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Committee refers ordinance authorizing system development charge financing and related liens to council
Summary
The Finance Committee heard staff explain a package of loans and liens that allow property owners to finance system development charges, private plumbing loans and safety-net deferrals; the committee voted to refer the ordinance to full council with a recommendation to pass.
The Finance Committee on Monday referred to the full City Council an ordinance that authorizes the city to process financing and liens related to system development charge (SDC) contracts, private plumbing loan contracts and safety-net loan deferral contracts.
Chief Financial Officer Jonas Berry said the package is a routine, typically annual set of actions that authorize the city to process low-cost financing and liens for property owners who arrange financing with SDC bureaus. Salida Holt of the Revenue Division and Sherry Matias (online) explained the program and answered committee questions about who uses the financing and how it is structured.
Holt described the city code authority that allows property owners to finance SDCs and sewer improvement fees through the city and explained the Revenue Division assesses the contracts and records liens when appropriate. Matias said many participants are developers building housing that includes units targeted for lower-income households; other participants are private property owners undertaking upgrades. The ordinance before the committee included 279 liens assessing $3,545,395.04 in system development charge fees, according to staff.
Committee members asked about borrower eligibility, interest rates and historical default experience. Matias said many contracts are 20-month deferrals made interest-free under a council action from a prior year; others use the city's interim interest rate (staff cited 6.2% at the time of the meeting) or the previously used 5.2% rate. Staff said they would follow up with specific answers about qualification criteria for owner-occupants and about how interest revenue flows into city budgets.
Members asked whether the program has experienced developer defaults; staff said there have been instances of late payment and that staff can set up payment plans, and that staff would provide any historical default details in follow-up materials. Councillors asked staff to report back before final council action with details on default risk and where interest revenue is recorded in the budget.
Vice Chair Burghini moved and Councillor Novick seconded a motion to refer the ordinance to City Council with a recommendation for passage; the committee recorded the referral as approved and the matter will appear on the full council agenda for final action.
