The Bend City Council unanimously approved a one year system development charge deferral program that allows developers to delay paying SDCs for up to nine months, or until the city receives an occupancy permit application, whichever comes first, without interest in the hopes of kick-starting new construction and creating new construction industry jobs.
The idea originally came from Bend’s Community Development Department.
Some city councilors voiced their concerns about the risk of developers completing projects and simply deciding not to pay their SDCs, saying there is no incentive in place for them to pay once a project is completed, and also wondered how the city would go about collecting fees if they become past due.
Andy High, director of government affairs for the Central Oregon Builders Association, told CBN last month that there is very little chance of builders taking advantage of the system.
“There is a strong possibility people pay SDCs up upfront and not worry about them, because when you go to get a construction loan you need to have a building permit, and you can’t get one of those without paying SDCs,” High said.
System Development Charges from the City of Bend for water are $4,449, sewer $2,800, transportation $4,434, and parks $3,507 and they are due in full before a building permit can be issued. Because of the established collection system, developers were forced to pay the fees with money borrowed from their bank, which resulted in additional expenses in the form of interest. But the builder is not the ultimate user of these city services, the home owner is, so the Community Development Department wanted the city council to let builders defer the costs and pass them on later to homeowners as part of sale price of the house.
Postponing SDC payments could save builders hundreds of thousands of dollars annually on new home construction projects if they decide to take advantage of the program, High told CBN.
