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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 oh 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 consistentwith <br />that approach. Many of the suggestions and ideas raised in the studies referenced above are outside <br />the current policy framework and would require Council action to modify, <br />Comment 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% overalldaverage increase should be gradualty 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 can-ent 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 Metropolitan 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 thatfiave 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 />Corryment 6: The proposed changes would use an entirely"newsystem 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 />~ding~ 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 pofion 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 />Comment 8: The City should conduct a comparison ofthe total SDC revenues with the total SDC eligible <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 />