‘Critical funding tool’: Bend hiking SDC fees to cover growth costs; some homebuilders hesitant to start new projects

We hear from city official, builder and nonprofit calling for more affordable housing

BEND, Ore. (KTVZ) -- Bend city councilors recently approved increases to system development charges, the one-time fees developers pay to support growing infrastructure costs faced by the growing city in the areas of water, sewer and transportation SDCs.

Despite increasing rates to address city growth in infrastructure, the SDC increase was also approved by councilors to better align with city goals such as addressing housing affordability.

The SDC's will not only impact homebuyers and individuals looking to build homes, but it will also impact construction companies. The rise in SDC rates will also increase for businesses based on their level of water, sewer, and transportation impacts.

With rates rising, some developers are already feeling the hesitancy from their clients to start a new build.

Riley Hayes, the owner of WelBuilt Homes, said Wednesday, " Improvements to the community are needed. However, in the short term it's really challenging. it's just eliminating a lot of buyers from building homes."

Hayes expects smaller construction companies and homebuilders to be the ones who bear the burden of increased fees.

"Being a small business owner in this community, it's hard to get started," Hayes said. "Then once you get the lights on, it's hard to keep them on."

Clients, he says, have already been hesitant because of the higher fees.

"I don't know what that looks like, necessarily," he said. "Affordable housing at $800,000 is kind of not affordable for most people in this community. "

For residential construction, fees are calculated based on home size. Those with smaller homes will face lower SDCs than those who build larger homes.

Russell Grayson, the city's chief operations officer, said, "Before, we had one rate for any size house, whether it's 1,000 square feet or 4,000 square feet. So we're able to tier that through several different tiers."

He says the fees offset the lack of federal and state money coming in to address infrastructure needs.

"This is one of the critical funding tools that the city has," Grayson said. "We're trying to bring in several hundred million dollars of revenue to to build significant infrastructure in the city."

SDC fees currently sit at a fixed rate of just over $21,000 for all homes, regardless of size. With the changes now approved, SDC charges will be just about $16,000 for homes between 600 and 1,200 square feet. Homes of 3,000 square feet or larger will see fees rise to about $31,000.

David Welton, a volunteer with Bend YIMBY (Yes In My Backyard), said, "They're actually lowering fees on starter homes, workforce housing and the kind of housing we actually need for people who work here. I think that's a very positive development."

He argues that SDCs are not ideal, but agrees the tiered fee system is a good step. 

"We don't have a housing shortage of, you know, 'McMansions' and large, large homes," Welton said. "We have a shortage of the more affordable types of housing."

SDC fee increases will also effect the business sector of Bend. Those charges will be based on water usage, sewer impacts, and transportation. and have

The approved increases will begin July 1, although some large business-related SDC increases will be phased in over two or three years, to ease the initial impact.