Man, builders and other development types aren't pulling punches when it comes to the higher fees the parks bureau wants to slap on new buildings.
Some samples from the City Council meeting Wednesday afternoon:
"It creates a large illegal slush fund and a large illegal blank check."—Dave Nielsen, CEO, Home Builders Association of Metro Portland.
"Honestly, the entire method needs to be scrapped. It has no basis in reality." —Also Nielsen, who really got on a roll.
"I cannot express strongly enough how much this methodology update departs from the previous ones."—Kelly Ross, lobbyist, Commercial Real Estate Development Association.
"Parks are one of the highest [system development charge] rates. They can make a project go upside down." —Marion Haynes, lobbyist, Portland Business Association.
"I don't think this is the answer. I don't know what the right one is."— Justin Wood, Fish Construction NW.
Okay, so only Nielsen really got his digs in, and that naysaying was outgunned by the many, many organizations that like the proposed changes, and what they'd do.
But it's a touchy change we're talking about—one that's so different from the way things are now that it could lead to a court challenge.
Essentially, parks (along with the water, sewer, and transportation bureaus) requires a "system development charge" from developers when they build a brand new home or commercial building. The thinking is: These projects create increased demand on the water, sewer, transportation, and parks systems, so let's make sure they pay for it.
Parks' calculation of these fees is unique in the city and, since 2012, people have been trying to figure out how to better assign charges to new development. They've also been toying with new methods for how parks can capture all the costs of future demand from these SDCs—not just the 75 percent we've been sweeping up for the last 7 years (which, in turn, is higher than earlier iterations of the fee).
All this results in increased costs for builders (passed on to consumers). But the thing some say could put this change—begun during Commissioner Nick Fish's tenure as parks commissioner, but brought forth by Commissioner Amanda Fritz—before a court is that it fundamentally alters the math for calculating fees.
The bureau in the past has figured out future demand on an acres-per-1,000-residents basis—endeavoring to sweep up new property as people moved to the city. But suitable land is running out in Portland, with only around 6,700 acres of undeveloped property available for any use, according to consultant Randy Young, who crunched numbers for the city on this. Using as much of that land as the current metric requires would eat up too much.
"That would diminish your ability to attract business and housing," Young said Wednesday.
So parks is proposing an entirely new calculation method. It wants to figure out future needs on an investment-per-person basis. To do that, Young and his team estimated the total value of parks bureau assets, including property, and came up with $3.5 billion. They used that number to figure out what the parks investment per resident is in both the center city and outer Portland, and came up with calculations accordingly.
They've also reformatted how they charge homes.
Rather than flat rates by the type of unit (single-family, multi-family, single-room occupancy, etc) new homes will be assessed a charge based on how big they are—a move that Fritz and Fish hope will induce smaller homes.
Fees for commercial development will be based on square footage as always, but costs are slated to go up across the board—in some cases by as much as 300 percent. Here's how the commercial comparison looks (current charge per square foot on the left, proposed charge on the right).
All told, the charges are expected to generate $552 million over the next 20 years. And as a matter of state law, the city needs to lay out how it's going to use that money. This is where Nielsen's "illegal slush fund" comment comes in. Developers are primarily concerned the changes are too expensive, but some also claim the city hasn't adequately explained where the money will go. Here's the parks bureau's plan [pdf], which is short on specifics.
Daniel Heffernan, a Portland consultant hired by developers to parse the new methodology, says the Parks bureau is going about things all wrong—identifying how much it should spend in the next 20 years and picking projects, rather than identifying projects that are needed then figuring out what they will cost.
"It has to be project-based," Young said. That prompted Fish to note his argument "appears to be the road map for a legal challenge," and inquire on specifics.
If the city passes the new SDC structure, Heffernan said, it's open to challenge in court for up to 60 days. He told the Mercury that window was created because the city is suggesting fundamentally changing its basis for SDCs.
Young, the city-hired consultant, said the proposal was sound. "We're allowed to do that," he said. "This is not an item I see you losing on."
It's unclear when commissioners might vote on adopting the changes. Fritz said she'd schedule a second-reading a minimum of two weeks out.
"Certainly there's need for some time for analysis given the depth of testimony we received," said Mayor Charlie Hales.
By the way, these changes aren't universally despised by developers. Kevin Cavenaugh of Guerilla Development applauded them.
"The old math promoted McMansions," he said, "and dissuaded developers from livable and walkable neighborhoods."