Editorial: Bend's SDC deferral program should be extended

In 2008, the city of Bend gave builders a break by allowing them to delay payment of system development charges, better known as SDCs. The move was a response to the economic troubles that were devastating the construction industry, and the city is now considering extending the program for two more years.

It’s a smart move, likely to nourish the budding recovery that promises to bring so many benefits to the city.

SDCs are designed to pay for infrastructure costs caused by development. The deferral program allows builders to pay the fees for transportation, sewer and water impacts nine months later, or when an occupancy permit is issued, whichever comes first. The builder must first make application, which must be approved by the city’s finance department, and a lien is placed on the property for the amount of the deferred SDCs. Failure to pay can bring fees and interest payments.

In its report to the City Council, staff cites the program’s positive stimulus effect, as the SDCs, which average $14,000, go directly into payroll and purchases in the local economy. The staff report says the deferrals provide flexibility and financial relief to builders, which could help a local economy that is “particularly dependent on development activities.”

The report also acknowledges that the program causes extra work for city staff and slows the flow of funds into the city. Nonetheless, the city administration recommends extending the program.

The deferral program has been used 57 times in the last two years, the city reports, primarily for the construction of affordable and entry-level homes. There have been no defaults, and staff time is described as minimal. The extension is backed by the Central Oregon Builders Association and the city’s Affordable Housing Committee. A letter of support says the program is also used extensively by nonprofit developers such as Bend Area Habitat for Humanity.

The City Council will hold a public hearing on the extension at its regular meeting Wednesday, which we hope will be followed by swift approval.