Council remains at standstill over development fees
In deliberating how it plans to rejigger requirements for system development charges, Wilsonville City Council and staff are trying to find a balance between not placing too much burden on the private sector — especially small-time developers — while also ensuring payment predictability so that the City's funds don't dry up at an inopportune moment.
System development charges are collected from new commercial and residential building projects to help offset the demands put on city infrastructure.
So far, at least, they have yet to come to an agreement. And at the May 20 City Council meeting, they took a public hearing and resolution on the proposed plan for SDCs off of the meeting agenda.
The plan that City staff showed to the council during the work session prior to the meeting, which was tweaked after councilors expressed opposition at a previous meeting to disallowing installment payments, allowed payments up to $100,000 and over a maximum of a two-year period.
In its current form, the plan would require Council approval for installment payments and the recording of a lien against the property, while payment deferrals would be prohibited.
Wilsonville Mayor Tim Knapp and Councilor Ben West objected to many aspects of the new proposal and would like the policies to be even more favorable to developers.
Knapp wants the installment payments to be allowed over a three-year period and said he was worried banks wouldn't lend to a developer with a City lien attached to the property.
West agreed and also said he wants payment deferrals added to the proposal and said such policy changes could lead to more attractive commercial development in Wilsonville.
"I can go to other parts of the state and get that boutique, really great small business vibe. I don't get that vibe here. We have a great business community, but we could use more of that," West said. "I actually like the deferral process. And I like it because of that same reason of that large capital that's due up front, and you have no money going in or out. Three months to a business owner is a huge deal. And relative to the City, we're fine in my opinion."
City of Wilsonville Assistant City Attorney Amanda Guile-Hinman said that in her research she found no other cities that allow deferral payments, while Councilor Susie Stevens said SDC policies aren't the most appropriate means by which to bolster small business.
"While I do like the idea of supporting small businesses, helping small businesses, I think there's a real risk of going too far out on this limb. If we're going to start a program to incentivize small businesses, that's what this needs be, not doing it through an SDC deferral or loan program," she said.
Stevens also didn't like the idea of the council having to sign off on individual installment agreements.
"It puts the council in a position to be subjective," Stevens said. "It has to be more objective than that, and this one goes and this one doesn't."
Guile-Hinman said part of the reason City staff decided to require council approval is the difficulty of creating objective criteria to determine which businesses deserve the installment option and which do not because of the vagaries of what constitutes a small business or large business. City Attorney Barbara Jacobson said the City added the lien to the requirements so that it could secure funds even if a developer goes bankrupt prior to paying SDCs.
City staff also warned the council that deferring SDC payments could put the City at risk of not having enough money to fund projects.
"It's staff's recommendation that installment agreements should be the only allowance that we provide. Installments allow that flexibility that council is looking for, but also makes sure the City still continues to receive SDC payments, whereas the deferral agreement means the City receives no funding during that time, which could mean that we start to lag behind what we need in our SDC fund," Guile-Hinman said.
A developer himself, Knapp said he would recuse himself from voting on the proposal once the final version is considered by the council.
"I'm feeling uncomfortable because I have used this process in the past and could use it again in the future," he said. "I don't want to be arguing for one thing or another and it be construed that I'm arguing for my benefit."
The City will likely consider the issue again at a later date.