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Welfare for Builders 

Just needs a little stimulus.As the housing slump widens and deepens, builders all over the country are in a world of hurt. Builders in Central

click to enlarge Just needs a little stimulus.
  • Just needs a little stimulus.
Just needs a little stimulus.As the housing slump widens and deepens, builders all over the country are in a world of hurt. Builders in Central Oregon are hurting too. But the builders here have come up with an idea to ease their pain: Interest-free loans from the taxpayers.

The loans would take the form of a break on SDCs - Systems Development Charges. These are fees builders pay to help cover the cost of new roads, sewers, water mains and other stuff made necessary by new construction. In the City of Bend, SDCs can run upwards of $13,000 on a new house.

As things stand, builders have to pay the SDCs up front, before they can get their building permits. But under the bright idea the Central Oregon Builders Association has put forward - an idea that, incredibly, has the support of the city's Community Development Department - SDC payments would be deferred for nine months, interest-free.

At the end of nine months, supposedly, the builder will have sold the house and be able to pay off the city. Or if he isn't, the city will have a lien on the house as security.

This scheme is screwed up in so many ways we'd have to write a book to describe them all, so we'll try to just hit the high points.

One: Nobody seems to even know how much money the city would lose under this deal, much less how it would make up for it. At the very least, the city would lose nine months' worth of interest on any SDC payments it didn't get when it was supposed to.

Two: What if (as seems all too likely) the builder isn't able to sell the house and pay the SDCs in nine months? Will the city give him another nine months? And another?

Three: COBA wants the SDC deferral to be in force for 12 months What if (as seems all too likely) the housing slump isn't over in 12 months? Will COBA want another 12 months? And another?

Four: If a builder goes bankrupt (hey, it could happen) and can't ever pay the SDCs, what then? The city ends up holding the title to a house in one of the most overbuilt and overpriced real estate markets in the country.

Five: How is this deal supposed to help Bend claw its way out of the housing slump? It isn't SDCs that are driving the market down - it's too many houses and too few buyers, as the result of (a) overbuilding during the boom and (b) the drying up of credit from lenders who are burdened with bad debt after making too many bad loans during the boom.

The city council has yet to approve COBA's welfare scheme, and we hope it will join us in vigorously giving it THE BOOT.

Meanwhile, in recognition of a singular achievement in the field of chutzpah, we would like to confer an additional honor on COBA: a trophy in the form of two baseball-sized spheres made of solid brass.

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