McMinnville and the SDC
by Nathan Knottingham
There are a lot of acronyms in the world, but no matter what town you live in you’ll hear the term SDC. SDC stands for System Development Charge which is a tool used by local governments to help increase a certain public service for the good of the community. Recently the McMinnville Chamber’s Government Affairs Council invited Mike Bisset to give a presentation on the city’s current SDCs and the recent discussion on raising specific SDC charges.
Mike is the City Engineer and Community Development Director for the City of McMinnville and a fantastic wealth of information on all things related to city planning and growth. His presentation covered current SDC in McMinnville, comparative analysis to other cities around McMinnville, and what calculation changes can mean for the future of McMinnville; many of the points listed here were provided by Mike in his presentation.
What SDCs does McMinnville currently leverage?
McMinnville has only three SDCs currently. There are strict guidelines and controls in place for municipalities who wish to enact SDC:
- SDC are governed by state statutes (ORS 223)
- They are a means for growth to help pay for the increased infrastructure cost of growth
- The fees must be used on capital projects needed to address growth – NOT for maintenance
- Assessed on new development at the time of building permits
Currently McMinnville’s SDC are: Sanitary Sewer, Parks, and Transportation.
- Sanitary Sewer SDC started in 1973 and is currently rated at $2,870 per dwelling unit, and was last adjusted in July 2007. For businesses the fee is assessed on estimate flow to sanitary sewer using a value per plumbing fixture. The fees are used to pay the costs to construct excess capacity at the treatment plant.
- Parks SDC was enacted in 1999 and is currently set at $2,118 per dwelling unit which was last adjusted in July 2007. This SDC ONLY applies to residential growth and fees are used to construct growth related projects included in the 1998 Parks, Recreation, and Open Space Master plan.
- Transportation SDC began in 1995 with a significant update in 2014. Currently it is set at $1,426 per dwelling unit. The major change in 2014 came with an adjustment to calculations for non-residential uses where the fee is now based on the number vehicle trips generated around the 5PM peak travel time. Again the fees are only used for construction of growth related projects included in the 2010 Transportation System Plan.
This chart was provided to Mike by a separate research organization (which was alerted to the misspelling of McMinnville) and shows a good comparison of the SDC leveraged by other cities around McMinnville. You will see clearly that the City leadership continues to be strong supporters of a business friendly atmosphere and also very open to new growth residentially.
What were the significant changes to the Transportation SDC in 2014?
In 2014 the conclusion of a study on transportation needs for McMinnville was reported to the City Council. That study found that McMinnville’s current transportation capacity is stressed, especially during the PM peak period. The calculation for the Transportation SDC had been based on traffic generated all day long, but did not account for peak times which gave an unrealistic account of the evening pressure on our transportation system. The change in the calculation kept residential fees at the same level, but used business models to calculate for new non-residential fees. For example the PM peak traffic created by a daycare facility is much higher at 5PM then the PM peak traffic produced by a manufacturing plant. Although the manufacturer may create traffic during the business day, the impact at the height of PM travel time is much reduced to the manufacturer, unlike the day care facility who has highest traffic in the PM when parents are picking up children.
The 2010 Transportation plan identified over $24.5 million of needed capital improvement projects necessary to accommodate growth. Under the current fee calculation the City will raise an estimated $9.8 million in Transportation SDC fee over the life the Transportation plan which is only 40% of the needed capital cost recovery. There is a shortfall in projected need and finances to make the improvements for growth.
How does the 2014 Transportation Bond affect the calculations?
The Transportation Bond addressed some growth projects on the 2010 Transportation Plan, specifically the Hill Road and Old Sheridan Road projects. However, the bond is being used to improve current roads as well which per the State Ordinance (ORS 223) SDC cannot be used for maintenance and upkeep. For this reason the Transportation Bond was needed to cover immediate need and is paid by all land owners in McMinnville through property tax.
Given the passage of the Transportation Bond the total need for the 2010 Transportation Plan was reduced from $24.5 million to an estimated $15.7 million. There is still a funding shortfall in the current Transportation SDC rates; to meet the need full recovery of the remaining balance would result in a fee increase of $2,179 per house (up from $1,426) which is roughly a 53% increase. All other non-residential Transportation SDC would increase at roughly the same rate.
Where does the McMinnville Chamber stand on this issue?
While it can be hard to accept an increase of fees directly related to growth the reality is that if we do not assess the need now and plan accordingly then our transportation infrastructure will be woefully unprepared for future development. While it may seem that increased fees today on business development would be something the Chamber would stand against, the reality of strong transportation infrastructure to move assets (both goods and people) is good for every business. Our service industry needs to be able to move around the city with speed and agility, our shoppers need to be able to reach their destinations efficiently (and happily) to spend money, and our production businesses need to be able to ship their goods with reduced traffic times to save cost.
In an effort to ensure that all members have a chance to receive the most updated information from the source we are hosting an information meeting with Mike Bisset March 26th at 9AM. This meeting will take place at the Civic Hall and everyone is welcome. We highly encourage any business to attend if you are considering structural remodeling, building a new building (even if on a currently developed site), or relocating your current business to another space in the city. Having a current knowledge of SDC in McMinnville will make planning and budgeting growth easier and more accurate, helping to ease the frustration of changing financial benchmarks when in the middle of development.
If you have questions please contact the McMinnville Chamber at any time. You can also find additional information on the City’s website at www.ci.mcminnville.or.us. And Mike Bisset can be reached at 503.434.7312 or firstname.lastname@example.org.