Salem updates construction fees to add parks, help transportation

A man and woman look out at Minto-Island Brown Park in early winter. (Caleb Wolf/Special to Salem Reporter)

Salem officials are bumping up some costs of building new homes in the city to pay for more parks and traffic improvements.

Salem City Council on Monday approved changes to its system development charges, which builders pay the city during construction and the city then uses for roads, parks, sewers and other infrastructure. The fees do not benefit the city’s general fund.

A seven-member committee has worked since June 2017 to change the prices of the fees and how the fees are applied. City council approved the changes unanimously. The updates will be phased in over the next two years.

Under the new fees, projects for everything from new single-family homes to apartment complexes to commercial construction will pay more for parks and transportation. An 80-page report released ahead of the meeting showed a new, single-family home will cost about $2,000 more.

READ: The proposed changes to Salem’s system development charges.

Councilor Tom Andersen chaired the committee, alongside some people within the development industry, and members of the planning commission and the Salem Parks and Recreation Advisory Board.

Andersen said committee members were conscious to strike a balance between helping city roads and parks without hampering builders with too many costs, who would then pass the costs along to buyers or renters.

“What is fair to the builders? What is fair to the homeowners?” he said. “After incremental cost, after incremental cost, after incremental cost – are you pricing yourself out of the market?”

The committee’s concerns according to Andersen were reflected at council Monday night. While councilors agreed to raise the fees, many mentioned they did not want to stifle construction of more housing.

“We don’t want to do it at such a rate that we scare people off or that Salem becomes known as ‘it’s too expensive to build there’ so you aren’t able to have the housing ability that we do need,” Councilor Cara Kaser said. “That’s a tough decision though, too, because I see the need for having those increases, also, so we can have better development in our community.” 

Although builders face higher permitting costs, they also get some breaks, said Mike Erdmann, CEO of the Home Builders Association of Marion and Polk Counties. Erdmann also sat on the committee. Some of the costs associated with in-fill development will lower, he noted.

“I think we’re always concerned about fee increases and how they affect housing affordability, but at the same time we recognize the fees have not been updated in a few years,” Erdmann said. “And I think we all agree the process was a fair one, and the number is something we can all agree upon.”

Builders will likely pass the cost down to the homebuyers, Erdmann said. Andersen noted homebuyers will likely to spread those costs over a 15- or 30-year mortgage.

According to the report published ahead of the meeting, the city will get twice as much money for transportation projects and almost 25 percent more for parks.

Parks and transportation will also benefit because the committee removed restriction on how the city could use its fees. The old fees usually required the city to spend some general fund dollars, or else spend no money whatsoever. The rule often stalled plans for parks, for example, if the city did not have general fund money.

“I think it’s a source of frustration for people to move in (near a park), only for years later to find out that park has not been developed,” Erdmann said.

For parks, the city is currently sitting on about $9 million that it can spend. The new rules allow the city to spend that money more freely, said Glenn Davis, Chief Development Engineer.

The city owns about 877 acres of park property, according to the report, of which about 577 acres still needs to be developed. The fee changes will allow the city to develop 244 acres over the next 20 years.

“The community has already decided it wants more parks under the planning process and this is a way to more effectively implement those goals,” he said, referencing the city’s Comprehensive Park System Master Plan, which was last updated in 2013.

Like Erdmann, Andersen stressed that the committee came away feeling they worked well together.

“I really appreciated the way all of us from differing points-of-view worked together in a respectful manner,” Andersen said. “I appreciated very much the give-and-take and the public spirit and public service.”

Have a tip? Contact reporter Troy Brynelson at [email protected], 503-575-9930 or @TroyWB.