Resolution No. 22-29 CITY OF TIGARD, OREGON
TIGARD CITY COUNCIL
RESOLUTION NO. 22-29
A RESOLUTION ADOPTING WATER SYS I EM DEVELOPMENT CHARGE (SDC)
METHODOLOGY
WHEREAS, Tigard Municipal Code Chapter 3.24 establishes the authority and process for imposing water
SDCs;and
WHEREAS,this chapter of the code also specifies SDC methodology shall be adopted by resolution;and
WHEREAS,water SDCs were last updated twelve years ago,in 2010;and
WHEREAS,since that time,the council adopted the Water System Plan in December of 2020;and
WHEREAS,the city recently prepared a Water System Development Charge Study;and
WHEREAS, adopting the updated SDC methodology outlined in the study will allow the use of SDC revenues
to fund council-approved water capital projects identified in the Water System Plan;and
WHEREAS, as required by state statute, a 90-day notice of intent to update the water SDCs was sent to
interested parties,and the methodology was available for public review at least 60 days prior to this meeting.
NOW,THEREFORE,BE IT RESOLVED by the Tigard City Council that:
SECTION 1: The City Council hereby adopts the water SDC methodology as outlines in the Water System
Development Charge Study attached hereto as Exhibit A.
SECTION 2: All previous water SDC methodology, including the methodology approved in Resolution
No. 10-71, is hereby replaced with the SDC methodology outlined in the attached Water
System Development Charges Study dated August 24,2022.
SECTION 3: This resolution is effective immediately upon passage.
PASSED: This 25th day of October 2022.
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City Recorder-City of Tigard
RESOLUTION NO.22-29
Page 1
CityTigardof
WATER SYSTEM
DEVELOPMENT
06. CHARGE UPDATE
Draft Report
August 24, 2022
Washington
7525 166th Avenue NE,Ste.D215
Redmond,WA 98052
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Oregon
5335 Meadows Road,Ste 330
Lake Oswego,OR 97035
503.841.6543
Colorado
PO Box 19114
Boulder,CO 80301-9998
719.284.9168
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This entire report is made of readily
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which are made from post-consumer
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Solutions-Oriented Consulting
City of Tigard Water System Development Charge Update
August 24, 2022 page ii
TABLE OF CONTENTS
Table of Contents ii
Section I. Introduction 1
I.A. Project 1
I.B. Policy 1
Section II. SDC Analysis 3
II.A. Growth 3
II.B. Improvement Fee 4
II.C. Reimbursement Fee 5
II.D. Calculated SDC 6
•FCS GROUP
City of Tigard Water System Development Charge Update
August 24, 2022 page 1
Section I . INTRODUCTION
This section describes the project scope and policy context upon which the body of this report is
based.
I.A. PROJECT
The City of Tigard(City) imposes a system development charge (SDC) to provide partial funding for
the capital needs of its water system. The current SDC is charged based on the size of the meter
necessary for a new service, measured in terms of meter capacity equivalents (MCEs). The rate is
currently $10,853 for one MCE, which is the typical charge for a single-family residence.
In 2020, the City and Murraysmith completed a new Water System Plan. Also in 2020, the City
engaged FCS GROUP to update the City's water SDC based on the capital and capacity needs of the
water system identified by the new plan.
I.B. POLICY
SDCs are enabled by state statutes, authorized by local ordinance, and constrained by the United
States Constitution.
I.B.1 . State Statutes
Oregon Revised Statutes (ORS) 223.297 to 223.314 enable local governments to establish SDCs,
which are one-time fees on development that are paid at the time of development or redevelopment
that creates additional demand for water facilities. SDCs are intended to recover a fair share of the
cost of existing and planned facilities that provide capacity to serve future users -- growth.
ORS 223.299 defines two types of SDC:
• A reimbursement fee that is designed to recover "costs associated with capital improvements
already constructed, or under construction when the fee is established, for which the local
government determines that capacity exists"
• An improvement fee that is designed to recover"costs associated with capital improvements
to be constructed"
ORS 223.304(1) states, in part, that a reimbursement fee must be based on"the value of unused
capacity available to future system users or the cost of existing facilities" and must account for prior
contributions by existing users and any gifted or grant-funded facilities. The calculation must
"promote the objective of future system users contributing no more than an equitable share to the
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City of Tigard Water System Development Charge Update
August 24, 2022 page 2
cost of existing facilities." A reimbursement fee may be spent on any capital improvement related to
the system for which it is being charged(whether cash-financed or debt-financed).
ORS 223.304(2) states, in part, that an improvement fee must be calculated to include only the cost
of projected capital improvements needed to increase system capacity for future users. In other
words, the cost of planned projects that correct existing deficiencies or that do not otherwise increase
capacity for future users may not be included in the improvement fee calculation. An improvement
fee may be spent only on capital improvements (or portions thereof) that increase the capacity of the
system for which it is being charged (whether cash-financed or debt-financed).
In addition to the reimbursement and improvement fees, ORS 223.307(5) states, in part, that "system
development charge revenues may be expended on the costs of complying" with state statutes
concerning SDCs, including "the costs of developing system development charge methodologies and
providing an annual accounting of system development charge expenditures."
1.13.2. Local Ordinance
Chapter 3.24 of the Tigard Municipal Code authorizes and governs the imposition and expenditure of
water SDCs in Tigard.
I.B.3. United States Constitution
The United States Supreme Court has determined that SDCs, impact fees, or other exactions that
comply with state and/or local law may still violate the United States Constitution if they are not
proportionate to the impact of the development. The SDCs calculated in this report are designed to
meet all constitutional and statutory requirements.
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City of Tigard Water System Development Charge Update
August 24, 2022 page 3
Section II . SDC ANALYSIS
This section provides the detailed calculations of the maximum allowable water SDC.
In general, SDCs are calculated by adding a reimbursement fee component and an improvement fee
component—both with potential adjustments. Each component is calculated by dividing the eligible
cost by growth in units of demand. The unit of demand becomes the basis of the charge. Below is an
illustration of this calculation:
Maximum Allowable
Reimbursement Improvement System
Fee Fee Development
Charge
Eligible cost of Eligible cost of
unused capacity planned capacity
in existing increasing
facilities facilities
per unit of demand
Growth in system Growth in system
demand demand
II.A. GROWTH
The calculation of projected growth begins with defining the units by which current and future
demand will be measured. Then, using the best available data, we quantify the current level of
demand and estimate a future level of demand. The difference between the current level and the
future level is the growth in demand that will serve as the denominator in the SDC calculations.
Unit of Measurement
A good unit of measurement allows an agency to quantify the incremental demand of development or
redevelopment that creates additional demand for water facilities. A better unit of measurement
allows an agency to distinguish different levels of demand added by different kinds of development
or redevelopment.
For water SDCs, the meter size necessary for a development is broadly used as a measure of its
potential water demand. In order to compare meters and calculate the total demand of the system,
meters are often compared by their flow rates and measured by their meter capacity equivalents
(MCEs). In this system, the smallest meter employed by the City has one MCE, and every larger
meter has a larger number of MCEs based on their relative flow rates. The City uses its own schedule
of flow rates to assign MCEs.
•FCS GROUP
City of Tigard Water System Development Charge Update
August 24, 2022 page 4
II.A.2. Growth in Demand
The current (2020) maximum daily water demand, representing demand for water facilities, is 14.67
million gallons per day (MGD). During the forecast period from 2020 to 2040, the water demand is
expected to grow by 5.66 MGD. If MCEs grow proportionally, 15,872 MCEs will be added during
that same period, which is the denominator of the SDC calculation. The calculations of growth are
summarized in Table 1 below.
Table 1:Growth in MCEs
Growth
20211 Growth Share
Water Demand, Max Daily Demand(MGD) 14.67 20.33 5.66 27.84%
MCEs 41,138 57,010 15,872 27.84%
Source: 2020 Tigard Water System Master Plan Table 2-8(2040 MDD);e-mail from Brian
Ginter, 07/09/2021 (2020 MDD); customer billing data(2019 MCE5).
II.B. IMPROVEMENT FEE
An improvement fee is the eligible cost of planned projects per unit of growth that such projects will
serve. Since we have already calculated growth (denominator) above, we will focus here on the
improvement fee cost basis (numerator).
II.B.1 . Eligibility
A project's eligible cost is the product of its total cost and its eligibility percentage. The eligibility
percentage represents the portion of the project that creates capacity for future users. Where possible,
specific details about a project can provide an eligibility percentage. In this case, the eligibility for
each project was calculated by Murraysmith in the City's 2020 Water System Plan.
11.6.2. Improvement Fee Cost Basis
Projects in the improvement fee cost basis were also taken from the City's 2020 Water System Plan.
Error! Reference source not found. below shows all the projects in the improvement fee cost basis. T
he eligibility for each project is shown in the Eligibility Percentage column, and the Eligible Cost
column shows that full amount of the improvement fee cost basis is $69.7 million.
•FCS GROUP
City of Tigard Water System Development Charge Update
August 24, 2022 page 5
Table 2:Water System Improvement Fee Cost Basis
Eligibility
Project Timing Cost Percentage Eligible Cost
S-1 LOT Supply Expansion 2026-2030 $ 7,876,000 100% $ 7,876,000
R-1 Reservoir 18 2021-2025 33,557,000 73% 24,608,467
R-2 Reservoir 19 2031-2040 7,552,000 100% 7,552,000
PS-1 Pump Station 8 Rebuild 2021-2025 5,038,000 28% 1,402,611
D-1 SW Burgundy Court Pressure Improvement 2021-2025 243,000 0% -
D-2 560E/640 Zone Consolidation 2021-2025 401,000 0% -
D-3 560C/560D Zone Consolidation 2021-2025 556,000 0% -
D-4 560D/560E Zone Consolidation 2026-2030 506,000 0% -
D-5 560F/560G Zone Consolidation 2026-2030 476,000 0% -
D-6 560F/530 Zone Consolidation 2026-2030 14,543,500 28% 4,049,002
D-7 560G/560H Zone Consolidation 2026-2030 1,098,000 0% -
D-8 560H/560A Zone Consolidation 2026-2030 138,000 28% 38,420
D-9 Pipe Renewal and Replacement Program 2021-2040 84,975,000 28% 23,657,575
P-1 50-year Water Distribution Seismic CIP 2021-2025 155,000 28% 43,153
P-2 ASR Feasibility Study 2021-2025 1,151,000 28% 320,446
P-3 Reservoir 8-1 Structural Analysis/Improvement 2021-2025 1,885,000 0% -
P-4 Water System Master Plan 2026-2040 600,000 28% 167,044
P-5 Water Management and Conservation Plan 2026-2040 160,000 0% -
0-2 Reservoir and Pump Station Abandonment Program 2021-2030 888,000 0% -
Total $ 161,798,500 $ 69,714,717
Source: 2020 Tigard Water System Plan Table 8-1(project list);City staff(project costs,eligbility percentages);Email from
Brian Ginter(eligibility for project R-1)
II.C. REIMBURSEMENT FEE
A reimbursement fee is the eligible cost of the water facilities available for future users per unit of
growth that such facilities will serve. Since growth was calculated in Section II.A, we will focus on
the eligible cost of the water facilities available for future users. That is, we will focus on the
reimbursable cost of existing facilities.
II.C.1 . Eligibility
To calculate the eligible cost of the City's assets available for future users, four systems of the full
water system were examined: supply, storage, pumping, and transmission and distribution. Details on
the remaining capacity of each of these systems were sourced from the 2020 Water System Plan, and
from Murraysmith where needed.
II.C.2. Calculated Reimbursement Fee Cost Basis
The reimbursement fee cost basis is the product of remaining capacity for each water system and the
eligible original cost of those systems. The eligible cost for each system is simply the original cost,
less any outside funding or outstanding principal for debt related to those systems. The eligible cost
for reimbursement is shown in row 4 of Table 3 below. The eligible cost multiplied by the capacity
for growth equals the reimbursable cost of the City's water system, which as shown in Table 3 totals
to $36.6 million.
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City of Tigard Water System Development Charge Update
August 24, 2022 page 6
Table 3: Reimbursement Fee Cost Basis
Transmission
Supply Storage Pumping &Distribution Total
Original Cost $ 36,436,236 $ 33,462,056 $ 13,183,402 $ 80,942,435 $164,024,128
Outside Funding - - - 8,916,258 8,916,258
Reimbursable Outstanding Debt 33,709,921 - - - 33,709,921
Original Cost Eligible for Reimbursement $ 2,726,315 $ 33,462,056 $ 13,183,402 $ 72,026,177 $121,397,949
Cost-Weighted Capacity for Growth 13% 40% 22% 28% 30%
Total Reimbursable Costs $ 344,706 $ 13,288,629 $ 2,940,702 $ 20,052,541 $ 36,626,578
Source: City staff(original cost,outside funding,and outstanding debt);2020 Tigard Water System Plan, Tables 4-5,5-4,
and 5-7 (capacity for growth in the supply,storage,and pumping systems);Email from Brian Ginter(capacity in the
transmission&distribution system)
II.D. CALCULATED SDC
This section combines the eligible costs from the improvement and reimbursement fee cost bases and
applies adjustments for fund balance and compliance costs. The result is a total SDC per MCE, which
can be charged to each development based on its water meter size.
II.D.1 . Adjustments
The City estimates that it has $16,052,039 in its improvement fee fund balance as of December 1,
2021. Unspent improvement fee revenue represents projects that remain unbuilt. Because these
projects remain on the project list and are part of the improvement fee cost basis, it is reasonable to
reduce this cost basis by the amount of revenue already received for those projects that remain on the
list.
Table 4: Adjustment to the Improvement Fee Cost Basis
Unadjusted Improvement Fee Cost Basis $ 69,714,717
Improvement Fee Fund Balance (16,052,039)
Improvement Fee Cost Basis $ 53,662,678
ORS 223.307(5) authorizes the expenditure of SDCs on "the costs of complying with the provisions
of ORS 223.297 to 223.314, including the costs of developing system development charge
methodologies and providing an annual accounting of system development charge expenditures." To
avoid spending monies for compliance that might otherwise have been spent on growth-related
projects, this report also includes compliance costs as a separate cost basis. The City estimates that
compliance costs will equal 5.00 percent of the improvement and reimbursement fees.
II.D.2. Calculated SDC
Table 5 below is a complete calculation of the water SDC showing the improvement fee,
reimbursement fee, and compliance fee per MCE.
•FCS GROUP
City of Tigard Water System Development Charge Update
August 24, 2022 page 7
Table 5: Calculated SDC
Cost Basis:
Improvement Fee $ 53,662,678
Reimbursement Fee 36,626,578
Total Cost Basis $ 90,289,257
Growth in MCEs 15,872
Improvement Fee per MCE $ 3,381
Reimbursement Fee per MCE 2,308
SDC per MCE $ 5,689
Compliance Fee per MCE 284
Total SDC per MCE $ 5,973
As shown above, the maximum allowable charge is $5,973 per MCE. Below is a complete schedule
for the water SDC based on meter size and the City's flow rates.
Table 6:Water SDC Schedule
Reimbursement Compliance Calculated Full
Meter Size MCEs by Meter Improvement Fee Fee Fee SDC
5/8" 1.00 $ 3,381 $ 2,308 $ 284 $ 5,973
3/4" 1.44 4,869 3,324 410 8,603
1" 2.67 9,019 6,156 759 15,934
1 1/2" 8.00 27,042 18,457 2,275 47,774
2" 12.99 43,911 29,971 3,694 77,576
3" 22.90 77,435 52,852 6,514 136,802
4" 46.97 158,810 108,393 13,360 280,564
6" 50.00 169,053 115,384 14,222 298,659
8" A 80.00 270,484 184,614 22,755 477,853
II.D.3. Comparison
This section provides comparisons for the City's current and proposed SDCs against those of
comparable jurisdictions. As shown in Table 7 below, if SDCs are implemented as proposed, the
City will have a lower water SDC than it currently charges, and will charge a middling water SDC
relative to several comparable jurisdictions.
•:4FCS GROUP
City of Tigard Water System Development Charge Update
August 24, 2022 page 8
Table 7: Water SDC Comparison
Water SDC per SFR
Hillsboro $ 13,395
Wilsonville 10,971
Tigard (Current) 10,853
Cornelius 9,449
Beaverton 9,354
Lake Oswego 9,055
Forest Grove 7,208
Newberg 6,444
Tigard (Proposed) 5,973
Tualatin 5,306
Sherwood 4,838
Portland 4,563
Milwaukie 2,041
Source: Survey by FCS GROUP, as of 7/31/2022
•FCS GROUP