The City of Prineville is revising its system development charge calculations to relieve expenses for business remodels

Earlier this spring, the City of Prineville launched a revision of its system development charge calculation methods for transportation.

The decision was prompted by a complaint by Paul Rodby, owner of the McDonalds in Prineville, after he was asked to pay what he felt were excessively high transportation SDCs for a remodel project.

“He indicated that this addition was about a $120,000 investment,” said City Manager Steve Forrester. “We were asking him for almost $40,000 in SDCs. From an investment standpoint or a loan-to-value standpoint, if you can imagine saying ‘I’m going to add onto my business, a $100,000 remodel, and I have got an SDC that represents 30 or 40 percent of that cost,’ for a bank, that is going to be problematic.”

A committee was formed to revise the fee calculation process, particularly the method related to business renovations. Earlier this month, City Engineer Eric Klann presented the results of their work.

He explained that the current transportation SDCs are based upon a 1998 transportation system plan (TSP). Although the TSP was updated in 2005, the city did not update its SDC methodology.

“Since that time, we have raised our transportation SDCs annually, based upon construction costs,” Klann said.

In determining their new fee, Klann said that the committee identified $41 million worth of projects that will be needed for the transportation system over the next 20 years. Steve Forrester

“These were everything from simple road restriping projects to very expensive arterial highway projects,” he said.

The committee further identified 2,788 peak hour trips that have come online. They then divided the $41 million by the number of trips. That number was then adjusted based upon the percentage of city funding required for the projects. Klann gave the example of improvements to the Tom McCall/Highway 126 intersection. Since federal and state gas taxes will pick up much of the tab, the city will only have to pay 13 percent of the project cost.

“We decided to rank every project in the transportation system plan as a comparison of who would be a funding partner,” Klann continued. “From there, we were able to whittle down the $41 million down to $10 million of expected city contribution.”

The net result was a $3,800 transportation SDC for each trip a new development adds to the city system. Going forward, the city will update its project percentages, and adjust its SDCs accordingly.

“This offers us a good deal of flexibility,” Klann said.

When it comes to remodels, the committee chose to cap the amount of SDCs that the city can charge for a project. Klann explained that the fees they apply to remodels are based on information in the Institute of Transportation Engineers’ trip generation guideline books.

The books, updated every three to four years, include 172 categories of developments with data backed by more than 5,000 studies related to a variety of factors including square footage.

“It tries to help us understand what the impact to our streets will be when someone comes in and builds,” Klann said.

With the McDonalds remodel, 719 more square feet was being added, which resulted in an approximately $38,000 transportation SDC, which amounted to more than a third of the total project cost.

The committee researched its SDC collections for the past four years and found that just 5 percent of its total came from renovations. Consequently, they decided that they could cap SDCs at 10 percent of the project cost.

“We want to support our local businesses that have an opportunity to expand,” Forrester said. “We don’t want to put a burden that is in the 20+ percent add-on just for transportation SDCs.”

Klann agreed.

“I think this would be a good example of showing Prineville is open for economic development,” he said.

Going forward, Klann said that the SDC adjustment process will require giving notice to affected businesses, which could take at least two more months. Consequently, he wants to wait until Sept. 9 to hold a public hearing on the proposed changes.

Following the hearing, city staff would then develop a resolution that would make the changes official pending city council approval.

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