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Lowering system development charges, and in some cases scrapping them all together, has become a tool used by municipal governments to stimulate development and entice business to the area. This has been reported extensively in the Daily Journal of Commerce (here, here, here and here) over the past few months.

Molalla was the first town to take the drastic step by going on a development fee holiday, waiving all system development charges for 2010 until a million-dollar threshold is reached. The town was the first Oregon municipality to drop SDCs in 15 years. Out of it, the city has attracted a few major development projects. One is a 160-unit apartment complex. Under the fee holiday, the developers were only charged $400,000 instead of $1.4 million in development related fees. The savings alone made the project financially feasible.

Grants Pass took a similar approach, rolling back all SDCs to the 2006 levels. The fee savings will run through August 2011.

Roseburg decided to decrease transportation related development charges by 75 percent. Transportation development charges are often the most disputed because the methodology for creating the fee is less concrete than SDCs for water, sewer and parks.

Portland has taken some advice from the smaller towns in Oregon. City staff announced earlier this month that they are dropping all development fees for homeowners who build or convert space on their land into a second living unit. The fee waiver will last three years and will save homeowners $7,000 to $15,000 on these projects.

While Portland focused its fee waiver around homeowners looking to expand, the City of Gresham is focusing on helping businesses expand. Under the new Vibrant Storefront Incentive, Gresham is waiving business license fees, development-related fees and SDCs for anyone looking to start a business or expand into a downtown storefront.

In The Dalles, the city council has created a task force to restructure the transportation SDC in order to make it more development friendly. Seaside, Tigard and Wilsonville are looking into similar approaches.

While fee holidays sound great for developers and economic vitality, they put a hindrance on tax payers. SDCs go toward expansion of infrastructure associated with development. Now, the tax payers have to cover those fees. It could be said that increases property taxes because of new developments, but there is no guarantee that money will actually go to infrastructure improvements.

Only time will answer these questions.