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Memo to Les Lyle September 3, 1993 Page 2 revenue from an SDC reimbursement fees is used are fewer than when it is an SDC improvement fee. The only limitations are that the revenue from reimbursement fees be spent for capital projects on the approved plan or for bonded debt used to finance such capital improvements. (ORS 223.307(1) and (4)) Improvement Fees Expenditure of "improvement fee" revenue must meet three criteria. There are other requirements involving the segregation of SDC revenue, audits and accounting for the expenditure that do not help this analysis except to note the obligation to keep the money segregated and spent according to the statue. 1. ORS 223307(2) requires the revenues "...shall be spent only on capacity increasing capital improvements...[or debt related thereto]..." Since using the funds to retire city debt is not a question we will ignore that authorization. The question of whether an expenditure increases the capacity of a capital improvement is addressed if it: [1.1] increases the level of performance or service provided by existing facilities The expenditures ability to meet this requirement will depend upon the facts. Adding facilities at an existing park or adding more land area to the park would certainly constitute an "increase" in the service provided at an existing park. [1.2] provides new facilities Providing land for a new park or constructing a new recreational facility in an established neighborhood meets this requirement. 2. ORS 223307(1) also provides that "The portion of such improvements funded by improvement fees must be related to current or projected development." The facts really come to play under this standard. For example, if new apartment houses within an established part of the city are constructed, the SDC revenue used to purchase park land or expand an existing park in reasonable proximity to the new apartments is probably sufficiently tied to that new development to pass legal muster. If, however, there has been no new development within reasonable proximity of the purchase, then the tie becomes more tenuous.