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Developers scramble to avoid 40 percent increase in water system development charges for new projects

In the weeks prior to the implementation of the City of Wilsonville's nearly 40 percent increase in water system development charges — one-time charges to developers for public infrastructure costs — developers scrambled to file their building permits before the new fee went into effect.

But there was one problem. The City and some developers were operating based on a different deadline. Even though some builders thought they had submitted their applications prior to their assumed deadline of 5 p.m. March 1, the actual deadline was midnight, March 1.

"I'm not sure how this happened," said Dan Grimberg of West Hills Development at the March 4 Wilsonville City Council meeting. "It's very unusual. We have great communication (with City staff). We were all sitting around last week saying 'How did we get here?'"

After the City admitted it may have accidentally misled developers, Wilsonville City Council voted 3-0 at the meeting to change the effective date of the new fees to 5 p.m. March 1. In total, various developers saved $283,000 in expenses due to the resolution.

Wilsonville City Attorney Barbara Jacobson said the City had given notice to developers about the fee hike and the implementation date so it wouldn't be liable had it maintained the 12 a.m. deadline. But City Council members thought changing the deadline was the right thing to do.

"If something was communicated to a person that this was the due date and they earnestly thought this was the due date, I don't have an interest in playing 'Gotcha' there," said Wilsonville Council President Kristin Akervall at the meeting. "I would feel like if a message was given that it was end of day on March 1, then that's something I would feel good about honoring."

The council passed the resolution to approve the new water SDCs, which boosted the charge from $5,995 to $9,600 per water capacity equivalent of a single-family home, at the Feb. 21 council meeting. The City had last updated its water SDCs in 2000.

Wilsonville Planning Director Chris Neamtzu said 69 applications were delivered to the City on March 1 while 33 applications came in during the days prior to the implementation of the new fee.

"We are talking about $402,000 that came in over the course of three days in an attempt to try to beat the increase of rate," Neamtzu said.

Grimberg, Stan Earnshaw of Community of Hope Lutheran Church, Mike Morse of Pahlisch Homes and James Adkins of the Homebuilders Association of Metro Portland testified at the meeting, asked the council to change the deadline, and said they had been told by City staff that the new charges would go into effect 5 p.m. March 1.

"As Pahlisch said, we were advised that if we had our applications in end of business Friday that that would vest our permits. That's what we

were counting on," Grimberg said.

West Hills Development recently handed in building applications for the development of the Frog Pond Meadows 74-lot subdivision located on the west side of Stafford Road just north of Boeckman Road. During the meeting, the City Council also approved the zoning change and annexation of the development.

Community of Hope Lutheran Church also is included in the development, in part so that it could be annexed into the City and use its public infrastructure.

"I was informed last Friday that these fees were going to go up in the neighborhood of $30,000, money we don't have as a church. We were not notified (by the City) that these were going up," Earnshaw said.

Pahlisch Homes is developing Morgan Farms, a 78-lot Frog Pond West subdivision the City annexed last summer. Regardless of the implementation date, Morris said the fee increase was "unfair."

"We're at the point of no return, so we're going to have to build out. We're so far into it with land costs and site costs, we can't turn back," Morris said. "It's (the increased SDC charge) not impacting developers or homebuilders. It's the homebuyer that's ultimately going to be paying for (it), which impacts affordability."

Councilor Ben West initially proposed changing the date to March 15 instead of March 1 to give developers more leeway. And Neamtzu said the City expected to receive about 20 more applications in the near future.

"I think it's a small cost to make sure that we're taking care of these people, that we're slowing down, that we're not missing anybody," West said.

But West then agreed to Akervall's amendment to his motion, which changed the effective date to March 1. Akervall felt that moving the effective date forward two weeks was unnecessary.

"It's an impressive hustle what happened on March 1," Akervall said. "There was considerable effort that was put in to get that many applications in on March 1. ... They were trying to abide by the word they believe we've given them. I think there's something to honoring that (and to show) our word means something too.

"I think what we can do is follow through. If what was said was March 1, we should follow through on that."

Mayor Tim Knapp concurred with the decision to tweak the effective date and wanted to continue what he said was a strong relationship between the City and the development community.

"Over the last decade there's been $800 million in private-sector investment in the community of Wilsonville," he said. "That has benefited our community in a lot of ways."

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