Milwaukie staff outline how transportation system development charges are calculated, then-warn of revisions after new TSP

Milwaukie officials and consultants reviewed the basics of system development charges for transportation on Sept. 16 and presented preliminary calculations that use the city’s existing Transportation System Plan (TSP) and capital improvement plan (CIP). The city will recalculate the charges after adopting an updated TSP expected this winter.

Consultant John Guilarducci of FCS Group told the council that SDCs are “one-time fees paid at the time of development by new development,” and stressed the two-part legal structure used in Oregon: a reimbursement fee (for unused capacity in existing infrastructure) and an improvement fee (for planned, capacity-increasing projects). He cited the Oregon Revised Statutes sections the team used for guidance (ORS 223.297–223.316) and said the law also requires 90 days’ public notice before action on changes to SDCs and that a draft report be publicly available for the last 60 days of that notice period.

The consultants showed a preliminary calculation using three project lists (the city CIP, the draft TSP list and a combined list) and explained the numerator/denominator approach the city uses: the numerator is the dollar value of eligible existing capacity (reimbursement) plus growth-related portions of planned projects (improvement); the denominator is projected growth in PM peak-hour person trip ends over the planning period.

Using the combined list in the presentation, the consultants reported an improvement-cost basis of about $5,500,000 and a reimbursement-cost basis of roughly $611,000, producing a total cost basis the consultant displayed in the slide deck. They translated the forecast growth into a denominator of about 2,300 PM peak-hour person trip ends and showed a calculated SDC of $26.87 per PM peak-hour person trip end; the presentation converted that to an estimated single-family residential charge of about $3,982 under the combined-list approach. "The top row comes in your TSP," the consultant said, explaining where the trip forecasts originate and how they convert vehicle trips to person trips using standard conversion factors.

Councilors pressed the consultants on methodology choices: whether the analysis should use the fiscally constrained TSP list or the unconstrained project list, how to treat projects that improve safety (for example, sidewalk widening or curb ramps) versus projects that clearly add vehicle capacity, and how the analysis allocates shared projects (sidewalks, bike lanes, ADA) proportionally between existing users and future growth. The consultants said they generally prefer to start with the unconstrained list, then isolate the growth-related portion of each project; for projects that serve both existing and future users they apply the growth-share percentage as an allocation method.

Consultants also noted practical limits when estimating unused capacity for transportation: intersection level-of-service data are inconsistent and scarce, so for reimbursement calculations they often use a historical-spending approach (looking at past capital spending, adjusted for growth) to arrive at an estimate of existing capacity that should be credited to new development.

Staff and consultants said the numbers in the presentation are preliminary because the city is updating its 2018 TSP; they expect the new TSP to be considered in December, after which staff will incorporate the new project lists and trip forecasts and return with final SDC recommendations. The consultants reminded the council that the calculated number represents a legally defensible maximum; the council may adopt any rate up to the calculated maximum. The presentation also noted a local practice the city is considering — tiering single-family SDCs by building footprint to align SDCs with unit sizes — and cautioned that any policy-based discounts (for example, to incentivize affordability) should be backfilled from other revenue sources if the city wishes to preserve the proportionate-share funding assumptions in the SDC analysis.

Why it matters: SDCs fund capital projects meant to serve growth rather than ongoing maintenance. The choices the council makes about project lists, growth forecasts and discounts will affect how much new development pays and which future projects are financed from SDC revenues. Staff said the SDC work will return for Council consideration after adoption of the updated TSP and an updated CIP.

What’s next: Consultants and staff expect to complete their recalculation after the TSP update is adopted; they described a realistic schedule of bringing a draft report and starting the 90-day notice period in late winter to allow for a council hearing in spring (May–June timeline presented).