SDC waivers approved for housing

Sky Gate, a seven-lot affordable-housing development slated for northeast Sisters, received approval from Sisters City Council for the waiving of water, sewer, and parks system development charges (SDCs).

Shane Lundgren, the developer of the Sun Ranch residential project, sold the two-thirds of an acre for $10,000 to HousingWorks, to satisfy the City requirement to construct one affordable housing unit for every 10 market-priced houses in a development.

Tom Kemper, executive director of HousingWorks, said Core Housing will build and sell the houses, and HousingWorks will hold title to the land. To be considered formal affordable housing, the purchasers must have income of no more than 80 percent of the average median family income for Deschutes County, which is currently about $47,000.

To qualify for SDC waivers, a house must remain affordable for 50 years, which means if it is resold within that 50 year period, the new purchaser must also qualify as having the 80 percent of Deschutes County income. If the house does not remain affordable, then the City must be reimbursed for the waived SDC fees.

The City charter allows for the waiving of SDC fees, which reduces the initial construction costs of a new home, helping to lower the sales price. However, those fees have to somehow be accounted for by the City. Therefore, a ledger transfer is made from general fund reserves (currently $900,000) into the SDC accounts. In other words, the City pays the fees to itself. Those funds will soon be supplemented by the increase in the transient room tax.

On an average 2,000-square-foot, three-bedroom, two-bath house, the total SDC fees usually run $10,000 to $12,000. The transportation SDC fees for the seven lots have already been paid by Lundgren, so the fees being waived are for water, sewer, and parks.

Kemper reported that the seven Sky Gate homes will be high-quality 1,200-square-foot houses with three bedrooms and one-and-a-half baths. His organization will control the sale process with a ground lease. The buyers will have to provide documentation to prove their eligibility for purchasing an affordable-housing home. The paperwork will be certified by HousingWorks and sent to the City.

There is one sticking point still to be worked out: Kemper was told a year ago that they would receive the SDC exemption, although the source of that assurance was not identified. The City charter states that the homeowner must continue to qualify for affordable housing after the purchase of the home, throughout their tenure as the homeowner.

Kemper stated that his organization is not able to provide continuous monitoring of the ongoing income of a purchaser over the years. They can verify at the time of purchase and at the time of sale to a new purchaser. The City charter, which can only be changed by a vote of the citizens, states that income of the homeowner must continue to remain at no more than 80 percent.

Kemper and City attorney Steve Bryant will be meeting to try to reach a mutually agreeable solution. Mayor Chris Frye assured Kemper that the City is eager to work with him and appreciative of his efforts to provide affordable housing for the community. Council approved the waivers.

Construction should begin shortly on the first three houses, as the contractor is ready to begin work, and permits were to be issued this week.