Portland Imposes Parks SDC on Non-Residential Development; Increases Fees on All New Construction

By Jeff Bennett, assisted by law clerk Damien Hall

Last week the Portland City Council approved an amendment to the existing Parks and Recreation System Development Charge ("SDC"). The SDC will now apply to non-residential development, which was previously exempt. The amendment also significantly increases the fees on all new residential development within the city. Both residential and non-residential development in the Central City Area will be charged at a different rate from developments in the rest of the City. The adopted SDC will be implemented in two phases. Phase I will go into effect on January 1, 2009. Phase II will become effective on January 1, 2010.

The SDC is a one-time fee charged on new development. The fee revenue is utilized to finance capital improvements that offset growth-related impacts of development. The City has SDCs for parks and recreation, transportation, water, sewer, and stormwater capital improvements. The new amendment only affects the Parks and Recreation SDC.

The fees for non-residential development will be calculated based on the square footage and nature of the development.

Development of other non-residential uses, including hospitals, schools, restaurants, hotels, and parking structures are also subject to the amended SDC, the fees for which are calculated independently. The SDC shall be assessed only on new non-residential development and/or non-residential development resulting in an expansion of floor area.

An impact of the amended SDC to new residential development will be to more than double the charges on new single and multifamily residential development. The fees on new residential development are illustrated below.

To help put the impact of the amended SDC fees into perspective, some limited examples of potential developments and the applicable fee under Phase II are listed below.

• A 200,000 square feet mixed-use development, with 25,000 square feet of retail space and 175,000 square feet of office space would be assessed a fee of $186,250 if located in the Central City or $147,050 if outside the Central City.
• A mixed-use development with 15,000 square feet of retail space, 40,000 square feet of office space, and 36 condo units would be assessed a fee of $224,208 if located in the Central City or $216,383 if outside the Central City.
• A multifamily residential development consisting of 90 apartments would be assessed a fee of $443,970 if located in the Central City or $448,920 if outside the Central City.

Not accounted for in the above figures are project-based opportunities for developers to receive discounted SDC assessments from the City. For example, developers of affordable housing may be exempt from the SDC fee. Also, in exchange for building qualified public improvements, developers may be eligible to receive credits that reduce SDC fees. Legal counsel should be consulted when determining the amount of SDC fees applicable to a specific project.

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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