“Every home owner will need to pay in excess of $500,000 to build out Damascus.”
This was a statement made by the leader of Ask Damascus in his questions to the DLCD’s director, Richard Whitman during the February 22nd City Council meeting. This is not the first time I have heard him make this claim and I have heard others make this claim as well.
Is this statement accurate?
Is this informing the citizenry with facts?
Or is it misleading the citizenry?
Personally I feel those who are making this claim are misleading the citizens and there are plenty of red flags which make me suspect of such claims:
- Red Flag 1 – The Comp Plan does not contain cost figures so how can they make such accurate sounding claims?
- Red Flag 2 – The Tashman Report’s scope, providing the most comprehensive infrastructure cost projections includes area larger than Damascus’ city limits.
- Red Flag 3 – Claims use today’s housing / population base; not the expected growth projections
- Red Flag 4 – Not able to reach $500,000 per household to corroborate the claims
- Red Flag 5 – The false assumption and expectation that this will be completely paid by the citizens
- Red Flag 6 – The figures simply do not add up. Even if figures matched the claim, they do not account for development offsets, relieving citizens of the total cost burden.
- Red Flag 7 – Rome wasn’t built in a day. Costs are projected over a 20 year development cycle.
If you wish to understand how I arrived at each of the seven “Red Flags”, all of the details may be found below.
My suggestion, is if presented with this claim, is to ask the following questions:
- “How do you determine the facts behind your claim?”
- “From where (such as reports) do you determine the costs claimed?”
- “How many home owners are you talking about to determine $500,000 per household?
- “What is being done to identify grants or other “Impact Fees” to offset the burden that would be placed upon Damascus citizens?
Because of my research and the above items of what I have been able to ascertain, the claim of homeowners having to pay $500,000 is:
- Designed to mislead citizens about the current comp plan recently submitted to the DLCD
- Designed to create fear in the current comp plan recently submitted to the DLCD
Because:
In researching the following documents:
- Damascus Comprehensive Plan submitted by the City of Damascus to the DLCD
- Tashman Report
- Damascus/Boring Concept Plan
I am not able to determine where such claim is based in fact. From what I am able to ascertain:
- The costs are rounded up for maximum “marketing” impact
- Assumes all current Damascus homeowners will pay for all future infrastructure development making infrastructure development free for all those who will move to Damascus in the future.
- Naively removing funding sources from offsetting citizen costs
My reasons for making such assertions are laid-out below.
Background:
In an earlier post, titled “DLCD Presentation Summary from February 22 City Council Meeting”, one citizen, when questioning DLCD’s Director, Richard Whitman said (in referring to the cost of building out the City), “Now what that works out to is in excess of $500,000 per household here in Damascus.” I have heard others recently make this same claim. In his question this particular citizen refers to Metro and a price tag of around 3 billion dollars. I have also heard the figure to be 1.6 billion dollars. So the price tag is somewhere potentially between $1.6 billion and $3 billion to build the City’s infrastructure. However the $500,000 per household seems constant by those who mention the figure. When this comment comes up it tends to be around the current comp plan that was submitted by the City in 2010, which the DLCD is currently reviewing and which the LCDC will soon comment on.
Current Comp Plan:
In an earlier post titled, “City Adopts Comprehensive Plan”, the City submitted the Comp Plan that has been worked on since 2006 (please see earlier post titled, “Brief History of the City’s Comprehensive Plan”) to the DLCD, based on state law (see post titled, “Why the need for a Comp Plan”). The current comp plan submitted by the City in December 2010 was designed to provide a “broad brush” of how the city should look. No figures as to infrastructure buildout are provided in the current Comp Plan.
In the Beginning:
Before voters voted to incorporate Damascus into a City, conversations about the Urban Growth Boundary moving out to this area started in 2000. Prior to incorporation Clackamas County, in conjunction with Oregon Department of Transportation, developed what is called the Damascus/Boring Concept Plan, [pdf] a plan completed in February 2006 and prepared by Clackamas County, Metro, ODOT and OTAK.
The Tashman Report
In researching for figures on how such claims can be made about each homeowner needing to pay $500,000 to build out the City’s infrastructure, the only figures I can find which discuss such costs can be found in a report submitted in July, 2003 by Jeff Tashman, of Tashman Johnson LLC. The formal title of this report is the “Report on the Preliminary Infrastructure Financial Analysis: Damascus/Boring”. [pdf] For purposes of clarity and simplicity I will refer to this report as the “Tashman Report”.
The Tashman Report was based upon the the Damascus/Boring Concept Plan [pdf] that was prepared in 2003, which was before Damascus citizens voted for incorporating into a City in 2004. The Tashman Report was based upon information prepared in the Damascus/Boring Concept Plan which was developed by Clackamas County and the Oregon Department of Transportation.
Why am I suspect of such comments?
There are several reasons why such comments raise red flags for me regarding the “$500,000 per household” claim.
Red Flag 1 – The Comp Plan does not contain cost figures so how can they make such accurate sounding claims?
While people ask how much it will cost is a valid question, it is puzzling to hear that the current comp plan will cost each homeowner $500,000. How do they know when the current comp plan does not include pricing?
Red Flag 2 – Tashman Report’s scope, providing the most comprehensive infrastructure cost projections includes area larger than Damascus’ city limits.
One of the red flags made by such statements is understanding the scope of the Tashman Report. The scope of the Tashman Report included areas which are now incorporated by the City of Happy Valley, the area currently incorporated by the City of Damascus as well as the Boring area up to highway 26.
As can be seen the financials from this report include costs associated with building infrastructure for an area that is larger than the City of Damascus. Therefore, the overall costs should actually be less when looking at the area only within the city limits of Damascus. However, with that said I will continue with the figures provided by the Tashman Report as I am not able to reduce the figures for Damascus only.
Red Flag 3 – Claims use today’s housing / population base; not the expected growth projections
If we go back to the Damascus/Boring Concept Plan that was developed before citizens voted for incorporation, upon which the Tashman Report is based, the concept plan was geared around providing growth for an additional 50,000+ citizens in over a 20 year period. If our current population is around 10,000 citizens with 4,351 tax lots, of which not all lots contain a home, development to support 50,000 citizens will mean a substantial increase in homes along with a substantial increase in tax lots due to development and the subdividing of lots. So if anything the supposed $500,000 figure would be watered down significantly. How can I say that? See the next red flag.
Red Flag 4 – Not able to reach $500,000 per household to corroborate the claims
Using $1,851,250,639 as the figure, as derived from the Tashman Report, how does one derive $500,000 per home owner? The simple way would be to divide $1,851,250,639 by $500,000 to derive the number of home owners.
This calculation results in 3,703 home owners who will have to pay $500,000 to equal the total figure of $1,851,250,639. HOWEVER, there are 4,351 tax lots in Damascus. The infrastructure buildout will only be paid by 3,703 homeowners? Does this mean that there are no homes on the other 648 tax lots? So only those with homes on their property are to pay? This doesn’t make sense.
Outside of the Tashman Report, but within the Damascus/Boring Concept plan itself there are some high-level figures with regards to cost. If we look at the costs within the Damascus/Boring Concept plan we get:
- Complete Road System: $1,900,000,000 to $2,210,000,000
- Major Transportation Facility: $320,000,000 to $630,000,000
- Regional Trails: $7,300,000
- Regional Transit: $466,000,000 to $683,000,000
- Parks: $360,765,000
- Schools: $261,504,000
- Wastewater: $150,000,000
- Stormwater: $70,000,000
- Fire Protection: $15,050,000
When you look at the figures provided from the Damascus/Boring Concept Plan you wind up with anywhere from $3,976,280,500 to $4,813,280,500. Running either figure through our algorithm yields either $500,000 paid by 7,953 homes or 9,627 homes.
- $3,976,280,500 / $500,000 = 7,953 homes
- $4,813,280,500 / $500,000 = 9,627 homes
- $1,851,250,639 / $500,000 = 3,703 homes (earlier algorithm using figures from the Tashman Report.)
According the to the Damascus/Boring Concept plan they project NEW dwelling units at:
- 20,458 new homes based on a population of 54,836 people.
- 36,191 new homes based on a population of 95,000 people.
- 30,052 new homes based on a population of 80,000 people.
- 33,804 new homes based on a population of 89,000 people.
- 29,415 new homes based on a population of 78,000 people.
Also, according to the Damascus/Boring Concept Plan, they define a “dwelling unit” as being made up of 2.5 citizens. With that said, if we take Damascus’ current population of 10,539 citizens that would equate to 4,216 homes. So let’s do some math to see if we can get anywhere to the claims being made.
- $3,976,280,500 / 4,216 homes = $943,141
- $3,976,280,500 / 20,458 homes = $194,363
- $3,976,280,500 / 36,191 homes = $109,869
- $3,976,280,500 / 33,804 homes = $117,628
- $3,976,280,500 / 29,415 homes = $135,179 (includes current homes of 4,216)
- $3,976,280,500 / 24,674 homes = $161,153 (includes current homes of 4,216)
- $3,976,280,500 / 36,191 homes = $109,869 (includes current homes of 4,216)
- $3,976,280,500 / 33,804 homes = $117,628 (includes current homes of 4,216)
- $3,976,280,500 / 29,415 homes = $135,179 (includes current homes of 4,216)
- $4,813,280,500 / 4,216 homes = $1,141,670
- $4,813,280,500 / 20,458 homes = $235,276.20
- $4,813,280,500 / 36,191 homes = $132,996.62
- $4,813,280,500 / 33,804 homes = $142,387.90
- $4,813,280,500 / 29,415 homes = $163,633.54 (includes current homes of 4,216)
- $4,813,280,500 / 24,674 homes = $195,075.00 (includes current homes of 4,216)
- $4,813,280,500 / 36,191 homes = $132,996.62 (includes current homes of 4,216)
- $4,813,280,500 / 33,804 homes = $142,387.90 (includes current homes of 4,216)
- $4,813,280,500 / 29,415 homes = $163,633.54 (includes current homes of 4,216)
(Same calculations using buildout totals coming from the Tashman Report)
- $1,851,250,639 / 4,216 homes = $439,101.20
- $1,851,250,639 / 20,458 homes = $90,490.30
- $1,851,250,639 / 36,191 homes = $51,152.24
- $1,851,250,639 / 33,804 homes = $54,764.25
- $1,851,250,639 / 29,415 homes = $62,935.60 (includes current homes of 4,216)
- $1,851,250,639 / 24,674 homes = $75,028.40 (includes current homes of 4,216)
- $1,851,250,639 / 36,191 homes = $51,152.24 (includes current homes of 4,216)
- $1,851,250,639 / 33,804 homes = $54,764.25 (includes current homes of 4,216)
- $1,851,250,639 / 29,415 homes = $62,935.60 (includes current homes of 4,216)
So out of all of those calculations, the only thing that remotely comes close to $500,000 per home is if all of the existing homes in Damascus pay for all of the City’s infrastructure and new residents do not pay for anything! This makes no sense.
Red Flag 5 – The false assumption and expectation that this will be completely paid by the citizens
“Impact fees” were designed to help provide other sources of funding so residents would not have to pay for EVERYTHING regarding a city’s growth.
In the Tashman Report such Impact Fees could be temporary bonds (which are always voted on by citizens for acceptance). With regards to development one of the most common forms of Impact Fees are System Development Charges, [pdf] or “SDCs”.
In Oregon SDCs may be used for:
- Water supply, Treatment and Distribution
- Wastewater collection, transmission, treatment & disposal
- Drainage and flood control
- Transportation
- Parks and recreation
An impact fee is:
“An impact fee is a fee that is implemented by a local government on a new or proposed development to help assist or pay for a portion of the costs that the new development may cause with public services to the new development within the United States. They are considered to be a charge on new development to help fund and pay for the construction or needed expansion of offsite capital improvements. These fees are usually implemented to help reduce the economic burden on local jurisdictions that are trying to deal with population growth within the area.”
“Based on Oregon law, SDCs [pdf] may consist of a reimbursement fee (to recover existing facility capacity available for growth), an improvement fee (to recover planned capacity improvements for growth), or both. In many cases, both components are needed to fully recover capacity costs needed to serve growth.”
“The SDC methodology is based on a recently adopted capital improvement or facility plan that projects needed improvements for a minimum of 10 years to serve existing and future growth as defined by the comprehensive plan.”
- Parks
- Transportation
- Water
- Sewer
- Stormwater
“During the past decade, communities across the country have turned to system development charges (SDCs) as a principal source of revenue for funding infrastructure system facilities.”
SDCs can play a strong role in offsetting infrastructure development costs associated with development. In the Tashman Report they identified SDC’s can provide offsets to the tune of $532,520,451.
If we look at the infrastructure costs as based in the Tashman Report, the associated SDC offset was projected to be as follows (over a 20 year period):
- Water: $176,700,730 — Water:
- Waste Water Management: $249,377,574 — Waste Water Management
- Surface Water: $192,952,405 — Surface Water
- Roads: $660,819,625 — Roads
- Phasing Roads: $ 899,018,061 — Phasing Roads
- Parks: $79,738,031 — Parks
- Schools: $223,682,645 — Schools
- Libraries: $29,781,193 — Libraries
Red Flag 6 – The figures simply do not add up. Even if figures matched the claim, they do not account for development offsets, relieving citizens of the total cost burden.
When reading the Tashman Report the report does identify projected costs of a build out that will occur over the period of 2005 to 2024. If we were to use the figures in the Tashman Report and pay up all in one lump sum, there would be costs for the following:
- Water
- Waste Water Management
- Surface Water
- Roads
- Phasing Roads
- Parks
- Schools
- Libraries
The costs for each of the above items as totaled in the Tashman Report are as follows:
- $176,700,730 — Water
- $249,377,574 — Waste Water Management
- $192,952,405 — Surface Water
- $660,819,625 — Roads
- $ 899,018,061 — Phasing Roads
- $79,738,031 — Parks
- $223,682,645 — Schools
- $29,781,193 — Libraries
Keep in mind while Damascus takes in the majority of the area analyzed in the scope of the report, the above figures take in areas currently within the City of Happy Valley as well as Boring up to highway 26.
But given the above figures for development in the above categories over a 20 year period, the total comes to $1,851,250,639.
The Tashman Report also identified other forms of funding that may serve to offset development
True, funding at the time the Tashman Report was produced is more limited than what may be available today, but the key is to identify what SDCs and grants are available to offset costs associated with development.
It should be noted that Ask Damascus initiated a ballot measure in the November 4, 2008 vote regarding SDCs. Ballot Measure 3-328, as noted by then Damascus City Manager, Jim Bennett, in the City’s monthly newsletter [pdf]:
“This measure covers System Development Charges, commonly referred to as SDCs. These are charges that can be assessed to new developments within the city to help to pay for the cost of building the infrastructure needed to serve these developments. This includes streets, water, sewer, storm drains, and parks. These are the only types of improvements that can be paid for with SDCs and are regulated by state law. Such developments include everything from a new single family home, to an apartment building, to a public, commercial, or industrial building.
The city does not currently have any System Development Charges in place. It takes time for a city to create an SDC. Let’s use a city water system as an example. First, we have to design the system that will serve the entire city. We have to figure out how many homes, businesses, schools, and so on, are going to use the system. We have to figure out how much it will cost to build the system. Then we can determine how much each type of development would need to pay to help build the system.
If Measure 3-328 is approved, it would allow the city to set up a System Development Charge program that determines what the appropriate SDC should be for each type of development and to assess these SDCs to new development as it occurs in the city. If the measure is not approved, the city would need to use other city resources such as property taxes for developing public infrastructure or propose a new way to pay for it that could be submitted to the voters of Damascus for consideration.”
The vote results for measure 3-328 were 2,972 (or 57.02%) “no” and 2,240 (or 42.98%) “yes”. What this means is the City will not be able to establish or charge SDC to developers. As of today the burden, or cost of development falls upon its citizens. If an SDC is to be charged it will need to be determined and then taken to the voters to see if they approve of the rate of the SDC.
Red Flag 7 – Rome wasn’t built in a day. Costs are projected over a 20 year development cycle.
As the old adage goes, “Rome wasn’t built in a day”, neither will Damascus be built in a day. Damascus will evolve and develop over time. Therefore costs associated with development, as well as opportunities for cost offsets will occur over the course of, as identified in the Tashman Report, 20 years.
