capacity-increasing capital improvements, including expenditures relating to repayment of debt for such improvements. An increase in system capacity may be established if a capital improvement increases the level of performance or service provided by existing facilities or provides new facilities. The portion of the improvements funded by improvement fees must be related to demands created by current or projected development.
(b) A capital improvement being funded wholly or in part from revenues derived from the improvement fee shall be included in the systems development charge fund project plan adopted by the city.
(3) System development charge revenues may be expended on the direct costs of complying with the provisions of this chapter or applicable law including, without limitation, the costs of developing system development charge methodologies and providing an annual accounting of system development charge funds. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 6, 2000; Ord. 243 § 6, 1991. Code 2002 § 13.20.060].
13.25.070 Project plan.
(1) The council shall adopt, by resolution, the systems development charge fund project plan, which may be separate plans and/or resolutions for each system. This plan shall:
(a) Define the amount of current or under-construction capacity available for new development and the cost of the facilities comprising this capacity;
(b) List the capital improvements that may be funded with improvement fee revenues; and
(c) List the estimated cost and time of construction of each improvement.
(2) In adopting this plan, the council may incorporate by reference all or a portion of any public facilities plan, master plan, capital improvements plan or similar plan that contains the information required by this section.
(3) The city may modify this project plan at any time through the adoption of an appropriate resolution. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 7, 2000; Ord. 243A § 4, 1996; Ord. 243 § 7, 1991. Code 2002 § 13.20.070].
13.25.080 Collection of charge.
(1) Except as otherwise provided in an approved deferral agreement, systems development charges are payable upon, or concurrently with, the sooner to occur of the following:
(a) Issuance of a building or placement permit;
(b) Issuance of a development permit for development not requiring the issuance of a building permit;
(c) Commencement of a use (including, without limitation, a change of use), or occupation of a structure, that does not require a building permit or development permit;
(d) Approval to connect or increase the usage of any system or systems provided by the city; or
(e) Issuance of a right-of-way access permit or approval.
(2) Any system development charge not paid when due is subject to interest at the rate of nine percent per annum commencing from the day it was due.
(3) No permit or approval for connection or increased usage of any system(s) will be issued until all applicable system development charges have been paid except as otherwise provided in an approved deferral agreement.
(4) If a use or development is commenced, or connection is made to the systems provided by the city without an appropriate permit or approval, the system development charge is immediately payable upon the earliest date that a permit was required.
(5) The city may enter into intergovernmental agreements to collect system development charges on behalf of other districts or jurisdictions or for other districts or jurisdictions to collect system development charges on behalf of the city.
(6) All monies collected from system development charges shall be retained in a separate fund and segregated by type of system development charge and by reimbursement versus improvement fees. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 8, 2000; Ord. 243 § 8, 1991. Code 2002 § 13.20.080].
13.25.090 Deferral of system development charges.
By resolution, the council may establish one or more programs for deferral of system development charges, which programs may include charges, fees, and interest for participation in the deferral program. Any deferral must be memorialized in a deferral agreement. [Ord. 542 § 2 (Exh. A), 2025; Ord. 243 § 9, 1991].
13.25.100 Security.
The obligation to pay any deferred system development charge, and any associated charges, fees, or interest thereon, may be secured by bond, deposits, letter of credit or other security acceptable to the city manager. [Ord. 542 § 2 (Exh. A), 2025; Ord. 243 § 10, 1991].
13.25.110 Exemptions.
(1) Structures and uses established and existing on or before the effective date of city’s initial adoption of applicable system development charges.
(2) Additions to single-family dwellings that do not constitute the addition of a dwelling unit, as defined by the city’s building code, are exempt from all portions of the system development charge.
(3) 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 applicable system development charge. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 9, 2000; Ord. 243 § 11, 1991. Code 2002 § 13.20.110].
13.25.120 Credits.
(1) A permittee is eligible for credit against the system development charge constructing a qualified public improvement. This credit shall be only for the improvement fee charged for the type of improvement being constructed. Credit under this section may be granted only for the cost of that portion of the improvement that exceeds the facility size or capacity needed to serve the development project.
(2) Applying the adopted methodology, the city may grant a credit against the improvement charge for capital facilities provided as part of the development that reduces the development’s demand upon existing capital improvements or the need for further capital improvements or that would otherwise have to be constructed at city expense under the then-existing council policies.
(3) When the construction of a qualified public improvement gives rise to a credit amount greater than the improvement fee that would otherwise be levied against the project receiving development approval, the excess credit may be applied against improvement fees that accrue in subsequent phases of the original development project.
(4) All credit requests must be in writing and filed with the city before the issuance of a building permit. Improvement acceptance shall be in accordance with the usual and customary practices, procedures and standards of the city of Sisters. The amount of any credit shall be determined by the city and based upon the subject improvement construction contract documents, or other appropriate information, provided by the applicant for the credit. Upon a finding by the city that the contract amounts exceed prevailing market rate for a similar project, the credit shall be based upon market rates. The city shall provide the applicant with a credit on a form provided by the city. The credit shall state the actual dollar amount that may be applied against any system development charge imposed against the subject property. The applicant has the burden of demonstrating qualification for a credit.
(5) Credits shall be apportioned against the property which was subject to the requirements to construct an improvement eligible for credit. Unless otherwise requested, apportionment against lots or parcels constituting the property shall be proportionate to the anticipated public facility service requirements generated by the respective lots or parcels. Upon written application to the city, however, credits shall be reapportioned from any lot or parcel to any other lot or parcel within the confines of the property originally eligible for the credit. Reapportionment shall be noted on the original credit form retained by the city.
(6) Any credits are assignable; however, they shall apply only to that property subject to the original condition for land use approval upon which the credit is based or any partitioned or subdivided parcel or lots of such property to which the credit has been apportioned. Credits shall only apply against system development charges, are limited to the amount of the fee attributable to the development of the specific lot or parcel for which the credit is sought and shall not be a basis for any refund.
(7) Any credit request must be submitted before the issuance of a building permit.
The applicant is responsible for presentation of any credit and no credit shall be considered after issuance of a building permit.
(8) Credits shall be used by the applicant within 10 years of their issuance by the city. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 10, 2000; Ord. 243 § 12, 1991. Code 2002 § 13.20.120].
13.25.130 Annual accounting.
(1) The city shall provide an annual accounting for system development charges showing the total amount of system development charges collected for each system along with a list of projects funded in whole or in part through system development charges.
(2) Any city resident or other interested person may challenge an expenditure of system development charge revenues. The challenge shall be in writing and shall be submitted to the city manager. The challenge shall include the date of the expenditure, the amount and purpose of the expenditure and the basis for the challenge. The challenge must be filed within two years of the expenditure of the system development charge revenues and shall be reviewed as provided by state law. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 12, 2000; Ord. 243 § 13, 1991. Code 2002 § 13.20.170].
13.25.140 Notification – Appeals.
The city shall maintain a list of persons who have made a written request for notification prior to adoption or amendment of the system development charge methodology. These persons shall be notified in writing of any such proposed changes at least 45 days prior to the first hearing to adopt or amend such methodology(ies). This methodology shall be available at least 30 days prior to the public hearing. No challenge to the system development charge methodology will be accepted after 60 days following final adoption by the council. [Ord. 542 § 2 (Exh. A), 2025; Ord. 300 § 11, 2000; Ord. 243 § 14, 1991. Code 2002 § 13.20.140].
13.25.150 Prohibited acts.
(1) No connection to the city water system, sewer system, or transportation system is permitted, or may be maintained, unless the applicable system development charges have been paid except in the case of an approved deferral agreement.
(2) Commencement of construction, occupancy of a building or structure, and/or commencement of a use or development for which system development charges are due, or the continuation of any the foregoing, without payment of the applicable system development charges is a violation of this chapter. [Ord. 542 § 2 (Exh. A), 2025; Ord. 243 § 15, 1991].
13.25.160 Enforcement.
(1) The provisions of this chapter may be enforced by any means legally available to the city, including but not limited to the following:
(a) Any building official is authorized to issue a stop work order if construction has begun, or withhold an occupancy permit of a development in the case of a deferral of system development charges, for which system development charges are due, without payment of the applicable system development charges. The stop work order must be in writing and given to the owner of the property involved, or to the owner’s agent, or to the person doing the work. Upon issuance of a stop work order, the cited work shall immediately cease. The stop work order must state the reason for the order, and that work will be permitted to resume when system development charges have been paid.
(b) Impose a penalty not to exceed $500.00 per violation of this chapter. Each day that a violation continues to exist constitutes a separate violation, and a separate penalty may be assessed for each day the violation continues.
(c) A system development charge is the obligation of the property for which a system development charge is due and is not personal to the person paying the system development charge, pursuing the development, and/or engaging in the use. System development charges that remain unpaid after they become due will be a lien on the property, which may be recorded in the city lien docket and/or in the real property records of Deschutes County. Liens for unpaid system development charges may be foreclosed in any manner provided by ORS 223.505 to 223.650 or as otherwise provided by law.
(d) In addition to an action at law or equity, and any statutory rights, the city may:
(i) Refuse to issue any permits, of any kind, to a property and/or party that is delinquent on payment of system development charges;
(ii) Refuse to honor any system development charge credits associated with a property and/or party that is delinquent on payment of system development charges;
(iii) Condition any development approval on payment in full, including penalties and interest;
(iv) Revoke any previous deferrals issued to the delinquent property and/or party, in which case the amount shall be immediately due, and refuse to issue any new deferrals;
(v) Withdraw the amount due, including penalties and interest, from any offset account or other security held by the jurisdiction for the delinquent party. [Ord. 542 § 2 (Exh. A), 2025].