Two years ago, following the calamitous bust of the real estate bubble, the Bend City Council voted to give local builders and developers a break on their SDCs. SDCs - Systems Development Charges - are fees paid to help cover the cost of improvements to roads, sewer systems and other stuff made necessary by development.
Under the resolution the council passed, a builder doesn't have to pay SDCs up front. Instead he can wait nine months or until an occupancy permit for the new structure is issued, whichever comes first. The city gets a lien on the property in case the builder doesn't pay up. The deal essentially amounts to a nine-month, interest-free loan for the builder.
At the end of August 2009, the SDC deferral plan expired. The council voted to extend it for one year. And last week, with the deferral about to expire again, the council unanimously voted to extend it for yet another year, to the end of August 2011.
The deferral was a dumb and irresponsible idea in 2008, it was even dumber in 2009, and it's dumber yet in 2010. Here are three reasons why:
First, the deferral deal costs money that the city can ill afford to throw away in these Great Recessionary times. Okay, only 26 builders have taken advantage of the deal so far and a little over $300,000 was deferred, about $102,000 of which has not yet been paid. That's not an enormous sum, but it's still enough to fix a few potholes or pay a couple of cops.
Second, the program hasn't worked. It hasn't reignited the building boom or revived the local economy. The unemployment rate in Bend and Deschutes County is higher now than it was two years ago.
The program hasn't worked because it doesn't address the real problem, which is a basic one of supply and demand. There are more houses and commercial buildings on the market here than there are people willing and able to buy them. Encouraging builders to build more won't get us out of this hole - in fact, it could just dig it deeper.
Third, the SDC deal shows favoritism. Yes, times are tough for builders, but they're tough for everybody. If builders get to defer their SDCs, why isn't the city letting restaurants or clothing stores or book stores whose sales are down defer their property taxes? (Obvious answer: because they don't have a powerful organization like the Central Oregon Builders Association to lobby city officials and contribute generously to council campaigns.)
It's too much to hope that the council will see the light and realize it should repeal the SDC deal ASAP, so we're probably stuck with this turkey for another year.
But we can give it THE BOOT (again) in the hope that it won't get a third renewal in 2011 - and that the Bend Metro Park and Recreation District, which is thinking about giving builders a similar deal, will see how stupid and unfair it is.