Builders Challenge Portland, Ore. Parks Fees

PORTLAND, Ore. (CN) - Builders groups sued Portland, Ore., claiming new fees on development are an unconstitutional means to build an "enormous slush fund" for the city's parks program.

The Portland Metropolitan Association of Realtors and six other trade groups, including the Oregon Association of Realtors, claim the city did not identify how it will spend its "windfall," as required by Oregon law. They asked the Multnomah County Court to toss out the new rules.

The builders challenge Portland's Ordinance 187150, which the City Council adopted on May 27. They say the law imposes new fees "on virtually all new construction in the city ... at a time when housing prices are already unaffordable for many in our community."

Portland real estate prices suffered less, perhaps, than any other major city's during the Great Recession. Portland is recognized for its urban planning and revitalized downtown.

But the builders say the new law "dramatically changes the methodology for calculating improvement fees," and will bring the city more than $50 million a year, "approximately twice the fees generated under the current methodology."

The System Development Charges (SDCs) on developments provide funding for Portland Parks and Recreation. City Commissioner Amanda Fritz introduced the new fees and Mayor Charlie Hales supported it. Fritz said in a statement that the fees are were "more equitable" than previous assessment methods.

"These Parks SDC changes are for new development," Fritz said. "They do not impact existing homes. They provide for a more equitable collection of Parks SDCs which will help ensure that money will be available to provide needed parks and recreation facilities to serve Portland's growing community."

In the July 24 lawsuit, the builders acknowledge that "(t)he City has the right to assess fees and SDCs on its citizens. This is a powerful right that is carefully guarded by checks and balances. This petition is about the city's attempt to sidestep these rules and procedures to create an enormous 'slush fund' for use by the city for its parks system."

Dave Nelson, CEO of the co-plaintiff Home Builders Association of Metropolitan Portland, said the fees would add "thousands of dollars" to the cost of a 1,800-square-foot house.

"Our industry supports parks, but this questionable methodology goes beyond making development pay its fair share," Nelson said in a statement. "It is flawed, unbalanced, inequitable and significantly hurts housing affordability. It doesn't take into account existing deficiencies in the parks system, doesn't use accepted standards for defining capacity improvements, and puts monstrous charges on new homeowners, renters and businesses that current residents never had to pay. It's simply a huge slush fund on the backs of new home owners and renters."

The builders claim that fees for nonresidential construction will increase by more than 300 percent. They want the ordinance annulled. The new fees will take effect on July 1, 2016.

The 33-page lawsuit includes another 116 pages of attachments dealing with Portland parks and homes.

The builders are represented by Paul Conable with Tonkon Torp.

Here are the plaintiffs: Portland Metropolitan Association of Realtors, Home Builders of Metropolitan Portland, Building Owners and Managers Association of Oregon, NAIOP Oregon Chapter, Portland Business Alliance, Commercial Association of Brokers Oregon/Southwest Washington, and the Oregon Association of Realtors.

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