SDC’s and Affordable Housing in Newberg, OR

A lack of affordable housing in Oregon is a well-known issue preventing would-be first-time home buyers from actually purchasing a home. With interest rates over 7%, many simply cannot afford the high monthly mortgage payments and are electing to hold off buying. And many home owners, who might otherwise sell, are staying put to hold on to their current low-interest loans. And although there are several nearby housing developments in progress, the total inventory is still low, which is keeping home prices elevated.

Another significant factor is System Development Charges (SDC’s). SDC’s drive up costs not only for new home construction, but other types of construction and new business startups as well. There are several cases here in Newberg, where a new business would have been started, but the proprietors could not afford to pay the excessive SDC’s.

In this article, I’ll discuss what SDC’s are, why they are needed, and what changes have been proposed by Newberg city management.

This past year, Newberg City Manager Will Worthy, along with other community leaders, took a deep dive to investigate how SDC’s are structured and have proposed changes to help improve the issues of affordable housing, business startups, and daycare.

The City of Newberg website defines SDC’s as ‘one-time charges to individuals, developers, and projects who are developing a vacant piece of property, redeveloping a property, or changing what a property is used for.’

SDC’s provide funding for both existing and new capital projects related to potable water, storm water, waste water, and transportation. The first three water-related categories of SDC’s are rather intuitive. These charges are related to the underground systems that bring clean water to a structure, systems that remove surface water runoff (i.e., after a rain, washing your car, etc.), and systems that remove sewage from a property. SDC’s ensure there is sufficient capital to build, add to as necessary, and maintain these systems.

Below is a rendering of these underground systems at a single family home.

Being out of sight, we take these intricate systems for granted, but it takes a lot of engineering and planning expertise to maintain them. SDC’s provide the capital to make this possible.

Though the formulas to calculate them might be a bit complex, SDC’s related to water are rather intuitive, as they are related to the numbers of sinks, toilets, bathtubs, showers, etc.

Transportation SDC’s for are not quite as intuitive and are based on factors such as ‘land use’ and ‘PM Peak Hour Person Trips’.

‘Land use’ refers to a specific type of project or development. Land use for a new hotel, for example is a much different from a single-family home. ‘PM Peak Hour Person Trips’ account for the additional impact on the infrastructure of pedestrian, bicycle, and motorized vehicle traffic during peak hours. It is assumed each new structure represents an increase in total population. A new home implies a slight increase in traffic, whereas a new hotel would imply a greater impact.

SDC’s are mandated by the state of Oregon, and because of their complexity, the City of Newberg has historically relied on outside contractors who specialize in SDC development and compliance. Doing so has made it challenging to implement changes.

I applaud the current administration for taking on the challenge of better understanding Newberg’s SDC’s and proposing changes.

A few of the proposed changes are:

• Multipliers based on size of the structure.

SDC’s for single family homes no larger than 1,000 square feet would be reduced by 75%.

Conversely, SDC’s for homes larger than 2,200 square feet would be increased by 25%.

• Waive SDC’s for new licensed day care facilities.

• Eliminate ‘change of use’ transportation SDC’s for new businesses.

Keep in mind these are proposed changes. Approval by the City Council will likely occur early next year, pending the results of a thorough legal review.

Implementing these changes would be a great step toward making housing more affordable for first-time home buyers, and help to cultivate a more business-friendly environment, including much needed day care facilities.

For more information, please see our video below, where Daniel interviews City Manager Will Worthy. You can also find out more at the City of Newberg website.

Please check out out other videos as well, and subscribe to our Living in Newberg YouTube channel.