System Development Charges

System Development Charges
In March 2008 the City of Cottage Grove hired FCS Group to perform a comprehensive study of City utility rates (water, wastewater and stormwater) and system development charges (SDCs) for water , wastewater, stormwater, streets and parks.   Volume II of the study relating to System Development Charges is complete and provided in the adjacent table.  

What is a System Development Charge?
A system development charge (SDC) is a one-time fee imposed on new or some types of re-development at the time of development. The fee is intended to recover a fair share of the costs of existing and planned facilities that provide capacity to serve new growth.

Oregon Revised Statute (ORS) 223.297 - 223.314 defines SDCs and specifies how they shall be calculated, applied, and accounted for by local government. By statute, an SDC is the sum of two components:

• a reimbursement fee, designed to recover costs associated with capital improvements already constructed or under construction; and
• an improvement fee, designed to recover costs associated with capital improvements to be constructed in the future.

The reimbursement fee considers the cost of existing facilities and the value of unused capacity in those facilities. The calculation must ensure that future system users contribute no more than their fair share of costs for existing facilities. The improvement fee calculation considers the cost of future capital improvements to increase system capacity. The costs of planned projects that correct existing system deficiencies and do not increase capacity are not included in the improvement fee calculation.

SDC Calculation:
In general, an SDC is calculated by adding the reimbursement fee component to the improvement fee component. A sample calculation is shown below.

The System Development Charges Study is listed below by section.  Sections can be opened by selecting the section heading or the entire study can be downloaded by using the link at the bottom.