A developer's request to reduce systems development charges for a 108-unit apartment building is worth serious consideration, but city officials should make sure any break they agree to will benefit the community, not just the developer.
Dan Thomas, who has received city approval for the complex on Almond Street off East Main Street in Medford, says he needs to reduce the cost of the $12 million project by $1 million. He's proposing the city cut the systems development charges from $641,000 to about half that amount to help him get there. He's also cutting costs elsewhere, he told the City Council last week.
Systems development charges, assessed on new construction, are intended to reimburse the city for the increased costs that result. New housing, for instance, means more vehicle traffic, more demand on sewer and water systems, more people and property for police and fire departments to protect.
At the same time, however, more residences benefit the city as well, by stimulating the economy as new residents buy furniture, shop and dine out. That's especially true in the downtown area, which needs people living there to continue the revitalization that is still underway.
Improvements brought by the Medford Urban Renewal District have helped — new sidewalks and street lighting, restored facades on downtown buildings and the park blocks that make up The Commons. But the vibrant downtown the community wants to see can't really happen without a critical mass of people living downtown and not just working there.
It's not that the city hasn't tried. Residential development was supposed to be part of the project that eventually became One West Main, along with retail and office space. For a variety of reasons, that project wound up being just offices.
The Commons, incorporating the Lithia Motors headquarters and the park blocks, was originally intended to include a residential component, too. The Great Recession intervened, causing Lithia to downsize its building, and the residential development was cut from the project.
Now, with the economy rebounding and the construction industry recovering, the city has an opportunity to make up for lost time and encourage residential development downtown.
That may mean offering some limited incentives to developers, such as the fee waiver Thomas has requested. There are several options for doing that, as City Council members pointed out.
The fees could be deferred, allowing the project to get off the ground, and then assessed later.
If the council decides to extend MURA beyond its scheduled sunset date next year, that could generate money for additional projects within the district. Some assistance could be provided to developers from that money.
Before city leaders agree to extend any help, however, they should insist on full disclosure from Thomas and any other developer who wants a break. Rental housing is at a premium, with a vacancy rate approaching zero, so any new units that come on the market will be filled before they are finished. Developers should be asked to explain in detail why they need help from the city to make their projects succeed.
If rents will be kept more affordable as a result of some waived or deferred fees, that's a community benefit that could balance the loss of some SDC proceeds.
An agreement that results in more housing downtown will be a plus for the community. The council's job is to make sure the benefit equals the investment.