Chapter 13.25
SYSTEM DEVELOPMENT CHARGE
Sections:
13.25.040 System development charge established.
13.25.060 Authorized expenditures.
13.25.070 Expenditure restrictions.
13.25.090 Collection of charge.
13.25.100 Delinquent charges – Hearing.
13.25.110 Installment payment.
13.25.140 Segregation and use of revenue – Annual accounting.
13.25.160 Prohibited connection.
13.25.170 Violation – Penalty.
13.25.010 Purpose.
The purpose of the system development charge is to impose a portion of the cost of capital improvements for water, waste water, drainage, streets, flood control, and parks upon those developments and redevelopments that create the need for or increase the demands on capital improvements. (Ord. 452 § 1, 2005)
13.25.020 Scope.
The system development charge imposed by this chapter is separate from and in addition to any applicable tax, assessment, charge, or fee otherwise provided by law or imposed as a condition of development. (Ord. 452 § 2, 2005)
13.25.030 Definitions.
For purposes of this chapter, the following mean:
(1) “Administrative charge” means the amount charged to each development to cover the cost of developing the methodologies, providing an annual accounting of system development charge expenditures, implementation, and operational costs associated with the system development charge program.
(2) “Capital improvements” means facilities or assets used for:
(a) Water supply, treatment and distribution;
(b) Waste water collection, transmission, treatment and disposal;
(c) Drainage and flood control;
(d) Transportation; or
(e) Parks and recreation.
(f) “Capital improvement” does not include costs of the operation or routine maintenance of capital improvement.
(3) “Development” means the change in character, occupancy or use of land or buildings; including redevelopment and demolishing a building for the conversion of such property to a different use.
(4) “Improvement fee” means a fee for costs associated with capital improvements to be constructed after the date the fee is adopted pursuant to VMC 13.25.040.
(5) “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 for a public scenic or preservation purpose.
(6) “Owner” means the owner or owners of record title, or the purchaser or purchasers under a recorded land sales agreement, and other persons having an interest of record in the described real property.
(7) “Parcel of land” 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 that includes the yards and other open spaces required under the zoning, subdivision, or other development ordinances.
(8) “Qualified public improvements” means a capital improvement that is required as a condition of development approval, identified in the plan adopted pursuant to VMC 13.25.080, and either:
(a) Not located on or contiguous to property that is the subject of the development approval; or
(b) 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.
(9) “Reimbursement fee” means a fee for costs associated with capital improvements already constructed or under construction on the date the fee is adopted pursuant to VMC 13.25.040, for which the council determines capacity exists.
(10) “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” includes that portion of a sewer or water system connection charge that is greater than the amount necessary to reimburse the city for its average cost of inspecting and installing connections with sewer and water facilities. “System development charge” does not include fees assessed or collected as part of a local improvement district assessment, 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. 467 § 1, 2006; Ord. 452 § 3, 2005)
13.25.040 System development charge established.*
(1) A system development charge shall be established and may be revised by resolution of the city council. The resolution shall set the amount of the charge, the type of charge, and, if the charge applies to a geographic area smaller than the entire city, the geographic area subject to the charge.
(2) Unless otherwise exempted by the provisions of this chapter or other local or state law, a system development charge is hereby imposed upon all development within the city, upon increased usage of a capital improvement, issuance of a development permit or building permit, or connection to the capital improvement, and upon all development outside the boundary of the city that connects to or otherwise uses the sewer, water or storm sewer facilities of the city.
(3) An administrative charge associated with the cost of the city’s system development charge program, including the periodic and on-going direct and indirect costs associated with complying with the requirement of state law and the cost of administering system development charges, may be established by council resolution. (Ord. 467 § 2, 2006; Ord. 452 § 4, 2005)
* Code reviser’s note: Ord. 501, Section 1, temporarily allows for deferral of the charges established in VMC 13.25.040. In Section 6, Ord. 501 provides that it will be automatically repealed on January 1, 2013, unless extended by the city council. Ord. 501 is available for review in the city clerk’s office.
13.25.050 Methodology.
(1) The methodology used to establish or modify a reimbursement fee shall consider the cost of the then-existing facilities, prior contributions by then-existing users, gifts or grants from federal or state government or private persons, the value of unused capacity available to future system users, rate-making principals employed to finance publicly owned capital improvements, and other relevant factors identified by the council. The methodology for establishing or modifying a reimbursement fee shall promote the objective that future system users shall contribute no more than an equitable share of the cost of then-existing facilities.
(2) The methodology used to establish or modify an improvement fee shall consider the cost of projected capital improvements needed to increase the capacity of the system, the need for increased capacity required to serve future users, and be calculated to obtain the cost of capital improvements for the projected need for available system capacity for future users.
(3) The methodology used to establish or modify an improvement fee or a reimbursement fee, or both, shall be contained in a resolution adopted by the council.
(4) The methodology used to establish or modify an improvement fee or a reimbursement fee shall not:
(a) Include or incorporate a method or system under which the payment of the fee or the amount of the fee is determined by the number of employees of an employer without regard to new construction, new development or new use of an existing structure by the employer;
(b) Include or incorporate any method or system under which the payment of the fee or the amount of the fee is based on the number of individuals hired by the employer after a specified date; or
(c) Assume that costs are necessarily incurred for capital improvements when an employer hires an additional employee.
(5) All methodology for establishing or modifying reimbursement or improvement fees shall be available for public inspection.
(6) A change in the amount of a reimbursement fee or an improvement fee is not a modification of the system development charge if the change in amount is based on a change in the cost of materials, labor or real property applied to the projects or project capacity as set forth in the plan adopted pursuant to VMC 13.25.080; or 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:
(a) 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;
(b) 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
(c) Incorporated as part of the established methodology or identified and adopted in a separate city resolution or order.
(7) A combination of a reimbursement fee and an improvement fee may be imposed, if the methodology demonstrates that the charge is not based upon providing the same system capacity. (Ord. 452 § 5, 2005)
13.25.060 Authorized expenditures.
(1) Reimbursement fees shall be applied only to capital improvements associated with the systems for which the fees are assessed, including expenditures relating to the repayment of indebtedness.
(2) Improvement fees shall be spent only on capacity-increasing capital improvements, including expenditures relating to the repayment of debt for the improvements. An increase in system capacity occurs if a capital improvement increases the level of performance or service provided by existing facilities or provides new facilities. The portion of the capital improvements funded by improvement fees must be related to the need for increased capacity to provide service for future users.
(3) A capital improvement being funded wholly or in part from revenues derived from an improvement fee shall be included in the plan adopted by the city pursuant to VMC 13.25.080.
(4) Notwithstanding subsections (1) and (2) of this section, system development charge revenues may be expended on the direct costs of complying with the provisions of this chapter, including the costs of developing system development charge methodologies and providing an annual accounting of system development charge expenditures. (Ord. 452 § 6, 2005)
13.25.070 Expenditure restrictions.
(1) System development charges shall not be expended for costs associated with the construction of administrative office facilities that are more than an incidental part of other capital improvements.
(2) System development charges shall not be expended for costs of the operation or routine maintenance of capital improvements. (Ord. 452 § 7, 2005)
13.25.080 Improvement plan.
Prior to the establishment of a system development charge by resolution, the council shall adopt a plan that:
(1) Lists the capital improvements that may be funded with improvement fee revenues, including the estimated cost and time of construction of each improvement, and the estimated percentage of costs eligible to be funded with revenues from improvement fees for each improvement; and
(2) Describes the process for modifying the plan. The council may modify the plan and list at any time. If a system development charge will be increased by a proposed modification of the list to include a capacity-increasing capital improvement, as referenced in VMC 13.25.060(2), the city shall provide at least 30 days’ notice of the proposed plan modification to persons who have requested written notice under VMC 13.25.150(2). A hearing on such proposed plan modifications will be held if the city receives a written request for such a hearing within seven days of the date the proposed modification is scheduled for adoption. If no such request is received within this time period, a hearing is not required, but may be held in the council’s sole discretion. (Ord. 452 § 8, 2005)
13.25.090 Collection of charge.*
(1) The system development charge is payable upon annexation or issuance of a building permit, a development permit, a development permit for development not requiring the issuance of a building permit, a permit or approval to connect to the water or sewer system, or a right-of-way access permit.
(2) If no building, development, or connection permit is required, the system development charge is payable at the time the usage of the capital improvement is increased based on changes in the use of the property.
(3) The applicant for a connection permit shall be required to state in writing the intended use of the building in sufficient detail to enable the city to determine the appropriate category of use. If the use of a building changes or if the stated use is incorrect, the occupant shall report the change of use to the city within 30 days and promptly pay any additional system development charges. If the occupant fails to report a correct statement of use or a change of use within 30 days or fails to pay the additional system development charge within 10 days after invoice, the occupant shall pay a penalty of 10 percent of the balance due plus interest on the unpaid balance at the rate of 1.5 percent per month.
(4) The city shall not issue such permit or allow such connection until the charge has been paid in full, provision for installment payments has been made pursuant to VMC 13.25.110, or unless an exemption is granted pursuant to VMC 13.25.120. (Ord. 452 § 9, 2005)
* Code reviser’s note: Ord. 501, Section 1, temporarily allows for deferral of the charges regulated in VMC 13.25.090. In Section 6, Ord. 501 provides that it will be automatically repealed on January 1, 2013, unless extended by the city council. Ord. 501 is available for review in the city clerk’s office.
13.25.100 Delinquent charges – Hearing.
(1) When, for any reason, a system development charge has not been paid, the city administrator shall report to the council the amount of the uncollected charge, the description of the real property to which the charge is attributable, the date upon which the charge was due, and the name of the owner.
(2) The council shall schedule a public hearing on the matter and direct that notice of the hearing be given to each owner with a copy of the city administrator’s report concerning the unpaid charge. Notice of the hearing shall be given either personally or by certified mail, return receipt requested, or by both personal and mailed notice, and by posting notice on the parcel at least 10 days before the date set for the hearing.
(3) At the hearing, the council may accept, reject, or modify the determination of the city administrator as set forth in the report. If the council finds that a system development charge is unpaid and uncollected, the city recorder shall docket the unpaid and uncollected system development charge in the city lien docket. Upon completion of the docketing, the city shall have a lien against the described land for the full amount of the unpaid charge, together with interest at the legal rate of 10 percent and with the city’s actual cost of serving notice of the hearing on the owners. The lien shall be enforceable in the manner provided in Chapter 223 ORS. (Ord. 452 § 10, 2005)
13.25.110 Installment payment.
(1) The owner of the parcel of land subject to a system development charge of over $10,000 may apply for payment in installments, to include interest at the legal rate of 10 percent on the unpaid balance, in accordance with ORS 223.208. Payment may be over a period of less than 10 years, if so elected by the property owner. Otherwise, system development charges are payable over a period of 10 years, in accordance with such terms as set by the city.
(2) The city administrator shall provide application forms for installment payments, which shall include a waiver of all rights to contest the validity of the lien, except for the correction of computational errors.
(3) An applicant for installment payments shall have the burden of demonstrating the applicant’s authority to assent to the imposition of a lien on the parcel and that the property interest of the applicant is adequate to secure payment of the lien.
(4) The city administrator shall report to the city recorder the amount of the system development charge, the dates on which payments are due, the name of the owner, and the description of the parcel.
(5) The city recorder shall docket the lien in the lien docket. From that time the city shall have a lien upon the described parcel for the amount of the system development charge, together with interest on the unpaid balance at the rate established by the council. The lien shall be enforceable in the manner provided in Chapter 223 ORS.
(6) Upon written request of the city administrator, the city recorder is authorized to cancel assessments of system development charges, without further council action, where the new development approved by the building permit is not constructed and the building permit is cancelled.
(7) For property that has been subject to a cancellation of assessed system development charges, any future installment payment contract shall be subject to the code provisions applicable to system development charges and installment payment contracts on file on the date the new contract is received by the city. (Ord. 452 § 11, 2005)
13.25.120 Exemptions.
(1) Structures and uses established and legally existing on or before the effective date of the ordinance codified in this chapter are exempt from system development charges imposed hereunder, until the parcel is further developed and connects to or increases the parcel’s or structure’s use of one or more public improvement facilities.
(2) 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.
(3) An alteration, addition, replacement or change in use that does not increase the parcel’s or structure’s use of the public improvement facility are exempt from all portions of the system development charge.
(4) Municipal projects are exempt from all system development charges. (Ord. 467 § 3, 2006; Ord. 452 § 12, 2005)
13.25.130 Credits.
(1) A system development charge shall be imposed when a change of use of a parcel or structure occurs, but credit shall be given for the computed system development charge to the extent that prior structures existed and services were established on or before the effective date of the ordinance codified in this chapter. The credit so computed shall not exceed the calculated system development charge. No refund shall be made on account of such credit.
(2) A credit shall also be given for construction of a qualified public improvement, upon acceptance by the city of that public improvement. The credit shall be only for the improvement fee charged for the type of improvement being constructed, and may be granted only for the cost of that portion of such improvement that exceeds the city’s minimum standard facility size or capacity needed to serve that particular development project or property. The applicant shall have the burden of demonstrating that a particular improvement qualifies for credit under this section. The request for credit shall be filed in writing no later than 60 days after acceptance of the improvement by the city.
(3) The city may deny a credit if it demonstrates that the application is not for a qualified public improvement, as defined in this chapter, or by showing that the improvement for which credit is sought is not included in the plan adopted pursuant to VMC 13.25.080.
(4) 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. However, this subsection shall not prohibit the city from providing a greater credit, or from establishing a system providing for the transferability of credits, or from providing a credit for a capital improvement not identified in the plan adopted pursuant to VMC 13.25.080, or from providing a share of the cost of such improvement by other means, if the city so chooses.
(5) Credit shall be used within 10 years from the date the credit is given. (Ord. 467 § 4, 2006; Ord. 452 § 13, 2005)
13.25.140 Segregation and use of revenue – Annual accounting.
All funds derived from a particular type of system development charge are to be segregated by accounting practices from all other funds of the city. The system development charge calculated and collected shall be used for no purpose other than those set forth in VMC 13.25.060. The city shall provide an annual accounting to be completed by January 1st of each year for system development charges showing the total amount of system development charge revenues collected for each system and the projects that were funded in the previous fiscal year. The city shall include in the annual accounting a list of the amounts spent on each project funded, in whole or in part, with system development charge revenues, and the amount of revenue collected by the city from system development charges and attributed to the cost of complying with the provisions of this chapter, including the costs of developing system development charge methodologies and providing annual accountings. (Ord. 452 § 14, 2005)
13.25.150 Review procedures.
(1) Expenditure Review.
(a) Any citizen or other interested person may challenge an expenditure of system development charge revenues by filing a written complaint with the city describing with particularity the decision of the city and the expenditure which the person challenges. Such challenges must be filed within two years of the expenditure of the system development charge revenues.
(b) A hearing shall be held by the council within 60 days of the filing of the complaint. After providing notice to the challenger, the council shall determine whether the expenditure was in accordance with this chapter and the applicable Oregon Revised Statutes, and may affirm, modify or overrule the decision. If the council determines that there has been an improper expenditure of system development charge revenues, the council shall direct that a sum equal to the misspent amount be deposited within one year to the credit of the account or fund from which it was spent.
(c) The decision of the council shall be judicially reviewed only as provided in ORS 34.010 to 34.100.
(2) Methodology Review.
(a) The city shall maintain a list of persons who have made written requests for notification prior to adoption or amendment of a methodology for any system development charge. Written notice shall be mailed to persons on the list at least 90 days prior to the first hearing to establish or modify a system development charge, and the methodology supporting the system development charge shall be available at least 60 days prior to the first hearing. The failure of a person on the list to receive a notice that was mailed does not invalidate the action of the city.
(b) The city may periodically delete names from the list, but, at least 30 days prior to removing a name from the list, must notify the person whose name is to be deleted that a new written request for notification is required if the person wishes to remain on the notification list.
(c) Legal action intended to contest the methodology used for calculating a system development charge may not be filed after 60 days following adoption or modification of the system development charge resolution by the city. Persons shall request judicial review of the methodology used for calculating a system development charge only as provided in ORS 34.010 to 34.100.
(3) Other Review.
(a) Challenges of any other decisions required or permitted to be made by the city under this chapter or associated resolutions including, but not limited to, objections to the calculation of a system development charge must be filed in writing with the city office within 20 days of the date of the decision. The complaint must describe with particularity the challenged city decision, and state:
(i) The name and address of the appellant;
(ii) The nature of the calculation being appealed;
(iii) The reason the calculation is incorrect; and
(iv) What the correct determination of the appeal should be or how the correct calculation should be derived.
A person who fails to file such a written challenge within the time permitted waives all objections, and any filed objections shall be dismissed.
An appeal fee in an amount as set by council resolution shall accompany the complaint. A separate complaint and fee must be filed for each decision being appealed.
(b) A hearing shall be held by the council within 60 days of the filing of the complaint. After providing notice to the complainant, the council shall determine whether the decision challenged is in accordance with this chapter and the applicable Oregon Revised Statutes, and may affirm, modify, or overrule the decision.
(c) The council must advise a person making written objection to a system development charge calculation of the review procedures provided by this section, and the right to petition for review pursuant to ORS 34.010 to ORS 34.100.
(d) A decision to increase a system development charge by modifying the plan adopted pursuant to VMC 13.25.080 may be judicially reviewed only as provided in ORS 34.010 to 34.100. (Ord. 467 § 5, 2006; Ord. 452 § 15, 2005)
13.25.160 Prohibited connection.
No person may increase usage of a capital improvement or connect to the water or sewer system of the city unless the appropriate system development charge has been paid, or an installment payment plan has been applied for and approved. (Ord. 467 § 6, 2006; Ord. 452 § 16, 2005)
13.25.170 Violation – Penalty.
Violation of this chapter is punishable by a fine not to exceed $500.00, in addition to any other lawful remedies available to city per this chapter, or other local, state or federal law. (Ord. 467 § 6, 2006; Ord. 452 § 17, 2005)