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Paying a High Price

A Medford builder says city fee increases killed his plans to build a large residential development — and killed 100 construction jobs or more at the same time.

Mel Sherbourne's dissatisfaction over the city's permit and system-development fees has prompted two members of the City Council to ask for a review of the charges to see how they stack up with other communities.

Sherbourne, who has built residential housing in the Rogue Valley for more than 30 years, canceled plans to build a series of four-plexes earlier this summer and later contacted Medford City Councilman Chris Corcoran, who asked the city to seek comparative information.

Sherbourne said when he built a 3,700-square-foot four-plex in 2003, permits and system-development charges amounted to $13,500. The fees for that same four-plex today, he said, have increased to $37,000, or a 174 percent increase in an eight-year span — an average increase of nearly 22 percent per year.

"Banks will not invest because of the extra debt," he said, and tenants can't afford to pay extra rent.

Sherbourne planned to build 17 four-plexes on Lozier Lane, but says it is no longer financially feasible. He said 100 or more people would have been put to work on the project.

The city fees alone on the 17 four-plexes would have totalled $629,000, an increase of almost $400,000 over what it would have cost eight years ago.

Corcoran said this week that he and fellow council members Bob Strosser and Dick Gordon have asked Deputy City Manager Bill Hoke to put together a study of fees.

"The council as a whole needs to study what surrounding communities and Jackson County collect for street, leisure services and sewer development," Corcoran said. "We need to see where we stack up compared to those other markets. We need to analyze the results and see if what we're charging is fair."

There is no specific timeline for action.

Corcoran said some of the fees builders and developers encounter will end when Walmart pays its development fees for its new superstore, which is planned for the former Miles Field site off Highway 99.

"Once Walmart ponies up, the bond for the South Medford interchange will go away," Corcoran said. "But quite frankly, it's not going to make an appreciable difference."

Sherbourne recalls telling the City Council, during former Mayor Lindsay Berryman's administration, that he was hitting a wall.

"I know when it works and when it doesn't," Sherbourne said. "It's not working anymore. Medford is hitting the wall now and can't make it work. I think people just need to speak up, because if people aren't building they won't be able to maintain a planning or building department."

Corcoran said the rising fees reflect increasing financial pressure on the city over the years.

"Wages (for city employees) have gone up and we are paying prevailing or living wages (to city contractors)," Corcoran said. "All those jobs require union or other skilled labor. While other costs have gone down, those costs haven't."

Corcoran said he likes what Jackson County has done, rolling back development fees to spur development.

"Whether it's appropriate for the city of Medford, I don't know," Corcoran said. "I don't know how we compare to other communities and if it is right to roll back the fees if we are not in line."

The councilman said Lithia Motors is paying "huge" system-development charges for its new downtown corporate headquarters.

"Mel Sherbourne is being treated the same as Walmart or Lithia," Corcoran said. "Whether that is fair or not, I can't tell you. But that's just the way it is."

Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.

Mel Sherbourne, who has built residential housing such as Ish Ranch in the background, canceled plans to build a series of four-plexes earlier this summer, citing excessive permit and system-development charges. - Bob Pennell