McKenzie River Reflections - Make the McKenzie Connection!

Blue River Downtown Redevelopment & Wastewater Roadmap

 



Blue River Downtown Redevelopment & Wastewater Roadmap

2015 - 2016

Prepared by Stephen Dobrinich and Aniko Drlik-Muehleck, Hatfield Fellows with Lane County Community and Economic Development

In partnership with Chris Marko, Rural Development Specialist at Rural Community Assistance Corporation (RCAC)


Acknowledgements

Portland State University’s Hatfield Residential Fellowship Program. In July 2015, Lane County Community & Economic Development brought on two Hatfield Fellows to assist with rural economic development projects. The two Fellows provided research assistance to McKenzie community members interested in investigating options for building a community wastewater system and creating a “downtown district” in Blue River, Oregon.

Rural Community Assistance Corporation (RCAC) is a private non-profit organization which provides training, technical assistance, and financing for housing, environmental infrastructure, and community economic development. Technical assistance provider Chris Marko provided expertise, research, guidance, and advice on developing and analyzing options for Blue River to develop a community wastewater system. Chris worked collaboratively with Stephen and Aniko to plan, prepare for, and conduct meetings with Lane County Land Management and to educate the community about options. RCAC contributed information on land use requirements, district formation process, city incorporation, and resources referenced in this report. RCAC work on the project was made possible by Grant Number 90EF0080-01-00 from Health and Human Services.

Kent Howe and Keir Miller from Lane County Land Management Division for review and input on the options outlined in this report.

Nancy Toth, Environmental Specialist at Eugene Water & Electric Board (EWEB), for insight and input on EWEB’s Septic System Assistance Project and water quality monitoring efforts on the McKenzie and Blue Rivers.

McKenzie River Community Development Corporation (formerly the Blue River Community Development Corporation) and McKenzie River Action Team for local support and organization of this endeavor.


Table of Contents

Executive Summary ..................................................................................................... 5

Project Purpose and Goals ........................................................................................................................ 5

Overview of Options ................................................................................................................................. 5

Key Takeaways .......................................................................................................................................... 5

Evaluation of Options ................................................................................................................................ 7

Recommended Action ............................................................................................................................... 7

Conclusion ................................................................................................................................................. 8

Summary of Options ............................................................................................................................... 10

Chapter 1: Overview .................................................................................................. 11

Background ............................................................................................................................................. 11

Project Purpose and Goals ...................................................................................................................... 11

Current Conditions .................................................................................................................................. 11

Overview of Options ............................................................................................................................... 12

Organization of This Report .................................................................................................................... 13

Chapter 2: What We Know and Where We Have Been ............................................... 14

Eugene Water & Electric Board Reports ................................................................................................. 14

Wastewater Engineering Report ............................................................................................................. 15

Other Key Documents ............................................................................................................................. 17

Chapter 3: Evaluation of Options ............................................................................... 18

Option 1: Incorporate Into a City ............................................................................................................ 18

Option 2: Transfer of Development Rights ............................................................................................. 19

Option 3: Change Community Designation ............................................................................................ 19

Summary ................................................................................................................................................. 21

Chapter 4: Process for Changing Community Designation .......................................... 22

Steps for Changing Community Designation .......................................................................................... 22

Conclusion ............................................................................................................................................... 24

Chapter 5: Recommended Action ............................................................................... 25

Near Term ............................................................................................................................................... 25

Ongoing ................................................................................................................................................... 25

Conclusion ............................................................................................................................................... 26


References ................................................................................................................. 27

Appendices ................................................................................................................ 28

Appendix A: Resources ........................................................................................................................... 28

Appendix B: Meeting Notes .................................................................................................................... 30

Appendix C: Other McKenzie Communities ............................................................................................ 37

Supplement A: District Formation Process ................................................................. 38

Supplement B: Tools for Community Engagement & Involvement .............................. 40


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Executive Summary

Project Purpose and Goals

The purpose of this report is to provide a “roadmap” for McKenzie River community members interested in seeing a “downtown district” take shape in Blue River, Oregon. Efforts to create a viable downtown district are closely linked to discussions on the construction of a community wastewater system -therefore, both topics are reviewed as a part of this report.

During community conversations, McKenzie River residents helped identify three goals for moving forward with these closely linked efforts:

? Goal 1: Facilitate redevelopment in the Blue River Community, a traditional hub of activity located in the McKenzie River Valley

? Goal 2: Create a dense, walkable “downtown district” serving the McKenzie River Valley

? Goal 3: Develop a community wastewater system to reduce reliance on private septic systems which may be failing or at risk of failing

These three goals were used to guide the investigation outlined in this document.

Overview of Options

A detailed review of available material and discussions with regulatory officials revealed three primary options for Blue River moving forward.

? Option 1: Incorporate and perform land use duties as a city

? Option 2: Utilize transfer of development rights to gain approval to build at higher densities in the downtown Blue River area

? Option 3: Change Blue River’s community designation from “rural unincorporated community” to “urban unincorporated community” as a means to develop at higher densities in downtown Blue River (Fulfilling this option would require the construction of a community wastewater system and formation of a special district for managing wastewater)

All three of these options were investigated as a part of this report.

Key Takeaways

EWEB Findings – No Major Threat to Water Quality

? Through continued water quality monitoring the Eugene Water & Electric Board has observed low levels of contamination attributable to septic system clusters along the McKenzie River

o Presently, no major impacts to water quality can be attributed to septic system cluster areas and the current level of contamination is unlikely to trigger regulating authorities (including the Oregon Department of Environmental Quality) to take action that would induce the construction of a community wastewater system in Blue River

o EWEB will continue to monitor water quality to help mitigate against future threats

Constraints on Incorporation (Option 1)

? The process to incorporate is long, cumbersome, and involves a variety of moving parts and political interest


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? Damascus (2004) and La Pine (2006) are the two most recent Oregon communities to incorporate

o Both communities have a much larger population than Blue River –Damascus -10,539; La Pine -1,653

Constraints on Transfer of Development Rights (Option 2) ? Transfer of Development Rights (TDR) programs are “a voluntary, incentive-based and market-driven approach to preserve land and direct development away from resource areas and into urban and urbanizable areas”

o TDR allows communities to designate “sending areas” (land for preservation) and “receiving areas” (land appropriate for development)

o Developers who utilize TDR are permitted to build more densely in receiving area than they would otherwise be allowed under existing zoning. In exchange for this they are required to place a conservation easement on land designated as sending area.

? An active TDR program would provide a potential path to increased development within the Blue River community without the construction of a community wastewater system

? An increase in development sparked by a TDR program would also serve as a step towards achieving the minimum dwelling units required for a change of community designation.

? Lane County Land Management Division investigated the potential to participate in Oregon’s TDR Pilot Program but determined that was not viable in its current form.

o This means no mechanism is currently in place to enable receiving areas in Blue River (TDR is not currently an option for Blue River)

Change Community Designation (Option 3)

? A change to Blue River’s community designation from “rural unincorporated community” to “urban unincorporated community” would provide the opportunity to develop at higher densities in downtown Blue River

? In pursuit of this option, Blue River will need to address two key pieces of criteria which are currently missing:

o The construction of a community wastewater system

o A minimum 150 permanent dwelling units including manufactured homes

? The Dyer Partnership’s “Wastewater Engineering Report” examined three sites for suitability as a community drainfield (i.e. wastewater disposal site)

o Two of the three sites evaluated are highly regulated and tightly constrained (U.S. Forest Service parcel and Blue River Community Park)

? The U.S. Forest Service parcel and Blue River Community Park are located on resource land OUTSIDE the Blue River community boundary

o To build a community wastewater facility on either of these sites Blue River would need to:

? Alternative A: Extend the community boundary to incorporate the parcel selected and change the land use designation (this is possible but the criteria is very restrictive when expanding onto resource zoned land) OR

? Alternative B: Get a plan amendment/ zone change with an exception. This would also require a declaration of a health emergency (highly unlikely under current circumstances)


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o Issue of locating on resource land should effectively rule these two sites (and corresponding alternatives) out of consideration

? Lane County Land Management staff suggested that looking at a site located inside the current community boundary makes the most practical sense (Alternative C)

o Locating inside the community boundary would minimize land use roadblocks

o The Seneca Lumber parcel (eastern portion of the old mill site) east of the McKenzie track is located inside the community boundary and has potential for being a drainfield location.

? Investigating sites inside the community boundary is the best path forward BUT construction of a community wastewater facility on its own is not enough to change planning and development regulations governing Blue River.

o With wastewater system built, Blue River would still only meet 3 pieces of criteria.

? Additional development would need to take place within the Blue River Community Boundary to make change of community designation possible (must reach minimum required 150 permanent dwelling units).

? Alternatively, an exemption and/or rule change may open the door to bypassing this requirement

Evaluation of Options

? Option 1: Incorporation is politically difficult and challenging for a small community like Blue River to pursue. Incorporation ranked lowest of the three options.

? Option 2: Lane County Land Management looked into Oregon’s Transfer of Development Rights pilot program but determined that the one-to-one-sending /receiving area ratio limitation of the program would not generate sufficient market demand for the program to be viable in Blue River

o Utilizing Transfer of Development Rights is not currently available to Blue River, however, project supporters should continue to monitor changes in the State’s TDR program. Rule changes may open new doors to Blue River and active discussions about existing roadblocks may lead to future opportunities.

? Option 3: Change community designation

o Change of community designation represents Blue River’s clearest path for the development of a downtown district, however, under current rules construction of a community wastewater system on its own is not enough to change planning and development regulations governing Blue River.

? Requires construction of community sewer system (i.e. community wastewater system) AND meeting the 150 minimum required permanent dwelling units

o Additional information on Option 3 is provided in Chapters 3 and 4 of this report

Recommended Action

In moving forward, Blue River will need to simultaneously discuss alternative parcels for locating a wastewater treatment facility and steps to increase the number of permanent dwelling units located within the community boundary. If appropriate, Blue River project supporters should work with local stakeholders to take land use rules issues to the Oregon State Legislature.


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Near Term

? Investigate what it would mean to build a community wastewater system with less than 150 dwelling units

o Assess whether this would lead to increased development

? Inventory parcels located inside Blue River community boundary in order to assess the following factors (possible project for RARE participant):

o The number of undeveloped residential parcels

o The number of vacant and occupied parcels

? Develop supplemental document to Blue River Downtown Redevelopment & Wastewater Roadmap –“Tools for Community Engagement & Involvement” (potential project for RARE participant)

o This document will serve as a guide for holding community discussions

? Investigate options for locating wastewater treatment facility inside the Blue River community boundary

o Explore Old Mill site (Seneca Lumber Mill) more thoroughly

o Soil testing, engineering recommendation, etc. (Support from Mike Godfrey)

Ongoing

? Further investigation of Blue River wastewater opportunities has been placed on the Lane County Land Management Division’s proposed work plan as a small project proposal for 2016-2017 LRWP

o On July 5, 2016 the Lane County Planning Commission recommended that the Board of County Commissioners adopt the proposed work plan, including 100 hours of staff time to assist and consult on land use issues related to Blue River wastewater

o Board review of the proposed work plan is likely to take place in late July 2016

o Blue River Community members and other project supporters should monitor this situation and stay connected with staff for more information.

? Monitor State of Oregon’s Transfer of Development Rights program and discuss opportunities to influence rule changes

? If appropriate, work with local stakeholders to take land use issues to Oregon State Legislature

o Explore discussion on possible rule exception and/or rule changes related to the 150 permanent dwelling unit requirement

? Continue the conversation with the Blue River community by meeting quarterly to discuss issues of wastewater and development

? Identify local champion

? Identify ongoing project manager

Conclusion

The rules and regulations governing growth in the State of Oregon are designed to limit development in unincorporated, rural areas. While “unincorporated communities” are a viewed as locations most appropriate for rural development there is a strictly defined set of rules for how growth may take place. This means that the pursuit of a community wastewater system and the development of a “downtown district” in Blue River is complex and long-range in nature. Above all, persistent effort from within the community and support from strategic partners are necessary to success.


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The recommendation of this report is that Blue River pursue Option 3: Change Community Designation moving forward. Additional information on Option 3 is provided in Chapters 3 and 4 of this report. Project supporters should also monitor the State of Oregon’s Transfer of Development Rights program (Option 2) and discuss rule changes which would make it viable a tool for Blue River. Additional analysis provided by land use planning experts and the mobilization of local support will provide insight into specific next steps.

×Option 1:Incorporate into a City

?Option 3: Change Community Designation

×Option 2: Transfer of Development Rights

Too Cumbersome and difficult

Not Currently Available. Monitor changes in State’s TDR program.

Viable if the following criteria is met:

(1) Includes at least 150 permanent dwelling units

(2) Contains a mixture of land uses including three or more public, commercial, or industrial land uses

(3) Includes areas served by a community sewer system

(4) Includes areas served by a community water system

No

Does Blue River meet this requirement?

No

Yes

Yes

Three alternatives to build a community sewer system:

Begin community conversation on how to raise number of permanent dwelling units. If necessary, work with Lane County Land Management Division and local stakeholders to explore possible rule exception and/or rule changes related to the 150 permanent dwelling unit requirement.

?Alternative C: Identify a parcel inside existing community boundary for community sewer facility and change land use designation. Seneca Lumber parcel (eastern portion of old mill site) could be investigated as an option.

×Alternative A:Extend Blue River’s community boundary to incorporate parcel outside boundary and change the parcel’s land use designation

×Alternative B: Get an exception to statewide land use planning goals that govern growth as a means to build community sewer system on parcel outside community WITHOUT extending boundary

Summary of Options


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Chapter 1: Overview

Background

The community of Blue River is located approximately 44 miles east of Eugene, Oregon where the Blue River feeds into the McKenzie River. Blue River sits at the heart of the McKenzie River's "50-Mile Main Street" which runs from Cedar Flats in the west to Belknap Hot Springs in the east. In 2013, an estimated 4,800 people made their homes in and around the McKenzie River (U.S. Census Bureau, 2013).

As far back as 8000 years ago, the Molalla and Kalapuya people traveled along the McKenzie River during their annual circuit, harvesting salmon, lamprey eel, camas root, huckleberries, medicinal plants, and hunting. In the early 1800s, European-American homesteaders began to settle the river valley, and in 1863, gold was discovered near Blue River. This led to a short boom which lasted until about 1912. While agriculture and the area’s recognition as a resort and fishing destination contributed to growth and stability throughout the 20th Century the timber industry acted as the leading economic driver for Blue River and the McKenzie River Valley.

Since the precipitous drop in the timber industry during the 1980s, the McKenzie River Valley has relied on recreation, travel, and natural resource management for economic stability.

While the McKenzie River Valley’s rich natural amenities are attractive to residents and visitors alike, there is no clear “downtown district” or “community gathering point” along the river. Under current rules governing rural development in unincorporated communities there are few places in the Valley where new businesses can locate and expansion of existing businesses can be prohibitive. Community members interested in seeing a “downtown district” take shape have identified Blue River as their preferred location, namely because of its size and central location. Land use regulations, however, have made it challenging for property owners to redevelop lots in downtown Blue River.

Project Purpose and Goals

The purpose of this report is to provide a “roadmap” for McKenzie River community members interested in seeing a “downtown district” take shape in Blue River. Efforts to create a viable downtown district are closely linked to discussions on the construction of a community wastewater system -therefore, both topics are reviewed as a part of this analysis.

During community conversations, McKenzie River residents helped identify three goals for moving forward with these closely linked efforts:

? Goal 1: Facilitate redevelopment in the Blue River Community, a traditional hub of activity located in the McKenzie River Valley

? Goal 2: Create a dense, walkable “downtown district” serving the McKenzie River Valley

? Goal 3: Develop a community wastewater system to reduce reliance on private septic systems which may be failing or at risk of failing

These three goals were used to guide the investigation outlined in this document.

Current Conditions

Redevelopment and improvement of downtown Blue River faces significant challenges due to land use regulations governing rural development. Limitations on development directly relate to Blue River’s designation as a “Rural Unincorporated Community.” Bearing this designation has several implications:


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? Restricts density for the creation of new lots or parcels to 2 acres for RR2 and 5 acres for RR5 (Lane County Rural Comprehensive Plan, Goal 2: Land Use Planning, Section 11.a.i.F)

? Restricts the development of a sewer system outside unincorporated community boundaries, unless certain exceptions are met (OAR 660-011-0060, Section 2.a)

Due to the absence of a community wastewater system, residential and commercial wastewater in Blue River is disposed of by private on-site septic tanks and subsurface disposal fields. In general, these on-site septic systems are located on sandy loam top-soils with moderate to high infiltration rates and gravel layers which may have a hydraulic connection to the river or ground water sources (Dyer Partnership, 2012). This means that private septic systems have the potential to impact the McKenzie River’s water quality and Blue River’s potable groundwater supply (Dyer Partnership, 2012).

During the summers of 2008 and 2009 EWEB inspected 439 private septic systems located in eight septic cluster areas along the McKenzie River watershed. Approximately 12.5% (55 total) of the systems inspected needed major repairs or replacement (EWEB, 2009). According to the Dyer Partnership, an estimated 15% to 20% of private septic systems in Blue River are currently failing (Dyer Partnership, 2012).

The Lane County Rural Comprehensive Plan sets precedent for improving Blue River's wastewater systems and/or incorporating as a city:

? "Lane County recommends that plans be developed and implemented for the maintenance and repair of the existing on-site sewage disposal systems in...Blue River. A more aggressive and long term alternative to the development of such plans would be development of public facility plans for public sewers and updating these community plans to comply with the requirements of the Community Rule for urban unincorporated communities. Another more aggressive and long term alternative would be for these communities to incorporate and to perform the land use planning as cities…" (Lane County Rural Comprehensive Plan, Goal 2: Land Use Planning, Section 15.c)

Overview of Options

A detailed review of available material and discussions with regulatory officials revealed three primary options for Blue River moving forward.

? Option 1: Incorporate and perform land use duties as a city

? Option 2: Utilize transfer of development rights to gain approval to build at higher densities in the downtown Blue River area

? Option 3: Change Blue River’s community designation from “rural unincorporated community” to “urban unincorporated community” as a means to develop at higher densities in downtown Blue River (Fulfilling this option would require the construction of a community wastewater system and formation of a special district for managing wastewater)

Both Option 1 (incorporation) and Option 2 (transfer of development rights) would address goals one and two outlined above but would not immediately address goal three. Option 3 (change of community designation) would address all three goals. The scope and feasibility of pursuing each option is discussed in the following sections of this report.


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Regardless of which option Blue River pursues, the rules for governing development within the community would change thereby opening the door to new development. Community members supportive of this effort point to several key benefits:

? Creation of a centralized community gathering place which is attractive to visitors and provides basic amenities to local residents

? Retention and expansion of existing businesses and attraction of new businesses

? Development of affordable housing clustered in a walkable mixed-use district

o Expansion of pool of students in McKenzie School District

? Reduced (or eliminated) reliance on private septic systems which may be failing or at risk (if community wastewater system is built)

Organization of This Report

The remainder of this report is organized as follows:

? Chapter 2: What We Know and Where We Have Been provides a detailed overview of previous work related to wastewater and community redevelopment in Blue River.

? Chapter 3: Evaluation of Options presents a comparison of options for moving forward including a discussion on the challenges associated with incorporation; a look at transfer of development rights; and an investigation into how a change of community designation might impact Blue River’s growth opportunities.

? Chapter 4: Process for Changing Community Designation provides an overview of the process for moving forward with Option 3: Change of Community Designation.

? Chapter 5: Recommended Action presents a series of recommended actions for moving forward with Blue River’s effort to build a community wastewater system and reinvigorate its “downtown district.”

? The References section cites materials utilized in the preparation of this report.

This report includes three appendices:

? Appendix A: Resources identifies key resources for Blue River community members to utilize as this project moves forward.

? Appendix B: Meeting Notes contains meeting minutes for meetings held by the Blue River Wastewater Group.

? Appendix C: Other McKenzie Communities looks at the viability of pursuing a change in community designation in other McKenzie River communities.

This report also includes two supplemental documents: Supplement A: District Formation Process and Supplement B: Tools for Community Engagement & Involvement.


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Chapter 2: What We Know and Where We Have Been

In July 2015, Lane County Community & Economic Development brought on two Hatfield Fellows to assist with rural economic development projects. Over the course of eight months the two Fellows, along with a Rural Development Specialist at the Rural Community Assistance Corporation (RCAC), provided research assistance to McKenzie community members interested in learning more about the feasibility of building a community wastewater system in Blue River as a means to spur new development and protect public and environmental health in the long term. Over time their goal was expanded to focus more broadly on options for enabling redevelopment within the community.

Hatfield Fellows and RCAC began the work of conducting background research by reviewing existing technical documents and meeting with local officials and stakeholders. The following sections provide a brief overview of relevant materials covered during this investigation.

Eugene Water & Electric Board Reports

Serving Eugene and a handful of surrounding communities, Eugene Water & Electric Board (EWEB) is a customer-owned drinking water and electric utility provider. EWEB drinking water, and a portion of its electricity generation, is derived from the McKenzie River which means that a clean river is vital to the health and safety of its customers. Approximately 4,000 septic systems are located in the McKenzie River watershed upriver of EWEB’s drinking water intake. Septic system failure threatens to release untreated wastewater into groundwater and surface water, potentially finding its way into the McKenzie.

Over the past decade, EWEB has conducted detailed assessments of private septic systems located in the McKenzie River watershed as well as an examination of measured and potential water contamination. During the fall of 2005, EWEB conducted water quality monitoring at 23 sample locations in six septic system cluster areas including Blue River (EWEB, 2006). Manganese, phosphorus, nitrates, total organic carbon, and E. coli were detected at low levels in the McKenzie River and/or Blue River, however, comparison of data collected upstream and downstream did not indicate a substantial difference in detected metals, nutrients, or bacteria from the Blue River septic system cluster (EWEB, 2006). More recent assessments found potential impacts to surface water in four septic cluster areas but Blue River was not included in the analysis (EWEB, 2009). While this indicates that septic cluster areas may lead to increased levels of bacteria, nutrients, and some metals they do not currently impose major impacts on water quality (EWEB, 2009).

In 2008, EWEB launched its two-year Septic System Assistance Project with the goal of providing homeowners with information about the importance of regular septic system inspection and maintenance and the potential risks of failing septic systems to water quality. Additional goals included evaluating the impacts of septic system clusters on shallow groundwater and surface water; conducting inspections and pump-outs of systems in high-risk areas; and collecting data on septic tanks and drainfield locations. As a part of this project:


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? 330 septic systems were categorized as high risk1

? 439 septic systems were inspected in eight high-risk clusters (including Blue River)

o 55 of the septic systems inspected ( 12.5%) needed major repairs or replacement

The “McKenzie River Septic System Assistance Project Final Report” offers a series of recommendations for moving forward. Most notable, is a call to continue water quality monitoring in high density areas along the river. Other next steps identified include continuing outreach to homeowners on the importance of septic system inspection and maintenance; the development of a zero interest loan program to help homeowners repair or replace failing systems; and working collaboratively to minimize negative impacts to the river posed by new development. EWEB developed a Septic System Financial Assistance Program in 2011, which consists of a 50-50 cost share program for regular inspections and pump-outs, and a zero-interest loan program for major septic system repairs/replacements.

Wastewater Engineering Report

In May 2012, the Dyer Partnership –an engineering firm based in Coos Bay, Oregon- completed a “Wastewater Engineering Report” for the community of Blue River. The purpose of this study was to “assess current facilities, develop alternatives, and recommend a course of action for wastewater systems that would allow more businesses to open within the community, provide residents with a solution to failing septic systems, and preserve the water quality of the Blue and McKenzie Rivers” (Dyer Partnership, 2012).

Wert & Associates examined the suitability of three sites for wastewater disposal in a “Preliminary Soils Report” (see Appendix D of “Wastewater Engineering Report” for full info). These three sites became the focus of the Engineering Report at large:

? Blue River Community Park

o Suitable soils for a community drainfield but soils have a high infiltration rate which would likely require more treatment than other alternatives

? Old Mill Site

o The area around the McKenzie Track is not very suitable for a community drainfield. This is due to a large amount of filling and disturbed soil.

o Seneca Lumber parcel next to track has potential for a community drainfield. Additional examination would need to take place to determine useable space.

? U.S. Forest Service parcel

o Very suitable for a community drainfield

Based on these findings, the “Wastewater Engineering Report” recommends a STEP collection system leading to a wastewater treatment plant on the U.S. Forest Service parcel. This system could be built in phases with options for further expansion. Other benefits include high influent quality and cost savings through built in sludge storage and treatment. The Report noted that the Forest Service parcel offered the greatest flexibility because of its size and location.

1 Defined as septic systems located in clusters, in permeable soils, and within 300 feet of a water body


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Challenges with Recommended Site & Alternatives

While the U.S. Forest Service parcel was selected for engineering purposes the property is protected resource land. In order to build a community wastewater facility on the Forest Service parcel, Blue River would need to follow one of two paths:

Alternative A: Extend Blue River’s community boundary to incorporate the Forest Service parcel and change the parcel’s land use designation from F-1 to PF/RCP or RPF, RCP

? While this is technically possible it would be extremely challenging because the criteria for expanding onto resource zoned land is highly restrictive

Alternative B: Get an exception to statewide land use planning goals that govern growth as a means to build a community wastewater facility on Forest Service parcel WITHOUT extending community boundary

? This would require a series of rulings which are altogether extremely unlikely to take place:

o Declaration of public health emergency (not viable under current circumstances)

? Despite failing septic systems, limited impact on river has been observed

o Likely would require a plan amendment

o Change in the parcel’s land use designation from F-1 to PF/RCP or RPF, RCP

These challenges also apply to Blue River Community Park which is located on resource land and was examined as part of the “Wastewater Engineering Report.”

Lane County Land Management Division advised that these issues should effectively rule out both sites from consideration. Land Management staff suggested that looking at a site located inside the current community boundary would be a better option for moving forward.


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Alternative C: identify a parcel within existing community boundary for community wastewater facility and change land use designation.

? This alternative presents the fewest land use barriers and represents the most viable option for moving forward

? While additional engineering examination would need to take place, the Seneca Lumber parcel (eastern portion of the old mill site) is one option located inside the community boundary. Additional information on pursuing Alternative C can be found in the “Change Community Designation” section of this document.

Transfer of Development Rights

The “Wastewater Engineering Report” notes that Transfer of Development Rights (TDR) may be used to achieve increased densities in Blue River. TDR programs are “a voluntary, incentive-based and market-driven approach to preserve land and direct development away from resource areas and into urban and urbanizable areas2.” Implementation takes place by designating “sending areas” (land for preservation) and “receiving areas” (land appropriate for development). Developers who utilize TDR are permitted to build more densely in receiving areas than they would otherwise be allowed under existing zoning. In exchange for this they are required to place a conservation easement on land designated as sending areas.

A full discussion of the opportunities and challenges to pursuing a TDR program is included in Chapter 3 of this report.

Other Key Documents

The following studies and reports have been used in the preparation of this document:

? Blue River Water District. Water System Masterplan, October 2001.

? Community of Blue River Wastewater Engineering Report, by Dyer Partnership Engineering & Planners, Inc. May 2012

? Lane County Rural Comprehensive Plan, General Plan Policies, April 2010.

? McKenzie River Septic System Assistance Project Final Report, by Karl A. Morgenstern, Nancy Toth, and David Donahue, Eugene Water & Electric Board, November 2009.

? Nonpoint Source Pollution Assessment and Evaluation for the McKenzie River Watershed, by Karl A. Morgenstern, Eugene Water & Electric Board, April 2006.

? Preliminary Soils Report for Blue River Oregon, by Wert and Associates, December 2011.

2 https://www.oregon.gov/LCD/pages/tdr_pilot_program.aspx


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Chapter 3: Evaluation of Options

The purpose of this chapter is to provide a detailed evaluation of Blue River’s options for moving forward in pursuit of the goals identified as a part of this project:

? Goal 1: Facilitate redevelopment in the Blue River Community, a traditional hub of activity located in the McKenzie River Valley

? Goal 2: Create a dense, walkable “downtown district” serving the McKenzie River Valley

? Goal 3: Develop a community wastewater system to reduce reliance on private septic systems which may be failing or at risk of failing

A detailed review of available material and discussions with regulatory officials revealed three primary options for Blue River moving forward.

? Option 1: Incorporate and perform land use duties as a city

? Option 2: Utilize transfer of development rights to gain approval to build at higher densities in the downtown Blue River area

? Option 3: Change Blue River’s community designation from “rural unincorporated community” to “urban unincorporated community” as a means to develop at higher densities in downtown Blue River (Fulfilling this option would require the construction of a community wastewater system and formation of a special district for managing wastewater)

Ultimately, Options 1 was deemed not to be feasible and was ranked lowest of the three options. Option 2 is not to be feasible at this point in time but project supporters should monitor changes to the State’s TDR program and explore a discussion on rule changes and/or exceptions. The recommendation of this report is that Blue River pursue Option 3. Detailed information on each of the three options is provided below.

Option 1: Incorporate Into a City

Option 1 is for Blue River to incorporate and perform land use duties as a city. While this option would allow the community to address present land use challenges the bar for successful incorporation is set very high. The process to incorporate is long, cumbersome, and politically difficult.

In Oregon, the most recent cities to incorporate were Damascus (2004) and La Pine (2006). Prior to incorporation both communities had a much larger population than Blue River. In 2015, an estimated 10,952 residents called Damascus home and La Pine had an estimated population of 1,7773. By comparison, the “Wastewater Engineering Report” estimates that Blue River is home to approximately 280 residents (Dyer Partnership, 2012). Blue River’s small population means that its tax base would be limited as an incorporated City.

Population aside, the process to reach incorporation was fraught with challenges for both Damascus and La Pine and in all likelihood Blue River would face similar challenges. This set of circumstances combined with discussions with Lane County Land Management Division led the authors of this document to rank 3 Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2015. Source: U.S. Census Bureau

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Option 1 the lowest of the three options. In light of this, project supporters should pursue other options for moving forward.

Option 2: Transfer of Development Rights

In the “Wastewater Engineering Report” the Dyer Partnership mentions that Transfer of Development Rights (TDR) may be used to achieve increased densities in Blue River. TDR programs are “a voluntary, incentive-based and market-driven approach to preserve land and direct development away from resource areas and into urban and urbanizable areas4.” Implementation takes place by designating “sending areas” (land for preservation) and “receiving areas” (land appropriate for development). Developers who utilize TDR are permitted to build more densely in receiving areas than they would otherwise be allowed under existing zoning. In exchange for this they are required to place a conservation easement on land designated as sending areas.

Lane County Land Management Division investigated the potential to participate in Oregon’s TDR Pilot Program but determined that the one-to-one sending/ receiving area ratio limitation of the program would not generate sufficient market demand for the program to be viable in Blue River. This means there is no mechanism currently in place to enable receiving areas in Blue River. If Lane County were to participate under the TDR program it is likely that the current program rules would need to be modified to be an effective tool for the Community of Blue River.

If a County TDR Program did become available, sections of downtown Blue River could be designated as receiving areas and denser development would be allowed to take place. This would help reduce barriers to achieving Goals 1 and 2 of this document. While it would not immediately address Goal 3 –reducing reliance on private septic systems- any new development that took place could spark a broader conversation about a community wastewater system. An increase in development spurred on by a TDR program would also serve as a step towards achieving the minimum dwelling units required for a change of community designation.

While the recommendation of this report is to pursue Option 3, project supporters should continue to monitor the State’s TDR program. Rule changes may open new doors to Blue River and active discussions about existing roadblocks may lead to future opportunities.

Option 3: Change Community Designation

Option 3 focuses on changing Blue River’s community designation from a “rural unincorporated community” to an “urban unincorporated community” as a means to develop at higher densities in downtown Blue River. According to OAR 660.022.0010 (8), a change of community designation can take place if the following four pieces of criteria are met (also described in the Lane County Rural Comprehensive Plan, Goal 2: Land Use Planning, Section 10.b.iv):

? Includes at least 150 permanent dwelling units including manufactured homes

o Blue River DOES NOT meet this requirement (An investigation by Lane County Lane Management found that Blue River has 131 permanent dwelling units (That is 19 units shy of the 150 permanent dwelling units required for becoming an urban unincorporated community)

4 https://www.oregon.gov/LCD/pages/tdr_pilot_program.aspx />

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? Contains a mixture of land uses including three or more public, commercial, or industrial land uses

o Blue River DOES meet this requirement

? Includes areas served by a community sewer system (i.e. community wastewater system)

o Blue River DOES NOT currently meet this requirement

? Includes areas served by a community water system

o Blue River DOES meet this requirement

In pursuit of this option, Blue River will need to address the two missing pieces of criteria –the construction of a community wastewater system and the required minimum 150 permanent dwelling units. Both of these criteria are discussed in the sections below.

Construction of a Community Wastewater System

The Dyer Partnership’s “Wastewater Engineering Report” examined three sites for suitability as a community drainfield (i.e. wastewater disposal site). Two of the three sites (U.S. Forest Service parcel and Blue River Community Park) are located on resource land outside the existing community boundary and are therefore highly regulated and tightly constrained. As such, it would not be ideal to build a community wastewater facility on either site (See Chapter 2 for additional information).

As detailed in the Chapter 2 discussion of alternatives for building a community wastewater facility, Lane County Land Management Division advised that Alternative C –building the wastewater treatment facility inside the existing community boundary- is the most viable path for moving forward. In order to build the facility, the land use designation of the selected parcel would need to be changed but Blue River’s community boundary would not need to be extended.

The Seneca Lumber parcel (eastern end of the Old Mill) was the only site examined in the “Wastewater Engineering Report” which is located inside the existing community boundary. While the presence of disturbed and fill soil ruled this site out initially, the eastern edge of the property may still be suitable for a drainfield. Additional examination would need to take place to determine useable space. Other sites inside the community boundary may be suitable for a drainfield as well and should be examined accordingly.

Minimum 150 Permanent Dwelling Units

Meeting the minimum required 150 permanent dwelling units is another key criteria which must be met to qualify Blue River for a change of community designation. An investigation by Lane County Lane Management found that Blue River has 131 permanent dwelling units. That is 19 units shy of the 150 permanent dwelling units required for becoming an urban unincorporated community.

Supporters of this effort can begin to address this with a community conversation on how to raise the number of permanent dwelling units. If necessary, project supporters should work with Lane County Land Management Division and local stakeholders to explore a possible rule exception and/or rule changes related to the 150 permanent dwelling unit requirement.

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Summary

In summary, incorporation (Option 1) is politically difficult and challenging to pursue for a small community like Blue River. Incorporation ranked lowest of the three options.

Utilizing Transfer of Development Rights (Option 2) is not currently available to Blue River, however, project supporters should continue to monitor changes in the State’s TDR program. Rule changes may open new doors to Blue River and active discussions about existing roadblocks may lead to future opportunities.

Change Community Designation (Option 3), was determined to be the best path for Blue River to achieve the goals of this project. In pursuit of this option, Blue River will need to address two key pieces of criteria which are currently missing:

? The construction of a community wastewater system

o Community wastewater facility should be located INSIDE the existing community boundary in order to minimize roadblocks related to land use rules and regulations (Alternative C)

? A minimum 150 permanent dwelling units including manufactured homes

o Supporters of this effort can begin to address this with a community conversation on how to raise the number of permanent dwelling units. If necessary, project supporters should work with Lane County Land Management Division and local stakeholders to explore a possible rule exception and/or rule changes related to the 150 permanent dwelling unit requirement.

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Chapter 4: Process for Changing Community Designation

Based on the analysis contained in this report, Option 3: Change Community Designation was determined to be the best path for Blue River to achieve the goals of this project. Option 3 focuses on changing Blue River’s community designation from “rural unincorporated community” to “urban unincorporated community” as a means to develop at higher densities in downtown Blue River. In pursuit of this option, Blue River will need to address two key pieces of criteria which are currently missing:

? The construction of a community sewer system (i.e. community wastewater system)

? A minimum 150 permanent dwelling units including manufactured homes;

o An investigation by Lane County Lane Management found that Blue River has 131 permanent dwelling units. That is 19 units shy of the 150 permanent dwelling units required for becoming an urban unincorporated community.

As detailed in the Chapter 2 discussion of alternatives for building a community wastewater facility, Lane County Land Management Division advised that Alternative C –building the wastewater treatment facility inside the existing community boundary- is the most viable path for moving forward. In order to build the facility, the land use designation of the selected parcel would need to be changed but Blue River’s community boundary would not need to be extended.

Supporters of this effort will also need to address the fact that Blue River does not currently meet the 150 minimum required permanent dwelling units. This can begin with a community conversation on how to raise the number of permanent dwelling units. If necessary, project supporters should work with Lane County Land Management Division and local stakeholders to explore gaining additional input from state agencies and lawmakers.

The purpose of this chapter is to provide information on the process of changing Blue River’s community designation by pursuing the construction of a wastewater facility on a parcel inside the existing community boundary.

Steps for Changing Community Designation

Step 1 – Lay the groundwork for making a community wastewater treatment system legal in Blue River

Step 1.1 – Identify a site that could accommodate wastewater treatment

o Update the Dyer Partnership Wastewater Engineering Report to provide further investigation of Seneca Lumber parcel or alternative property

? Contact land owners to see if they would allow soil testing on their property

? Hire contractor to manage soil testing and development of viable wastewater treatment system for property selected

Step 1.2 – Change Land Use Designation to Public Facilities

o Industrial Site next to track or alternative property

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? Current: RI, RCP

? Change to: PF/RCP or RPF, RCP

o Work with Lane County Land Management Division to make this change

Step 2 - Form a Wastewater Special District (If positive outcome on Step 1)5

*NOTE: A water district is not able to take on wastewater services without following option 2 or option 3 listed below. Option 1 would maintain two separate districts.

Step 2.1 - Choose what type of district to form

o Option 1. Form a new sanitary district. Keep existing water district as a separate entity. (Would result in 2 separate districts.)

o Option 2. Form a new sanitary district and consolidate water services into the sanitary district. (Would result in 1 district.)

o Option 3. Form a joint water and sanitation district and dissolve the existing water district (1 district)

Step 2.2 - Form the District - This would have to happen regardless of whether the community wants to go with Option 1, 2, or 3 and involve the following:

o Get a signed petition from either owners or occupants OR get a Board Order

o Assemble required materials for the County (See link below for full list) http://www.lanecounty.org/departments/cao/operations/countyclerk/elections/pages/district_formations.aspx) />

o Completed application for special district formation goes to the Board of County Commissioners (BCC) for approval

o BCC approves application with a Board Resolution

o File materials to County Election to get district formation on the ballot

o Voters within the proposed district vote YES or NO to forming the new district

The Rules. ORS 450.005 - 450.245 and ORS 450.600 - 450.645 describe the formation process for a Sanitary District and the formation process for a Joint Water and Sanitary Authority respectively. The Lane County Clerk provides further instructions for the formation process in Lane County: http://www.lanecounty.org/Departments/CAO/Operations/CountyClerk/elections/Documents/District_Formation_Instructions.pdf. />

Step 3. Fund and build a wastewater treatment system (If voters approve district formation)

Step 3.1 - Get Funding - the newly formed wastewater district will need to seek funding to design and build community wastewater system.

5 See Supplement A –District Formation Process

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Step 3.2 - Build the System - Get it built!

Step 4. Address minimum 150 required permanent dwelling units

Step 4.1 – Investigate feasibility of raising the number of permanent dwelling units in Blue River to meet required minimum (150 units)

Step 4.2 – (If Step 4.1 is unsuccessful) Work with Lane County Land Management Division and local stakeholders to explore a possible rule exception and/or rule changes related to the 150 permanent dwelling unit requirement.

Conclusion

Once these steps are successfully executed, Blue River will be in a position to change its community designation and become an “urban unincorporated community." The designation change opens the door to higher density development and meeting goals 1 and 2 of this project (identified at the beginning of this report). Goal 3 –develop a community wastewater system to reduce reliance on private septic systems- will already be complete.

The pursuit of a community wastewater system and the development of a “downtown district” in Blue River is complex and long-range in nature. Broad support from the local community is vital and the time and energy of a local champion is all but required. Successful achievement of this effort will likely take many years.

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Chapter 5: Recommended Action

The purpose of this chapter is to present a series of recommended actions for moving forward with Blue River’s effort to build a community wastewater system and reinvigorate its “downtown district”. In moving forward, Blue River will need to simultaneously discuss alternative parcels for locating a wastewater treatment facility and steps to increase the number of permanent dwelling units located within the community boundary. If appropriate, Blue River project supporters should work with local stakeholders to take land use rules issues to the Oregon State Legislature.

Near Term

? Investigate what it would mean to build a community wastewater system with less than 150 dwelling units

o Assess whether this would lead to increased development

? Inventory parcels located inside Blue River community boundary in order to assess the following factors (possible project for RARE participant):

o The number of undeveloped residential parcels

o The number of vacant and occupied parcels

? Develop supplemental document to Blue River Downtown Redevelopment & Wastewater Roadmap –“Tools for Community Engagement & Involvement” (potential project for RARE participant)

o This document will serve as a guide for holding community discussions

? Investigate options for locating wastewater treatment facility inside the Blue River community boundary

o Explore Old Mill site (Seneca Lumber Mill) more thoroughly

o Soil testing, engineering recommendation, etc. (Support from Mike Godfrey)

Ongoing

? Further investigation of Blue River wastewater opportunities has been placed on the Lane County Land Management Division’s proposed work plan as a small project proposal for 2016-2017 LRWP

o On July 5, 2016 the Lane County Planning Commission recommended that the Board of County Commissioners adopt the proposed work plan, including 100 hours of staff time to assist and consult on land use issues related to Blue River wastewater

o Board review of the proposed work plan is likely to take place in late July 2016

o Blue River Community members and other project supporters should monitor this situation and stay connected with staff for more information.

? Monitor State of Oregon’s Transfer of Development Rights program and discuss opportunities to influence rule changes

? If appropriate, work with local stakeholders to take land use issues to Oregon State Legislature

o Explore discussion on possible rule exception and/or rule changes related to the 150 permanent dwelling unit requirement

? Continue the conversation with the Blue River community by meeting quarterly to discuss issues of wastewater and development

? Identify local champion

? Identify ongoing project manager

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Conclusion

The rules and regulations governing growth in the State of Oregon are designed to limit development in unincorporated, rural areas. While “unincorporated communities” are viewed as locations most appropriate for rural development there is a strictly defined set of rules for how growth may take place. This means that the pursuit of a community wastewater system and the development of a “downtown district” in Blue River is complex and long-range in nature. Broad support from the local community is vital and the time and energy of a local champion is all but required. It is possible that the University of Oregon’s Resource Assistance for Rural Environments (RARE) Program could help coordinate the efforts for keeping the community involved and the project moving forward. Successful achievement of this effort will likely take many years.

The recommendation of this report is that Blue River pursue Option 3: Change Community Designation moving forward. Project supporters should also monitor the State of Oregon’s Transfer of Development Rights program (Option 2) and discuss rule changes which would make it viable a tool for Blue River. Additional analysis provided by land use planning experts and the mobilization of local support will provide insight into specific next steps. Support from outside resource

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References

U.S. Census Bureau, 2009-2013 5-Year American Community Survey B01003

Blue River Water District. Water System Masterplan, October 2001.

Community of Blue River Wastewater Engineering Report, by Dyer Partnership Engineering & Planners, Inc. May 2012

Lane County Rural Comprehensive Plan, General Plan Policies, April 2010.

McKenzie River Septic System Assistance Project Final Report, by Karl A. Morgenstern, Nancy Toth, and David Donahue, Eugene Water & Electric Board, November 2009.

Nonpoint Source Pollution Assessment and Evaluation for the McKenzie River Watershed, by Karl A. Morgenstern, Eugene Water & Electric Board, April 2006.

Preliminary Soils Report for Blue River Oregon, by Wert and Associates, December 2011.

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Appendices

Appendix A: Resources

Technical Resources

Existing Partnerships

? Lane County Community & Economic Development (Sarah Means –Community & Economic Development Manager, Lane County)

? Lane County Land Management Division (Keir Miller –Senior Planner, Lane County Land Management Division)

o Land Management can help navigating land use questions/ p

 

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