Friday, July 9, 2010

Jean-Pierre gives testimony at Portland City Council on May 19th, 2010 concerning new SDC charges

On May 19th, 2010, Jean-Pierre gave testimony at the Portland City Council concerning new increases in System Development Charges:

"Dear Mayor Sam Adams,
Thanks to great ideas and great leadership, Portland is a city renowned for building green. That said, the higher costs and the larger permit fees required to produce mid-rise green buildings have required that most green projects be either government-sponsored or luxury housing. Our project, ecoFlats on North Williams, received a PDC loan due to its goal to shatter the belief that neighborhood-friendly green developments are cost prohibitive, and that net energy zero is too expensive. We have created a mid rise model that can be enjoyed by the many, and is highly reproducible. Therefore we are on the verge of creating a field of infill workforce housing that is low energy, green, and transportation oriented. Unfortunately, due to recent unexpected spikes in SDC fees, that hurt mid rise green development the most, the current threat of an 8% increase from BDS, and the inability for city agencies to produce a coherent remedy on how these fees ought to be handled, the future of green development is in jeopardy. The trail we are blazing along with other green motivated developers will scarcely be followed. 

In order to remedy the SDC increases, we looked into a City sponsored incentive offered to defer Transportation and Parks SDC fees as a solution. The result was not useful. The deferral program offered is actually a first position loan that no bank or even PDC can accept. The deferral program once entered is quickly boned and sold immediately. We have since paid interest on it even though our permits were not issued for another 3 months. Because the city has not produced a solution that can be used, another solution must be developed. Keep in mind, mid-rise structures already pay on an average of 12% in permit costs, and any City fee increase to this cost makes projects not viable. Put simply, the margins are already too thin, and what then are the benefits to investors?

When the 8% BDS fee increase arose, I was so in disbelief I thought that perhaps I was not seeing things correctly. The realization is that we the developers are the only ones to see things as they are. Now I have engaged with other green developers around the city, I have learned that they are having the same concerns over the fee increases, and I have gained their support in this letter, as you will see.

The truth is that we should be looking into the benefits of a decrease in City Fees. Currently System Development Charges are not properly valuing the green development that is in alignment with the city’s green goals. The current structure and additional increases are therefore self-defeating because, already SDC’s are hurting the very developments that put less pressure on the SDC Systems, and any further increases to development will disengage the developers who fund the agency. The new effort by the City to raise BDS fees on top of the high fees we are already paying will surely bring development to a stand still in Portland. To remedy this, what we’re asking for is the following Four things:

First: Vote down the 8% BDS permit fee increase, by doing so you have begun to spurn green development, create jobs and a greener future for Portland.

Second: Bureau of Environmental Services has to implement a conservancy based fee system that awards low water implementation in its SDC charge. Water conservancy has to be rewarded. Do this and it will happen on a larger scale.

Third: Parks fees need to be more fairly based on size of units rather then the current per unit charge. Currently we pay the same per unit for small footprint 600 sf units that one would pay for a 3,500 sf penthouse. (A big concern for mid rise development, infill workforce housing, energy efficient housing etc.,)

Fourth: The definition of “deferral” returns to what “deferral” really can mean—The SDC’s should be differed and paid when the buildings are put into use, at project completion.

Building green is obviously very important to climate change, energy conservation, and health and well-being. What’s more, in Portland green buildings are a source of regional pride. I have gathered the green development community of our city. These supporters have responded to the call from our leaders, that we need to do something better and greener. With the combined experience under our belts, we are experienced enough to know that developers are the only ones to see how all the different city agencies come into play, and that it is our combined opinion that our four requests have to be met to keep Portland Building Green infill structures.

In a climate where the market has shifted we the development community see how our efforts are key to creating the jobs that benefit the City and the State. The potential to pick up on the right foot and create new green construction jobs, green workplaces, and green living is here at this moment. With the City participation in our requests we can meet the goal of the greenest city for years to come. Our City’s and Our State’s Green developments soon could be able to include the everyone in its goals, and could continue to be recognized nation-wide."

Jean-Pierre Veillet

To watch the entire Portland City Council meeting on SDC fee increases, click here and choose item 667 on the menu.

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