Astoria council weighs SDC deferral to ease upfront costs for housing projects

The Astoria City Council spent more than an hour March 2 debating a staff-proposed system development charge (SDC) deferral program intended to ease up-front costs for certain housing and development projects.

Councilor Andy Davis, who introduced the policy discussion, said the proposal would offer flexibility to developers by shifting SDC payments from permit issuance to later milestones such as a temporary or final certificate of occupancy. "Deferrals give us an opportunity to try and meet some developers halfway who might be interested in putting a project out but are not able to pencil out a marginal project because of carrying costs associated with our SDCs," Davis said. He urged council to allow staff discretion to set timelines and administrative terms.

City staff recommended limiting a program by piloting it, restricting eligibility to deed-restricted or workforce housing or to projects where SDCs would have a material impact (for example, 10 or more units), and requiring a mechanism to ensure payment at collection time rather than at permit. City Manager Scott Spence said staff would propose ordinance language, consider surety or collateral, and recommend limiting the initial pilot to two projects to preserve staff capacity.

Community Development Director John Roberts cautioned that deferral programs can be administratively heavy and carry risk. "We're just not even 11 months in to administering [SDCs]," Roberts said, warning that in Astoria a significant number of developments remain at temporary certificate-of-occupancy status and that tracking deferred obligations can strain a small staff. He reported that recent records review identified "over 520 TCOs," underscoring the city’s existing permitting backlog.

Several councilors raised additional concerns and options: Councilor Mozzarella favored piloting and also suggested an interest or contract-based approach so the city would not become a long-term lender; Councilor Conklin warned that limiting eligibility only to housing might exclude beneficial change-of-use projects for vacant buildings; Councilor Adams emphasized the need to precisely define terms such as "deed-restricted affordable housing."

A member of the public, Jim Spence, suggested requiring a bank letter of credit as security so the city could draw funds if a deferred payment were not made.

Councilors expressed a mix of support and caution but did not vote to enact a program that night. Instead, they asked staff to draft ordinance language and return with a recommended pilot structure and details, including proposed surety mechanisms and administrative cost recovery. The council did not adopt any amendments or waivers on the spot; staff and council agreed on a narrower pilot and additional public and developer outreach before any ordinance hearing.