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Commissioners say charges aren't responsible for rising cost of construction, being a small percentage of overall price

Oregon City is putting housing developers on notice that they'll need to get their permits soon if they want to secure lower rates for charges that pay for water-system upgrades.

City Commissioner Denyse McGriff changed her vote on the implementation of full rate increases in less than four months, after initially expressing her concern about the timeline at the March 3 meeting.

"July 1 is just around the corner," McGriff said.

City Commissioner Rachel Lyles Smith, whose campaign for mayor was endorsed by the Home Builders Association of Metropolitan Portland, was the lone no vote in commissioners' 3-1 decision to increase the fees July 1, after failed 2-2 votes suggesting other timelines for implementing the rate increase.

"I'm struggling with the rate that we're increasing the fee," Lyles Smith said. "If developers are building now, they're paying a charge for something that we may or may not be able to build 20 years from now."

City Manager Tony Konkol defended the city staff's recommendation to increase fees. Oregon City has been short on funding for completing its needed capital projects, he said, due to a failure to charge developers adequately for building.

"We adopt the master plan, but then we never seem to adopt the fees to catch up," Konkol said.

McGriff and city Commissioner Rocky Smith said they agreed with Commissioner Frank O'Donnell when he said funding is needed for critical repairs to water systems. Oregon City already is experiencing decades of lag between collecting development fees and being able to invest in infrastructure.

"Anybody watching theFrank O'Donnell news is watching water systems fail all over the country, and I don't want to put this community in that position, either now, or in the future," O'Donnell said. "Even if it's a $10,000 system development charge, it's against a $500,000 house, which I think we can safely assume in today's market situation, we're talking 2%."

O'Donnell's point was that the city's fees aren't really responsible for increasing the price of housing, being such a small percentage of the overall cost of construction.

"We're not a bank," O'Donnell said. "If you don't want to pay the 9%, you can go find alternative financing elsewhere."

Roseann Johnson, a spokesperson for the Home Builders, had encouraged several provisions to "make doing business in Oregon City that much more attractive," such as lowering interest rates, delaying collections of fees and stretching out timelines for fee increases.

"One year is a very short timeframe for the financial infrastructure behind developers to adjust," Johnson said.

Oregon City's special projects senior engineer Patty Nelson said it's standard practice to collect all fees when the developer gets permits, so the city is ensured the builder has the money to finish the project.

"If you collect the fees later, you're really penalizing the people who are trying to buy that home waiting for it to finish," Nelson said.

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