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City manager explains system development charges, upcoming TSP update and major wastewater project
Summary
City manager presented how one‑time System Development Charges (SDCs) pay for capital projects, described eligibility rules and examples, and said the city will update its Transportation System Plan next year; staff cited a pending $30 million oxidation‑ditch wastewater project as an example of SDC‑funded capacity work.
The city manager explained at a Traffic Safety Commission meeting that system development charges are one‑time fees paid by developers to fund capital projects that expand system capacity, not ongoing utility rates. “They are 1 time charges. They are not ongoing rates,” the manager said.
The presentation described how SDCs cover both a reimbursement portion (existing system capacity) and an improvement fee (planned projects in a roughly 20‑year planning horizon). The manager said SDCs are applied as a percentage of the total project cost at the time a project is identified; that percentage remains the same even if inflation increases the cost before construction. “So it is always 21% of the cost of the whole project,” the manager said when explaining an example percentage.
Why this matters: SDCs are a primary way Newberg spreads the cost of growth‑related infrastructure across new development, but they rarely fully fund a project. The manager noted the city updates its SDC model every two years to remove completed projects and keep charges aligned with planning assumptions.
Details and examples: The manager walked commissioners through typical eligibility: routine maintenance and lateral repairs generally are 0% SDC‑eligible; projects that increase capacity can be 50–80% eligible depending on the element. For a large wastewater expansion the manager described as an “oxidation ditch,” staff expect significantly higher eligibility — and he cited a project cost figure in the neighborhood of $30,000,000 as an example of the scale the city is planning for.
Staff said the Transportation System Plan (TSP) will be updated next year and noted the city had previously sought grant funding for that work. After a grant application failed this year, the manager said the update will be paid from the CIP next year if necessary.
Commissioners asked how the percentage translates into cash on hand when inflation drives project costs above the originally estimated amount. The manager said SDCs pay the eligible percentage of the actual project cost, but the city can run into situations where eligibility exceeds available SDC revenue and general CIP funds must help cover the remainder.
What’s next: Staff encouraged interested commissioners to attend upcoming rate‑review meetings where the SDC models and assumptions are reviewed in greater detail. The commission did not take formal action on SDC policy at the meeting.
Quoted sources: City manager (presenter).
