HomeMy WebLinkAboutTetherow SDC Discussion
MEMORANDUM
Date: May 28, 2013
To: Board of County Commissioners
Through: Tom Anderson, County Administrator
From: Chris Doty, Road Department Director
RE: Tetherow SDC Discussion
In early 2013, representatives of the various ownership entities of the Tetherow Resort
approached Deschutes County staff with a request to evaluate the potential for System
Development Charge credit or relief in light of the fact that Tetherow pays both the Deschutes
County Transportation SDC as well as the Ci ty of Bend Transportation SDC (residential uses
only).
The purpose of this memorandum is to apprise the BOCC of discussions staff has held with
Tetherow as well as provide a staff recommendation for BOCC consideration with regard to the
issue.
Background/Timeline:
Spring 2005: Tetherow Resort originally approved as Cascade Highlands Resort.
Fall 2005: Cascade Highlands and the City of Bend enter into a Water and Sewer Service
Agreement in which the City agrees to provide water and sewer service to the development.
Within the agreement, Cascade Highlands agrees to:
1. Pay all City of Bend Water and Sewer SDCs (with surcharge).
2. Pay all City of Bend Transportation SDCs (residential uses only).
3. Dedicate right-of-way for future roundabout construction at Century Drive/Skyline
Ranch Road (specifically in lieu of Transportation SDC payment for non-residential
uses).
4. Construct Skyline Ranch Road and Metolius Drive through the development
(including a roundabout at their intersection) and forego any potential SDC
reimbursement of these facilities.
5. Pay all future City of Bend SDCs for any SDC established after implementation of the
agreement.
6. Consent to annex when deemed appropriate by the City.
Fall 2008: After a lengthy public process, Deschutes County implements Resolution 2008 -059
establishing a County Transportation SDC.
February 27, 2013: Staff meets with the legal counsel of the now numerous individual and
separate development entities of the prior Cascade Highlands project (now Tetherow). Staff
learns of the existence of the Water/Sewer Agreement as the mechanism requiring payment of
City SDCs. Staff suggests a joint meeting with City staff to similarly discuss the potential of
SDC relief from the City.
April 9, 2013: City and County staff meet with the legal counsel of the Tetherow entities, to
discuss the SDC issue. City staff indicates that the City has significant debt that is bonded
against Transportation SDC revenue from west side development, including the Tetherow
entities. Given the City’s bonded debt against future SDC revenue, it is clear that the City will
not consider SDC relief for the Tetherow entities.
Note: The above timeline briefly summarizes staff’s perspective of the key points relating to
Tetherow and the request for SDC relief. The history of the development, negotiation of
additional Westside Consortium related projects, impact of the recession, and the subdivision of
development components all factor into the discussion, but with lesser degrees of relevance.
Staff Recommendation:
It is quite uncommon for development projects to pay both City and County SDCs. There is no
land use mechanism or development requirement which would impose such a condition; it could
only occur through mutual agreement. The City of Bend/Cascade Highlands (Tetherow)
Water/Sewer Agreement is a mutually beneficial agreement. The City of Bend leveraged its
water and sewer capacity to direct investment into its bonded transportation system
improvements. The original developers of Tetherow willfully agreed to pay the City’s
Transportation SDC and most likely factored the additional cost of the Transportation SDC into
their decision whether to utilize the City’s water/sewer service or privately construct other
water/sewer systems similar to those provided in other resort communities.
Staff appreciates the argument that residential development within Tetherow is unfairly
assessed dual transportation SDCs and that the dual SDC places Tetherow’s residential
development at a competitive disadvantage. From staff’s perspective, this argument ignores the
self-imposed action which created the dual payment requirement as well as the quid pro quo
context in which the City provided highly valued utility capacity to the development in exchange
for additional revenue to fund needed west side transportation system improvements.
Any SDC relief or credit provided to the Tetherow entities would set a precedent whereby other
developments, specifically destination resorts, could request credit for infrastructure constructed
prior to establishment of the County SDC resolution. If SDC relief or credit were provided to the
Tetherow entities, other resorts or developments could also argue that they would now be
placed at a competitive disadvantage.
After review of the circumstances surrounding the dual SDC payment issue, staff
recommends foregoing any consideration of SDC relief or credit to the Tetherow entities.
Other outlets available to the Tetherow entities include renegotiation of their agreement with the
City of Bend, or annexation to the City of Bend whereby they would no longer be required to pay
the County’s Transportation SDC.
Additional Information to Consider:
In contemplation of the Tetherow request, the BOCC is invited to consider the following
additional information:
The County’s residential Transportation SDC is proposed to be reduced from $3,673 to
$3,044 – a 20% reduction per draft Resolution 2013-020 (June 5, 2013 public hearing).
While benefitting from City infrastructure systems, current Tetherow property owners (County)
pay significantly less property tax. Most developed residential lots within Tetherow will recover
the County’s SDC in less than five years due to a lower property tax rate within the County.
Similarly, Deschutes County’s transient lodging tax is 2% less than the City of Bend transient
lodging tax.
Skyliners Road is a proposed SDC eligible project on the County’s Capital Improvement Plan.
Skyliners Road is approximately one mile north of Tetherow.
Skyline Ranch Road (collector) and Metolius Drive (collector) - the streets bifurcating and
providing direct access to Tetherow - are Deschutes County facilities and are maintained and
operated by the Deschutes County Road Department.
A $3,044 Transportation SDC is less than one-half of one percent (<0.5%) of the cost of a
$750,000 home.
A waiver of the County’s Transportation SDC (residential only) for Tetherow properties will
result in a loss of potential revenue exceeding $1,000,000 – which equates to more than 5% of
the anticipated SDC revenue for the entire unincorporated County area.
The proposed 20% residential Transportation SDC reduction (per Resolution 2013 -020) will
reduce Tetherow’s SDC liability by over $250,000.
The City of Bend’s Water, Wastewater, and Transportation SDCs, paid by Tetherow, total
approximately $12,000 per residential dwelling unit. This upfront cost – which purchases
Tetherow the ability to connect to the City’s water and sewer system – is comparable to the
construction cost of a modern septic/drainfield system. If the City’s municipal utility services
were not made available to Tetherow, equivalent private or on -site water/sewer systems would
cost substantially more than $12,000 per dwelling unit.
Attachment: Water and Sewer Service Agreement between the City of Bend and Cascade Highlands Limited
Partnership