Just after the Central Oregon Business Index turned down in the first quarter, the city of Bend is considering an additional fee on commercial and industrial development.
The Bend City Council has an aggressive goal for housing by July 2021 — permits for 3,000 new units. Some of that construction is already happening. But city staff has been coming up with a range of options to speed up housing.
Some of them are good. Some of them are not.
One that is not is the proposed new fee. The example used at the city’s affordable housing committee meeting Wednesday was an additional perhaps 0.67% fee put on the building permit valuation of commercial and industrial developments. There is already a similar fee of 0.33% that the city has on all building permits. That money goes into the city’s affordable housing fund. The new fee might raise more than $1 million a year, according to the city.
That additional revenue could be spent at the council’s discretion — based on options submitted by developers or the city. It might be spent on infrastructure that helps pave the way so new housing can be built.
For instance, the city says the intersection at Neff and Purcell needs about $4 million in improvements. The way the city code is written, if you wanted to build a big new apartment building near that intersection, you would have to come up with that $4 million in addition to the cost of your project. That torpedoes the apartments. The money raised by the new fee could build up and be used to defray the intersection costs so that a needed housing project could move ahead.
But the city’s answer doesn’t have to be more taxes and fees. The better option would be to waive or loosen the city’s code that creates the problem in the first place. City staff are planning to bring that option to the council, as well.
In the Neff/Purcell example, instead of the city adding a new fee to help pay for the improvement, the city could change its rules. The city already has lists of infrastructure projects it believes it is going to need in the future. Neff/Purcell is on the list. It already collects money through system development charges to build those projects. The council could decide to allow more congestion at Neff and Purcell for now because the community’s greater need is for a new apartment complex that creates more housing in Bend. Bend shouldn’t try to tax its way to more housing. That just drives up costs for everyone. The permit fee proposal sounds like nothing more than a poorly disguised SDC increase.