Pay to Playground

Fritz is proposing an overhaul of the fees used to expand the city's parks. 

The plan Fritz is scheduled to bring before the City Council on April 15 could mandate a 37 percent hike on the fees that a developer of a new, 1,600-square-foot single-family home pays to Portland Parks & Recreation.

The builder of a smaller house could see fees go down. But the developer of a new office building could see the bill from the parks bureau go up nearly 300 percent.

Unlike the much-savaged "street fee" Mayor Charlie Hales has pushed for in the past year, Fritz's fee change has until now moved forward quietly.

Developers—some of whom first saw the size of the proposed fee change earlier this month—say new fee increases threaten to further drive up the cost of housing.

"All it does is push prices up," says Greg Goodman, whose family is one of downtown's largest property owners. "I'm not opposed to an increase, but tie it to the cost of living and population growth. To raise fees 300 percent? That's mind-boggling to me. They should have told us they were going to do this before we supported the parks operating bond."

Fritz argues the change would reward builders of smaller houses.

"One of the intended consequences of this policy is larger homes will pay more," she says. "That may encourage developers to make them smaller, which in turn makes them more affordable."

Fritz's proposal to increase fees comes as colleagues Hales and City Commissioner Steve Novick have taken fire for more than a year on a proposed $46 million street fee to fund transportation projects.

And Fritz is proposing the fee increase less than six months after Portland voters approved renewing a $68 million property tax bond to fund parks. That money will go to repairing existing parks facilities, from decaying bridges in Forest Park to decrepit playground equipment in Southeast Portland's Creston Park. 

But the parks bureau can't use that money to purchase new parkland or build new playgrounds. The bureau instead bankrolls its capital projects with fees on developers called systems development charges.

Other bureaus also levy charges on new construction to fund water, sewer and transportation infrastructure—but parks fees are the biggest component of such charges. For instance, the developer of a single-family home in Portland currently pays $18,360 in total systems development charges: $8,582 of that goes to parks.

Fritz's proposal would make the fees more progressive by scaling them to the square footage of the project. In fact, in neighborhoods outside the central city, the parks fees for a home of less than 1,000 square feet would drop to $6,773.

But the parks charges for a 1,600-square-foot home, a more common size, would rise to $11,265. The developers of bigger homes could pay the parks bureau $13,185.

The increase proposed for developers of commercial properties is far steeper: The builder of a 2,549-square-foot retail building would see parks fees jump from $14,066 to $56,312—a 300 percent spike.

It's unclear how much more money these fee hikes would bring the parks bureau. Portland Parks & Recreation spokesman Mark Ross says the changes are not designed to increase revenue but to divide costs more equitably and better reflect the city's growth. (Commercial development pays less than 5 percent of the fees paid to the parks bureau, according to city records.)

“The increases,” Ross says, “are simply necessary to help pay for the impact on Portland parks of new development.” 

But the bureau is seeking additional funds. City budget documents show Portland Parks & Recreation says it faces a $47.7 million annual shortfall over the next 10 years to meet its goal for adding parkland and community centers.

Parks bureau officials have been working since December 2012 on changes to how they calculate systems development charges.

Justin Wood, a lobbyist for the Home Builders Association of Metro Portland, sat on the parks committee that studied the changes. He saw the fee increases in December—and now says they are too steep.

"We'd love to have better parks," Wood says. "But who pays for them? When we start talking about $13,000 on a single-family house, just to parks, it starts to get a little crazy."

The Portland Business Alliance sent a March 10 letter to parks officials, warning that its members are "extremely concerned" by the fee hikes.

"Portland has largely become unaffordable for middle-income families buying a home," PBA president Sandra McDonough tells WW. "These increases are going to make housing less affordable."

Fritz disagrees. "The proposal is not designed to raise more revenue," she says. "We're doing it to be more fair. New development needs to pay its way. No more, no less.” 

WWeek 2015