HERMISTON — After nearly two hours of presentation and discussion during its Monday, June 28, meeting, the Hermiston City Council made the decision to raise the city’s system development charges for the first time since they were implemented.

System development charges are a one-time charge on new construction projects, meant to help pay for infrastructure needed to support the growth. Cities in Oregon can charge SDCs for water, sewer, parks and transportation.

According to Assistant City Manager Mark Morgan, Hermiston adopted water and sewer charges in 1998 and added parks charges in 2006. Neither set of charges has been increased since, despite rising costs.

The city hired FCS Consulting, which specializes in SDCs, to do an updated calculation of how much the city can charge, taking into account expected growth, planned infrastructure projects and other factors. According to the report, if the city were to fully reimburse itself for the costs, it could charge developers up to $12,258 per single-family home.

City staff recommended the city not go near the maximum amount, and instead use other sources of revenue to help cover some of the costs for things like new water mains. But staff did recommend some increases to help bring the city’s prices, set 22 years ago, up to something with more similar buying power today.

Currently SDCs for a single-family home are $907.

The proposal, adopted by the council Monday, will break the increase up into four, one-year increments starting in January 2022 and ending with the new price at $1,768 in January 2026. After that, charges would rise 3% each year to help keep up with inflation. The charges would be split four ways, instead of three, to add money for the city’s street fund in addition to water, sewer and parks.

According to numbers put together by FCS Consulting, a $1,768 SDC would keep Hermiston below Pendleton ($1,913), Umatilla ($3,402), Stanfield ($5,400), all three of the Tri-Cities and several Oregon cities of similar size.

During the public comment period, Luke Pickerell, owner of Monte Vista Homes, said Monte Vista has built more than 500 homes in Hermiston. He noted his company understood the need to keep up with rising costs, but also said higher SDCs get passed on to homebuyers, who then pay those costs for years to come through ongoing interest on their mortgage.

He said the median income in Hermiston can afford about $200,000 to $230,000 for a home, based on a calculation that a family can afford a home four to five times their annual income, but the median list price in Hermiston is over $300,000 right now. He also noted that homebuilding costs are soaring due to spikes in material costs.

“The (cost) of lumber that it would cost to build 10 houses a year ago would build two houses today,” he said.

Hermiston city councilors discussed the need to weigh two competing goals against each other: to encourage affordable housing development in Hermiston, and to be fiscally responsible with the city’s budget. Councilors Roy Barron and Phillip Spicerkuhn voiced concern that the city was not raising the charges enough to keep up with the costs to complete needed projects.

Councilor Nancy Peterson said she would be the first one to say if she thought the charges were too much, but the change seemed reasonable.

“The numbers make sense,” she said.

After approving the increase to system development charges, the council also took care of the following business:

• The city council voted to approve changes to the city’s sidewalk ordinance to modernize the language and align it with the public works department standards previously adopted.

• The council voted to approve an updated franchise agreement with Cascade Natural Gas.

• The council voted to award Swaggart Brothers, Inc. of Hermiston a contract to rebuild the apron at the Hermiston Municipal Airport. The company was the low bidder of five bids, at $1,474,266.

• The council voted to name a new road going into the South Hermiston Industrial Park as East Cook Avenue. City Manager Byron Smith said the name honors Ivan and Vernon Cook, who owned most of the industrial land south of Hermiston and have used that land to help bring in the Walmart Distribution Center, Pioneer Seed and other major employers for the city.