Developers may begin to pay a bigger share of road costs
By Virginia Bruce
In 2008, voters in Washington County approved a measure to impose a Transportation Development Tax (TDT) that replaced the older Traffic Impact Fee. County residents had been surprised to find out what a small percentage of the actual transportation costs of new development were borne by the developers who profited from it. The TDT was designed to impose about 27% of the actual costs, with county-wide taxpayers picking up the difference. The theory behind the public support is that growth is desirable, and that we would all benefit from more businesses, houses and roads.
The TDT rates were supposed to be phased in over a four-year time period, from July 1, 2009 to 2013. But then the county, along with the rest of the US, fell into recession. Because of that, the Board of County Commissioners (BCC) adopted an Ordinance (A-Engrossed No 746) which delayed the final step-increase of the TDT rate phase-in schedule to as late as July 1, 2015. The Board reviewed and continued the delay in votes in April 2013 and March 2014. The majority of the BCC felt that developers would be hesitant to build if they had to pay their full 27%.
Now, with development booming, and pressure building for the county to address the condition of our roads, they feel the time is right to finally implement the final step increase.
In addition to fully implementing the 27% TDT, the BCC plans to make permanent a discount of the TDT for development applications that are considered to be a “Change-In-Use.” This occurs when a structure or property that already exists is going to be remodeled or otherwise changed for a new use. For example, if a building had been a retail store, and a developer wanted to change it to a manufacturing facility, where the traffic impact would be similar or less than the previous use, the TDT that the developer must pay will be discounted.
Discount eligibility is limited to buildings at least three years old that are changing to certain commercial, industrial or office uses. Discounts are applied to the first 5,000 square feet of floor area, and are calculated at 50% for buildings three years or older, and 75% for buildings 20 years or older. The discount was to expire on June 30, 2015, however the new ordinance proposes to make this discount available permanently.
From the draft ordinance 793: “The effect of these changes in Code will result in an increase in the TDT rates to the rates approved by the voters in 2008, and will result in a continued decrease in the TDT for development qualifying as a change in use. It is necessary and desirable to enact these and other minor housekeeping changes which do not increase the level of the tax beyond the rates approved by the voters or reduce exemptions from the tax.”
Developers have the option of deferring payment of the TDT until the development is occupied. The new ordinance also locks in TDT rates that were in effect at the time the building permit was issued, even if rates change when the development is finally occupied.
Ordinance 793 had its first reading at the BCC meeting on July 15, where recently re-elected Commissioner Bob Terry moved to put the change off for another month. He was concerned that developers would abandon projects that they had started if they had to pay the full 27%. (Terry, according to information on the Oregon Secretary of State’s OreStar reporting system, received a large portion of his campaign funding from the development community.) The second reading and first public hearing is scheduled for the August 5 BCC meeting (10 am in the auditorium at the County headquarters in Hillsboro). If the BCC votes to approve the ordinance at that meeting, the changes become effective on October 4, 2014.
There may be a connection between the full implementation of the TDT and the proposed vehicle registration fee that will come before the voters in November. After all, who’s going to vote for a fee increase when we see that developers aren’t paying their “full” share of transportation costs?
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