Public works board still grappling with SDC issue
Committee wants to fashion final proposal to deliver to City Council Dec. 17
By William Lundquist
Argus Observer
Monday, December 10, 2007 11:10 AM PST
Ontario — The Ontario Public Works Committee worked quickly and deliberately on the city’s proposed system development charge (SDC) plan Thursday afternoon, apparently determined to have a final recommendation ready for the Dec. 17 City Council meeting.
Ontario Public Works Committee Chairman and area developer Riley Hill said the board will meet as often as necessary to meet the Dec. 17 deadline.
Committee members unanimously approved five recommendations to the City Council during the meeting, then went to work on the all-important issue of SDC rates.
The fate of the city’s utility capitalization fee (UCF) on water rate payers depends on a decision the City Council and the committee make on SDCs.
While that remains undecided now, committee members voted quickly to recommend the June 29, 2006, version of the city’s SDC methodology report and rate study as the only methodology to use in setting SDC rates.
Hill said the June version is the most complete of the three versions prepared for the city by the independent consulting firm of Don Ganer and Associates.
Ontario City Councilman Dan Cummings said in the June version, the committee had removed two-thirds of the projected transportation projects in the next 20 years. He said the version issued in March, 2006, contained all of the projects in the city’s master plan — totaling $22 million — but the committee reduced that total to $8 million in the June version, leaving a much smaller total for the proposed SDCs to pay for.
Committee member Scott Wilson said using the June methodology would set the upper limits of SDC rates lower than using the March version. The committee voted unanimously to do so. Also approved unanimously was a housekeeping recommendation concerning meter size for residences.
The committee also approved a recommendation to waive SDCs for the next 20 years on lots already platted by the city. Committee members said they had made the same recommendation in the city’s last attempt to establish SDCs, and the City Council had shortened that “grandfather” clause to five years.
The next topic tackled was the transition period for implementation of the new SDCs. At exactly what point would an SDC be levied on building projects that are already in some stage of planning?
“This is really important,” committee member Tom Frazier said. “You may get your financing package together and then get hit with another $60,000 to $70,000 SDC. That’s a big hit.”
Hill said someone could also be “tricky” and put in applications for projects to beat the SDC deadline, even if they did not begin building for another six or eight months.
Cummings suggested waiving the SDC on any building project accepted by the city prior to the SDC implementation date. By accepted, he said, he meant when an application goes into the book and is assigned a number. After considerable discussion, committee members unanimously accepted that proposal.
The members then moved on to what would happen to the UCF and the city’s eastside transportation project impact fee when SDCs are implemented. The eastside fee had previously been levied to pay for improvement projects along East Idaho Avenue.
Cummings said some people in that area had already been charged the fees, so he wanted to make sure they did not pay twice.
He said as long as every eastside transportation project was included in the June 29 version of the study, the impact fees could be dropped and replaced by the SDCs. Members combed through the study at length until everyone was satisfied all the eastside projects had been included, then they voted unanimously to drop the impact fee as soon as the SDCs are implemented.
As for the UCF, Wilson said, “We were all OK with keeping it (the UCF) to pay for wastewater and water projects for residential. We weren’t sure it should carry over to pay for commercial and industrial projects.”
At Hill’s urging, the committee had previously voted to recommend the City Council keep charging the UCF to pay for future water and sewer projects for residential, commercial and industrial developments. He was not present at the last meeting, but said he understood the concern members had about a large industrial development overwhelming what has been saved in the UCF fund. No vote was taken on what to do about the UCF, however.
Debating a fee schedule
The members of the committee then turned their attention to the SDC fee schedule itself.
Wilson said he believed different SDC rates could be set for residential, commercial and industrial categories, but he did not know if the SDC rates had to be consistent for transportation, water and sewer, and parks and recreation projects.
If that was the case, Wilson said, setting a low SDC rate for water and sewer projects, which would also be funded by the UCF, would result in SDC rates that were too low for transportation projects. He said the parks and recreation committee has already decided on an SDC of 11 percent for future parks and recreation projects.
“You guys are addressing public works items. You don’t have to account for what the Parks and Recreation Committee has already done,” Ontario Mayor Joe Dominick said.
Committee member Max Mills said the parks SDC is much higher than what the Ontario Public Works Committee had been discussing.
Hill said he simply did not trust Ganer’s study as a base from which to set rates.
“Ganer’s the one who is supposed to be knowledgeable in this,” Dominick said.
Yet another concern, Hill said, was how high to set industrial SDC rates. Should they be set high to give the City Council flexibility to lower them on a case by case basis when the city negotiates with companies looking at Ontario, he said, or should they be set low to attract those companies in the first place?
“In the real world,” Hill said, “Companies go around and check the best deal they can get. We need something to give in a bidding war.”
Frazier said incentives are a key issue.
“We’ll be competing against communities that can offer a lot of incentives,” he said.
Hill said he was still pondering the issue.
“I was in favor of low rates, but now I’m thinking the city needs flexibility,” he said.
Mills agreed the city needed a bargaining chip. Wilson also favored setting rates higher initially.
“Then the city still has a way to collect the money if a company comes in and causes headaches,” Hill said.
The committee took no vote on that issue, but agreed to meet again at 3 p.m. Monday at city hall to continue the work, and to meet again later in the week if necessary.
