Funding Bend’s Growth Gets Real

Funding Bend’s Growth Gets Real

Published on Jun 27, 2024

by Katy Brooks, CEO & President, Bend Chamber

Bend is one of the few cities in Oregon still experiencing net population growth. And the city of Bend is at the receiving end of trying to accommodate these new residents and businesses by planning and investing in roads, water, sewer and other infrastructure that holds our community together.

But the pace of our growth hasn’t kept up with the funds we need to pay for the infrastructure. The bill for that is now due, and we will see this take effect next month.

On July 1, both businesses and residents will pay a new monthly fee on their city of Bend utility bills. The Transportation Utility Fee will be assessed on residential and commercial utility accounts to help pay for street operations and maintenance. Residential customers can expect to pay $5.60/month for a single-family home, while multi-family dwellings will pay $4.15 per unit.

Commercial customers’ fees will be assessed based on building footprint (square foot) during the first year of the new fee, with further refinement in future years.

But that fee only touches the surface of the funding needed for our growing city. If you plan to build in Bend, System Development Charges (SDCs) and permit fees will also be higher.

It’s a challenging time for builders. Few tools help offset the enormous costs of building. This year a limited number of projects received tax exemptions to help offset the costs of building housing and new mixed-use amenities like storefronts, parking and street treatments but even with temporary tax relief some of this construction still doesn’t pencil out. From large, high-profile mixed-use projects to small renovations, builders and developers are feeling the impact of escalating costs. Construction material cost increases and high interest rates are adding to the challenges that are tapping the brakes on building.

The root problem, however, is how we fund what happens before we build. Public utilities, roads, and amenities that make a city livable are expensive — especially in Bend where lava rock increases the cost of even the most basic installations. In the distant past, local, state and federal governments funded much of this work.

Today funding relies heavily on the builder or developer. This may make sense — you build it, you pay for the impacts, but the builder’s share is now relied upon to fill shortfalls in the general fund to pay for people and infrastructure elsewhere in the city.

This scenario highlights serious shortcomings in how we fund growing cities in Oregon. Many cities like Bend across the state struggle with antiquated state funding systems that force a Frankenstein approach to finding money to pay for roads, sewer, water, and other utilities and infrastructure. These cities have had to create other funding sources to fill the gap.

Ballot Measures 5 and 50 passed in the mid-1990s limited how much property tax can increase year over year in Oregon but the reality is that capped property taxes as our source for funding infrastructure to keep up with our city’s growth falls very short of what is needed and must be filled by other sources.

There aren’t many options to fill that gap, and none are easy to do. Bonds, gas tax, utility fees, and prepared food tax are a few alternatives that could generate a stable funding source but will have implications for businesses and residents. Many folks believe tourists should help pay their fair share through seasonal or lodging tax that helps address the strain of growth in peak season on our roadways and utilities and fund the shortfall of affordable housing for those who work in that industry.

A bigger idea with significant longer-term benefits would be a wholesale change in Oregon taxes to fix our infrastructure funding gap. State tax reform is being whispered among a variety of interests who have seen how our state funding system is failing to address our need to build housing, transportation, water, sewer, and other fundamentals.

Tax reform could mean any number of things, and rather than calling out specific tactics, it may be time to begin talking about what is important, including a more agile, sustainable model that has equitable impacts and benefits to people, property owners and businesses.

A multi-year conversation, no doubt but we have to start somewhere. Paying for our basic needs to deal with growth has gotten real and it’s not getting easier.

Article first appeared in The Bulletin on June 23, 2024

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