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Finding: The City's SDC Methodology defines the scope of the system to be included in the rate <br /> structure, identifies the relationship between the system and capacity utilization by new development, <br /> and assigns the non-assessable cost of providing that service to the SDC rate structure. The proposed <br /> rate structure recovers the anticipated costs attributable to the impact of new development on the <br /> systems, as defined in the Methodology. This basic framework was adopted by the Eugene City Council <br /> in 1991. Subsequent updates, including the current proposed updates, are required to be consistent with <br /> that approach. Many ofthe suggestions and ideas raised in the studies referenced above are outside <br /> the current policy framework and would require Council action to modify. <br /> s:omment 4: The City is taxing new development as a means of funding the expansion and upgrading of <br /> existing systems. The contemplated 40% to 50% overalNaverage increase should be gradually phased in <br /> rather than being imposed all at once. <br /> Finding: SDCs are not a tax on property or on a property owner as a direct consequence of ownership <br /> of property. They are charges that represent the share a development must bear for the impact it creates <br /> on the existing and needed infrastructure. The fees are established based on the current levels of <br /> service and the costs of providing planned capital improvements needed to support growth. In the case <br /> of the Wastewater SDC (local and regional, there is a reimbursement component in the fee that is <br /> intended to reimburse the community for the additional capacity that was constructed to support growth <br /> as outlined in the IV~etropolitan Area General Plan. <br /> The cost to provide the infrastructure is largely based on the City's construction costs for the public <br /> improvements. Phasing in the rate increases over a period of years would not provide a revenue stream <br /> that would be adequate to finance the infrastructure demands needed to support growth. Based on the <br /> review of comments, staff will be working with the City Council to design an ongoing rate update process <br /> on an annual basis (one system per year) which should mitigate the need for large fluctuations in the <br /> rates. Policy issues will be addressed based on future Council direction. <br /> Comment 5: The City should include pricing mechanisms or incentives that reduce SDCs for projects that <br /> are consistent with the community's vision (and provides for additional charges to those which are <br /> inconsistent), and should provide exemptions for developments that have begun working through the <br /> annexation, zoning, and permit approval process. <br /> Finding: This is a policy issue that cannot be addressed in the context of this administrative rule <br /> process, as noted in the opening paragraph of this document. <br /> Comment s: The proposed changes would use an entirely new system of calculating the base costs and the <br /> annual index (updating annual rates based on other than the Engineering News Record [ENR] Construction <br /> Cost Index). Implementing these would change the basis for estimating the cost of infrastructure systems. <br /> Finding: The proposed Methodology had included a provision to utilize the best available information, in <br /> addition to the Engineering News-Record Construction Cost Index, for future Automatic Annual Updates. <br /> As noted in item (b) on page 5 of this document, this portion of the proposed Methodology has been <br /> modified to eliminate the Automatic Annual Update approach. In addition, staff will be meeting with <br /> Council to discuss the assumptions used in establishing the 1991 policy framework for construction costs <br /> in order to determine if refinements or clarification is necessary. <br /> Comment 7 : If the costs have risen on average by 65°~ to 75% why do the resulting fee increases only <br /> range from 40-50%? <br /> Finding: The SDCs have increased incrementally between 1991 and the January 1997 proposal, based <br /> on an annual inflation adjustment. The difference between the overall cost increases and the proposed <br /> rate increases is accounted for by the annual increases accomplished in intervening years. <br /> <br /> Comment 8: The City should conduct a comparison of the total SDC revenues with the total SDC eligible <br /> <br /> costs. Other cities are charging more, which indicates that Eugene's rates are too low. <br /> Exhibit B to Administrative Order No. 58-97-02-F-2 Page 2 <br /> <br />