City considers raising development charges
At the Nov. 5 Wilsonville City Council work session, Wilsonville Mayor Tim Knapp was surprised to hear that the City's water system development charges — fees assessed to developers for water-related capital improvement projects and a source of government revenue — may need to rise by over 50 percent in the coming years.
"I find it shocking," Knapp said. "I didn't think we would be that far out of where we ought to be."
Though water rates are projected to experience only modest increases over the next few years, system development charges for water are expected to spike from about $6,000 to about $9,600 for the water capacity equivalent of a single family home, according to an assessment by Wilsonville Finance Director Cathy Rodocker and Doug Gabbard of FCS Group. The assessment evaluated projected needs over the next 20 years.
City Manager Bryan Cosgrove explained that the projected increase is due to City expansion and myriad water projects like upgrades to the Willamette River Water Treatment plant, which will boost its capacity from 15 million gallons per day to 30 MGDs by 2030.
And in total, the City has 167 water projects planned, for a total improvement fee of $66.6 million.
Cosgrove also said cost of construction increases due to steel tariffs and other factors has caused the projected water SDC rate to rise.
"The SDC is based on the future growth of the City's projects. We're dreaming of providing water to people 10, 15, 20 years down the road at our peak capacity, which is some day in August (when the most water is used)," Cosgrove said.
As for rates, Gabbard said water rates could be increased by about two percent and sewer increases about four percent per year, though those numbers could change.
The City has discussed using the $17 million it will garner by 2026 from adjoining municipalities for the hassle of constructing a water pipe from Wilsonville to Hillsboro to keep utility rates down. Cosgrove suggested the Council not use it to purposely lower SDC costs.
"I assume you wouldn't want to subsidize growth," he said. "I would recommend that you not do that. Growth should pay its way."
Council President Scott Starr posited that if the City increases SDCs too much, developers might avoid building in Wilsonville.
"Wilsonville officials have stated that funding the development of Garden Acres Road in the nascent Coffee Creek Industrial Area has been challenging because the City needs urban renewal development funds to pay for the road, but developers haven't wanted to invest in the area until the road is built.
However, the City might have an answer to this chicken-or-the-egg Catch 22.
During the work session, City Councilors and staff discussed the possibility of applying for a $3.6 million loan from the State of Oregon Infrastructure Finance Authority to help fund the road development.
City officials are considering this option because they want to start developing the road next year and, due to recent development interest that could help cover the cost and because they scaled back the project's scope, they are just a few million dollars away from having the money needed to start building.
"We've been stuck on that point but we do have TIF (tax increment financing) revenue coming in now, other pots of money. It looks like we do have an opportunity to fund this road project without other development taking place first," said consultant Nick Popenuk of Tiberius Solutions.
Prologis, an investment brokerage, is considering purchasing 40 acres of land in Coffee Creek and the City has also received development interest from Republic Services and Universal Health in the industrial area. Prologis is pursuing "speculative light industrial" according to the City.
"They've (Prologis) come to us and said they would like to acquire as much land in Coffee Creek as they can," Economic Development Manager Jordan Vance said.
The City initially expected the project to build the section of Garden Acres Road to cost $15 million but cut that down to $8.8 million after scaling it back to not include an intersection at Day Road and by deciding to build three quarters of the road, leaving out one lane in the initial project.
"From scaling it back and reducing the initial construction phase and reducing cost, that helped us," Popenuk said.
Nick said the State would be more amenable to loaning to Wilsonville than a private source and anticipates the loan will be on a 20-year timetable with an interest rate of 4 percent. Also, he said the State would expect the City to pay for the loan through other sources if urban renewal funding doesn't cover the cost.
"If you get any new development in the area that increases the value and dramatically changes the financial feasibility of this project," Popenuk said.
The State will decide whether it wants to service the loan and decide on its stipulations in early 2019 and then City Council would decide whether to approve the loan thereafter.
City schedules Aurora
Airport public hearing
The City also agreed to hold a public hearing Tuesday, Nov. 27 regarding the Oregon Department of Aviation's $37 million federal grant request to fund a runway extension.
Among many concerns, Wilsonville officials have argued that the push to fund the extension has lacked public involvement and that it could exacerbate traffic congestion in Wilsonville. Recently, the Oregon State Legislature Emergency Review Board decided to postpone a decision on whether to greenlight the grant application until December so that Oregon Solutions could mediate the dispute between proponents and opponents.
However, Oregon Solutions recently decided that it would write an assessment of the situation rather than hold a mediation conference. With that in mind, the City decided to schedule the public hearing. City staff said they would advertise the event, set for Nov. 27, and invite all interested parties to attend and testify.
Following the hearing, the Emergency Board will likely make a decision of whether to approve the grant application Dec. 14.
Also, after State Senator Fred Girod recently accused the council of illegally discussing the Aurora Airport issue during executive sessions, the City said they wanted to show that they are committed to transparency and allowing various interest groups a voice.
"This would be taking a firm step to demonstrating our commitment to public transparency on the whole issue," Knapp said. "That's a big part in my mind of why it would be important for us to see that this happens."
Knapp said the hearing could also help inform Oregon Solutions' assessment.
"We told Oregon Solutions we were entertaining the idea of doing this," Knapp said. "My sense is they will be very interested in observing what the public input is and probably would be including some of that in their report to the E-Board in December."