This block of North Bend Way, and properties adjoining it, are the target areas for the city of North Bend’s new approach to attracting businesses into the city’s downtown. (Photo courtesy of Mary Miller)

To fight downtown blight, North Bend approves fee waiver for new businesses

Empty buildings and downtown blight will be combated in a new way in North Bend soon, but only time will tell if the city’s new tactic will work.

“I hope it’s successful, in time,” said Councilwoman Jeanne Pettersen of the action, a waiver of water and sewer connection fees to attract businesses into the city’s historic downtown. “If it doesn’t prove to be, we’ll change it.”

The action, approved in a 6-1 vote with Martin Volken opposed, will allow City Administrator Londi Lindell to waive a portion of the General Facilities Charges (GFCs) for specific target businesses, provided the business owners have made an equivalent amount in property improvements, in buildings that have been vacant for at least a year.

The target businesses are primarily restaurants, breweries and other businesses with a high level of water use. The GFC waiver specifies the locations as “any commercial building for retail, restaurant, brewery, or similar social and entertainment use.” All have to be in or immediately adjacent to the city’s Historic District, just over a block of North Bend Way, from Main Avenue N to the buildings just on the other side of the Bendigo Boulevard intersection.

“Council kind of wanted it to be social entertainment and like businesses,” Lindell said, because with their high rates of water use, the connection charges can be an obstacle to opening shop.

Both water and sewer connection fees are based on equivalent residential units, or ERUs. One ERU is typical of a single-family home. The water connection fee is about $7,000 and the sewer connection fee is $10,350, per ERU; the rate drops slightly as the connection size increases.

For example a two-inch water connection (eight ERUs) for a new restaurant, would add more than $50,000 to the permit cost.

“These kind of charges act as a disincentive to adding businesses to our Historic District,” explained the city’s new Community and Economic Development Director David Miller.

“It really depends on your use,” said Lindell. “If you’re just straight retail, your connection fee might only be $8,000. If you were a restaurant, it could be a lot more difficult.”

The waiver is granted only to businesses opening in buildings that have been vacant for a year or more, because those businesses must pay the connection fees to restart the service, even if the buildings were already connected to the systems.

In discussions before the vote, several council members commented that this action could potentially bring money into the city, despite the loss of connection fees.

“This is just the GFC,” said Alan Gothelf, “the businesses are still paying for water and sewer.” He added that since the buildings were empty when the city did its rate study, the lack of connection fees wasn’t really a loss of projected revenues.

Jonathan Rosen commented that the empty buildings in the downtown area felt like downtown blight to some residents, while others just wanted the city to leave them alone. He supported the fee waiver as a compromise. “I believe it is the right plan, and it’s perfect timing to piggyback on the downtown plaza work.”

Ross Loudenback was happy to support a solution to the blight, saying “We’ve been dealing with this situation for 20 years,” and just waiting for things to improve hadn’t worked in all that time. “To not offer it, I think, is the wrong choice.”

Volken said he was excited to see change come to downtown North Bend, but said “I’m having a hard time with this, and he was “concerned that we’ll be rewarding bad behavior.”

During citizen comment, area resident Michael Thomas spoke strongly against the action, telling the council “It allows new businesses to skirt their obligations on water and sewer.”

Lindell noted that other cities have used this tactic to drive growth.

“This is not an unusual problem that you have historic buildings that no one wants to develop in,” she said.

Some cities have also waived park impact fees and transportation impact fees, she said, which were not really options for North Bend.

Miller emphasized that the waiver is not guaranteed, just allowable, up to the value of the tenant improvements made, since the improvements will create value and benefit for the entire Historic District.

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